Canada Bread full-year net up despite soft Q4

by Eric Schroeder
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TORONTO — Net earnings at Canada Bread Co., Ltd. rose 19% in fiscal 2009, overcoming a softer fourth quarter in which the company focused on investments in new products. Net income in the year ended Dec. 31, 2009, was C$77,478,000 ($73,471,000), equal to C$3.05 ($2.89) per share on the common stock, up from C$64,936,000, or C$2.55 per share, in fiscal 2008.

Earnings from operations before restructuring and other related costs were C$120,537,000 ($114,334,000), up from C$97,632,000.

For the fourth quarter, net income fell 43% to C$15,009,000 ($14,237,000), or C$0.59 per share, from C$26,460,000, or C$1.04 per share, in the same period a year ago. Net sales in the fourth quarter eased 3% to C$432,190,000 ($410,048,000).

“As a company, our goal is to deliver higher levels of growth by expanding into new categories and markets,” said Richard Lan, president and chief executive officer. “The earnings decline in the fourth quarter reflects important investments in new products to drive growth. These included expanding our sweet goods with Cadbury Snack Cakes, and launching Dempster’s OvenFresh ready-to-bake premium dinner breads.

“For the year 2009, we achieved solid earnings and margin recovery following the sharp commodity cost increases of the previous year. In 2010, we are continuing to place a strong emphasis on innovation to support our leading brands and market shares and investing in our plant network, such as construction of the new Ontario bakery, to increase scale and efficiency.”

Earnings from operations within the Fresh Bakery segment rose 20% in fiscal 2009 to C$91,535,000 ($86,928,000) on a 2% gain in sales to C$1,119,790,000 ($1,063,436,000). For the fourth quarter, earnings from operations were down 21% at C$20,078,000 ($19,065,000). Sales rose narrowly to C$279,244,000 ($265,160,000) from C$279,132,000.

Earnings from operations with the Frozen Bakery segment rose 37% in the year to C$29,002,000 ($27,531,000) from C$21,103,000. Sales in the division eased 5% to C$585,998,000 ($556,227,000) from C$614,140,000. For the fourth quarter, earnings from operations rose 7% to C$9,053,000 ($8,590,000) from C$8,433,000, while sales fell 8% to C$152,946,000 ($145,127,000). Canada Bread said sales volumes increases in North American frozen bakeries due to the addition of new customers were offset by lower volumes in U.K. bakery operations due to a trade down from premium to staple products.

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