George Weston fourth-quarter profit up from a year ago

George Weston Ltd. reported higher sales and profit in its most recent quarter, as it says its bakery business has started to stabilize amid a multi-year transformation plan.

The company earned $271 million attributable to its common shareholders or $1.86 per diluted share for the fourth quarter ended Dec. 31. That compared with a profit of $34 million or 27 cents per share in the same period a year earlier, before it issued about 26.6 million shares in connection with the spin-out of Loblaw's interest in Choice Properties.

Sales totalled $11.72 billion, up from $11.40 billion a year earlier.

On an adjusted basis, George Weston earned $232 million or $1.59 per share for its most recent quarter, compared with $226 million or $1.76 per share a year earlier.

The average analyst estimate had been for a profit of $1.57 per share, according to Thomson Reuters Eikon.

"We're clearly disappointed by our 2018 performance," said Richard Dufrense, George Weston's president, during a conference call with analysts Tuesday after the company released its fourth-quarter and full-year results.

He noted that benefits of the company's three-year transformation program, launched during the fourth quarter of its 2017 financial year, are flowing through and the company is seeing that in its results this year, as well as planning on them for the future.

The transformation plan included a planned reduction in offerings that would see 800 products eliminated. CEO Galen Weston said the company was about 80% of the way through that process and it would continue through 2019.

Dufrense declined to comment when the company expected to add a previously anticipated $100 million to its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

The company's outlook foresees that number dipping slightly in 2019 as it expects to face a number of headwinds, including higher input and distribution costs in an inflationary environment.

The baking business is showing early signs of stabilization, wrote Irene Nattel, an analyst with RBI Dominion Securities Inc., in a note.

"We expect investor interest in (George Weston) to remain tepid until we see tangible signs of recovery in the baking business," she said.

George Weston Ltd. operates Weston Foods, including bakery operations in Canada and the U.S., Loblaw and Choice Properties.

For the full year, the company earned $530 million attributable to common shareholders or $3.99 per diluted share, down from $722 million or $5.58 per share in 2017. Adjusted profits were $908 million or $6.85 per share, compared with $903 million or $6.99 a year ago. Sales increased to $48.6 million from $48.3 million.

On the Toronto Stock Exchange, George Weston shares lost $3.26 or 3.4 per cent at $92.11 in midday trading.