Cost cuts help drive earnings gain at Canada Bread
TORONTO — A sharper focus on efficiency gains, cost reduction and innovation led to gains at Canada Bread Co. Ltd. in the third quarter of fiscal 2013. Adjusted operating earnings in the quarter ended Sept. 30 totaled C$38,900,000 ($37,247,000), up 17% from C$33,329,000 in the same period a year ago. Earnings from operations before interest and income taxes were C$34,442,000 ($32,981,000), up from C$33,146,000 in the same period a year ago.
Sales during the third quarter of fiscal 2013 fell 2% to C$392,501,000 ($375,870,000) from C$401,494,000.
“The business delivered solid earnings growth in the third quarter, benefiting from a very strong focus on efficiency gains, cost reduction and innovative new products,” said Richard Lan, president and chief executive officer. “We are realizing some of the benefits of our strategic initiatives already implemented and moving forward with others to realize this potential.”
Earlier this month, Canada Bread’s parent, Maple Leaf Foods Inc., announced its intent to sell its 90% interest in the company. The process is expected to close in early 2014.
Adjusted operating earnings within the Fresh Bakery segment during the third quarter of fiscal 2013 fell 6% to C$26,417,000 from C$28,086,000, while sales fell 4% to C$266,719,000 from C$277,709,000 in the third quarter of fiscal 2012.
“Lower volumes and higher raw material and inflationary costs in the fresh bread business were partly offset by operating efficiencies, driven by the closure of a third Toronto, Ont., bakery, higher pricing, and lower selling, general, and administrative expenses,” the company said. “Earnings in the fresh pasta business were consistent with the prior year.”
Canada Bread on Oct. 24 announced it has signed a definitive agreement to sell substantially all of the net assets of its fresh pasta and sauce business for approximately C$120 million to Madrid, Spain-based Ebro Foods S.A. The transaction is expected to close by the end of 2013.
Adjusted operating earnings in the Frozen Bakery segment during the third quarter of fiscal 2013 totaled C$12,483,000, up 138% from C$5,243,000 in the same period a year ago. Sales increased to C$125,782,000 from C$123,785,000.
“The North American frozen bakery business benefited from operational cost reductions and higher pricing, while the U.K. business earnings benefited from increased volumes in the bagel and croissant categories,” Canada Bread said. “This business continued to benefit from network consolidation, investment in scale facilities and focus on its core categories.”
For the nine months ended Sept. 30, adjusted operating earnings at Canada Bread were C$92,460,000, up 19% from C$77,709,000 in the same period a year ago. Net sales were C$1,158,836,000, down from C$1,176,599,000.