In 2023 and 2024, Maple Leaf Foods anticipates plant-based profitability.
TORONTO—Maple Leaf Foods, Inc., the biggest meat processor in Canada, is dedicated to being a major player in the plant-based protein market in North America. Under the direction of management, the business segment, which was introduced through two acquisitions in 2017, is expected to turn a profit in 2023 or 2024.
Driven by pandemic-fueled purchasing behaviors, the Plant Protein Group business unit, which includes the Lightlife and Field Roast brands, achieved C$211 million ($168 million) in sales in fiscal 2020, which was 20% more than sales in the previous year. In fiscal 2021, management had guided a further 30% growth in sales, but after the company’s second-quarter earnings were announced on August 5, they reduced that goal.
Plant Protein Group’s sales for the first half of the 2021 fiscal year, which concluded on June 30, came to $90.7 million. Second-quarter sales dropped 21% to C$48 million ($38 million). Although the business segment’s 30% sales growth target for the entire year will not be met, management stated that it will rise by 30% in the second half of the year.
“Without accounting for the impact of foreign exchange, we do anticipate sales growth in the second half of the year of at least 30%, and in line with our strategic target,” Chief Financial Officer Geert Verellen stated in a conference call with investors on August 5. Although the economy in both of North America’s major markets is gradually recovering, the potential effects are not fully apparent.of a fourth wave of COVID-19 on the recovery of the foodservice business.”
According to Curtis Eugene Frank, president and chief operating officer of Maple Leaf, the fresh plant-based meat substitutes that the company predominantly sells in supermarket fresh meat cases were most negatively affected by the slowdown.
“We continue to outperform the broader market with our core portfolio, which consists of products typically found in the produce and frozen sections of the grocery store,” he stated. We have increased our market share in Lightlife Tempeh and our Field Roast Chao cheese range within the past 12 weeks. We still view tempeh and chao cheese as long-term growth platforms that will be advantageous to the well-being of our company. Crucially, we also carried out our strategic strategy during the quarter, and we are still certain that we have positioned the Greenleaf business forlong-term success.”
Michael H. McCain, president and chief executive officer, characterized Maple Leaf’s past efforts to grow the Plant Protein Group as investments and not losses.
“We believe that the path to profitability will most likely intersect in the 2023–2024 timeframe and will be achieved through growth,” he stated. “We have to get back to that growth level, and we know we can.”Compared to 13% in fiscal 2020, the Plant Protein Group’s gross margin for the quarter was 0.6%.
“Our strategic investments in capacity in anticipation of revenue growth was the primary cause of this decrease, leading to increased overhead and temporary costs,” Mr. Verellen stated. “Higher trade expenditures and low sales volume also had an impact on gross margin.”
Mr. McCain continued, saying that while Maple Leaf’s plant-based operations are a little unstable right now, things will settle down.Our primary focus is on achieving the increase in the long term, not quarter-to-quarter, in the long term with the ambition that those lines will intersect on a path to profitability in 2023, 2024,” he said.
The continual increase in the number of locations where the Plant Protein Group’s goods are offered gives the company hope for future sales growth.
The second half of this year will see a rise in our overall retail points of distribution of over 10%, according to Mr. Frank. This comprises the addition of thousands of new distribution points at major chains like Walmart, Albertsons, Publix, Whole Foods, Kroger, Sprouts, and several others.
In addition, we have introduced Field Roast plant-based nuggets to Costco locations in the Los Angeles area, further increasing our footprint in the retail club channel. We see this as a possible first step toward distributing our items more widely through the club channel.
The business unit is expanding into the foodservice industry as well. on the US, Field Roast plant-based pepperoni will be featured on Little Caesars’ new Planteroni Pizza.
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In comparison to the second quarter of fiscal 2020, when the firm earned C$26 million, or C21¢ per share, Maple Leaf Foods earned C$8.8 million, or C7¢ per share, on its common stock during the second quarter of fiscal 2021.The quarter’s sales increased 6% to C$1.16 billion.