Maple Leaf Foods narrows loss as pork business spin-off gains traction
CANADA – Maple Leaf Foods Inc. reported a reduced net loss of US$26.2 million for the latest quarter, a significant improvement compared to the US$53.7 million loss recorded in the same period last year.
The company’s ongoing preparation to spin off its pork business into a separate, publicly traded entity has garnered a positive response from investors, according to the Mississauga, Ont.-based meat producer’s president and CEO, Curtis Frank.
Frank expressed confidence that the planned separation, set for next year, will drive growth and enhance value creation.
He emphasized that by allowing each business segment to focus on its unique strategies with dedicated management, the company expects to achieve higher levels of success.
The spin-off will transform Maple Leaf into a more focused consumer packaged goods company, primarily centered around its prepared meats, poultry, and plant protein divisions.
Well-known brands such as Maple Leaf and Schneiders will remain under its umbrella.
Current Maple Leaf shareholders will receive shares in the new pork-focused company, while Maple Leaf will maintain a 19.9% stake and secure a long-term pork supply agreement for its prepared foods division.
For the quarter ending June 30, Maple Leaf’s loss translated to 21 cents per diluted share, compared to 44 cents per share in the same quarter last year.
The company attributed its improved performance to factors including growth in prepared meats, better pork market conditions, and contributions from recent large-scale capital projects.
Overall sales in the quarter stood at US$1.26 billion, a slight decline from US$1.27 billion a year earlier.
The company’s prepared foods division saw a modest sales increase of 1%, while its pork segment experienced a 4.2% drop.
Looking ahead, Maple Leaf expects low single-digit revenue growth for 2024, with an anticipated expansion of adjusted margins driven by returns from its investments in facilities and operational efficiencies.
However, the company remains cautious, acknowledging the current economic pressures on consumer demand for premium products.
Shares of Maple Leaf Foods fell by over nine percent on the Toronto Stock Exchange, closing at US$23.05 in the first week of August.
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