Maple Leaf opting for organic growth over acquisitions

The past two years have been busy ones for Maple Leaf Foods on the mergers and acquisitions (M&A) front.

Roy Graber Headshot
(Maple Leaf Foods)
(Maple Leaf Foods)

The past two years have been busy ones for Maple Leaf Foods on the mergers and acquisitions (M&A) front.

The Canadian company has acquired plant-based protein companies Field Roast Grain Meat Co. and Lightlife Foods, Italian cooked and dry-cured meats company VIAU Foods, two poultry plants from Cericola Farms, and it has invested in insect protein company Entomo Farms.

Meanwhile, it has been busy expanding its plant-based protein endeavors, growing its reach into the United States, and building a new value-added poultry plant in London, Ontario.

Speaking during a quarterly earnings call on February 28, Maple Leaf Foods CEO Michael H. McCain said that in the near future, it will focus more on organic growth, rather than seeking more acquisitions.

“We want to commit to organic capital. We demonstrated that in the poultry business, and we’re also going to be demonstrating that in our plant protein business, and other projects that are in pipeline. We still intend to maintain an investment-grade balance sheet with all of those organic moves,” McCain said.

“We’ve completed four acquisitions over the last number of years. I suspect that we won’t be having too many more acquisitions over the next few years. We will turn our attention to completing these organic projects. I actually feel pretty comfortable with that because the returns are better, the risk is lower and the pricing in the current M&A environment is probably not that shareholder-friendly and we won’t overpay.”

RWA products fuel expansion into US

The Canadian company is steadily growing its reach into the United States, and McCain said central to that expansion are its raised without antibiotics (RWA) meat and poultry products.

“RWA is a key point of difference fueling out expansion in the U.S. market. We’ve made significant inroads with our products now in more than $8,000 stores in America, including 12 of the top 15 retailers in the U.S.,” McCain said.

Quarterly financial results

Maple Leaf Foods saw its net earnings for the first quarter of fiscal year 2019, which ended December 31, 2018, slip nearly 80 percent to CA$11.9 million from CA$59.1 million for the first quarter of fiscal year 2018.

The quarter’s financial results included a $40.7 million restructuring charge, related to the plans to build the new poultry plant. However, McCain is confident that the investment will increase shareholder value in the long run.

Page 1 of 32
Next Page