Toronto / CA. (cb) Canada Bread Company Limited reported its financial results for the third quarter ended September 30, 2009. Summary:
- Net earnings per share increased to 0,99 CAD compared to 0,77 CAD last year.
- Adjusted Operating Earnings increased to 36,9 million CAD from 31,9 million CAD in the third quarter 2008.
- Sales declined to 424,6 million CAD from 443,1 million CAD last year.
Note: Adjusted Operating Earnings are defined as earnings from operations before restructuring and other related costs and other income (expense). Adjusted Earnings per Share are defined as basic earnings per share adjusted for the impact of restructuring and other related costs, net of tax.
«Our organization has achieved steady earnings growth despite challenging global economic conditions», said Richard Lan, President and CEO. «We are steadfastly focused on growing sales through deepening our relationships with customers, delivering more product innovation to appeal to consumers, and developing lots of excitement and momentum internally around our market wins and opportunities ahead».
Financial Overview
Sales for the third quarter decreased by 4,2 percent to 424,6 million CAD compared to 443,1 million CAD last year due to lower volumes and a moderate change in mix from specialty to staple products primarily in the United Kingdom. Adjusted Operating Earnings increased 15,9 percent to 36,9 million CAD compared to 31,9 million CAD last year, while net earnings increased 27,0 percent to 25,1 million CAD compared to 19,7 million CAD last year.
Business Segment Review
Fresh Bakery sales in the third quarter declined by 1,0 percent to 287,3 million CAD, from 290,2 million CAD last year, mainly due to lower sales of fresh sandwiches. Sales of fresh bakery products were largely consistent with the third quarter of 2008.
Adjusted Operating Earnings increased to 33,3 million CAD in the third quarter compared to 26,0 million CAD last year. The fresh bakery and pasta operations realized improved margins as a result of lower commodity prices, although the benefit was partly mitigated by a weaker Canadian dollar, which increased the cost of US-Dollar priced flour and other ingredients. Earnings from the fresh sandwich business, which includes the 2008 Aliment Martel acquisition, have not met expectations. Management considers the business to be an important part of its growth strategy and is actively working on initiatives to improve its market share and profitability.
Fresh Bakery launched several exciting new innovative products in the quarter aimed at supporting margin and category expansion. Dempster´s(R) OvenFresh(TM) is a line of fresh, long life white and multigrain baguettes and dinner rolls that finish baking at home in minutes. Under a licensing agreement, the Company has also launched Cadbury(TM) Snack Cakes in Eastern Canada, an exciting new addition to its sweet goods offerings in the region.
Frozen Bakery sales decreased by 10,2 percent to 137,3 million CAD from 152,9 million CAD in the same period last year due to lower volumes and an unfavourable shift in mix from specialty to staple products primarily in the United Kingdom. As the U.K. economy continues to be impacted by the global economic downturn, Management remains focused on initiatives to sustain sales volumes and expand product offerings that deliver value at reasonable prices.
Adjusted Operating Earnings in the quarter decreased to 3,7 million CAD compared to 5,9 million CAD last year. Earnings from the U.K. bakery operations declined in the quarter due to the continued effects of the recession on sales of premium specialty bakery products and also as a result of higher manufacturing overheads. North American frozen bakery operations benefited from lower commodity costs.
Other income (expense) was 0,1 million CAD in the quarter compared to other income of 4,8 million CAD last year. Year-to-date other income was 2,4 million CAD (2008: 6,4 million CAD). Year-to-date and 2008 other income were primarily comprised of insurance proceeds received to cover business interruption losses resulting from the oven fire at the U.K. bakery in 2008.
