Q2 numbers reveal Maple Leaf is strong in meat, weak in plant

The food company sees profits slide, despite revenue growth, as it completes renovation work on its two key plant-based brands.
Lightlife Foods Veggie-Burger Pack

Its two portfolios are going in different directions, but strength in meat was not enough to prevent a Q2 profit slump for Maple Leaf Foods.

The Mississauga-based company, which produces brands such as Schneider’s, Natural Selections and Lightlife, is reporting net Q2 earnings of $8.8 million, down 66% from 2020, but also a small uptick in revenue for the three months ending June 30, from $1.09 billion last year to $1.16 billion in 2021.

The results were thanks to what Michael McCain, the company’s president and CEO, called “material market headwinds and a difficult year-over-year comparable quarter due to COVID-19 effects.” 

Maple Leaf reports that meat protein sales surged 7.4% to $1.12 billion, with Adjusted EBITDA margins of 11.6%. 

The category was spurred by higher fresh poultry and pork market values (it’s the largest producer of raised-without-antibiotics pork in North America), a favourable shift towards branded products and sustainable meats and higher volumes in the U.S.

Selling, general and administrative (SG&A) expenses for Q2 were $81.2 million compared to $83.7 million last year, a reduction that was driven by a decrease in variable compensation, partially offset by the normalization of advertising and promotions spend compared to 2020 levels. 

Plant protein sales, meanwhile, which had seen a COVID-related spike, slumped 21% to $48.1 million.

“In Plant Protein, where we continue to invest for long-term growth, we expected our sales in the first and second quarters to come in soft,” said McCain. “At the same time, we expect to return to our strategic growth targets or above in the second half of this year. Our brand momentum, innovation pipeline and customer activity all support this.”

SG&A expenses for Q2 2021, however, were $29.8 million (61.9% of sales) compared to $34.1 million (56.3% of sales) in 2020. The decrease in SG&A expenses was primarily driven by the impact of foreign exchange. 

The company is reporting renovation work is complete for its two key plant-based brands. The Lightlife product line has been reformulated to “deliver clean and simple ingredients,” with new packaging. Meanwhile, Field Roast, also with new packaging, is putting greater focus on “bold flavours and indulgence.”

Revamped creative campaigns will support the two brands, including “Simple Ingredients for a Full Life” for Lightlife coming in Q3 2021, and Field Roast’s “Make Taste Happen” campaign, extending into Q3 and Q4.

As part of its outlook, Maple Leaf is reporting that its foodservice momentum is growing, and it boasted of key wins that include Lightlife Chicken and Burgers launching at all 52 U.S. IKEA outlets in Q3, and Field Roast’s link up with Little Caesars to become the first pizza chain to offer plant-based pepperoni nationally.

Maple Leaf also says that overall, its deliberate repositioning of its portfolio towards two high-growth categories – sustainable meats and plant-based protein – is now generating a compounded growth rate in excess of 25% in the last 3 years.