Canada Bread earnings flat in quarter

by Eric Schroeder
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TORONTO — Solid gains in fresh bread and the U.K. frozen bakery business were not enough to propel year-over-year earnings or sales at Canada Bread Co. Ltd. in the second quarter of fiscal 2013. Adjusted operating earnings in the quarter ended June 30 totaled C$36,459,000 ($35,323,000), down narrowly from C$36,524,000 in the same period a year ago. Earnings from operations before interest and income taxes were C$33,537,000 ($32,492,000), down from C$36,668,000 in the same period a year ago.

Sales during the second quarter of fiscal 2013 fell to C$397,630,000 ($385,327,000) from C$404,861,000.

“In the quarter we realized returns on prior strategic investments to lower costs and improve productivity in our manufacturing network,” said Richard Lan, president and chief executive officer. “This includes our new bakery in Hamilton, Ont., and our expanded facilities in the U.K. We expect continued operational improvements, along with profitable contributions from many exciting new product launches that are planned throughout the balance of the year.”

Adjusted operating earnings within the Fresh Bakery segment during the second quarter of fiscal 2013 fell 4% to C$28,568,000 from C$29,828,000, while sales eased 3% to C$271,169,000 from C$279,164,000 in the second quarter of fiscal 2012.

Canada Bread said earnings declined during the quarter as higher net corporate costs allocated to the segment more than offset higher earnings at the fresh bread and fresh pasta businesses.

“During the quarter, the company closed a third bakery in the Toronto area, eliminating any future duplicative overhead costs associated with consolidating production at its bakery in Hamilton, Ont.,” Canada Bread said. “Results in the fresh pasta business increased mainly due to lower SG&A costs.”  

Adjusted operating earnings in the Frozen Bakery segment during the second quarter of fiscal 2013 totaled C$7,691,000, which compared with C$6,696,000 in the same period a year ago. Sales increased to C$126,461,000 from C$125,697,000.

“Performance in the North American frozen bakery business was consistent as earlier price increases offset inflationary costs and lower volumes,” the company said. “Earnings in the U.K. bakery business improved primarily due to higher volumes in both bagels and croissants. This business continues to benefit from network consolidation, investment in scale facilities and focus on its core categories.”

For the six months ended June 30, adjusted operating earnings at Canada Bread were C$53,560,000 ($51,871,000), up 21% from C$44,380,000 in the same period a year ago. Net sales were C$766,335,000, down from C$775,105,000.
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