Maple Leaf Foods has announced details of a comprehensive plan to significantly increase near and longer term shareholder value.
The plan includes several initiatives that are expected to increase margins in the near term, of which several require little or no capital investment. Many of these near-term initiatives are well underway, including pricing and normalization of trade promotional activity, simplification of bakery and meat products formulation and manufacturing, early facility rationalization, and the implementation of an integrated SAP system that will provide a base to enhance business performance and further reduce administration and processing costs.
The plan also contemplates a series of plant consolidations, coupled with strategic capital investments in new manufacturing capacity and technology. This will include construction of two large scale facilities: a bakery in Hamilton, Ontario that is planned to be commissioned in mid-2011; and a new prepared meats facility, with construction planned to commence in 2012. These investments are expected to materially increase the profitability and competitiveness of Maple Leaf's manufacturing facilities and its distribution network.
Maple Leaf expects the plan will deliver substantial earnings growth in each of the next five years. Specifically, the company expects its plan will increase EBITDA margin by more than 75% over the next four to five years - from a current level of 7% to 9.5% in 2012, and 12.5% in 2015.