Sollio Agriculture generated net sales of $2.761 billion for fiscal 2020 compared with $2.604 billion for the previous fiscal year.

The $157 million increase was driven primarily by the addition of the agricultural business of F. Ménard, now Entreprise AMQ S.E.C., acquired in early 2020. The acquisition largely contributed to the animal production sector’s continued growth.

The increase also resulted from higher feed volumes in the hog, dairy and other ruminant sectors, plus the effect of the $15 per tonne rise in the average price of ingredients. Net sales in the crop production sector were down 4%, in line with expectations.

The overall EBITDA contribution was 3.4% higher than in the previous fiscal year. Fertilizer sales volumes remained stable across our networks, as did crop protection sales. However, growth continued in organic crop protection inputs, with an increase of more than 18% in 2020, enabling us to top $5 million in sales.

In the seed sector, Semences Elite’s portfolio of corn and soybeans was integrated into Maizex Seeds Inc. Sales in the grain sector declined by 6% in the past year. Regarding operations, the unfavourable consolidated results stemmed mainly from a significantly lower than expected volume (24%) attributable to the 2019 harvest conditions, the geopolitical conflict with China and the COVID-19 crisis.

However, the results also include a $7.34 million accounting adjustment in respect of the allocation of purchase price paid for our acquisitions in Ontario to rectify incorrect accounting charges to the 2019 results.

The COVID-19 pandemic impacted the organization in many ways. Certain animal production sectors were affected negatively: dairy, with lower demand and a 2% reduction in the right to produce, and poultry, with cuts in quotas for three periods. However, the hog sector has been fairly stable.

At the end of this particularly eventful year, we must highlight the exceptional commitment of our operational teams and teleworking employees who worked tirelessly to “hold down the fort.”

In crop production, pressure increased on the supply chain to ensure input availability as retailers and farmers procured their products faster than usual. These premature purchases, combined with an early spring season, resulted in increased handling and distribution costs on fertilizer products that slightly affected results. In the grains sector, the expected price increase in the corn base did not materialize when the demand for ethanol disappeared at the end of March at the start of the pandemic.

However, the price decline favoured exports to Europe. The lower administrative costs due to the travel ban did not offset the loss of revenue and additional expenses related to the pandemic.

A $6 million cost reduction program implemented in spring amid the initial effects of COVID-19 led to a decrease in administrative overheads in the sectors and cross-sector services.

At the end of this particularly eventful year, we must highlight the exceptional commitment of our operational teams and teleworking employees who worked tirelessly to “hold down the fort.” The past year also saw Sollio Agriculture’s agricultural partnership projects moving forward with the creation of Sollio & Avantis Agriculture coopérative and the launch of the first provincial partnership Sollio & Grains Québec Agriculture coopérative with several cooperatives involved in the grain sector.

In its second year of operations, Sollio & Vivaco Agriculture coopérative continued its momentum with results in line with the budget and in particular strong growth in the animal feed sector.

Our export activities gained momentum, with the loading facilities at our new grain export terminal in Québec City operational since the fall of 2019 and the commissioning of new equipment to unload trucks, trains and ships at the end of 2020. Supplies are sourced mainly from our Oshawa terminal where 82,000 tonnes of grain were loaded during its first season of operations.

In animal production, the integration of Entreprise AMQ S.E.C. proved to be a success and the expected gains have already materialized. We met our commitment to customers and employees to maintain F. Ménard’s successful business model, contributing to a customer retention rate approaching 100%.

Lastly, Sollio Agriculture finalized its 2020-2025 Strategic Plan where operational efficiency takes top priority for the next two years. This optimization will be the key to success for continuing integration of the acquisitions of recent years and for ensuring a sustainable future for the organization. This fiscal year will serve as the foundation for the upturn in growth expected at the end of this plan, in keeping with the aim of bolstering agricultural producers’ prosperity.

In fiscal 2020, despite the unprecedented disruptions, Olymel’s sales grew by $613 million or 16.4% to $4.35 billion.

This excellent performance, under difficult circumstances, was driven primarily by a rebound in the Chinese market early in the fiscal year coupled with the integration of the F. Ménard operations, acquired by Olymel in January 2020. Similarly to other businesses across the world, Olymel was badly affected by the COVID-19 pandemic’s impacts.

The turmoil in the markets weighed heavily on operations and results in certain sectors, particularly the processed products sector. Starting in March 2020, Olymel fully mobilized to prevent the virus from spreading by implementing strong health measures to protect its employees’ health. Despite these measures and close collaboration with public health services across Canada, Olymel had to shut down, as a precautionary measure, its hog slaughtering and pork cutting plant in Yamachiche for a period of two weeks at the end of March.

For as long as public authorities deem necessary, and regardless of the costs, Olymel will maintain the health measures in place and continue to adapt its activities to the constraints of this pandemic.

For the past fiscal year, the financial impact of the measures implemented amounted to $28.9 million. Olymel had to deal with other disruptions in fiscal 2020, including an eight-week strike at the Princeville hog slaughtering and pork cutting plant, a railway blockade in February, a longshoremen’s strike at the Port of Montréal in August, and lastly, an IT incident on October 5, 2020. In addition to the pandemic, all these disruptions gave rise to major logistical and operational challenges, but Olymel clearly demonstrated its ability to weather the storms.

Hog production

Following a loss in the previous fiscal year, the Eastern hog production sector reported a gain in fiscal 2020. The improvement in results was largely attributable to hedging transactions on hog prices and currencies.

The preparatory work for building a fifth collective swine nursery at Fermes Boréales in Témiscamingue was launched during the fiscal year. This new facility will round off Phase 1 of the project that produced 252,000 piglets in fiscal 2020. The Western hog production sector recorded a loss in fiscal 2020, but well below that reported in the previous fiscal year.

As in the Eastern hog production sector, the primary reason for the improvement was the gains generated from hedging operations. In fiscal 2020, the Western hog production sector produced over 1.3 million hogs.

Work on the gradual installation of open stalls in farms also continued. Olymel and Sollio Agriculture teams moved forward to create a Western hog section based on the Cooperative Pork Chain model but adapted to Western realities. This new section is expected to be launched in spring 2021. Lastly, in both the East and the West, Olymel put much effort into preventing African swine fever and developing an internal contingency plan.

Eastern fresh Pork

The Eastern fresh pork sector reported positive results for fiscal 2020, up sharply from the previous fiscal year. This performance was largely attributable to the reopening and strength of the Chinese market and the acquisition of F. Ménard. That being said, the eight-week strike at the Princeville plant at the beginning of fiscal 2020 and the COVID-19 pandemic during most of the fiscal year had a negative impact on our operations.

The number of pigs awaiting slaughter increased while value added production declined to the benefit of slaughtering operations. The strike and the pandemic caused a slight decline in slaughter volume.

Between March and October 2020, pandemic-induced slowdowns forced Olymel to send tens of thousands of hogs from Ontario to its Red Deer slaughterhouse in Alberta and nearly 200,000 hogs to other slaughterhouses in the U.S. and Canada. Additional unplanned and significant costs were incurred as a result.

In addition, the Saint-Esprit, Vallée-Jonction and Princeville slaughtering plants had their exports permits to China withdrawn temporarily following COVID-19 outbreaks at different points in time. Despite a difficult business environment, the reopening of the Chinese market in November 2019 enabled Olymel to more than double its pork exports to China.

Notwithstanding sporadic slowdowns, sales of chilled pork products to Japan were slightly up. In January 2020, Olymel began the seamless integration of F. Ménard’s pork production, processing and further processing operations. The project to set up a second shift at the Ange-Gardien slaughtering and cutting plant in 2021 should significantly increase its production capacity.

Western fresh Pork

Results of the Western fresh pork sector were slightly down in fiscal 2020 compared with fiscal 2019. As in the East, the Western fresh pork sector had to put in place significant health measures to prevent the coronavirus from spreading. The Red Deer plant opened up a second shift for both slaughtering and cutting. Nonetheless, although the Chinese market reopened, the Red Deer plant’s licence to export to China remained suspended, since April 28, 2019.

Further processed Pork

Lower volumes in this sector stemmed in large part from COVID-19’s impacts on further processed pork products. This impact was mostly felt in the hotel, restaurant and institutional (HRI) sector, where demand for various fresh sausage and ham products declined significantly during the first lockdown. Sudden changes in production volumes and labour management have been ongoing challenges since the early days of the pandemic. Under the circumstances, investment projects were postponed.

Bacon Sector

Despite lower sales volumes, the bacon sector generated positive results, driven by higher selling prices and improved returns. Sliced bacon, particularly bulk sales, as well as pre-cooked bacon were particularly affected by the decline in sales resulting from the pandemic.

Fresh Poultry

The fresh poultry sector was hard hit by the negative impacts of COIVD-19. The shutdown of restaurants led to a decline in both volumes and selling prices. Faced with complete disruption of this market, poultry farmers were forced to scale back their production for several months. For the first time in five years, Canadian chicken production declined, owing to the pandemic.

Notwithstanding, in September 2020, Olymel announced a $35 million investment in its poultry slaughtering and cutting plant in Saint-Damase, Montérégie, mainly to equip the plant with additional cutting, deboning and tray packing lines, and new high-capacity, state-of-the-art facilities. Olymel’s interests in Sunnymel, New Brunswick and in Volaille Giannone, Québec generated positive contributions to fiscal 2020 results, although to a lesser extent than in the previous year.

Further processed Poultry

Although sales volumes declined, the further processed poultry sector generated positive results compared with a loss in the previous fiscal year. The improved results stemmed from higher selling prices coupled with lower raw material prices.

The decline in sales volumes was entirely attributable to the negative impacts of COVID-19. The shutdown of the HRI sector, particularly restaurants, triggered a sharp drop in sales, mostly at food wholesalers but also for retailers. Drive-through orders and mobile delivery applications partly offset these volume declines. The lower demand impacted operations and resulted in temporary closures, slowdowns and production reorganization at several poultry further processing plants.

The integration of Pinty’s operations in Ontario was also actively pursued in 2020. Some operations were transferred from Port Colborne to two Olymel further processing plants in Brampton. The installation of a second roasting line at the Paris, Ontario plant in 2020 will improve the distribution of production across the cooking plants.

In fiscal 2020, the turkey sector posted a lower loss than in the previous fiscal year, due to the improved meat margin. While Olymel has now enhanced its offering by marketing bagged seasoned turkeys, the disappointing results in this sector confirm an ongoing trend of the past few years. This situation is not limited to Olymel. Between 2017 and 2019 alone, Canadian processors suffered losses of $120 million, according to a PwC study. The COVID-19 pandemic, labour shortages, and poultry quality issues were all factors that contributed to these negative results.

Resilience – A condition for growth

The year 2020 will be unforgettable. If there is one word to describe how Olymel weathered the many turbulences of this difficult period, it would be resilience. I would like to express my gratitude to all of our personnel. Our employees complied with stringent health measures and adapted to a working environment that was not always predictable.

I thank them while pointing out that our results are a reflection of their commitment. In November 2021, we will be celebrating the Olymel’s 30^th founding anniversary.

As we embark on our fourth decade, we remain focused on our values of integrity, trust and respect. Lastly, even more so than in the past, I would like to warmly thank all of my colleagues in the Corporate Governance Committee for the work accomplished under exceptional conditions. Before concluding, I wish to extend my sincere thanks to Gaétan Desroches, Chief Executive Officer of Sollio Cooperative Group, for his transparent collaboration during this fiscal year. I’m also deeply grateful to our President Ghislain Gervais and all the members of the Board of Directors for their support and invaluable advice.

Despite the challenges and uncertainty that marked fiscal 2020, we can look back at a highly successful period.

Our financial results exceeded expectations with BMR Group sales reaching $1.159 billion, compared with $948 million for the previous fiscal year. As a result, the Group recorded exceptional growth for the year!

A year of challenges as well as opportunities

Combined with the closing of borders, the lockdown had a significant impact on consumption habits, leading to strong growth in the renovation market during the year. Our network was ready to handle this growth, stemming in particular from the omnichannel strategy rollout begun this year, which allows customers to place orders via the bmr.co website and pick them up in store, as well as to the new telephone order service introduced in stores at the beginning of the crisis.

With more than 10,000 orders received between April and October, this initiative contributed significantly to our good results. Online sales grew during the year, but BMR was able to meet the demand. From the beginning of the pandemic, already initiated digital projects were accelerated while BMR’s web offering was enhanced, resulting in exceptional growth for our online sales.

The pandemic also forced us to demonstrate audacity and creativity and transform BMR Group’s traditional Salon d’achats into a 100% virtual event. The new formula was a success, generating sharply higher sales than in the previous fiscal year. Amid the pandemic, protecting the physical and psychological health of our employees, our merchants and all BMR network members was a clear priority. It was also important to guide them through this turbulent period and ensure they remained motivated. A number of initiatives have been put in place in this regard, including operational management, communications to employees and proactive support for retailers.

From the beginning of the pandemic, already initiated digital projects were accelerated while BMR’s web offering was enhanced, resulting in exceptional growth for our online sales.

Manage urgent issues without losing sight of our vision

While the COVID-19 pandemic and the implemented measures are certainly central to our assessment of this exceptional year, several other achievements contributed to making fiscal 2020 a positive year for BMR Group. One such achievement is no doubt the development of the 2020-2025 Strategic Plan, which will continue to drive BMR’s growth across Canada.

This plan aims to make BMR Group “the emerging benchmark in Canada for entrepreneurs and consumers, recognized for its retailers’ expertise, its quality customer experience and relevant product offering”. The year 2020 was also marked by the programming and development of the brand new Enterprise Resource Planning (ERP) system, a crucial strategic milestone in the impressive digital transformation launched three years ago. BMR is now equipped with a high-performance system providing it with greater efficiency in managing its activities, a better overview of the organization’s business, all while adapting to the uniqueness of each retailer.

Another noteworthy milestone was the completion of Lefebvre & Benoit’s first year of operations within BMR on September 1, 2020. The addition of this division, operating in a complementary sector and perfectly illustrating BMR Group’s vision of bold and innovative growth, was a resounding success. The financial results are on track, despite the temporary closure of projects in spring 2020. To sum up, the conditions under which we operated in fiscal 2020 were highly favourable in several respects.

But what allowed us to surpass our business objectives was the prudence that guided our daily actions, as well as the agility and courage shown by our retailers, our employees and our entire network to adapt and transform obstacles into opportunities. I would like to thank them for being such a great source of motivation, which keeps pushing us to exceed ourselves. It’s with this frame of mind we are entering the upcoming year, which will be marked by our digital shift and during which our network growth and business process optimization will play at the core of our actions. And I know that to achieve its most ambitious objectives, BMR can once again rely on its employees, retailers as well Sollio Cooperative Group and all our partners.