Margin improvements and higher sales at Maple Leaf Foods enabled the Canadian meat company to book a jump in first half earnings yesterday (29 July).
Maple Leaf said net profit for the first six months of the year rose to CAD73.7m (US$56m), up from a loss of CAD10.4m last year. Adjusted operating earnings increased from CAD32.2m last year to CAD114m this year. EBITDA margin rose to 10.3% from 5.4% last year.
Sales were also higher – increasing to CAD1.65bn from CAD1.6bn in the comparable period of last year. Growth was supported by higher sales at the firm’s meat products business, where revenue increased by 3.2%. This was somewhat offset by lower sales from Maple Leaf’s agribusiness unit.
“The strategic foundation we have built delivered a second consecutive quarter of double-digit EBITDA margin and product innovation at a level unprecedented in our history,” said Michael McCain, president and CEO. “Our performance was driven by strong commercial results across the business and continued efficiency gains in our plant network. Our team is focused on pursuing profitable growth, market expansion and further cost efficiencies.”
TD Securities analyst Michael Van Aelst said the company stands to benefit from its strong position in the more sustainable meat sector. “We are most optimistic about Maple Leaf’s leadership position in the rapidly growing trend of sustainable meat, including Raised Without Antibiotics (RWA). New product development and sales gains in RWA have recently shifted the category from being margin dilutive to margin accretive, and the sales opportunity is only in its infancy,” Van Aelst wrote in a note to investors.