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George Weston profit rises to $157-million

A file photo of the bread section of a Rabba store on Front St. in Toronto is seen in these photos. Canada's two largest bread producers, Weston Bakeries Ltd and Canada Bread Co. Ltd haven't given up on white bread. April 14, 2006.

Deborah Baic/The Globe and Mail/Deborah Baic/The Globe and Mail

George Weston Limited says its second-quarter profit rose 22.7 per cent on slightly higher sales and lower costs.

The baked goods and grocery giant reported a profit of $157-million or $1.13 per share, an increase from $128-million or 91 cents per share a year ago.

Adjusted earnings per share were $1.34, above analyst expectations of $1.11 per share, according to estimates compiled by Thomson Reuters.

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Sales grew 0.7 per cent to $7.53-billion from $7.48-billion.

The company's costs were lower as net interest expenses and other financing charges dropped nearly 15 per cent to $98-million on lower non-cash charges tied to the fair value adjustment of its forward sale agreement for 9.6 million Loblaw common shares.

In its Weston Foods division, sales rose to $407-million from $359-million.

Weston Foods is a fresh and frozen baking company that owns brands such as Wonder and D'Italiano breads. George Weston also owns about 63 per cent of Loblaw .

George Weston Ltd. said in May that wholesale buyers have been resisting price increases that it started charging in April in order to help offset the rising cost of ingredients it uses to make breads and other products.

Companies such as Maple Leaf Foods and Tim Hortons have raised prices due to the soaring costs of key commodity ingredients such as wheat, corn, sugar and vegetable oil, which have gone up as much as 50 to 100 per cent over the last year at a near-record rate.

Combined with higher transportation costs, George Weston has said higher expenses could have a negative impact of up to $65-million this year, and the company has warned it could increase prices even more by the end of the year if costs continue to rise.

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Economists have estimated that Canadians will be paying between 5 and 7 per cent more for groceries on average by the end of the year, due to bad crops around the world, more farmers selling their corn for ethanol fuel rather than food and the effect of the economic recovery driving prices higher.

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