Newspaper article The Canadian Press

George Weston Ltd. Net Profit Falls 40% to $65M in Q4; Revenue Up Slightly

Newspaper article The Canadian Press

George Weston Ltd. Net Profit Falls 40% to $65M in Q4; Revenue Up Slightly

Article excerpt

George Weston Ltd. profit down 40% in Q4

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TORONTO - Bakery and grocery company George Weston (TSX:WN) says jts net earnings fell 40 per cent in the fourth quarter, helping to pull full-year profits down amid restructuring and other charges aimed at shoring up its competitive position.

"Weston Foods delivered satisfactory operating results despite a challenging environment," executive chairman W. Galen Weston said Thursday during a conference call with analysts.

"In 2012 the company continued to focus on long-term value creation for shareholders," Weston said, noting incremental investments in the "customer proposition" and other improvements by grocery chain Loblaw (TSX:L).

Galen Weston directly and indirectly owns 63 per cent of George Weston which, in turn, is the majority shareholder of Loblaw and Weston Foods, the bakery division.

The grocery business in Canada is seeing increased competition not only among traditional players, but also through expansion by new entrants such as Walmart and Target, which is expected to open the first of its Canadian stores this year.

Target's official launch date hasn't been announced but some locations are expected to open by the end of March, the first of at least 124 planned stores.

It's also an environment where profits need to be driven by productivity and innovation, company president Pavi Binning told the analysts.

Binning said the company's results "came in as we expected" with adjusted operating profits slightly ahead of the prior year, driven primarily by productivity improvements.

"In terms of price increases, what I would sort of say is that the pricing environment remains tough out there," he said in answer to a question.

Although George Weston has announced price increases of "a few per cent" in its fresh bakery business effective in February "our objective is to cover commodity costs," he said.

Meanwhile the company, is moving to increase into double digit territory the "very small" percentage of sales represented by new products like gluten-free bread, while also focusing on the health and nutritional benefits of wheat in promoting other key bakery items. …

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