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Canada Bread to shut Quebec cake bakery

Another of Canada Bread's sweet goods bakeries is poised to close this year on a drop in demand for snack cakes.

The Toronto company, 90 per cent owned by Maple Leaf Foods, announced Tuesday it will shut its bakery at Shawinigan, Que. effective May 3, affecting 74 employees.

"We have experienced a significant decline in consumer demand for snack cakes in recent years," Canada Bread CEO Richard Lan said in a release Tuesday. The Shawinigan facility makes Chevalier, Cadbury and Obsession snack cakes.

The company is reviewing ways to expand the category, which could allow the company to use the plant to make other products, but in the meantime, "based on declining capacity utilization we have no alternative but to close the facility," Lan said.

Two other Canada Bread bakeries have already been booked to close this year. The company announced at the end of January it will close its bakery at Grand Falls, N.B., which made cake products, other sweet goods and English muffins, effective June 28.

An Edmonton bakery making raisin and garlic breads and foodservice products was also slated in late January to close at the end of March.

A Canada Bread facility making frozen breads and rolls at Laval, Que. was closed in 2011, as was a fresh bakery making pantry breads, rolls and other goods at Delta, B.C. The company that year also sold off its fresh prepared sandwich business to Vancouver processor Premium Brands.

Canada Bread in late February booked net earnings of $74.2 million on $1.567 billion in sales for fiscal 2012, up from $51.95 million on $1.595 billion in 2011.

Factoring in the sale of the sandwich product line, 2012 sales were down 2.1 per cent on lower volumes both in Canada Bread's fresh bread and fresh pasta businesses, partly offset by price increases put in place during 2011 in the fresh bread business, the company said.

Lan said the company, whose fresh bakery division operates seven other plants in Quebec, is "committed to supporting (the Shawinigan staff's) transition to new employment."

Costs tied to the Shawinigan closure are expected to run to about $3.1 million in fiscal 2013 before tax, including severance, decommissioning and asset write-downs. Of that, $1.6 million is expected to represent cash expenses, the company said.

Related story:
Maple Leaf Foods profit jumps as charges drop,
Feb. 26, 2013



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