Maple Leaf to take $20M hit on higher spending

Maple Leaf Foods Inc. says increased expenses tied to the COVID-19 pandemic will drain up to $20 million from its income statement in the second quarter as it struggles to cope with market shifts, public health restrictions and plant shutdowns following infections at several sites.

The higher costs include extra spending on labour — including a weekly $80 bonus to hourly staff — personal protective equipment, sanitation and screening, the company said.

“Unfortunately, we have identified some cases of COVID-19 among front-line team members that work in our processing facilities,” CEO Michael McCain said during a conference call with analysts Wednesday. The infections required the company to suspend operations “at a small number of facilities over the past several weeks,” he said.

Even with strict protocols in place at processing facilities, “there’s a certain sense of unpredictability going forward.”

More broadly, McCain cited volatility triggered by the crisis as demand migrated to retail thanks to consumer “hoarding” and away from food service, where sharp declines began in mid-March.

While Maple Leaf derives about three-quarters of its business from retail, the shift toward it has nonetheless been highly disruptive as the company grapples with insufficient capacity to churn out some products for retail, he said. Among the most popular items for home-bound Canadians and Americans are wieners, sausages and bacon, while deli meat sales have dipped with the shutdown of restaurants across the continent, McCain said.