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March 5, 1999
Canada Bread Company, Limited - Announces Earnings for 1998
TORONTO, ONTARIO--CBCL today announced earnings for 1998.
Full year and fourth quarter earnings were disappointing, as sales and profitability from the sale of fresh bread products continued to track significantly lower than last year. A new management team has been in place since January 1, and initiatives are being launched to deal with the underlying problems that have contributed to this result. Financial results from these efforts will be realised as we progress through 1999.
Sales of $127.6 million in the fourth quarter increased marginally compared with pro forma sales last year of $126.2 million. For the full year, sales of $508 million represent a decrease of 1.4 percent from sales of $515 million last year.
Earnings from operations in the fourth quarter of $4.4 million decreased by more than 50 percent from last year. The full year earnings from operations before unusual items of $19.4 million compares to $36.4 million in 1997.
The factors that had the greatest impact on results for the fourth quarter continue to be: lower fresh bread volume in Western Canada; reduced gross margins in Atlantic Canada; and lower earnings from the Company's 25 percent interest in Multi-Marques. A very positive development in the fourth quarter was an agreement with the Great Atlantic and Pacific Company of Canada, Limited to supply bakery products to A&P and affiliated grocery stores in Ontario, beginning in late February 1999. The agreement together with the purchase of Hamilton Baking Company, Limited which closed in the fourth quarter, will have a positive effect on the Company's Ontario fresh bakeries. Momentum in frozen bakery and pasta products continued.
Fourth quarter net earnings decreased to $2.4 million ($0.11 per share) from $8.8 million ($0.42 per share) last year. Full year net earnings before unusual items of $12.3 million ($0.58 per share) compares to net earnings of $27.1 million ($1.27 per share), after adjusting for the profit on the sale of Brooklyn Bagel Boys in 1997.
Roger Dickhout, President and Chief Executive Officer stated: "Management has as its first priority the turnaround in short term financial performance. It is also our belief that Canada Bread has the potential to play a larger role in shaping the bakery industry in Canada, and has the potential to earn excellent long term returns. We look forward to an exciting journey in the months and years ahead."
The Company declared a dividend of $0.06 per share payable on April 1, 1999 to shareholders of record on March 16, 1999.
Canada Bread Company, Limited, which is 68 percent owned by Maple Leaf Foods Inc., is Canada's leading manufacturer and distributor of bakery products, sold both under the Company's own brands and private label brands to the retail and food service industries.
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