Weston Foods operating income falls 5%
November 24, 2009
by Eric Schroeder
TORONTO — Operating income for the Weston Foods division of George Weston Ltd. fell 5% to C$36 million ($34 million) in the third quarter ended Oct. 10. This compared with income of C$38 million in the same period a year ago. Net sales were C$502 million ($474 million), down 26% from C$678 million a year ago.
For the nine months ended Oct. 10, operating income totaled C$65 million ($61 million) on sales of C$1,334 million ($1,259 million), down from C$124 million and C$1,690 million, respectively, in the same period a year ago.
George Weston said fresh bakery sales fell approximately 3% in the third quarter but were up 0.3% for the year, mainly due to price increases in key product categories combined with changes in sales mix.
“Volumes decreased slightly in the third quarter of 2009 and year-to-date mainly due to declines in certain categories offset by growth in the Gadoua and Country Harvest brands and private label products,” George Weston said. “Sales growth in whole grain and whole wheat products exceeded the sales growth of white flour based products. The introduction of new products such as Country Harvest Vitality, Gadoua MultiGo, D’Italiano Thintini and the recently launched Wonder Invisibles contributed positively to branded sales during the third quarter and year-to-date 2009.”
Frozen bakery sales, meanwhile, decreased approximately 1.7% in the third quarter, while year-to-date sales increased 1.5%, mainly due to price increases combined with changes in sales mix. The company said volume in the third quarter and year-to-date decreased compared to the same periods in 2008, partially due to the timing of customer orders.
Biscuit sales, principally wafers, ice-cream cones, cookies and crackers, increased approximately 0.9% in the third quarter of 2009 and 3.5% year-to-date compared to the same periods in 2008 driven by price increases combined with changes in sales mix, the company said. Overall, volume in the third quarter and year-to-date decreased compared to the same periods in 2008, with growth in certain categories being more than offset by declines in other categories.
Also during the third quarter, George Weston said it received $15 million in earnings from discontinued operations related to the Jan. 21 sale of the company’s U.S. fresh bread and baked goods business to Grupo Bimbo, S.A.B. de C.V. Operating income of the U.S. fresh baking business of George Weston Ltd. was C$66 million in the third quarter of fiscal 2008 on sales of C$732 million.
Overall, net income at George Weston fell 52% in the third quarter to C$86 million ($81 million), equal to C$0.56 per share on the common stock. Sales were down 1% to C$9,777 million ($9,228 million).