Weston Foods donuts
Adjusted EBITDA and sales both increased for Weston Foods during the second quarter.

TORONTO — Adjusted EBITDA in the Weston Foods segment of George Weston Ltd. totaled C$59 million ($45.1 million) in the second quarter of fiscal 2016 ended June 18, up 1.7% from the same period in fiscal 2015. Sales increased 7% to C$496 million ($378.8 million) from C$464 million.

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

“Weston Foods continued to deliver results in line with our expectations, reflecting the impact of increased capital expenditures and incremental investments to support growth initiatives,” Pavi Binning, president and chief executive officer, said during a July 29 conference call. “Our capital investments are on track. Of the seven new lines that I’ve talked to previously, three are now fully operational, and four are in the start-up and testing phase. These lines, when fully operational, will add approximately 20% in incremental capacity in cake, donuts and pies.

“With this capital investment, we expect volumes to continue to grow through the next two quarters as we get through the start-up period and begin to win new business.”

Mr. Binning said Weston Foods expects sales growth generated by new capacity and productivity improvements to drive an increase in adjusted EBITDA in 2016. The increase is expected to be greater in the second half of the year, as new plant capacity and capability come on-line, he said.

Additionally, Weston Foods’ management now expects to make capital investments of approximately C$275 million in 2016 compared with C$300 million previously stated due to efficiencies. Depreciation is projected to increase in 2016 when compared with 2015 and largely offsets the improvement in adjusted EBITDA.

“The competitive retail landscape continues to intensify,” Mr. Binning said. “And this may put added pressure on the business.”

Overall, George Weston posted second-quarter net earnings attributable to common shareholders of C$143 million ($109.2 million), equal to C$1.04 per share on the common stock, which compared with C$51 million a year ago. Sales increased 2% to C$11,075 million ($8,459 million).