Maple Leaf Foods QIV and Full Year 2019 results reported
The company also announced it will increase its quarterly dividend by CAN$0.015 per share or 10.3% to CAN$0.16 per share, effective the first quarter of 2020.
"Our teams delivered on our strategic, operational and financial priorities in the fourth quarter," said Michael H. McCain, President and CEO. "In meat protein, we continue to see the results of our brand renovation strategy and focus on sustainable meats. Despite an extremely challenging and volatile year in meat protein due to global trade issues and the impact of African swine fever, we delivered Adjusted EBITDA margin expansion in the quarter and year in this segment.
"We are seeing our disciplined investments in advertising and marketing take hold in plant protein, which combined with continued product innovation and broader distribution points, resulted in strong growth in the fourth quarter. We expect this momentum to continue as these strategies unfold," continued Mr. McCain.
Total company sales growth of 13.7% and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin of 7.4% of sales was fueled by strong performance in the Meat Protein Group. Its sales grew 13.3% (9.9% excluding the impact of acquisitions) driven predominantly by favourable pork market prices and consistent execution of the company's brand renovation strategy. Adjusted EBITDA margin was 11.4%, expanding 130 basis points, in line with expectations.
Continued solid Plant Protein Group sales growth of 31.5% was the second consecutive quarter of growth exceeding 30.0%. Focused and disciplined investment in marketing and brand, as well as building sales support and supply chain infrastructure, resulted in selling, general and administrative expenses ("SG&A") of CAN$45.3 mill. Adjusted EBITDA in the Plant Protein Group was a loss of CAN$34.9 mill.
Net earnings for the quarter of CAN$17.5 million increased 46.1% over prior year.
During the year ended 31 December, 2019, the company completed a comprehensive analysis of the role of its rapidly expanding plant protein business in the company's meat and plant protein portfolio, their respective financial profiles and long-term value creation opportunities. Based on the importance of these two distinct businesses and differing strategic and financial requirements to maximize their market leadership and long-term shareholder value, the company has disaggregated its business into two operating segments. These segments offer different products, with separate organizational structures, brands, financial and marketing strategies. The company's chief operating decision makers regularly review internal reports for these businesses; performance of the Meat Protein Group is based on revenue growth, Adjusted Operating Earnings and Adjusted EBITDA, while the performance of the Plant Protein Group is based predominantly on revenue growth rates, managing gross margins and controlling investment levels which generate high revenue growth rates.
For 2020, the Company expects to achieve the following:
•Mid-to-high single digit revenue growth driven by sustainable meats and higher sales to Asian markets.
•Gross margin expansion due to the continued mix-shift benefits in prepared meats resulting from growth in sustainable meats and brand renovation, coupled with pork complex conditions more in-line with the 5-year average, as well as contributions from higher sales to Asian markets.
•Revenue growth of approximately 30% from 2019 levels in the Plant Protein Group, which is in line with long-term strategic targets. This growth is driven by continued product innovation, brand awareness resulting in further demand generation, increased distribution points, and strong growth in the underlying market.
In addition to financial and operational priorities, Maple Leaf Foods believes that shared value and operating its business for the benefit of all stakeholders is crucial. The Company's guiding pillars to be the "Most Sustainable Protein Company on Earth" include Better Food, Better Care, Better Communities, Better Planet, are core to how Maple Leaf Foods conducts itself. To that end, the Company's priorities include:
•Commitment to carbon neutrality.
•Better Food: leading the real food movement and transitioning key brands to 100.0% "raised without antibiotics".
•Better Care: further advancement of animal care, including progress towards transitioning all sows under management to open housing systems by 2021.
•Better Communities: Investing approximately 1.0% of pre-tax profit to advance sustainable food security.
•Better Planet: Focus on eliminating waste in any resources the Company consumes, including food, energy, water, packaging and time.