Canada Bread net falls 14% in first quarter

by Eric Schroeder
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TORONTO — Net earnings at Canada Bread Co., Ltd. in the first quarter ended March 31 were C$12,727,000 ($12,699,000), equal to C$0.50 per share on the common stock, down 14% from C$14,882,000, or C$0.59 per share, in the first quarter of fiscal 2009.

Earnings from operations before restructuring and other related costs were C$20,324,000 ($20,276,000), down 5% from C$21,350,000.

“Our first-quarter results were impacted by transitory challenges in our Frozen Bakery business, including our North American and U.K. operations, which more than offset earnings growth in our Fresh Bakery business,” said Richard Lan, president and chief executive officer. “We are taking steps to reduce costs and build volumes, and as a result are seeing signs of improvement in these businesses. We are confident that these initiatives will drive better results.”

Sales for the first quarter fell 8% to C$381,932,000 ($380,939,000) from C$413,125,000 for the prior year period. Canada Bread attributed the sales decline to an unfavorable impact of currency shifts and lower volumes in the Frozen Bakery segment.

The Fresh Bakery segment’s sales eased to C$257,200,000 ($256,336,000) from C$263,000,000 while earnings from operations were C$20,691,000 ($20,621,000), up 61% from C$12,818,000 in the first quarter last year.

Canada Bread said the sales decline reflected lower sales in the fresh sandwich business and increased trade investment.

Frozen Bakery sales fell 17% to C$124,700,000 ($124,185,000), while the segment sustained an operating loss of C$367,000, which compared with operating earnings of C$8,532,000 in the same period a year ago. Canada Bread said its operational loss was “mostly due to the decline in sales volume. Management expects the volume decline in North America to be transitory as new business is gradually being secured and is taking steps to reduce the cost base in the company’s U.K. operations until volumes improve.”
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