TORONTO — Canada Bread Co., Ltd. in the fiscal year ended Dec. 31, 2011, posted earnings of C$51,951,000 ($52,118,000), equal to C$2.04 per share on the common stock, down 16% from C$62,072,000, or C$2.44 per share, in fiscal 2010. Earnings from operations before restructuring and other related costs, meanwhile, were C$109,791,000 ($110,150,000), down 2% from C$111,542,000. Fiscal 2011 included C$46,357,000 in restructuring and other related costs, which compared with C$15,548,000 in such costs during fiscal 2010.
Sales during fiscal 2011 rose to C$1,595,456,000 ($1,600,479,000) from C$1,588,437,000.
“We maintained consistent earnings for the year despite a surge in wheat prices,” said Richard Lan, president and chief executive officer. “Our fourth-quarter results declined due to incremental costs resulting from changes in our manufacturing network, and continued exposure to high input costs in our frozen bakery business. Our focus in 2012 is to continue with the execution of our value creation initiatives which will contribute to margin growth, and to manage higher input costs through pricing.”
For the fourth quarter ended Dec. 31, net earnings at Canada Bread fell 44% to C$7,757,000 ($7,781,000), or C$0.31 per share, from C$13,841,000, or C$0.54 per share, in the same period of fiscal 2010. Sales rose 2% to C$400,280,000 ($401,409,000) from C$393,079,000.
Adjusted operating earnings within the Fresh Bakery segment during fiscal 2011 eased to C$99,857,000 ($100,158,000) from C$100,180,000, while sales rose narrowly to C$1,087,335,000 ($1,090,737,000) from C$1,086,827,000 in fiscal 2010.
For the fourth quarter, adjusted operating earnings fell to C$19,463,000 ($19,522,000) from C$20,864,000, while sales rose narrowly to C$261,963,000 ($262,764,000) from C$261,876,000 in the same period a year ago. Adjusting for the sale of the company’s fresh sandwich product line in February 2011, sales for the segment were up 4%.
“During the quarter, price increases implemented in the first half of 2011 offset higher wheat costs. However, margins were compressed due to approximately C$4 million of duplicative overhead costs associated with the transition to the company’s new bakery in Hamilton, Ont., and by approximately C$2.5 million in costs due to supply chain disruptions related to the installation of SAP in the fresh bakery operations in Western Canada,” Canada Bread said. The company added it continues to operate three small bakeries in the Greater Toronto area as it gradually consolidates production at its new fresh bakery in Hamilton.
Adjusted operating earnings in the Frozen Bakery segment during fiscal 2011 eased 13% to C$9,934,000 ($9,958,000) from C$11,362,000. Sales increased 1% to C$508,121,000 ($509,336,000) from C$501,610,000.
For the fourth quarter, adjusted operating earnings were C$6,738,000 ($6,756,000), up from C$6,566,000, while sales rose 5% to C$138,317,000 ($138,694,000) from C$131,203,000.
“Price increases implemented during the first half of the year offset higher raw material costs in the U.K., but did not fully mitigate the impact in North America,” Canada Bread said. “Management intends to implement further price increases commencing in early 2012 to address this shortfall. Cost reductions in selling, general and administrative expenses and operational efficiency gains resulting from the prior closure of a frozen bakery in Quebec, and the consolidation of production in the U.K., helped mitigate the remaining impact of higher raw material costs.”
Also during the fourth quarter, Canada Bread said it decided to close its bakery in Walsall, U.K., in early 2012.