Canada Bread, the Canadian bakery group controlled by Maple Leaf Foods, today (24 July) posted a 49.2% slump in half-year earnings as wheat and fuel costs hit the business.
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The company, which has operations in the UK as well as in Canada, booked net earnings before restructuring costs of C$20.7m (US$20.5m) for the first half of 2008 – against C$40.6m a year earlier.
President and CEO Richard Lan said higher commodity costs had had a “significant impact” on the business but said the company believes the effects will be short term.
“We believe these effects, while material, are short-term with improvements to come in the second half of the year as markets stabilise and we continue to pass on costs by way of price increases to offset the effects of commodity inflation,” Lan said.
Revenue rose 11% to C$820.3m as Canada Bread’s fresh bakery business benefited from higher prices and the impact of recent acquisitions.
Underlying earnings from the fresh bakery unit tumbled 47%, however, thanks to higher wheat costs.
Earnings from Canada Bread’s frozen bakery business more than halved, reaching C$6.8m, compared to C$16.2m a year earlier. Costs again were crucial, as well as Canada Bread’s decision to up marketing expenditure by more than a third.
Canada Bread’s performance helped push down profits at Maple Leaf, which saw its half-year earnings almost halve due to soaring grain and fuel costs.
Maple Leaf owns over 89% of Canada Bread.
