Maple Leaf Foods cuts alternative meat business

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TORONTO – Maple Leaf Foods, Inc. has big plans. as the market continues to grow, alternatives to meat are becoming smaller. The company “right-sizes” its business to meet forecasted demand that never materialized.

“We now understand why it didn’t happen, and we no longer believe it will,” Michael H. McCain, president and chief executive officer, said on an Aug. 4 conference call to discuss the company’s second-quarter results. “As such, we are changing our business model and returning our investment to reflect the objective of profitable growth…”

Maple Leaf Plant Protein Group’s sales for the quarter ended June 30 were C$40.8 million, down from C$48.1 million in the same period a year earlier. The second quarter sales results reflect a further slowdown in category sales that have been C$44.9 million in the first quarter.

“The decline was driven by lower retail volumes as consumers adjust to higher prices, partially offset by higher foodservice volumes as well as price action to offset inflation,” said Gert Verehlen, chief financial officer.

According to the company, Plant Protein Group’s gross margin was minus 25% during the quarter as a result of low sales, low capacity utilization, raw material inflation and start-up costs.

Ongoing business reduction efforts include cost adjustments to reflect current market conditions, normalization of revenue management and redeployment of excess capacity in Maple Leaf’s Meat Protein Group.

An analyst on the call noted that any cost-cutting could affect businesses’ ability to compete, but Mr. McCain noted that everyone in the category is giving up efforts to gain “share of voice.”

Maple Leaf Foods cuts alternative meat business

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