TORONTO — Against a backdrop of challenging inflationary pressures and costs relating to the company’s transformation program, operating income in the Weston Foods segment of George Weston Ltd. totaled C$10 million ($7.7 million) in the first quarter of fiscal 2018 ended March 24, down 56% from C$23 million in the same period a year ago. Adjusted EBITDA, meanwhile, fell 28% to C$44 million (C$33.9 million) from C$61 million. Sales decreased 4.1% to C$517 million ($399 million) from C$539 million.

Despite the declines in the quarter, Galen G. Weston, chairman and chief executive officer, said the transformation initiative is “on track.”

“Weston Foods is now one business with nine go-to-market categories with a new team that is working well together,” Mr. Weston said during a May 8 conference call with analysts. “Top-line performance for Weston Foods was impacted by higher foreign exchange and product rationalization as part of our transformation plan. I’m happy to report that our previous operational issues have now been rectified in addition to our transformation efforts. We’re focusing on backfilling the lost business due to product rationalization. This replacement volume, however, is taking a bit longer than we anticipated. And we are working hard to fill the capacity and should see tangible improvement in the second half of the year.”

Commenting on the transformation program during the call, Mr. Weston pointed to three areas of progress: new processes, simplification and people.

As part of the company’s new processes, he said Weston has implemented a new sales and operational planning process under which the company is matching its operations planning to sales forecasting on a category basis versus previous forecasting on a business unit basis. The process has resulted in better alignment between supply and demand, he said.

In terms of simplification, Weston has been “dramatically” reducing supply vendors, which has resulted in an improved economy of scale, he said.

Finally, the company is realigning its resources to focus on key growth areas.

“A good example would be our customer versus business unit alignment, which has enabled over 30 U.S. colleagues to now sell artisan and in-store baking products, whereby, previously we had only 5 artisan colleagues in the U.S. covering limited accounts,” Mr. Weston said.

Overall, George Weston posted net earnings of C$180 million, equal to C$1.38 per share on the common stock, up 67% from C$108 million, or C$0.84 per share, a year ago. Sales decreased to C$10,744 million from C$10,803 million.