Weston embracing innovation, new capabilities

by Eric Schroeder
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Weston Foods artisan bread loaves
Weston remains focused on its artisan categories.

TORONTO — George Weston Ltd. is embracing its focus on innovation and new capabilities, the company’s top executive said during a March 3 conference call to discuss fiscal 2015 results.

Pavi Binning, George Weston Ltd., Weston Foods
Pavi Binning, president and c.e.o. of George Weston Ltd.

“One of the sort of things that we’ve been focused on over the last year or so, is certainly becoming a more market-led organization,” said Pavi Binning, president and chief executive officer. “We had great operational strength, and you had seen that for many years, but I felt that, with the changing bakery landscape, there was an opportunity for us to be more market focused. And we’ve brought a number of presidents into the organization who are very strong on the sales and marketing side of things.

“And what we’ve been driving is — aggressively — is an innovation agenda, and we’ve identified a number of innovation platforms and are developing products around each of those platforms. So, I’m sort of very pleased with the progress. We are getting great feedback from our customer base, in terms of the way that we are now going to market, and I think this will continue as we move forward.”

Mr. Binning declined to give specifics on exact products that may be coming to market and when they may arrive, but he noted Weston remains focused on the cakes, biscuits, artisan and frozen categories.

Operating income in the Weston Foods segment totaled C$177 million ($132 million) in fiscal 2105, down 24% from C$231 million in fiscal 2014. Adjusted operating income, meanwhile, fell 17% to C$202 million ($151 million) from C$241 million. Sales increased 12% to C$2,144 million ($1,599 million) from C$1,923 million.

“Weston Foods continued to deliver results in line with our expectations, reflecting the impact of increased capital expenditure and incremental investments to support growth initiatives,” Mr. Binning said. “Volume growth was achieved across all business segments with the exception of fresh, which saw some softness consistent with the overall fresh market in Canada. Our capital investments are on track, and we anticipate that seven production lines currently under construction will be operational by the half year, on time and on budget.

“As we look forward Weston Foods expects sales growth generated by the new capacity and productivity improvements to more than offset continued investments and new plant costs, resulting in an increase in adjusted EBITDA in 2016 when compared to 2015.”

Breaking down the capacity increases scheduled for 2016 and 2017, Mr. Binning said Weston is planning to add about 50% in terms of cake, 30% in donuts and 25% in biscuits.

He said the capital the company is investing in has two benefits: driving growth and gaining efficiency.

“Some of the equipment that we are putting in is obviously much better than the equipment that we may have had in the past,” he said.

Overall, George Weston posted net earnings of C$864 million, equal to C3.78 per share on the common stock, which compared with C$134 million a year ago. Sales increased 7% to C$46,894 million.
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