Fresh margins and new management
For the 12-month period ending March 31, 2024, the pork company would have had an adjusted pro forma of $70 million in terms of earnings before interest, taxes, depreciation and amortization (EBITDA) — or approximately $180 million when adjusted for normal market conditions. Maple Leaf's management has made preliminary estimates of selected financial information regarding the new company and the business which will be retained after the separation by Maple Leaf Foods, giving investors indications of the size of each of the businesses.
Note that an EBITDA assessment should not be considered a strict representation of cash flow. With that said, it remains an industry-standard for assessing cash flow by proxy. Furthermore, this is a preliminary estimate only and is expected to change.
"Global demand for sustainably produced protein is expected to grow significantly, and we have built the right platform to unlock stakeholder value as we meet that demand. With our significant capital projects complete, we are harvesting the benefits of these investments, with margin expansion already underway and expected to continue,” said Frank.
The new company will provide Maple Leaf Foods with sustainable pork at market rates for their prepared food business. In exchange, Maple Leaf Foods will offer brokerage services to the pork company for the North American market. As a result, the new company will immediately have an anchor partner in Maple Leaf Foods, which had an estimated market capital position of $2.76 billion, as of July 9, 2024.
Maple Leaf Foods also expects that some shares of the Pork Company will not be able to be distributed in a return of capital and will instead be issued as a dividend.
The new venture will be helmed by Dennis Organ, who has 27-years of food industry experience, including 11-years with Smithfield Foods. Organ joined Maple Leaf Foods as President, Pork Complex, in February of 2023.
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Get A QuoteA carbon neutral story
Part of Maple Leaf Foods’ core mission is to become one of the most sustainable protein companies on Earth, and the new pork company aims to further that vision.
"The new Pork Company will offer investors direct access to one of the world's foremost, premium value-added pork producers with a clear vision to produce meat the right way while delivering industry-leading financial performance," said Organ.
Since 2019, Maple Leaf Foods has been a carbon neutral business, and is also aiming to reduce its emissions a further 30% by 2030. The company is one of North America’s leading producers of pork raised without antibiotics.
Maple Leaf Foods Inc. employs 13,500 people and includes brands like Shneiders, Country Naturals, Mina, Field Roast,, Natural Meat Co., Lightlife and both Maple Leaf Prime and Maple Leaf Natural Meat Co.
The types of sustainable investments
Maple Leaf Foods' commitment to green production processes can satisfy those investors with a preference for sustainability and responsible investments.
Thus, it is important to know the three different types of socially-conscious investment opportunities right now:
- Environmental, social and governance (ESG): Considers a company’s environmental, social and governance practices, coupled with traditional financial measures. However, ESG doesn’t screen out specific industries as “good” or “bad.” Instead, you might find an oil & gas firm like Dutch Shell leading their respective industry because of its involvement in setting carbon reduction targets and investing in electric vehicles.
- Socially responsible investing (SRI): Involves actively removing or choosing investments based on specific ethical guidelines. It focuses on the companies with the highest ESG ratings but takes it one step further by removing companies according to specific ethical guidelines. These excluded companies could be involved in the business of tobacco, controversial weapons, and civilian firearms, or those embroiled in severe controversies
- Impact investing: Helping a business or organization complete a project, deliver a program, or create something positive to benefit society. Investing in a non-profit dedicated to the research and development of clean energy, regardless of whether success is guaranteed, is an example
Not long ago, individual investors had little to no choice in the market for sustainable investing in the market — the funds that were available were expensive and made up of questionable constituents. Now investors have plenty of options to invest in mutual funds, ETFs and customized portfolios with a specific focus on sustainable investments.
One of the quickest and most cost-effective ways to get started with sustainable investing is by opening an account with one of Canada’s top robo-advisors and investing in SRI portfolios.
Wealthsimple is the country's most well-known investment platform that allows you select from a broad selection of SRIs at a low cost. The investment will build wealth slowly over time, choosing amongst eight to 10 exchange-traded funds (ETF) to get you there. You simply have to choose which portfolio you’d like: conservative, balanced or growth. Sign up for Wealthsimple and get a $25 bonus when you open and fund your first Wealthsimple self-directed investing account with at least a $500 initial deposit.
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