CANADA: Investment forecast to hit Weston Foods 2014 profits
Weston Foods set to see further investment in 2014
Underlying profits at Canadian baker Weston Foods are expected to fall this year as parent George Weston Ltd invests in plants, marketing and innovation.
George Weston, which also owns retailer Loblaw, said Weston Foods was forecast to see "modest sales growth" in 2014.
However, the company warned: "Despite the anticipated growth in sales, adjusted operating income is expected to decline due to continued investments in growth, including plant start-up costs, capabilities, marketing and innovation."
It added: "Results will be more challenged in the first half of the year by the performance of the frozen dough business and higher commodity and other input costs."
In 2013, Weston Foods sales increased from C$1.77bn (US$1.59bn) to C$1.81bn. Operating income rose from C$230m in 2012 to C$238m. However, adjusted operating income, which excludes items like restructuring costs, fell 2.9% to C$267m.
Quarterly sales increased by 3.5% to C$413m, with volumes up 0.1%. However, operating income fell from C$44m to C$40m and adjusted operating income dropped 5.3% to C$54m.
A decline in the performance of the frozen dough business, the cost of investments and higher input costs weighed on the result.
Loblaw issued its results last week.
In 2013, George Weston saw net earnings from continuing operations climb 19.9% to C$849m. Adjusted operating income inched up 0.9% to C$1.58bn. Sales grew 2.6% to C$33.58bn.
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