Food manufacturing looking up for 2014
The food manufacturing industry can look forward to an improved 2014, says a report from the Conference Board of Canada.
The report predicts increases over the previous year in revenues, profits and profit margins, and employment levels.
The study termed results for 2013 disappointing. Profits dropped for the third straight year to a little more than $3.5 billion, due to production cuts combined with rising costs and weak prices.
This year, a weaker Canadian dollar will improve exports—Canadian food products will be less expensive abroad, and as a result, be more competitive. A push for more gluten-free and healthy convenience foods will also help drive food manufacturing profits.
The report cites a strong global economic recovery and stabilizing commodity prices as indicators manufacturers will have an easier time of it in 2014.
Costs in 2013 were at $84 billion, up from $78.2 in 2010, and are expected to keep climbing to $87 billion this year, all the way to $96.2 billion in 2017. This is a result of greater production — more materials and labour resulting in higher costs.
Pre-tax profits dropped to $3.5 billion in 2013 from the preceding year when they topped $3.7 billion and are expected to hit $3.9 billion this year, an increase of 9.5 per cent. The Conference Board predicts that number will top $4 billion by 2017.
Profit margins, however, look less than robust. Though they are expected to enjoy a minimal increase to 4.3 % this year from 2013’s 4.1 %, it is expected they will return to that level in the near future and stay there through 2017.
The Board also sees an evolution in convenience foods as well as gluten-free products.
It reports that consumers are looking for healthier options in their convenience purchases and sees expanding markets for pre-cut and pre-washed produce, marinated meats and poultry cuts and improved, resealable and easy-to-open packaging for convenience foods.
The Canadian Industrial Outlook publications are produced twice yearly.