MISSISSAUGA, ONT. — Maple Leaf Foods, Inc., directly addressed the potential impact of tariffs during its recent fourth quarter and 2024 year-end earnings call, noting the company has options to mitigate tariffs if the United States decides to implement them, but hasn’t included those options as part of its 2025 fiscal forecast.

“The bottom line is tariffs are not an existential threat to our business, but there could be an impact to a relatively small percentage of our total sales, with roughly 7.5% of our sales being products exported from Canada into the US,” said David Smales, chief financial officer, Maple Leaf Foods. “The other uncertainty, which could be supportive of mitigating the impact of tariffs is exactly what the Canadian government response to US tariffs might be. At the same time, we have seen a lot of activity already among customers and consumers in Canada focused on buying Canadian products and seeking out security and high-quality Canadian supply. We will continue to monitor the situation and as a company are prepared to execute on a range of mitigation strategies.”

Curtis Frank, president and chief executive officer of Maple Leaf Foods, said sales within the US market are about C$500 million ($349 million) in terms of revenue, which is about 10% of Maple Leaf’s business.

“A portion is obviously made and sold in the United States, which is our plant protein business, and a little bit of prepared meat production, so (that’s) not impacted,” Frank said. “Of that C$500 million in revenue, about C$350 to C$400 million is exported from Canada to the US. That C$350 to C$400 million is roughly split, half pork and half prepared meats. We've got a team of people working on preparedness and a number of mitigation strategies that we could put in place.”

Frank said the pork business is global, and the company could look to markets outside the United States to export pork products.

“If we were forced to repatriate sales to other markets, the prepared meats business would certainly be more impacted,” he said. “The implications of tariffs are very much linked to what the Canadian response is and the counter tariffs. Tariffs have the potential to play some noise in our results this year … but they are not an existential threat for Maple Leaf with a maximum of 7.5% of our portfolio impacted.”

Financial performance

Maple Leaf posted positive 2024 fourth-quarter and full-year earnings. The company’s fourth-quarter sales were C$1.23 billion ($860 million), up 4.3% from C$1.18 billion the year prior. Net earnings were C$54 million ($38 million), equal to C43¢ per share on the common stock, which compared with a loss of C$9 million a year ago.

Fourth-quarter sales for the company’s Prepared Foods segment increased 4.6%, and within Prepared Foods, sales of prepared meats increased 6.5%, while poultry rose 1.8%. Sales in Maple Leaf’s Pork operating unit increased by 3.5%.

Full-year 2024 sales were C$4.9 billion ($3.4 billion), up 1.1% from C$4.8 billion in fiscal 2023. Net earnings were C$97 million ($68 million), or C79¢ per share, which compared with a loss of C$125 million in 2023.

Maple Leaf’s full-year sales in Prepared Foods rose 1.8%, and within that unit, prepared meats increased 3.9%, which was partially offset by declines in poultry (2.6%) and plant protein (4.3%). Sales in Pork also decreased by 0.9%.

“We closed out 2024 with strong momentum, setting the stage for what we are describing as a transformational year ahead,” Frank said. “We delivered significant financial improvement in what continued to be a challenging condition in the market. We completed the play on a highly successful startup of over C$1 billion in major capital projects at London Poultry and the Bacon Center of Excellence, where both projects achieved full business case benefits in Q4.”

Frank added that Maple Leaf has no large-scale manufacturing projects planned for 2025.

Forecast for 2025

Maple Leaf expects revenue growth in the mid-single digit range for 2025, with adjusted EBITDA growth higher than 2024, expected to meet or exceed C$634 million ($442 million), and capital expenditures to be within a range of C$175 million and C$200 million ($122 million and $139 million). The company also announced an increase of its annual dividend of approximately 9% to C96¢ per share for 2025, the 10th consecutive year of an annual dividend increase for Maple Leaf Foods.

Photo: CNW Group/Maple Leaf Foods Inc.

The company also expects to complete the spinoff of its pork business as an independent company — called Canada Packers Inc. — during the second half of 2025.

On the topic of product innovation, Frank said the company is focused on meeting the growing consumer need for protein with new SKUs, and mentioned the launch last year of Schneiders frozen breakfast portfolio has been well received with strong initial sales.

“We’re making a very important transition from a multi-protein approach in the company to a singularly focused, branded consumer packaged goods business, and innovation sits at the heart of that,” Frank said. “Our abilities from an innovation perspective were somewhat impaired through the pandemic and the post-pandemic experience … so the ability to get back to focusing on what matters most in our business, which is the consumer at the heart of everything, and offering consumer-focused solutions through an innovation platform that’s meaningful to the company is important, and it’s an area we’re now focused on. That focus showed up last year in 50-plus SKUs being launched into the market.”