Canadian food group George Weston has posted a 19% drop in third-quarter profits owing to a below-par performance at its supermarket subsidiary, Loblaw.
Operating income for the third quarter fell 19.1% to C$376m (US$383m). Sales rose by 0.8% to $10.2bn.
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Sales at Loblaw rose by 1.4% $9.1bn but third-quarter operating income declined from $396m to $248m. Sales increases in the quarter were insufficient to offset margin declines and cost increases, Weston said.
Sales at the company’s Weston Foods division fell by 2.8% to $1.3bn for the quarter. Overall volume decreased by 1.1%, the company said, adding that volumes were negatively impacted by the exit from the US frozen foodservice bagel business last year and the termination of certain biscuit manufacturing contracts.
Adjusted operating income from Weston Foods rose by 20.8% to $128m, on the back of price increases, changes in sales mix and cost-cutting initiatives.
The company said the 2007 results would continue to reflect the changes undertaken by both the Weston Foods and Loblaw operating businesses in order to position them for strong growth in the future. It added that for the remainder of the year, Weston Foods expects sales growth to be constrained by any further appreciation of the Canadian dollar.
