TORONTO — Operating income in the Weston Foods segment totaled C$36 million ($28.4 million) in the third quarter of fiscal 2017 ended Oct. 7, down 52% from C$75 million in the same period a year ago. Adjusted EBITDA, meanwhile, fell 21% to C$80 million ($63 million) from C$101 million. Sales decreased 0.7% to C$668 million ($526.4 million) from C$673 million.
|Richard Dufresne, president and c.f.o. of George Weston Ltd.|
“The third-quarter financial performance of Weston Foods was disappointing,” Richard Dufresne, president and chief financial officer of George Weston Ltd., said during a Nov. 21 conference call with analysts.
Elaborating on the disappointing results during the call was Galen G. Weston, chairman and chief executive officer.
|Galen Weston, chairman and c.e.o. of George Weston Ltd.|
“Our fresh artisan and biscuit business units each performed on plan,” Mr. Weston said. “However, the frozen business fell significantly short due to continuing operational issues in two cake facilities and one pie plant. The team has been working around the clock to resolve the issues. We have announced the closure of the Creative Occasions iced-cake facility and are beginning to see improvements in operational productivity.
“The frozen business has now been stabilized, albeit lower than our plan, resulting in a further downward revision to our 2017 outlook. It is worth noting that despite these challenges, we are seeing growth in donuts and un-iced cakes, the two areas where we have invested new capital.”
He said the company is operating at about 85% of capacity in its un-iced cake business and at 90% of capacity in donuts.
“We’re quite confident that in 2018 we will fill that capacity with new business that’s already sort of coming in to us,” he said.
Asked by an analyst about the company’s bread business, Mr. Weston said that portion of the company’s operations has been improving for the past couple of years.
“We’ve had a good leadership organization in there, that has worked hard to stabilize the business, to invest in new and interesting products and to work more constructively with our retail partners,” he said. “And so we’re feeling reasonably good about it.”
Mr. Weston said Weston Foods’ management team, led by Luc Mongeau, president, is focused on delivering “a compelling strategic path forward for Weston Foods.”
“They’ve completed their detailed assessment of the business and are funding their strategic plan,” he said. “We will outline the highlights of this plan when we report our Q4 results in March.”Overall, George Weston posted net earnings of C$420 million, equal to C$3.25 per share on the common stock, which compared with C$254 million, or C$1.97 per share, a year ago. Sales increased to C$14,648 million from C$14,605 million.