Milling & Baking News - May 15, 2012 - 29

early rollout stages. I think it allows us to mix out in the Northeast. It gives us a national footprint. We have a few more rollouts in the Southeast to do and in the Ohio-Pittsburgh area, but we anticipate getting those done later

this year and we’ll have another national brand heading toward $1 billion when we do that.” Mr. Prince said the build-out of the Sara Lee brand geographically does not diminish the value of the company’s

diverse portfolio of bread brands. “We have brands that have rich histories in the regions they grew up in, and they have tremendous potential, along with the national brands that we have in this combination,” he said. MBN Hamilton. The company will close a third Toronto bakery in early 2013. Adjusted operating earnings in the Frozen Bakery segment during the first quarter of fiscal 2012 totaled C$1,493,000 ($1,510,000), which compared with a loss of C$1,261,000 in the same period a year ago. Sales increased 5% to C$122,061,000 ($123,435,000) from C$116,675,000. “Earnings improvements were due to lower selling, general and administrative expenses, higher sales volumes in North America and improved sales mix in the U.K.,” the company said. “The lower selling, general and administrative expenses were due to reduced general administrative costs and lower advertising and promotional expenses, primarily in the U.K. The business also benefitted from the continuing growth in the U.K. bagel category and North American food service channel.” Canada Bread closed its bakery in Walsall, U.K., in March as part of a plan to focus production in its core categories of bagels, croissants and specialty bread. The company now operates three facilities in the United Kingdom in Rotherham, London and Maidstone. MBN digit growth in each region. “Again, Oreo was a major driver, while new platforms, such as BelVita breakfast biscuits and Choco-Bakery in Europe made significant contributions.” The biscuit business also featured prominently in a review of the North American sales results by David A. Brearton, executive vice-president and chief financial officer. Noting organic net revenue growth was 3%, he said the company’s power brands had 6% sales growth. “Let me give you some examples of standout performers,” he said. “Oreo, which celebrated its 100th birthday in March, and Miracle Whip, behind a new marketing campaign, each grew double digits. Philadelphia increased by more than 20% behind the launch of Philly Indulgence, and Newtons were up nearly 50%, with the continued success of Fruit Thins.” He called the introduction of BelVita
Milling & Baking News May 15, 2012 / 29

Bakery volume declines hurt Canada Bread earnings
TORONTO — An industry wide decline in bakery volumes hurt earnings at Canada Bread Co., Ltd. in the first quarter of fiscal 2012, the Toronto-based company said May 8. Adjusted operating earnings in the first quarter ended March 31 totaled C$8,761,000 ($8,858,000), down 48% from C$16,724,000 in the same period a year ago. Earnings from operations before restructuring and other related costs, meanwhile, were C$2,899,000 ($2,931,000), which compared with a loss of C$3,248,000 in the same period a year ago. The first quarter of fiscal 2011 included C$20,050,000 in restructuring and other related costs, while the most recent quarter included C$5,884,000 of such costs. Sales during the first quarter of fiscal 2012 fell to C$370,244,000 ($374,389,000) from C$371,760,000. “Our first-quarter results were significantly impacted, as expected, by an industry wide decline in bakery volumes,” said Richard Lan, president and chief executive officer. “Despite this, we benefitted from our position in key categories, innovation and the strength of our brands. We are addressing the challenges and improving profitability through increased marketing, consumer outreach and cost reduction.” Adjusted operating earnings within the Fresh Bakery segment during the first quarter of fiscal 2012 fell 60% to C$7,268,000 ($7,350,000) from C$17,985,000, while sales eased 3% to C$248,183,000 ($250,989,000) from C$255,085,000. Canada Bread said the earnings decline reflected a decrease in fresh bakery volume, C$3 million in incremental costs related to inventory write-downs in the fresh pasta operations and duplicative overhead costs as the company commissions its new fresh bakery in Hamilton, Ont., higher input costs, overall inflation and increases in advertising and promotional spending. During the quarter, Canada Bread closed two bakeries in the Greater Toronto area as it continues to consolidate production into its new fresh bakery in

Global biscuits growth headlines strong ﬁrst quarter at Kraft
NORTHFIELD, ILL. — The strength of the company’s global business helped fuel a “terrific start in 2012” at Kraft Foods Inc., said Irene Rosenfeld, chairman and chief executive officer. Ms. Rosenfeld and colleagues reviewed the first-quarter results in a conference call May 3 with investment analysts. While the fastest sales (and earnings) growth was in non-U.S. markets, the North American business was “solid” as well, she said. Net income of Kraft Foods Inc. in the first quarter ended March 31 was $813 million, equal to 46c per share on the common stock, up 2% from $799 million, or 46c per share, in the same period a year ago. Sales were $13,093 million, up 4% from $12,573 million Operating income of the U.S. Cheese
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segment jumped 25% in the first quarter from the same period a year ago; the U.S. Beverages segment was down 39%; U.S. Convenient Meals was down 11%; U.S. Grocery was up 6%; and U.S. Snacks was up 7%. Kraft Foods Europe enjoyed a 25% jump in operating income in the quarter while Kraft Foods Developing Markets was up 30%. “Global biscuits were up 8% on a constant currency basis, with developing markets growing in the high teens,” Ms. Rosenfeld said. “China was up 40%, leading the way, with Oreo growing by more than 60%. Tock and Club Social crackers also continued to post strong performance, up 12% across developing markets. Our biscuit businesses in North America and Europe were also solid, with mid-single-

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Milling & Baking News - May 15, 2012

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