Weston Foods operating income rises 48%

by Eric Schroeder
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TORONTO — Operating income for the Weston Foods division of George Weston Ltd. was C$114 million ($114.3 million) in the third quarter ended Oct. 6, up 48% from C$77 million in the same period of fiscal 2011. The increase was mainly due to the change in the fair value adjustment of commodity derivatives and share-based compensation net of equity derivatives of $35 million. Adjusted operating income, meanwhile, increased 8% to C$94 million ($94.3 million).

Net sales were C$541 million ($542.6 million), down 1% from C$545 million a year ago.

For the first nine months of fiscal 2012, operating income for Weston Foods was C$186 million, up 23% from C$151 million, while sales moved up narrowly to C$1,366 million from C$1,362 million.

George Weston said fresh bakery sales decreased approximately 4.6% in the third quarter compared with the same period in 2011, mainly due to smaller sales volumes.

“The introduction of new products in the last 12 months, such as Country Harvest Cranberry Muesli bread, D'Italiano Brizzolio rolls and Gadoua Pain de Ménage contributed positively to branded sales in the third quarter of 2012 and year-to-date,” Weston said.

Frozen bakery sales decreased approximately 0.6% in the third quarter, mainly due to smaller sales volumes combined with the negative impact of changes in sales mix. Volumes decreased due to declines in certain product categories, including the loss of certain distributed products, Weston said.

Biscuit sales, principally for wafers, ice cream cones, cookies and crackers, increased approximately 5.8% in the third quarter of 2012, due primarily to higher volumes combined with the positive impact of pricing and changes in sales mix.

Overall, net income at George Weston fell 31% in the third quarter to C$243 million ($243.6 million), equal to C$1.14 per share on the common stock, down from C$351 million, or C$1.94 per share, in the same period of fiscal 2011. Sales rose 1% to C$10,164 million from C$10,061 million. For the first nine months, net income was C$610 million, or C$3.02 per share, down 18% from C$746 million, or C$3.85 per share. Net sales increased 1.1% in the nine months to C$25,015 million from C$24,740 million.

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