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Weston profit falls, says full-year results will be below 2011

Weston Bakery truck trailers sit idle at a George Weston Ltd. owned facility on the Queensway in Toronto.

Louie Palu/The Globe and Mail

George Weston Ltd. says its second-quarter profit was down nearly 15 per cent from the same time last year and it expects the full-year 2012 results will be lower than in 2011, mainly due to costs at its Loblaw grocery division.

The bakery and grocery company, which is the largest shareholder of Loblaw Cos., said its overall net income in the 12 weeks ended June 16 fell to $196-million, of which $137-million was attributable to common shareholders.

That translates into 99 cents per common share, or $1.06 per share on an adjusted basis. There was a consensus estimate of 98 cents per share, based on three analysts, for the quarter.

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Even though George Weston's quarterly profit came in ahead of expectations, the company said it expects the full-year profit will be lower than in 2011.

"For the full year 2012, George Weston Limited anticipates adjusted basic net earnings per common share to be down year-over-year, primarily due to the impact of the incremental costs and ongoing customer proposition investments at Loblaw," the company said.

Weston Foods, which owns one of Canada's largest bakery businesses, is expected to produce sales and operating margins in line with 2011, the Toronto-based company said.

The consensus estimate for full-year earnings compiled by Thomson Reuters was at $4.47 per share as of Monday, although it was as high as $4.51 per share last week.

George Weston's overall revenue increased 1.3 per cent to $7.6-billion compared with a year earlier, including $400-million from Weston Foods. Loblaw, which operates retail stores under various banners, contributed $7.38-billion.

In the comparable period of 2011, George Weston's net profit was $230-million or $1.13 per share or $1.34 per share on an adjusted basis.

The company attributed the lower profit to numerous factors at Loblaw, including higher labour and other operating costs, investments in information technology and a charge related to a transition of some of its conventional stores in Ontario to other formats.

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