Canada Bread: Reports 2007 second quarter results

Toronto / CA. (nw) Canada Bread Company Limited announces its financial results for the second quarter ended June 30. «A 17 percent increase in wheat costs slowed our growth in the second quarter», says President and CEO Richard Lan. «While some of this was weather-related, all agricultural commodities have been impacted by the high demand and increased prices for corn, as supply is diverted to process ethanol. Despite rising input costs, we achieved a modest increase in earnings and benefited from the contribution of new businesses in our growing U.K Bakery operations. We will continue to pass through pricing as necessary to manage this major shift in food production costs».

Sales for the second quarter increased twelve percent to 375,7 million CAD from 335.5 million CAD last year, in part due to the contribution from recent acquisitions. Excluding acquisitions, sales increased six percent.

Earnings from operations for the second quarter increased six percent to 34,0 million CAD compared to 32,2 million CAD last year, reflecting higher earnings in the frozen bakery business and a modest decrease in fresh bakery results. This earnings increase was achieved despite significantly higher commodity costs. Net earnings for the quarter decreased seven percent to 21,2 million CAD (0,84 CAD per share) from 22,9 million CAD (0.90 CAD per share) in the prior year due to an increase in the effective tax rate from 26,4 percent in 2006 to 34,7 percent in 2007 as the Company is now recording a full valuation allowance against tax assets recognized in its U.S. bakery business. Year-to-date net earnings before restructuring and other related costs of 40,6 million CAD (1,60 CAD per share) compared to 42,3 million CAD (1,66 CAD per share) last year. Including restructuring and other related costs, year-to-date net earnings were 39,1 million CAD (1,54 CAD per share) compared to 42,3 million CAD (1,66 CAD per share) last year (full text).