TORONTO — Operating income in the Weston Foods segment of George Weston Ltd. totaled C$12 million ($9.1 million) in the second quarter of fiscal 2019 ended June 15, down 40% from C$20 million in the same period a year ago. The company said the decrease was primarily due to the decline in underlying operating performance of C$4 million mainly due to an increase in depreciation and amortization, and the unfavorable year-over-year net impact of adjusting items totaling C$5 million.

Adjusted EBITDA, meanwhile, rose 4.3% to C$49 million ($37.3 million) from C$47 million. Sales increased 2.4% to C$479 million ($364.2 million) from C$468 million.

“During the quarter, Weston Foods delivered on its plan as it continues to stabilize,” Richard Dufresne, president and chief financial officer of George Weston Ltd., said during a July 26 conference call with analysts. “Weston Foods demonstrated momentum as the quarter marked positive sales growth year-over-year. Management is delivering cost savings and improving operational metrics. In the first half of 2019, Weston Foods completed the first phase of the roll-out of SAP to Ace without disruption to the business or its customers. Across Weston Foods, the team continues to improve operations, meeting sales forecast and earning new business in growth categories.

“Our 2019 full-year outlook for Weston Foods remains unchanged. We are encouraged by the progress to date, but there’s still work to be done. As we look at the second half of the year, we are confident that narrowing our intrinsic value gap at George Weston and driving shareholder returns will be based on the continued strong performance of Loblaw and Choice and the return to prominence at Weston Foods. The three pillars of George Weston Ltd. and the long-term strategies of each business remain very compelling.

Luc Mongeau, president of Weston Foods, said the momentum the company is seeing goes beyond its investment areas.

“Donuts are doing very well,” he said. “Our frozen breads, our alternatives, mainly tortillas and bagels, are doing well beyond strengthening our relationship with key retailers across Canada and U.S. and the continued development of our food service business with leading players across Canada and the U.S.”

He said the company is seeing traction in both retail and food service in its donuts business.

“We work very closely with retailers and food service operators to ensure we bring the best donuts to the consumers across North America,” Mr. Mongeau said. “As you know, when we kicked off our transformation program two years ago, I believe there was a cost saving component to this, but it was as well an investment area — investment focus in key areas. One of these areas was the formation of a leading R.&D. capability, which now allows us to work on innovation in key areas of investment.”

He said the investment focus — combined with strong consumer shopper insights and a strengthened sales team — has proved a key differentiator in enabling Weston to gain volume in its donuts business.

Overall, net earnings attributable to shareholders of George Weston totaled C$194 million, equal to C$1.19 per share on the common stock, up from C$38 million, or C$0.21 per share, in the same period a year ago. Sales increased to C$11,603 million from C$11,245 million.