Canada News for Jan. 3: Just how much money did Canada’s CEOs make in 2021?

Maple Leaf Foods Inc. continued to navigate weaker consumer demand in the third quarter as it looked ahead to the spinoff of its pork business in 2025.

“This environment has a particularly significant impact on a premium portfolio like ours and I want you to know that we are not sitting still waiting for the macro environment to recover on its own,” said CEO Curtis Frank on a call with analysts.

Frank said the company is working to adapt its strategies to consumer demand. As inflation has stabilized and interest rates decline, he said pressure on consumers is expected to ease.

Maple Leaf reported a third-quarter profit of $17.7 million compared with a loss of $4.3 million in the same quarter last year.

The company says the profit amounted to 14 cents per share for the quarter ended Sept. 30 compared with a loss of four cents per share a year earlier. Sales for the quarter totalled $1.26 billion, up from $1.24 billion a year ago.

“At a strategic level … we’re certainly seeing the transitory impacts of an inflation-stressed consumer environment play through our business,” Frank said.

“We are seeing more trade-down than we would like. And we are making more investments to grow our volume and protect our market share than we would like in the moment. But again, we believe that those impacts will prove to be transitory as they have been over the course of history.”

Financial results are improving in the segment as feed costs have stabilized, said Dennis Organ, president, pork complex.

Maple Leaf, which is working to spin off its pork business into a new, publicly traded company to be called Canada Packers Inc. and led by Organ, also said it has identified a way to implement the plan through a tax-free “butterfly reorganization.”

Frank said Wednesday that the new structure will see Maple Leaf retain slightly lower ownership than previously intended.

The company said it continues to expect to complete the transaction next year. However, the spinoff under the new structure is subject to an advance tax ruling from the Canada Revenue Agency and will take longer than first anticipated.

Maple Leaf announced the spinoff in July with a plan to become a more focused consumer packaged goods company, including its Maple Leaf and Schneiders brands.

“The prospect of executing the transaction as a tax-free spin-off is a positive development as we continue to advance our strategy to unlock value and unleash the potential of these two unique and distinct businesses,” Frank said in the news release.

He also said that Maple Leaf is set on delivering profitability for its plant protein business in mid-2025.

“This includes the recent completion of a procurement project aimed at leveraging our purchasing scale,” he said.

On an adjusted basis, Maple Leaf says it earned 18 cents per share in its latest quarter compared with an adjusted profit of 13 cents per share in the same quarter last year.

The results were largely in line with expectations, said RBC analyst Irene Nattel in a note.

Maple Leaf shares were down 4.5 per cent in midday trading on the Toronto Stock Exchange at $21.49.

This report by The Canadian Press was first published Nov. 13, 2024.

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Loblaw had a busy third quarter as it ramped up efforts to capture more deal-seeking shoppers, pharmacy customers and immigrant communities, while growing its store footprint and planning for even more expansion in 2025.

President and chief executive officer Per Bank acknowledged the grocer has “done a lot” during his first year as chief executive.

“Now we’re going to perfect what we have done,” he said on an earnings conference call with analysts.

“We have a lot on our plate, and we’re going to perfect it.”

The company’s profit for the quarter rose year-over-year to $777 million or $2.53 per diluted share, up from $621 million or $1.95, boosted by the reversal of a charge at its President’s Choice Bank after a Federal Court of Appeal decision.

Revenue for the quarter totalled $18.54 billion, up from $18.27 billion a year earlier.

Amid the ongoing shift to discount stores by cash-strapped shoppers, Bank said No Frills and Maxi continued to outperform full-service stores.

Loblaw said it opened 25 new No Frills and Maxi stores during the quarter.

Six of these stores were the new small-format No Frills stores, said chief financial officer Richard Dufresne on the call.

“While it’s still early days, we are pleased with customer reactions and overall performance,” he said.

The company also launched a pilot program during the quarter trialling an ultra-discount No Name store format meant to offer savings beyond even its ubiquitous No Frills banner, with two stores opening during the third quarter and another recently opened.

“If it works, we will (add more). If not, we will pivot, take the learnings and apply them to our discount program,” Bank said.

Loblaw recently opened new T&T stores in Ontario and Quebec, and is beginning the banner’s expansion into the U.S. next month.

With Canada’s first-generation immigrant population continuing to grow, the company is also introducing new multicultural products, including offering more private label T&T products at the company’s other stores, said Bank.

Despite the Canadian government’s decision to slow immigration, Dufresne said there’s still growth ahead.

“While it may slow a bit, we still believe that it’s going to grow. And that’s a tailwind that is very positive for grocery players like us,” he said.

The company is also trying to boost food sales at Shoppers Drug Mart, said Bank. The shift toward discount has had a slight impact on food sales there, he said, so Loblaw is responding by lowering prices on several hundred products to encourage more people to shop for food at the pharmacy banner.

Loblaw is continuing its growth into the fourth quarter, with plans to add another 20 new Maxi and No Frills stores, mainly new builds, said Dufresne.

“For the full year 2024, we expect to have opened 50 new stores and converted an additional 42 stores,” he said.

Bank said the company plans to open even more new stores than in 2024 and is opening a new distribution centre in the first quarter.

He acknowledged that the company’s focus on opening more stores will put some pressure on its earnings in the short term.

“I think it’s important to say that we are planning for the long term, not the short term,” he said.

Part of that longer-term strategy is the company’s decision to no longer sell gaming consoles, games and certain electronics like laptops, computers and TVs. Dufresne said those products don’t drive shoppers’ baskets and have an “extremely low margin.”

“More than 80 per cent of the transactions that are on electronics, customers come in and just buy that item and leave. So it’s not good for our business,” he said. “That’s why we’re deciding to exit it.”

The decision to exit electronics, as well as the company’s move to eliminate multi-buy promotions in its discount stores, affect sales in the short term, Dufresne acknowledged.

“Our focus is on adding square footage. So if we have the right business model and that works and resonates with customers, if we just replicate it with new stores, long term, we win. So that’s how we’re thinking about this,” said Dufresne.

The company said that based on the year-to-date investments in its store network and distribution centres, it now expects to invest a net amount of $1.9 billion compared with earlier expectations for $1.8 billion.

Same-store sales at Loblaw’s food stores were up 0.5 per cent,compared with 4.5 per cent last year. After excluding the unfavourable impact of the timing of Thanksgiving, which fell in a different quarter this year, the company said food same-store sales were up about 1.3 per cent.

Drug retail same-store sales were up 2.9 per cent as pharmacy and health-care services same-store sales rose 6.3 per cent, but front store same-store sales fell 0.5 per cent.

In its outlook, the company raised its guidance for full-year adjusted net earnings per common share growth to low double-digits compared with earlier expectations for high single-digits.

This report by The Canadian Press was first published Nov. 13, 2024.

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Efforts to streamline operations have helped Suncor Energy Inc. hit its debt target, triggering a commitment to pay out 100 per cent of excess funds to shareholders.

The oil and gas giant has been working to make efficiency improvements across its sprawling network as it shifts focus to incremental gains over pricey expansion projects.

The efforts yielded upstream production of 829,000 barrels per day to mark its best third quarter ever, its highest ever refining throughput of 488,000 barrels per day and highest ever refined sales at 612,000 barrels per day.

“This is now back to back to back quarterly records,” said chief executive Rich Kruger on an earnings call Wednesday.

Suncor’s efforts to ease bottlenecks and cost improvements include everything from new maintenance techniques to its shift to bigger, autonomous trucks. They include spending $1 million to increase its base plant capacity to 100,000 barrels a day from 65,000, and spending $500,000 to increase Firebag production by between 6,000 and 10,000 barrels a day, with both creating upwards of $100 million of additional free funds flow per year, said Kruger.

The efforts also include everything down to the material in the totes it uses to receive additives in, said Dave Oldreive, executive vice-president of downstream.

“It sounds like a small thing. It’s worth $50,000 a year, not a big deal in the big scheme of things, but you add those up, we get 15,000 people in this company doing that, we’re going to continue to drive improvements.”

The higher production helped it earn $2.02 billion in its third quarter, up from $1.54 billion a year earlier.

It also helped Suncor reduce its debt by more than $1.4 billion in the quarter to achieve its net debt target of $8 billion ahead of many external forecasts, the company said. Hitting that triggered its commitment to pay out 100 per cent of excess funds to shareholders, up from 50 per cent at the start of the year.

Suncor returned $1.5 billion to shareholders in the quarter through share buybacks and dividends, while it boosted its dividend by five per cent to 57 cents per share.

The company is also tracking above the high end of its guidance on several measures so far in the fourth quarter, said Kruger, while the challenge next year will be to keep the improvements coming.

“What will be very key for us in 2025 too is holding the gains of 2024. We’ve made a lot of progress on cost, discipline, asset reliability and things. We’re trying to be sure whether we institutionalize those and don’t slip back at all.”

This report by The Canadian Press was first published Nov. 13, 2024.

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