TORONTO — SunOpta, Inc. will continue to invest in its plant-based foods and beverages segment as the Toronto-based company seeks to return to profitability.

SunOpta recorded a loss of $1.6 million attributable to common shareholders in the second quarter ended June 27, which compared with a loss of $11.1 million in the previous year’s second quarter. Revenue increased 6% to $310.9 million from $293 million in the previous year’s second quarter.

SunOpta’s stock on the Nasdaq closed at $6.57 per share on Aug. 5, the day the company gave second-quarter results, which compared with a close of $7.16 per share on Aug. 4.

SunOpta’s plant-based foods and beverage segment had revenues of $91.7 million in the quarter, a 12% increase compared with $81.9 million in the previous year’s second quarter. Higher volumes in aseptic beverages, broth offerings and ingredient extraction were offset partially by reduced sales volumes of plant-based beverage products to foodservice customers as a result of COVID-19.

“Our plant-based business unit is firing on all cylinders and once again exceeded our own internal forecast and is driving significant revenue and margin growth,” said Joseph D. Ennen, chief executive officer, in an Aug. 5 earnings call. “Despite the impact of COVID-19, the diverse customer base we have built across the platform is demonstrating our ability to operate and drive strong financial performance in any environment. We have a robust business development pipeline to support growth in 2021 and beyond, and we are excited about our well-timed capacity expansion projects.”

He said capital projects to expand extraction capabilities are progressing as are two expansion projects to increase capacity and capabilities across the company’s national footprint.

“We continue to expect all three of these projects to come online in the fourth quarter of this year, providing the capacity for significant future growth,” Mr. Ennen said. “We are particularly excited about the timing of our extraction capabilities, which expands our capacity fourfold to support the strong growth of oat milk, a category growing over 300%. When fully utilized, these three capital projects have the potential to provide $100 million of additional revenue.”

Mr. Ennen pointed to five factors driving plant-based growth: sustainability, animal welfare, food allergies, taste preference with examples being oat milk alternatives and almond milk alternatives, and health benefits.

In SunOpta’s global ingredients segment, second-quarter revenues increased 4.7% to $126.5 million from $120.9 million. Higher volumes came in certain organic ingredient product categories and premium juice products.

In the fruit-based foods and beverages segment, second-quarter revenues increased 2.8% to $92.7 million from $90.2 million. Increased retail volumes and pricing for frozen fruit were offset partially by lower demand for frozen fruit and fruit preparations from foodservice customers as a result of COVID-19.

Mr. Ennen said the California harvest of fruit for the frozen segment is coming in lower than expected.

“COVID-19 has produced a change in consumer purchasing patterns, and the retail demand for fresh strawberry is significantly higher than normal,” he said. “This demand is (incentivizing) growers to keep harvesting for fresh versus switching over to freezer. Our estimate is that the season will come in 15% to 20% below historical norms.

“Strong fresh demand combined with last year’s shortfall has had inflationary pressures on the prices we are paying for fruit. While the harvest is not what we had hoped for, the efforts we undertook in 2019 to reduce volatility and exposure to California have paid dividends.”

Mr. Ennen said the company is talking to customers in cases where SunOpta has the ability to adjust prices and looks to make those adjustments in the second half of 2020 and into 2021.

Companywide for the first half of 2020, SunOpta sustained a loss of $261,000 attributable to common shareholders, which compared with net earnings of $12.6 million, or 14¢ per share on the common stock, in the same time of the previous year. First-half revenues jumped 8% to $646.9 million from $598.3 million.



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