Maple Leaf Foods’ new value-added poultry plant in London, Ontario, is helping the company shift more toward serving retail customers and less geared toward the industrial channel.
During the Canadian company’s second quarter earnings call on August 8, executives explained the changes that are occurring, that included increased profitability, despite lower sales.
“The London poultry facility is delivering in almost every aspect. A majority of the year-over-year improvement was driven by the contributions from this capital project,” said Maple Leaf Foods President and CEO Curtis Frank.
Operations at the plant in London began on November 28, 2022.
Frank acknowledged that poultry sales were down 3.9% when compared to the second quarter of fiscal year 2023, but the main reason for that decline was a reduction of sales to industrial sales, “which we expected as part of executing our plan to repatriate volumes from a co-manufacturer and into London poultry.”
Chief Financial Officer David Smales added: “In essence London has allowed us to improve on the exposure, increasing our tray pack capacity, replacing lower-value and volatile industrial channel volume, resulting in the decline in poultry sales year-over-year, but improved mix and margin performance.”
Retail sales for Maple Leaf Foods’ poultry products increased during the most recent quarter by nearly 13%, which Frank attributed to “the resilience of our leading brands,” like Maple Leaf, Prime and Mina Halal.
Premium product demand soft
Frank said despite the strengths he mentioned, the poultry business does still have some areas that are not performing as well.
“Like many other companies, we are seeing softness in consumer demand for premium offerings, such as RWA (raised without antibiotics) and organic fresh poultry, largely attributable to the overall economic environment,” Frank said.
