Milling & Baking News - March 17, 2015 - 18

Business

Weston identifies specific areas of
potential growth in baked foods

will step up our investment in innovation, research and product development, and consumer insights
to make sure we continue to mainTORONTO - After spending sev- capacity clearly was an issue. It was tain and build our leadership posieral months reviewing the North an issue, for example, in the artisan tions in the categories where we are
American bakery market, manage- business, and we put in new facili- strong."
In the fiscal year ended Dec. 31,
ment at George Weston Ltd. has ties up in Toronto this year, which
concluded the best course of action gives a lot of runway as we move 2014, Weston Foods had adjusted
to create shareholder value over the forward to grow the ACE business EBITDA of C$311 million ($249 million), down from C$322 million a
long term is to increase the level of as we move forward.
"And what we have done is some- year ago, and operating income of
investment in Weston Foods.
"Our plan is to invest in targeted thing very similar in each of the C$241 million ($193 million), down
areas of growth, in innovation and other areas. If you take the North 7% from C$259 million in fiscal
2013. Revenue for the year was
in capabilities across the busiC$1,923 million ($1,537 million),
ness," Pavi Binning, president of
up 6% from C$1,812 million.
George Weston Ltd., said during
Mr. Binning said Weston plans
a March 5 conference call with
to split its capital spending in
analysts to discuss financial resuch a way that two-thirds will
sults. "Although these investgo toward efforts in the United
ments will impact profitability
States and one-third will go toin the short term, they will posiward Canada. Not all the spendtion us well for the future."
ing will be for capacity expanMr. Binning said Weston has
sion at existing facilities, either.
identified several areas of the
Mr. Binning said the company
business it believes have room
plans to put in place a couple
for growth, including cake,
new greenfield projects.
donuts, artisan, cookies and
"This is not simply upgrading
crackers.
"The bakery industry in North Earlier this month, Weston announed the acquisi- existing facilities," he said. "This
America has been going through tion of Starr Culinary Delights, a baker of a wide is actually putting new assets in
the ground, which will be statea challenging period in the last range of cakes and other desserts.
of-the-art."
few years," he explained. "We
He said the company also will
have clearly all seen pressure
(in fresh) whether it's in Canada or American - in particular the U.S. consider bolt-on acquisitions, but
North America with the declines in - in-store bakery, it is a growing he indicated they would be small.
area. Donuts, cake and biscuits are To that end, the company on March
white and wheat bread.
"What we have also seen is com- very important categories in in- 6 said it has completed the purchase
modity and input costs increasing, store bakery. Our customers are of Starr Culinary Delights Inc. of
but we have not been able to pass coming to us and saying, 'You're Mississauga, Ont. Starr has more
these on for a number of years into doing a good job in these areas. We than 25 years of experience baking
the marketplace, and that has result- would like to actually grow our a full range of cakes for the North
ed in pressure in margins. And so business with you.' And that's the American market. Starr 's products
that was what really led us to con- essence of why we're doing what are sold to retail and food service
ducting the strategic analysis of the we're doing. And my overall com- customers across Canada and the
business. And we do a strategic plan ment is Weston Food is a good busi- United States and include a wide
every year, but over the last year or ness. We absolutely believe in this range of cake and dessert products
so, with my direct involvement in business, and that is why we are such as Starr 's signature coffee
cakes, cheese cakes, loaf cakes, laythe business, I thought it was ap- investing it."
He said the company will need er cakes, cupcakes, tarts, mousses
propriate that we absolutely look at
every one of our businesses in some an infusion of capital to grow the and more.
"This strategic acquisition will
detail and put a plan in place for business, and the company has
each of them. And through that, we earmarked $300 million for capital complement our growing cake and
did a lot of work with the local man- spending in 2015 and another $170 sweet goods business with high
quality, innovative and unique
agement teams to assess the market million in 2016.
"This will have a negative impact products and capabilities," said
out there, our competitive position
in it and how we could develop our on operating income, as we will have Kevin McDonough, president of
higher depreciation and will incur frozen and biscuit divisions. "We
business over the long term.
"What we have done is we have start-up costs and full overheads in continue to enhance our product
put in place a good strategic plan in our P&L while it will take us time offering for our customers and conplace for every area of the business. to build up the volume and sales," sumers throughout North America.
And what we identified as we went he said. "To support and drive this Weston Foods is excited to partner
through and did this work is that we growth agenda we will invest in with Kelly Perera and Christian
had good positions in the areas we people in areas such as sales and Perera, who will continue to play a
are investing in, but we could build marketing, procurement and supply key role in the future of Starr under
those positions over time. And the chain. In addition to the above, we Weston Foods' ownership." MBN
18 / March 17, 2015

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Milling & Baking News - March 17, 2015

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