Weston fresh baking income falls in quarter
May 12, 2009
by Eric Schroeder
TORONTO — Operating income of the U.S. fresh baking business of George Weston Ltd. in the first quarter ended March 28 was C$9 million ($7.7 million), down 84% from C$58 million in the same period of fiscal 2008. Sales were C$143 million ($122.8 million), down 72%.
Results for the business, previously part of the company’s Weston Foods segment, were reported as discontinued operations, reflecting the Dec. 10 agreement to sell the business to Grupo Bimbo S.A.B. de C.V. for gross and net proceeds of C$3,092 million. The transaction was completed subsequent to the end of the fourth quarter, on Jan. 21.
Weston said it recorded a gain of C$921 million in connection with the sale of the business.
Overall, Weston Foods sustained an operating loss of C$27 million in the first quarter ended March 28. This compared with income of C$41 million in the same period a year earlier. Net sales were C$437 million, down 15% from C$511 million.
"Fresh bakery sales increased approximately 6.5% in the first quarter of 2009 compared to the same period in 2008, driven by price increases in key product categories combined with changes in sales mix," Weston said. "Volume decreased in the first quarter of 2009 mainly due to the timing of the Easter holiday, with declines in certain categories partially offset by growth led by the D’Italiano brand and private label products. Sales growth in whole grain and whole wheat products exceeded the sales growth of white flour based products. The introduction of new products such as D’Italiano Thintini and Country Harvest Vitality, contributed positively to branded sales during the first quarter of 2009."
Frozen bakery sales rose 6% in the first quarter of 2009, driven mainly by price increases and changes in sales mix. Volume decreased slightly for the quarter, included the negative impact of the timing of sales related to the Easter holiday.
"Biscuit sales, principally wafers, ice cream cones, cookies and crackers, increased approximately 3.5% in the first quarter of 2009 compared to the same period in 2008," Weston said. "Overall volume growth was flat with growth in certain categories being offset by declines in Girl Scout cookies."
Weston incurred a first quarter 2009 C$73 million write-down of part of the remaining goodwill related biscuits, cookies, cones and wafers business.