George Weston Ltd. says net profit rose 18 per cent in the first quarter, but that comparative adjusted earnings fell due to weakness at Loblaw, its grocery store chain subsidiary.
The Toronto-based baked goods and grocery giant says net earnings attributable to common shareholders grew to $124-million, or 89 cents per basic share due to a number of fair value adjustments and restructuring.
That was up from $105-million, or 74 cents per share in the year-earlier quarter as sales increased one per cent to $7.22-billion from $7.15-billion a year ago.
On an adjusted basis, however, basis earnings per share fell almost 17 per cent to a 89 cents from $1.07, excluding fair value adjustment on the forward sale of 9.6 million Loblaw shares, restructuring and other charges and adjustments.
The company says that weaker adjusted results were due to a decline in the operating performance of Loblaw Companies Ltd., which booked higher transportation and input costs.
Last week, Loblaw reported its net income fell by $36-million to $126-million or 45 cents per share, before adjustments. Revenue was up about one per cent, rising just above $6.9-billion for the quarter ended March 24.
In addition to its 63 per cent stake in Loblaw, George Weston operates Weston Foods, a fresh and frozen baking company that owns brands like Wonder and D'Italiano breads.
The company's Weston Foods segment reported an increase in sales to $425-million from $410-million, while adjusted operating income was $59-million, up from $57-million.
That was a result of higher pricing in key product categories and productivity improvements and cost reductions, partially offset by higher commodity and fuel costs and lower sales volumes.
Meanwhile, the company said net interest expense and other financing charges decreased by $22-million to $44-million, while income taxes declined to $59-million from $72-million — an effective income tax rate of 25.7 per cent compared with 30.4 per cent in the same 2011 period.