Toronto / CA. (cb) Canada Bread Company Limited reported its financial results for the third quarter ended September 30, 2012. Highlights: Adjusted Operating Earnings for the third quarter increased 7,8 percent to 34,2 million CAD compared to 31,8 million CAD last year. Net earnings for the quarter were 24,2 million CAD compared to 30,3 million CAD last year. Adjusted EPS for the quarter was 0,96 CAD, compared to 1,24 CAD in the third quarter of 2011 (0,86 CAD excluding a 9,8 million CAD tax adjustment associated with a prior acquisition).
«Our earnings growth resulted from effective buying strategies and a strong positive shift in our North American frozen bakery business. We have a number of commercial and marketing initiatives underway to support growth in each of our businesses and we expect to manage inflationary costs through responsible pricing», said Richard Lan, President and CEO.
Financial Overview
Canada Bread sales for the third quarter declined 3,8 percent to 401,5 million CAD, compared to 417,2 million CAD last year. After adjusting for the closure of a bakery in the U.K. and currency translation on sales in the U.S. and U.K., sales decreased 2,3 percent. This decrease was primarily related to lower volumes in the fresh bread business.
Adjusted Operating Earnings for the third quarter increased 7,8 percent to 34,2 million CAD compared to 31,8 million CAD last year, driven by higher earnings in the fresh bread business and the North American frozen bakery operations.
Net earnings in the quarter were 24,2 million CAD (0,95 CAD basic earnings per share) compared to 30,3 million CAD (1,19 CAD basic earnings per share) last year and included 0,2 million CAD in pre-tax restructuring costs (2011: 1,6 million CAD). Net earnings in the third quarter of 2011 also included 9,8 million CAD (0,38 CAD per share) related to a tax adjustment associated with a prior acquisition. Adjusted earnings per share for the third quarter were 0,96 CAD compared to 1,24 CAD last year.
Fresh Bakery
Includes fresh bakery products, including breads, rolls, bagels, sweet goods and fresh pasta and sauces sold to retail, foodservice and convenience channels.
Fresh Bakery sales for the third quarter declined 3,5 percent to 277,7 million CAD from 287,9 million CAD last year, primarily due to lower volumes in the fresh bread business.
Adjusted Operating Earnings in the third quarter were 28,8 million CAD compared to 29,2 million CAD last year, as improved earnings in the fresh bread business were offset by lower earnings in the fresh pasta business. Results benefited from positive hedging activities for raw materials during the quarter, although the business continues to experience inflationary costs and projected increases in flour and dairy costs that will require offsetting price increases. Volumes in the fresh bread business were consistent with the second quarter of 2012, but lower than last year, reflecting industry volume declines.
Frozen Bakery
Includes frozen bakery products, including frozen par-baked bakery products, specialty and artisan breads and bagels sold to retail, foodservice and convenience channels in North America and the U.K.
Frozen Bakery sales for the third quarter declined 4,2 percent to 123,8 million CAD from 129,2 million CAD in 2011. After adjusting for the closure of a bakery in the U.K. and currency translation on sales in the U.S. and U.K., sales increased 0,6 percent. Stronger volumes and selling prices in the North American frozen bakery operations were largely offset by lower volumes in the U.K. bakery business.
Adjusted Operating Earnings in Frozen Bakery for the third quarter of 2012 increased to 5,5 million CAD from 2,6 million CAD last year. The North American frozen bakery business benefited from higher pricing and increased sales volumes compared to last year. In the U.K., earnings were consistent with last year as improvements from cost reduction strategies, including the closure of a bakery in the first quarter, were offset by lower volumes and costs of commissioning new croissant capacity.
About: Canada Bread Company Limited, which is 90 percent owned by Maple Leaf Foods Inc., is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces. The Company had 2011 sales of 1,6 billion CAD and employs approximately 6’000 people at its operations across North America and in the United Kingdom.
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