Maple Leaf profit misses estimates on weak pork prices

Reuters — Packaged meat producer Maple Leaf Foods missed analysts’ estimates for quarterly profit on Thursday, as weak pork prices offset growth in its prepared meats business.

Pork prices have taken a beating from the Sino-U.S. trade war, with China’s retaliatory tariffs affecting demand from the South Asian country, which is the world’s biggest pork importer.

Mississauga, Ont.-based Maple Leaf said it expects continued uncertainty in the fresh pork markets, citing trade tensions, potential for increased supply and outbreaks of African swine fever in China.

Beijing has reported more than 100 outbreaks of the disease since August last year. African swine fever does not harm humans but is deadly to pigs and there is no vaccine or cure.

Maple Leaf, which owns the Greenfield Natural Meat, Prime and Schneiders brands, said sales rose about two per cent to $893.9 million in the fourth quarter, while gross margin fell eight per cent.

Excluding items, the company earned 29 cents per share, missing analysts’ average estimate of 34 cents, according to IBES data from Refinitiv.

Maple Leaf’s net earnings slumped 80 per cent to $11.9 million, or 10 cents per share, in the quarter ended Dec. 31, as the company recorded a $40.7 million charge related to its investment in a poultry facility in Ontario.

In November, Maple Leaf said it planned to set up a $660 million poultry processing plant at London, Ont., with investments from the federal and Ontario governments.

In its year-end outlook Thursday, Maple Leaf said it plans about $400 million in capital expenditures in 2019, including about $250 million on the London plant’s construction.

The company also said it plans to continue to build up “leadership” in both sustainable meat and refrigerated plant-based proteins in 2019.

Work to that end includes transitioning all sows under company management to open housing systems by 2021, and continuing to build its presence in both Canada and the U.S. in RWA (raised without antibiotics) retail and foodservice meats.

In plant-based proteins, where Maple Leaf owns the Lightlife and Field Roast brands, the company said it will target “consistent double digit-growth in sales supported by new product innovations and investment in capacity to meet demand.”

— Reporting for Reuters by Debroop Roy in Bangalore. Includes files from Glacier FarmMedia Network staff.