TORONTO — Executives at George Weston Ltd. believe Weston Foods is on the right path despite slower sales that weighed on full-year results.
Operating income in the Weston Foods segment totaled C$73 million ($55.4 million) in fiscal 2018 ended Dec. 31, 2018, down 20% from C$91 million in fiscal 2017. Adjusted operating income, meanwhile, fell 34% to C$98 million ($74.4 million) from C$149 million. Sales decreased 5.4% to C$2,122 million ($1,609 million) from C$2,243 million.
“Weston Foods completed the first year of its transformation plan,” Galen G. Weston, chairman and chief executive officer, said during a Feb. 26 conference call with analysts. “We’ve made good progress. However, our efforts to realize efficiencies and increase sales in our key growth areas was offset by sales slowing back more slowly than expected following our assortment rationalization efforts. In response, management slowed down the transformation to focus on restoring our sales growth trajectory and further embedded operational consistency. We are seeing results that suggest we’re on the right path. We are committed to seeing Weston Foods secure its place as North America’s premier bakery.”
Looking ahead to 2019, Richard Dufresne, president and chief financial officer, said Weston Foods will focus on growing its core business while selectively innovating in new segments and markets. He said the company expects sales to be lower than in 2018, as growth in key categories and pricing are expected to be more than offset by the lapping of sales loss from key customers last year and the impact of product rationalization.
“Weston Foods has begun to stabilize,” Mr. Dufresne said. “We delivered on our plan in the quarter. The transformation program is delivering cost savings, and we are seeing improvements in our operational metrics. More importantly, we have improved on how we show up to our customers, and this has resulted in the company earnings and new business in its growth categories.”
Overall, George Weston posted net earnings of C$908 million, up from C$903 million, a year ago. Sales increased to C$48,568 million from C$48,289 million.