Its plant-based protein business was hit by an impairment charge, inflation, difficult markets for meat proteins, and a cyberattack, which together created hurricane-force headwinds that hurt Maple Leaf Food, Inc.’s profitability in fiscal 2022.
In contrast to fiscal 2021, when the firm gained C$102.8 million, or C83 per share on the common stock, the company posted a loss of C$311.9 million ($226.1 million) for the year that ended on December 31, 2022.
Sales increased from $4.5 billion to C$4.7 billion ($3.4 billion) in comparison to the previous year.
A C$190.9 million ($138.4 million) impairment charge against Maple Leaf’s Plant Protein business group, weaker results in the production of pigs and pork, and the effects of a cyberattack that the company is estimated to have cost at least C$23 million ($16.7 million) were some of the factors that had an impact on profitability.
The fourth quarter of the company’s fiscal 2022 saw the same difficulties, with a loss of C$41.5 million ($30.1 million). During the same quarter the year before Maple Leaf Foods made C$1.9 million, equal to C2¢ per share.
Sales for the third quarter increased from C$1.12 billion to C$1.19 billion ($863 million).
During a conference call on March 9 to review the company’s performance, Michael H. McCain, president, chief executive officer, and executive chairman of the board, said: “First, this was definitely the cyber quarter. “The cyber incident was cunning and had a wide range of effects on our organisation. We had to quickly change the firm from a fully automated network of operations—one that handled orders, factory planning, inventory picking, receipts, and payment—to one that was entirely manual.
The cyber breach “has further knock-on consequences in delaying the resolution of the numerous supply chain inefficiencies that we’ve been having and are seeking to address by at least C$23 million or 200 basis points.”
According to the corporation, the pressure was increased by 10-year lows in the conditions of the world’s pork markets, particularly in Japan.
In terms of annual revenue, the Meat Protein Group saw a 5.2% growth to C$4.59 billion ($3.33 billion). Gross profit for the business unit decreased from C$676.8 million to C$474.7 million ($344.1 million), a decrease. In addition to the cyberattack and the dynamics of the world’s pork market, the company was also impacted by labour and supply chain interruptions, as well as inflationary cost rises.
The Plant Protein Group at Maple Leaf reported C$169 million ($122.5 million) in annual revenues as opposed to C$184 million. Lower retail product volumes, which more than offset pricing changes made during 2022 to counteract inflation and structural cost increases, were the main cause of the sales loss, according to the company.
The unit’s annual deficit increased from C$12.8 million to C$36.5 million ($26.5 million).
In order to reflect the present size of the business, we have rightsized our organisational design and boosted promotional investments, Mr. McCain stated. “And if the decreases persist, we will need to take additional measures to make sure we are on pace, and we are ready to do that. Given the consumer sentiment in this area, I for one feel confident—and we have continued to feel this way given the research we have done—that the market will eventually return to slowing growth.
“We have stated that the category would increase at a rate of 10% to 12% over the long run, which is what it was doing well before the COVID scenario. But at this point, decreases are still being observed. We will go forward if more action is required. At the same time, we do anticipate that the category will eventually see some growth again.