Maple Leaf Nears Completion of Business Transition

CANADA - Meat processor, Maple Leaf Foods, based in Mississauga in Ontario, has provided an update on its network transition, including the sixth of eight plant closures due at the end of this month.
calendar icon 24 December 2014
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In an update on the completion of its network transition, Maple Leaf Foods says its strategy that began with the Company's primary pork processing operations, and since 2010 has focused on its prepared meats plants and distribution network.

In the past four years, the Company has closed five plants, expanded three others, consolidated 17 distribution centres into two and built a 400,000 square foot state-of the-art processing facility.

To enable this transition, the Company simultaneously simplified its product portfolio to realize scale efficiencies and moved from multiple operating systems to one integrated platform.

The Company is nearing completion of this structural shift in its supply chain.

The expanded Lagimodiere plant in Winnipeg, Manitoba is fully commissioned with only minor optimisation remaining.

The McLeod plant in Saskatoon, Saskatchewan is in the final stages of transition and while not yet operating to expectations, performance is improving and variances are not material to achieving the Company's overall strategic targets.

The consolidation of the eastern distribution network is complete and achieving its targets

The expanded Walker Drive facility in Brampton, Ontario is fully commissioned with only minor optimisation remaining.

Strategic capital spending is complete (with the exception of performance guarantee holdbacks and cash flow timing) and total capital spending over this period of investment is largely in-line with 2010 estimates.

Wiener production at the new facility in Hamilton, Ontario is nearly fully commissioned with minor adjustments expected to be completed by the end of the first quarter of 2015. Commissioning of the final sliced meats and deli operations is well underway, and based on current operating performance trend lines, is expected to achieve full production by the end of the first quarter.

The processing plant on Panet Road in Winnipeg will close on 31 December, the sixth of eight plant closures. At the two remaining legacy facilities in Kitchener, Ontario and Toronto, production has significantly ramped down. While some capacity will be maintained to ensure the Company meets its commercial requirements, these plants are expected to close by the end of the first quarter of 2015.

Michael H. McCain, President and CEO, Maple Leaf Foods, commented: "Maple Leaf Foods is in the final stage of completing a complex strategy to step-change profitability in our business.

"While there is always some element of uncertainty of timing given the unpredictable nature of start-ups, we are clear on the benefits and see a much brighter picture for 2015. We have dramatically increased scale and technology, consolidated production into fewer, highly efficient plants and streamlined our product mix. We will complete the transition early next year and have a clear path to realising our financial targets."

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