TORONTO - George Weston Limited (TSX: WN) ('GWL' or the 'Company') today announced its consolidated unaudited results for the 12 weeks ended June 19, 2021.
GWL's 2021 Second Quarter Report has been filed on SEDAR and is available at sedar.com and in the Investor Centre section of the Company's website at weston.ca.
'We are pleased with the performance of our businesses as they lapped the most difficult quarter of the pandemic, with each delivering operational and financial improvements.' said Galen G. Weston, Chairman and Chief Executive Officer, George Weston Limited. 'As economies continue to reopen in the second half of the year, our businesses are well-positioned to execute on their plans.'
Loblaw Companies Limited ('Loblaw') delivered strong financial performance in the second quarter of 2021. Revenue growth continued despite lapping the unprecedented demand in the previous year from stockpiling by consumers at the start of COVID-19. Consolidated gross margin improved significantly, reflecting a heightened focus on the core retail business, including promotional effectiveness and cost controls. Loblaw maintained its focus on delivering value and quality to its customers in a safe shopping environment and is well-positioned to meet the evolving needs of customers as pandemic restrictions lift and economies re-open.
Choice Properties Real Estate Investment Trust ('Choice Properties') generated solid results in the second quarter of 2021, collecting 98% of contractual rents despite continued regional lockdowns across Canada. Choice Properties continued to advance its development initiatives, drive meaningful net asset value appreciation and improve its balance sheet. Net asset value per unit increased by 3.6% driven primarily by gains from the industrial portfolio, 149,000 square feet of new gross leasable area was transferred to income-producing assets, and Choice Properties lowered its leverage ratio through the early repayment of $200 million of debentures.
Weston Foods delivered much improved financial results in the second quarter of 2021 compared to the same quarter in 2020. Sales grew in foodservice and retail as government-mandated lockdowns were lifted in many regions of Canada and the United States. In addition to the increase in sales, lower pandemic-related costs and continued productivity improvements contributed to the year-over-year earnings growth. In the second quarter, Weston Foods was faced with higher-than-expected input, labour and distribution costs. The higher costs, together with labour availability challenges, negatively impacted sales and earnings. These factors were primarily the result of a surge in global demand for consumer goods as economies began to reopen following the lifting of many lockdown restrictions. Weston Foods has taken steps, including pricing, to help mitigate the impact of cost inflation, and expects the labour availability challenges will ease over time. The business is well-positioned to meet the increasing demand from its customers and continue to offer superior products and services.
2021 SECOND QUARTER HIGHLIGHTS
George Weston Limited's net earnings available to common shareholders of the Company were $108 million ($0.70 per common share) an increase of $363 million ($2.36 per common share) when compared to the same period in 2020. The increase was due to the favourable year-over-year net impact of adjusting items totaling $230 million ($1.49 per common share), which was primarily due to the favourable year-over-year impact of the fair value adjustment on investment properties of $203 million ($1.33 per common share) at Choice Properties, net of consolidation adjustments in Other and Intersegment, and an improvement of $133 million ($0.87 per common share) in the Company's consolidated underlying operating performance.
Adjusted net earnings available to common shareholders of the Company(1) in the second quarter of 2021 were $272 million ($1.78 per common share). In comparison to the same period in 2020, this represented an increase of $133 million ($0.87 per common share), or 95.7%, primarily due to the improvement in the underlying operating performance of Loblaw, Choice Properties and Weston Foods. The increase in adjusted diluted net earnings per common share(1) of $0.87, or 95.6%, was due to the performance in adjusted net earnings available to common shareholders(1) and the favourable impact of share repurchases.
CONSOLIDATED RESULTS OF OPERATIONS
The Company's results reflect the impact of COVID-19 and the year-over-year impact of the fair value adjustment of the Trust Unit liability as a result of the significant changes in Choice Properties' unit price, recorded in net interest expense and other financing charges. The Company's results are impacted by market price fluctuations of Choice Properties' Trust Units on the basis that the Trust Units held by unitholders, other than the Company, are redeemable for cash at the option of the holder and are presented as a liability on the Company's consolidated balance sheet. The Company's financial results are negatively impacted when the Trust Unit price rises and positively impacted when the Trust Unit price declines.
In the second quarter of 2021, the Company recorded net earnings available to common shareholders of the Company of $108 million ($0.70 per common share), an increase of $363 million ($2.36 per common share) compared to the same period in 2020. The increase was due to the favourable year-over-year net impact of adjusting items totaling $230 million ($1.49 per common share), and an improvement of $133 million ($0.87 per common share) in the consolidated underlying operating performance of the Company described below.
The favourable year-over-year net impact of adjusting items totaling $230 million ($1.49 per common share) was due to: the favourable year-over-year impact of the fair value adjustment on investment properties of $203 million ($1.33 per common share) primarily driven by Choice Properties, net of consolidation adjustments in Other and Intersegment and the favourable year-over-year impact of the fair value adjustment of the Trust Unit liability of $69 million ($0.44 per common share) as a result of the increase in Choice Properties' unit price in the second quarter of 2021; partially offset by, the unfavourable year-over-year impact of the fair value adjustment of the forward sale agreement of Loblaw common shares of $52 million ($0.34 per common share).
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this News Release include, but are not limited to, statements with respect to the Company's anticipated future results, events and plans, strategic initiatives and restructuring, regulatory changes including further healthcare reform, future liquidity, planned capital investments, and the status and impact of IT systems implementations. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the 'Outlook' section of this News Release. Forward-looking statements are typically identified by words such as 'expect', 'anticipate', 'believe', 'foresee', 'could', 'estimate', 'goal', 'intend', 'plan', 'seek', 'strive', 'will', 'may', 'should' and similar expressions, as they relate to the Company and its management.
Forward-looking statements reflect the Company's estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's expectation of operating and financial performance in 2021 is based on certain assumptions, including assumptions about the COVID-19 pandemic, healthcare reform impacts, anticipated cost savings and operating efficiencies and anticipated benefits from strategic initiatives. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events, including the COVID-19 pandemic and as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct.
Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in 'Enterprise Risks and Risk Management' section, of the MD&A in the Company's 2020 Annual Report and the Company's Annual Information Form for the year ended December 31, 2020.
Contact:
Mr. Roy MacDonald
Email: investor@weston.ca
GEORGE WESTON LIMITED 
