Food giant’s profit up 16.7% despite big Loblaw costs
GEORGE WESTON LTD.
Food giant George Weston Ltd. has recorded a bigger thirdquarter profit of $ 196 million — up 16.7 per cent — despite ballooning restructuring costs at its key holding, the Loblaw Cos. supermarket chain. Chairman and president Galen Weston painted a rosy outlook for the rest of 2005 yesterday, but warned cost pressures will continue to gnaw at profits.
“ Next year we anticipate the introduction of a number of helpful and innovative new products, and our aggressive capital program is progressing well,” Weston told investors.
“Cost pressures will persist and require continued low- cost focus. However, I am confident we are now well- positioned for future growth.” The Toronto- based firm’s net earnings for the quarter ended Oct. 8 amounted to $ 1.41 a share and compared with $ 168 million, or $ 1.24 per share, a year earlier. Analysts expected earnings of $ 1.64 a share before onetime items.
Quarterly sales rose 5.2 per cent to $ 9.7 billion from $ 9.3 billion. The company said earnings were reduced 20 cents a share by several factors, including a $20 million charge for costs associated with Loblaw’s supplychain disruptions.
Earlier this month, Loblaw, which is in the throes of a major retooling, reported its thirdquarter was plagued by supplychain glitches and higher- thanexpected restructuring costs. As a result, summer-quarter earnings for Canada’s largest supermarket operator fell by 25.6 per cent to $ 192 million, from $258 million a year ago.
George Weston’s latest quarter was also affected by an $8 million charge related to restructuring and other charges for the realignment of both Weston Foods and Loblaw, as well as plans to exit certain Weston Foods bread and roll lines. The parent company also absorbed a $40 million charge related to Loblaw’s estimate of GST and provincial sales taxes, and a $9 million charge for stock- based compensation. As for its other operating segment, Weston Foods, sales declined by 1.2 per cent in the quarter to $ 1.3 billion, hurt by the stronger Canadian dollar.