In its results for the full year to 31 December 2016, sales in its meat products division increased 1.2% to $3,316.5 million (m). Excluding only the contribution of the 53rd week in 2015, sales increased by approximately 3%.
Its prepared meats sales declined slightly in response to a price increase in the first quarter, but strengthened as 2016 progressed. The company’s success story was fresh pork, sales of which increased as its focus on value-added resulted in higher selling prices. This strong performance was bolstered by favourable exchange rates and pork markets.
Adjusted operating earnings for 2016 increased to $263.6m compared to $108.4m in the prior year. Higher earnings in its prepared meats division was attributed to lower operating costs and pricing implemented in the first quarter. Higher fresh pork earnings resulted from increased contributions from value-added retail and value-added export sales, higher industry margins and operating efficiency gains.
Fresh poultry sales for the year also increased due to “stronger volume and an improved sales mix”.
Maple Leaf Foods’ agribusiness group sales in 2016 declined slightly to $15.3m compared to $15.9m in the prior year, due to 2015 sales benefiting from a 53rd week.
“We finished 2016 with a strong quarter sustained by solid commercial performance. We surpassed our Adjusted EBITDA margin target for both the quarter and full year, demonstrating the strength of the strategic foundation we have built,” said Michael H McCain, president and CEO of Maple Leaf Foods. “With the combination of our increasingly competitive cost structure, and commercial strategies that intersect with important consumer needs and trends, we are well positioned for future profitable growth.”
Earlier this week, the business also announced that it is to acquire plant-based protein foods processor Lightlife Foods Inc.
Lightlife will operate as a subsidiary of Maple Leaf Foods out of its Massachusetts, US site. The processor manufactures more than 30 innovative products, including plant-based tempeh, hot dogs, breakfast foods and burgers.
“Expanding into the fast-growing plant-based proteins market is one of Maple Leaf’s strategic growth platforms and supports our commitment to become a leader in sustainability,” said McCain. “Consumers are increasingly looking to diversify their protein consumption, including plant-based options. The acquisition of Lightlife provides Maple Leaf with a leading market position and brand in the United States in a category that is outpacing growth in the broader packaged foods sector. We will expand our presence through investment in brand-building, innovation and leveraging our respective capabilities.”
Roy Lubetkin, president and CEO, Lightlife Foods, said: “We at Lightlife are truly excited about today’s announcement, which will allow us to accelerate our growth and broaden our reach in the fast-growing plant-based protein market. Maple Leaf Foods has an industry-leading commitment to sustainable protein, including a strategic focus on plant proteins, and being part of this incredible organisation will enable the continued growth of our brands.”
Subject to customary US regulatory review, the deal is expected to be finalised in March and financed from cash on hand.