Canadian food manufacturer and retailer George Weston saw its earnings fall in the third quarter as investments in its domestic business, a competitive grocery sector and a higher tax rate all hit its bottom line.
George Weston, the owner of the Loblaw chain, recorded a net income of C$171m (US$163.5m) in the three months ended 5 October. This fell from C$156m a year earlier, while its adjusted basic net earnings from continuing operations fell to $1.38 per share, down from $1.47 a year earlier.
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Operating profit from Loblaw and from food business Weston Foods fell. President Pavi Binning said the results reflected the “challenging environments in which both of its operating segments participate”.
Binning said both divisions had enjoyed a “good sales performance” but their operating results reflected the investments required to execute their respective strategies in “highly competitive sales environments”.
As a result, group operating income in the quarter dropped to C$86m from C$114m in the same period of 2012, primarily due to the unfavourable impact of the fair value adjustment of commodity derivatives of $19m and a decline in underlying operating performance, the retailer said.
Sales, however, were up 3.9% to C$562m. Excluding the impact of the loss of certain frozen products and foreign currency translation, sales increased 4.3% due to the combined positive impact of pricing and changes in sales mix of 3.1% and a 1.2% increase in volumes.
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