Canada Bread earnings climb 22% in Q1

by Eric Schroeder
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TORONTO — Net earnings at Canada Bread Co., Ltd. in the first quarter ended March 31 were C$14,882,000 ($12,346,000), equal to C$0.59 per share. This compared with income of C$12,211,000, or C$0.48 per share, in the first quarter of fiscal 2008.

Earnings from operations before restructuring and other related costs were C$21,350,000 ($17,703,000), up 9% from C$19,544,000.

"In line with the trend experienced late in 2008, the first quarter of 2009 continued to demonstrate a return to more stable and improved earnings, although margins were impacted by a decline in the Canadian dollar and its effect on wheat costs," said Richard Lan, president and chief executive officer. "The improvement in the first quarter reflects actions we have taken to improve business efficiencies and pass through higher input costs as required. A higher value sales mix also contributed to results, and we continue to focus on innovation to provide consumers with appealing new product choices and accelerate growth."

Sales for the first quarter increased 8% to C$413,125,000 ($342,552,000) from C$382,869,000 for the prior year period. The gain reflected higher selling prices across all North American bakery businesses in 2008 in response to escalating input costs and product mix improvements in the Fresh Bakery operations. Excluding acquisitions, sales rose 5%.

The Fresh Bakery segment’s sales grew by 11% to C$263,000,000 while earnings from operations were C$12,800,000, up 1% from C$12,700,000 in the first quarter last year.

"Fresh Bakery increased its investment in marketing and promotional activities in the first quarter of 2009 to support, among others, the national launch of Healthy Way with ProCardio Recipe breads and fresh squares," Canada Bread said. "Healthy Way with ProCardio Recipe breads and fresh squares are the first line of Fresh Bakery product specifically targeting the heart health segment and broaden Dempster’s brand leadership in higher nutrition bakery products."

Frozen Bakery sales rose 3% to C$150,100,000, while earnings from operations soared 25% to C$8,500,000 from C$6,900,000. Canada Bread said its operational improvements reflected lower distribution costs, the commissioning of a new bagel line in Roanoke, Va., in the first quarter of 2009, and the closing of a bagel facility in Toronto late in 2008. U.K. bakery business experienced slower growth as a result of a lower margin product mix, Canada Bread said.

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