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Canada Bread upbeat about UK bakery division

April 29th, 2011

Canada Bread posted a first-quarter loss citing declining volumes in its North American frozen bakery business but talked up improved performance in its UK bakery operations.

Adjusted Operating Earnings in the quarter showed a loss of C$1.3m compared to a loss of C$0.3m last year, driven by lower volumes and “the rapid rise in wheat prices.”

The Toronto-based company, which is 90 per cent owned by Maple Leaf Foods, said its fresh bakery operation was significantly exposed to higher wheat prices, with a lag in pricing to offset these inflationary pressures.

It added that its frozen bakery sales, for the quarter ending March 31, decreased by 6 per cent to C$116.7m compared to C$124.7m in the Q1 of 2010.

UK bagel trends

Performance in the UK bakery business however improved, reported Canada Bread, due, it said, to a significant increase in bagel volumes, which had been generated by a both product innovation in the category and a strong marketing campaign.

“Bagel volume increased significantly with the re-launch of the New York Bakery brand bagels, although overall volumes for the UK bakery were lower than last year,” commented the group, which entered into an agreement in the quarter to sell a bakery facility in Cumbria.

The company added that its recent decision to implement a price hike has begun to “positively affect margins going forward.”

Hovis

Meanwhile in other finanical results, Non-branded bakery sales were down 16.5 per cent on the same period in 2010 for Hovis, according to owner, Premier Foods.

But branded sales increased by 1.6 per cent in the Hovis division, while its milling operations saw branded sales increase 15.2 per cent and non-branded rise by 29 per cent.

Premier, in its financial result for the first quarter, said its McDougalls flour sales had increased due to “a more competitive pricing strategy”.

Total branded sales across the division were up 2.3 per cent, with non-branded up 4.1 per cent – a total increase of 4.3 per cent compared to Q1 of 2010.

Source: Bakery and Snacks

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