Bakery and grocery company George Weston Ltd. says net earnings fell 40 per cent in the fourth quarter, helping to pull full-year profits down more than 23 per cent amid restructuring and other charges aimed at shoring up its competitive position.
The Toronto-based concern, which is the largest shareholder in Loblaw Cos., says net earnings attributable to shareholders fell to $65-million or 43 cents per share in the 12 weeks ended Dec. 31.
That was down from $109-million or 77 cents in the same 2011 period even as revenue climbed 1.2 per cent to almost $7.73-billion from $7.64-billion.
George Weston said the earnings decline was primarily caused by the impact of the forward sale agreement for 9.6 million Loblaw common shares and restructuring and other charges. Those were partially offset by foreign currency translation.
Adjusted basic net earnings were $1.02 per share compared with $1.01 in the same period in 2011. The increase was due to an improvement in the operating performance of the company's two operating segments, Weston Foods and Loblaw, partially offset by a higher effective income tax rate.
However, Loblaw also saw a contraction in its bottom line in the fourth quarter when it reported last week.
Canada's largest grocer said its fourth-quarter net income was $143-million or 43 cents per share, down $31-million or 17.8 per cent from $174-million a year earlier.
The figures included a $61-million restructuring charge equivalent to 16 cents per share as Loblaw cut about 700 jobs, mostly involving head office and administrative positions.
For the full year, George Weston reported net income attributable to shareholders of $486-million or $3.45 per common share on revenues of $32.74-billion.
That was down 23.5 per cent from net earnings of $635-million or $4.58 per share on revenue of almost $32.38-billion in 2011.
"2012 was a year of significant accomplishments for George Weston Ltd.," executive chairman W. Galen Weston said in the company's earnings release.
"Loblaw focused on initiatives to build on its competitive position and Weston Foods delivered satisfactory results, as both segments operated in highly competitive sales environments," he said.
The grocery business in Canada is seeing increased competition not only among traditional players, but also through expansion by new entrants such as Walmart and Target, which is expected to being opening the first of at least 124 stores across Canada beginning in March.