Weston Foods income up sharply in third quarter

by Eric Schroeder
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TORONTO — Operating income for the Weston Foods division of George Weston Ltd. was C$111 million ($108.7 million) in the third quarter ended Oct. 9, up sharply from C$36 million in the same period of fiscal 2009. Net sales were C$494 million ($483.7 million), down 2% from C$502 million a year ago.

For the nine months ended Oct. 9, operating income totaled C$223 million ($218.3 million), up from C$65 million in the same period a year ago. Sales, meanwhile, fell 7% to C$1,238 million ($1,212 million).

During the third quarter, Weston Foods completed two bakery acquisitions: Keystone Bakeries and ACE Bakery Ltd. The results of Keystone from the date of the acquisition on Sept. 24 were included in Weston’s third-quarter operating results but were not significant to consolidated net earnings from continuing operations, the company said.

George Weston said fresh bakery sales fell approximately 0.9% in the third quarter and 1.1% year to date, mainly driven by lower sales volumes and lower pricing, including increased promotional spending.

“Volume decreased in the third quarter of 2010 and on a year-to-date basis mainly due to lower sales of private label products,” Weston said. “Year-to-date volumes were positively impacted by growth in the Gadoua, D’Italiano and Wonder brands. The introduction of new products, such as Gadoua MultiGo, Wonder Invisibles, Jake’s Bake House, Country Harvest Ancient Grains, Wonder SimplyFree and D’Italiano Focaccia, contributed positively to branded sales during the third quarter and year-to-date 2010.”

Frozen bakery sales increased approximately 3.4% in the third quarter and were flat year-to-date. The third-quarter gain primarily reflected the acquisition of Keystone. Excluding the acquisition, frozen bakery sales increased about 0.4% in the third quarter of fiscal 2010.

Biscuit sales, principally wafers, ice-cream cones, cookies and crackers, decreased approximately 3.8% in the third quarter of 2010 and 8.5% year-to-date compared with the same periods in 2009. Overall, volume in the third quarter and year-to-date increased compared with the same periods in 2009, mainly due to growth in cookie and wafer sales, partially offset by lower cone and cup sales.

Overall, net income at George Weston rose 114% in the third quarter to C$184 million ($180.1 million), equal to C$1.32 per share on the common stock, up from C$86 million, or C$0.56 per share, in the same period of fiscal 2009. Sales increased 1% to C$9,884 million ($9,679 million). For the nine months, net income totaled C$351 million ($343.7 million), or C$2.46 per share, down from C$953 million, or C$7.12 per share, in the same period a year ago. Net sales in the nine months rose 1% to C$24,591 million ($24,076 million).

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