Stockwatch – Q3 Report Leaves George Weston Seeking Growth

Stockwatch – George Weston, the parent company of Loblaw was hit by costs related to the acquisition of Shoppers Drug Mart.

Stockwatch – George Weston Limited (TSE:WN, Mkt cap 12.71B, P/E 118.01, Div/yield 0.42/1.69, EPS 0.84, Shares 128.10M) has reported a drop in its third quarter earnings, prompting the food processing and distribution company to announce that it is working on a new strategic plan to improve its bakery division.

Stockwatch - George Weston reported drop third quarter earnings

Stockwatch – George Weston Limited reported a drop in its third quarter earnings.

The parent company of Loblaw was hit by costs related to the grocery giant’s acquisition of Shoppers Drug Mart, but remained optimistic there are areas of growth available to it in the bakery market.

George Weston said that it earned a profit from continuing operations attributable to shareholders of $53 million or 30 cents per share, compared with a profit from continuing operations of $168 million or $1.21 per share 12 months ago.

Last year, however, the company also earned $58 million from discontinued operations. Once a number of one-time items are taken out – including costs related to the acquisition of Shoppers and restructuring – adjusted earnings from continuing items increased by 24.2% to $1.59 per share from $1.28 per share a year ago.

The arrival of Shoppers Drug Mart to its roster encouraged a revenue boost to the tune of 34.7% to nearly $14 billion for the quarter compared with $10.4 billion a year ago.

Excluding the sales from Canada’s largest pharmacy chain, George Weston’s revenue rose more modestly by 2% to $10.59 billion from $10.38 billion, which is attributed primarily to its Loblaw division.

The results exceeded analysts’ estimates of $1.54 of adjusted earnings and about $14 billion of revenue for the quarter, according to Thomson Reuters.

W. Galen Weston, George Weston’s executive chairman, said he was content with the company’s performance after two full quarters of operations with Shoppers Drug Mart.

George Weston Ltd. continued to advance strategic initiatives and focus on long term value creation for shareholders,” he added.

Stockwatch – George Weston generated $734 million in cash flow in the third quarter. The company made $198 million in interest payments, and invested $342 million in capital expenditures. This left $194 million of free cash flow. Weston ended the quarter with $1.3 billion in cash and cash equivalents on its balance sheet.

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