Maple Leaf Foods Inc is starting to focus on the basics of selling meat and bakery products to consumers and getting out of the animal parts rendering and biofuel business after 30 years.
The food giant is selling its subsidiary Rothsay to Darling International, in Irving, Texas for $645 million. The sale includes five rendering plants in three provenience's along with a biofuel factory in Quebec.
Maple Leaf lost $9.8 million in the second quarter and plans to use the money from the sale of Rothsay to pay down debt.
“We made the decision that it was in the best interest of the business and all of the stakeholders to focus on our core business and our portfolio of consumer packaged foods,” says Chief Executive Officer Michael McCain.
Meat sales have dragged while bakery sales have been strong. Maple Leaf has a $560 million multi-year plan to enhance meat operations to help boost sales.
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The strategy puts a strong focus on precooked bacon and single portion of boneless, skinless chicken that takes aim at busy consumers that are focused on their health, says Mr. McCain.
The third division, agribusiness, which includes hog production and Rothsay’s animal byproducts recycling operations, also lagged last year. Low pork costs mixed with the high cost of feed were a direct hit on the food giant. Sales in agribusiness were up 13.5 percent last year, but earning fell by 16.4 percent to $68 million.
Rothsay, handles about 700 million kilograms of inedible animal byproducts a year and is Canada’s largest rendering business.
“The combination of our two companies will create North America's leading provider of independent rendering and recycling services,” said Randall Stuewe, CEO of Darling, which operates 130 locations in 42 states.