- Packaged meats producer, Maple Leaf Foods (TSX:MFI) has reported a net loss in its first quarter, despite increased product demand in Asia
- In 2020’s first quarter, sales jumped up 12.8 per cent to C$1.02 billion, driven by increased pork sales in Asia
- However, the company reported a net loss of $3.7 million, versus $50.1 million net profit in 2019’s same quarter
- The quarterly loss resulted from investment in its plant protein sector, and a $36.7 million impairment on its pork products
- Maple Leaf Foods (MFI) is up 1.29 per cent, with shares trading for $26.65 and a $3.3 billion market cap
Maple Leaf Foods (TSX:MFI) has reported a net loss in its first quarter, despite increased product demand in Asia.
The company produces packaged meats that sell all around the world. As a food provider, Maple Leaf qualified as an essential service during the recent government-mandated lockdowns.
In 2020’s first quarter, sales jumped up 12.8 per cent to C$1.02 billion. The increased sales were primarily driven by increased pork sales in Asia.
However, the company reported a net loss of $3.7 million, versus a net profit of $50.1 million in 2019’s same quarter.
The company’s loss was the result of two sources. Firstly, Maple Leaf’s investment into its plant protein sector impacted its margin. Secondly, the company reported a $36.7 million impairment, caused by poor market prices for pigs which devalued its pork assets.
Ignoring these impairments, the company generated $45.1 million in operating earnings, compared to $42.1 million in 2019.
Looking forward, the company expects increased demand to remain steady in 2020’s second quarter.
However, COVID-19 related operating costs including increased labour, protective equipment, and sensitisation may partially offset this demand. The company estimates these expenses could cost up to $20 million in its second quarter.
Michael H. McCain, President and CEO of Maple Leaf, believes the pandemic has not altered the company’s aims.
“During the COVID-19 crisis, Maple Leaf’s commitment to social purpose has taken on new meaning and increased importance.
“Despite the unprecedented environment, Maple Leaf remains focused upon its strategic, financial, and operational targets, and continues to make steady progress in this regard. We are encouraged by the growth trajectory of our plant protein business and continue to witness the benefits of our investments in brands and sustainable meats,” he said.
Maple Leaf Foods (MFI) is up 1.29 per cent, with shares trading for $26.65 at 1:52pm EST.