Weston Foods operating income falls 20%

by Eric Schroeder
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TORONTO — Operating income for the Weston Foods division of George Weston Ltd. fell 20% to C$123 million ($117.9 million) in the fiscal year ended Dec. 31, 2009. This compared with income of C$154 million in fiscal 2008. Net sales were C$1,686 million ($1,616 million), down 23% from C$2,197 million a year ago.

For the fourth quarter ended Dec. 31, operating income totaled C$58 million ($55.6 million), up 93% from C$30 million in the same period a year ago. Sales, meanwhile, fell 31% to C$352 million ($337.1 million).

The sharp sales decline in both the fourth quarter and full year reflected the sale of the company’s dairy and bottling operations in the fourth quarter of fiscal 2008.

George Weston said fresh bakery sales fell approximately 3.3% in the fourth quarter and 0.9% for the full year, mainly due to the combined effect of pricing and changes in sales mix, and increased promotional support for new products during the fourth quarter of 2009.

“Volume increased in the fourth quarter of 2009 but decreased on a year-to-date basis,” George Weston said. “The year-to-date decrease was mainly due to declines in certain product categories, including the continued softness in the food service market offset by growth in the Gadoua and D’Italiano brands, and private label products. The introduction of new products, such as Gadoua MultiGo, Country Harvest Vitality, D’Italiano Thintini and the recently launched Wonder Invisibles contributed positively to branded sales during the fourth quarter and year-to-date 2009.”

Frozen bakery sales decreased approximately 4.5% in the fourth quarter and 0.6% year-to-date, mainly due to lower volumes and the combined effect of pricing and changes in sales mix.

Biscuit sales, principally wafers, ice-cream cones, cookies and crackers, decreased approximately 2.9% in the fourth quarter of 2009 but were up 2.5% year-to-date compared to the same periods in 2008. Overall, volume in the fourth quarter and year-to-date decreased compared to the same periods in 2008, mainly due to declines in certain categories, including lower sales volume in Girl Scout cookie sales in 2009 versus 2008.

Overall, net income at George Weston rose 24% in fiscal 2009 to C$1,035 million ($992 million), equal to C$7.68 per share on the common stock. Sales were down 1% to C$31,820 million ($30,500 million).

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