George Weston nudges quarterly dividend higher, reports first-quarter loss

George Weston Ltd. is starting to stabilize about a year into a multi-year transformation plan, executives say, as the company earned some new business during its most recent quarter.

“Today at the conclusion of year one, we’ve seen meaningful progress,” said chief financial officer Richard Dufresne, during the company’s annual general meeting of shareholders Tuesday.

The company, which also operates Weston Foods, including bakery operations in Canada and the U.S., and holds a controlling stake in Loblaw Companies Ltd., outlined the plan at its last annual general meeting. It included discontinuing some of the company’s offerings. George Weston slowed the process to reduce offerings by 800 instead of 1,000 after sales continued to fall in its third quarter.

Now the company continues to see momentum in its growth areas, which includes artisanal products and doughnuts, and stabilized performance in its frozen business, he said.

George Weston invested in its sales strategy efforts among other things, which has allowed it to further cement its relationship with key retail business partners and food service operators in Canada and the U.S., said Galen Weston, CEO, during a conference call with analysts earlier that day after the company released its first-quarter results.

That’s resulted in it being able to win a significant amount of new business in its frozen division, he said, mostly in doughnuts and pies.

The company’s service levels are up significantly in the last few quarters, said Dufresne, and the quality of its products has been improving. Stronger consumer and sales strategy insights have also helped to build stronger relationships with key retailers, he said.

George Weston’s investment into building state-of-the-art plants also contributed, added Weston.

“That is also making a difference,” he said, “when you’re having discussions with key customers that they know we can deliver the best product at the lowest cost.”

The company announced Tuesday it would pay a slightly higher dividend despite reporting a loss in its first quarter due to an accounting charge related to its holdings in the Choice Properties Real Estate Investment Trust.

George Weston will pay a quarterly dividend of 52.5 cents per share, up from 51.5 cents.

It reported a net loss attributable to common shareholders of $488 million or $3.18 per share due to a $601-million one-time charge related to a significant unit price increase at Choice Properties. The loss compared with a profit of $180 million or $1.40 per share in the same period in 2018.

Sales totalled $11.17 billion, up from $10.74 billion.

On an adjusted basis, George Weston earned $201 million or $1.30 per share for the 12-week period ended March 23 compared with an adjusted profit of $178 million or $1.38 per share a year earlier when the company had fewer shares outstanding.

Analysts on average had expected a profit of $1.34 per share and revenue of $11.22 billion, according to Thomson Reuters Eikon.

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