Maple Leaf Foods, maker of Schneiders bacon and Shopsy’s hot dogs, announced the closing of its two remaining legacy meat plants in Toronto and Kitchener, Ont., and said its new, state-of-the-art factory in Hamilton is nearing full production.Peter Power/The Globe and Mail
Maple Leaf Foods Inc. is nearing the end of a seven-year shakeup that has remade Canada's largest food processor.
The Mississauga-based maker of Schneiders bacon and Shopsy's hot dogs announced the closing of its two remaining legacy meat plants in Toronto and Kitchener, Ont., and said its new, state-of-the-art factory in Hamilton is nearing full production.
The company has already shut several plants and distribution centres across Canada, expanded three factories and sold off a handful of divisions, including the $1.8-billion sale of the maker of Dempster's Bread.
"The finish line is clearly in sight," said chief executive officer Michael McCain, who launched the $560-million makeover in a bid to boost competitiveness and slash production costs in the face of a rising Canadian dollar.
The transition has been anything but painless for the company, its shareholders and employees, with more than 1,000 of 12,000 jobs gone and several quarters of multimillion-dollar losses. The revamp cost $97-million in 2014 and is expected to cost another $13-million this year, Mr. McCain said in a call with analysts on Thursday.
The Globe and Mail has reported international food companies have shown an interest in buying the company when the transition is complete – a development that could clear the way for the exit of Mr. McCain, who owns one-third of the company's shares.
In a sign of confidence in its new footing, Maple Leaf Foods doubled its quarterly dividend on Thursday, even as it reported its seventh consecutive money-losing quarter.
A drop in sales that followed a rise in pork prices last year and the duplicate costs that came with operating production lines at different factories drove Maple Leaf Foods to an adjusted fourth-quarter loss of $13.7-million, or 8 cents a share, compared with $56-million, or 41 cents a share, in the year-earlier period. The full-year loss narrowed to $75-million, or 58 cents a share, from $136-million or $1.08 a share.
The net loss for the quarter was $28-million, or 20 cents a share, compared with a profit of $511-million, or $3.58 a share, in the same period last year, which includes profit from divisions that have been sold, or discontinued operations.
Maple Leaf Foods does not provide profit guidance, and Mr. McCain would not say when he believed the company would begin making money.
In the past year, the company's sales and costs have been hit by soaring pork prices amid a North American outbreak of a virus that killed millions of piglets and reduced hog supplies. The company responded by raising its prices for bacon and ham, a move that drove consumers to cheaper brands and sent sales down by $13-million.
Mr. McCain said "time and patience" will prove higher prices were the right move, and pointed to other economic tailwinds in the company's favour: a lower dollar that will aid exports, and cheaper energy costs in addition to lower prices for hogs and the food they eat.
He said these factors, combined with the benefits of the revamp, will boost profit margins to 10 per cent this year from 1.5 per cent in late 2014. "We're entering 2015 with what we believe is very positive momentum," he said.
Maple Leaf Foods said it plans to close its Toronto plant by the end of March. On Friday, it will close a meat plant in Kitchener, a factory that opened more than 100 years ago.
Eric Atkins