Canada Bread, 90%, owned by Maple Leaf, saw its profits decline 48% to $8.8m.
Its parent company Maple Leaf also saw profits tumble 20% to $40.5m.
Fresh bakery decline
Michael H. McCain, Maple Leaf president and CEO said: "Our first quarter results were challenged, as expected, due primarily to weak fresh bakery volumes; an issue is affecting the entire industry."
"We are addressing this challenge directly and expect improved results through the remainder of 2012,” he said.
Sales for both businesses were essentially flat as the companies rose prices to offset the weakening volumes.
Canada Bread closed two bakeries in Toronto during the quarter and plans to close another in the area in early 2013 as it plans to consolidate operations at its new fresh bakery in Hamilton, Ontario.
Last year, the company closed a bakery in Walsall, UK as it made a strategic exit from unprofitable fresh and in store bakery in the UK market. It now has three UK facilities focused on bagels, croissants and speciality breads.
Positives in frozen bakery
In spite of the declining volumes in fresh bakery, Maple Leaf and Canada Bread still have reason to be optimistic about another category that has experienced growth.
Frozen bakery sales for Canada Bread were up 5% to $116.7m driven by higher sales volumes in the US and UK.
Operating profit in this segment was also up by almost 16% to $1.5m helped by growth in the UK bagel category and the North American foodservice channel.