George Weston Ltd., a Toronto-based holding company consisting of the Choice Properties Real Estate Investment Trust and Canadian supermarket retailer Loblaw, has reported a decrease in net income for the second quarter. The company's real estate unit experienced higher interest and financing costs, impacting its profitability.
The net income for the second quarter was 498 million Canadian dollars ($377.5 million), or C$3.55 a share, compared to 634 million Canadian dollars, or C$4.32 a share in the same period last year. The decline in net income is attributed to significant changes in Choice Properties' unit price, resulting in net interest expense and other financing charges totaling around C$374 million.
Adjusted earnings, which exclude one-off and nonrecurring costs, improved to C$2.68 a share compared to C$2.23 a share last year. However, this fell short of analyst expectations of C$2.80 a share.
Despite the decline in profit, George Weston reported increased revenue for the second quarter. Revenue climbed to C$13.88 billion from C$12.98 billion, exceeding expectations of a rise to C$13.79 billion. This growth was primarily driven by strong revenue from Loblaw, in which George Weston is the majority owner. Loblaw's revenue for the quarter stood at C$13.74 billion, a 6.7% increase compared to the same period last year.
Choice Properties also experienced revenue growth of 5.4%, reaching C$330 million. This growth can be attributed to higher rental rates and higher capital recoveries.
George Weston Ltd. faced challenges in the second quarter due to increased interest and financing costs in its real estate unit. However, the company still managed to drive revenue growth through its ownership in Loblaw and the performance of Choice Properties. The adjusted earnings, although falling short of expectations, indicate some positive momentum.