TORONTO — The launch of a line of private label gluten-free bread and sweet goods late last year began to pay dividends for the fresh bakery business of the Weston Foods division of George Weston Ltd. in the first quarter of fiscal 2013. But the product introduction was not enough to spur year-over-year gains at Weston Foods, where operating income fell 20% to C$48 million ($47.8 million) in the first quarter ended March 23, down from C$60 million in the first quarter of fiscal 2012. Adjusted operating income, meanwhile, was flat at C$59 million ($58.7 million).

Net sales were C$424 million ($421.8 million), down narrowly from C$425 million a year ago.

George Weston said fresh bakery sales increased approximately 1% in the first quarter compared with the same period in 2012, mainly due to the positive impact of higher pricing across key product categories partially offset by lower sales volumes.

“Although overall volumes declined in the first quarter of 2013, the volume trend improved and growth was realized in the Country Harvest, D’Italiano and Gadoua brands,” Weston Foods said. “The introduction of new products in the last 12 months, such as Country Harvest Flax and Quinoa, Sprouted Multigrain and Sprouted Wheat breads, D’Italiano Brizzolio rolls, and Gadoua Pain de Ménage contributed positively to branded sales in the first quarter of 2013. In addition, during the fourth quarter of 2012, Weston Foods launched private label gluten-free bread and sweet goods and the Flat Oven Bakery line of international flatbreads, which contributed positively to sales and volumes in the first quarter of 2013.”

Frozen bakery sales decreased approximately 1.7% in the first quarter, mainly due to the loss of certain distributed products. Excluding the effect of the loss of the products, Weston Foods said frozen bakery sales increased by approximately 3% in the first quarter of fiscal 2013.

Biscuit sales, principally for wafers, ice cream cones, cookies and crackers, decreased approximately 0.3% in the first quarter of 2013, due primarily to volume declines in cookie sales, including Girl Scout products, cone and wafer sales. During the fourth quarter of fiscal 2012, Weston Foods started manufacturing and selling Mrs. Fields branded pre-packaged cookies under license, which contributed positively to cookie sales and volumes in the first quarter of 2013.

For full year 2013, Weston Foods said sales growth is expected to be moderate due to a combination of pricing and modest volume growth.

“Adjusted operating margins are expected to remain in line with 2012 as Weston Foods invests in growth, marketing and innovation,” the company said. “The benefits from these investments are expected to be realized increasingly over the course of the year.”

Overall, net income at George Weston increased in the first quarter to C$225 million ($223.8 million), equal to C$1.19 per share on the common stock, up from C$166 million, or C$0.87 per share, in the same period of fiscal 2012. Sales rose 4% to C$7,494 million ($7,454 million) from C$7,224 million.