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Maple Leaf Foods posts smaller loss of $4.3M in Q3 as market challenges ease

TORONTO — The head of Maple Leaf Foods Inc. said he's confident the company has "all the building blocks in place" for success as markets normalize.
A Maple Leaf Foods plant in Toronto is shown on Oct. 19, 2011. THE CANADIAN PRESS/Frank Gunn

TORONTO — The head of Maple Leaf Foods Inc. said he's confident the company has "all the building blocks in place" for success as markets normalize. 

"Our focus has not deviated from stabilizing the financial performance of our business in the post-pandemic economic environment," said president and CEO Curtis Frank on a call with analysts Thursday. 

Frank's comments came as the company reported a loss of $4.3 million in its latest quarter compared with a loss of $229.5 million a year earlier when the company took a large one-time, non-cash impairment charge related to its plant protein business.

The loss amounted to four cents per share for the quarter ended Sept. 30 compared with a loss of $1.86 per share in the same quarter last year, the company said Thursday. 

Sales in the company's third quarter totalled $1.25 billion, up from $1.23 billion a year earlier.

Pork markets have not yet fully normalized, he told analysts, though they did improve in the third quarter. 

The company raised prices in previous quarters to keep up with inflation, which affected consumer demand this past quarter, said Frank on the call. 

"We did experience some level of volume decline during the quarter, which is completely and fully consistent with what we would normally expect to see after pricing, especially in this kind of inflationary environment," he said. 

"We are confident that the volume impacts will prove to be transitory in time."

On an adjusted basis, Maple Leaf said it earned 13 cents per share for the quarter compared with an adjusted loss of a penny per share a year ago.

Analysts on average had expected an adjusted profit of 21 cents per share and $1.30 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.

Shares in the company were down more than nine per cent in midday trading. 

In its outlook, Maple Leaf said its capital expenditures for 2023 are expected to be about $200 million, down from its earlier guidance of less than $250 million.

It said it expects mid-single-digit sales growth in 2023 for its meat protein category. 

In the company's plant protein category, Frank said it made "great strides" in the third quarter, and is on track to deliver its target of achieving neutral adjusted earnings before interest, taxes, depreciation and amortization by the end of the year. 

Investors should be encouraged by another quarter of sequential improvements at Maple Leaf, wrote RBC analyst Irene Nattel in a note. 

Next year should mark an important inflection point for the company, she said, but gave a caveat: "The road from here to there is always bumpy." 

This report by The Canadian Press was first published Nov. 2, 2023.

Companies in this story: (TSX:MFI)

Rosa Saba, The Canadian Press