Canada's George Weston Ltd said today (5 March) it expects adjusted operating profit from its Weston Foods bakery arm to fall faster than it did in 2014 on the back of investment in the business.
The company, which also owns Canadian grocer Loblaw, said it expects a decline in adjusted operating income in 2015 "greater than that experienced in 2014 on an equivalent 52-week basis".
In the 53 weeks of George Weston Ltd's 2014 year, adjusted operating income at Weston Foods was C$231m (US$184.8m), 2.9% down on the C$238m reported for the 52 weeks of its 2013 financial year. Sales were up 6.1% at C$1.92bn.
George Weston Ltd said it is lining up capital investments of around C$300m in "targeted areas of growth" and "incremental investments in innovation and capabilities".
It said the cost of the investment, combined with higher input costs, would only be partially offset by pricing, volume growth and productivity.
"The decline in adjusted operating income is expected to be greater in the first half of the year," it added.
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In the fourth quarter of 2014, Weston Foods' adjusted operating income was up 9.6% at C$57m. Sales grew 13.6% to C$469m.
Pavi Binning, president of George Weston Ltd, said: "Weston Foods delivered volume growth across all business units. Financial performance was comparable with the fourth quarter of 2013 which was in-line with expectations. Loblaw and Weston Foods will continue to execute on their respective strategies in 2015 to drive sustainable, long term growth and profitability."