SunOpta Sees Revenue, Gross Profits Dip in Q2

Private label plant- and fruit-based food and beverage manufacturer SunOpta has released its second quarter financial results, in which revenue declined for both of its business segments.

For the period ended July 1, revenue was $207.8 million compared to $222.2 million (excluding its divested sunflower business) in Q2 2022, or $243.5 million including sunflower.

Excluding the impact of the sunflower business, total revenues were down 6.5%, an 8.1% decline in plant-based and a 4.4% decline in fruit-based. The plant-based foods and beverages segment generated revenues of $114.5 million, while fruit-based foods and beverages segment generated revenues of $93.3 million in the quarter.

In Q2, SunOpta reported a net loss of $18.8 million, including a tax expense of $8.8 million and $2.5 million of net expense related to a recent frozen fruit recall. Gross profit in the fruit-based foods and beverages segment was $2.0 million, compared with $11.0 million in the prior year period, while gross profit in the plant-based foods and beverages segment decreased 39.8% to $14.4 million. Gross profit margin was 7.9% on a reported basis. Excluding start-up and product recall costs, gross margin was 12.1%, down 230 basis points from 14.4%.

“While we were certainly not pleased with the quarter, the resiliency of our model to deliver high rates of profitability despite a more challenging environment was a key takeaway from our latest results,” said Joe Ennen, CEO of SunOpta. “Due to frozen fruit customer losses, slower ramp-up of new business, and current category softness, we are tempering our outlook for 2023. Demand for our oat-based offerings remains exceptionally strong, as volume growth drove a 59% increase in oat milk sales during the second quarter. Our fruit snack business also delivered another quarter of double-digit increases.”

Despite a disappointing quarter, Ennen said that SunOpta is well-positioned for future growth given the sustained demand for plant-based items.

“In addition, we continue to make steady progress on our strategic growth initiatives including starting up our new ready-to-drink protein shake line in Midlothian, Texas and our capacity expansion project in Omak, Wash,” he said. “Despite the short-term results, we remain committed to our long-term growth algorithm, and are well positioned for significant growth in our plant-based segment as we leverage our operational expertise and innovation across our expanding capabilities and production capacity to Fuel the Future of Food.”