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Jul 28, 2020

George Weston loses $255M in Q2 on COVID-related costs

George Weston bread

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TORONTO -- George Weston Ltd. recorded a $255-million loss in its latest quarter despite boost in revenue as the ongoing COVID-19 pandemic significantly impacted its three operating arms.

"From a financial perspective, our businesses were negatively impacted by COVID-19 during the quarter," said Richard Dufresne, president and chief financial officer, during a conference call with analysts Tuesday morning.

The retail, bakery and real-estate business lost $1.66 per share for the second-quarter ending June 13, according to its financial documents, down from a profit of $1.19 per share or $184 million in the second quarter.

Excluding one-time items, its adjusted net profit decreased 46 per cent to $142 million or 93 cents per share, down from $263 million or $1.70 per share in the prior year.

The Toronto-based company missed expectations, with an estimate of $1.41 per share in adjusted profits on $12.5 billion of revenues, according to financial markets data firm Refinitiv.

While George Weston saw revenue grow from to $12.36 billion from $11.6 billion in the second quarter of the previous year, it also incurred about $312 million in COVID-19 related costs.

Pandemic-related expenses included temporary pay premiums, pay protection safeguards, security, and increased health and safety measures. The extra costs came mainly from Loblaw Companies Ltd. but also from Weston Foods and Choice Properties Real Estate Investment Trust.

However, these costs are easing, Dufresne noted.

"As we experienced recovery in many categories, COVID-19 related costs are also dropping rapidly," he said.

At the company's bakery division, Weston Foods, these costs were about $1 million over the last four weeks, he said, compared to $16 million in the second quarter.

Sales also started to improve. During the second quarter, sales at Weston Foods fell 14 per cent, said Dufresne. Over the last four weeks, they were down five per cent compared to the same time last year.