ETOBICOKE, Ontario -- Oshawa Group here reported increased sales and earnings for the third quarter and 40 weeks ended Oct. 29. Net income rose 15.1% to $7.9 million U.S. (based on an exchange rate of $1.36 Canadian equals $1 U.S.) for the 12-week quarter and 14.9% to $29.4 million for the 40 weeks. 7 Sales increased 4.1% to $1.02 billion for the quarter and 4.4% to $3.4 billion for the 40 weeks. Food distribution sales -- exclusive of revenue from Oshawa's drug stores and real estate division -- rose 4.6% to $948.5 million for the quarter and 5% to $3.1 billion for the 40 weeks. Allister P. Graham, chairman and chief executive officer, said food distribution earnings for the quarter matched those of the same period last year, with strong results in the company's eastern and western regions "due to the continuing successful integration of acquisitions made in fiscal 1993 and operational refinements in Atlantic Canada." "However, these improvements were partially offset by lower margins from price competition in the central (Ontario-Quebec) region and recurring retail price pressure in the western region." Analysts said pressure on Oshawa in the central region is coming from A&P's Miracle Mart and in the western region from Safeway and Loblaw Cos. Graham also said that costs in the central region associated with preparing for and resolving a potential retail labor dispute reduced results for the quarter. Following negotiations, Oshawa reached a new collective bargaining agreement with clerks in the region that includes a freeze on full-time wage rates and a rollback of part-time wage rates effective in March. Marilyn Brophy, a Toronto-based securities analyst with Levesque Beaubien Geoffrion, Montreal, said although Oshawa's margins on EBITDA (earnings before interest, taxes, depreciation and amortization) have been improving, they were still the lowest among Canada's five major publicly held food companies (Metro-Richelieu, 3.97%; Loblaw, 3.82%; Empire Co., 3.76%; Provigo, 2.84%, and Oshawa, 2.57%). "That's probably due to the fact that Oshawa has a number of stores that need to be renovated to get better sales," Brophy said.
