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March 2, 2016

SunOpta FY bottom line hit by “unfortunate operational events”

SunOpta has recorded a loss for the year after the Canadian group's results were littered with one-time charges and higher costs.

SunOpta has recorded a loss for the year after the Canadian group’s results were littered with one-time charges and higher costs

Significantly higher interest expenses in the year saw a loss from continuing operations of US$3m, compared to US$19.3m a year earlier. Canada-based SunOpta publishes its results in US dollars.

Operating income for fiscal 2015 was US$21.3m compared to US$41.7m, impacted by commodity prices, foreign exchange rates, acquired businesses and product rationalisations. Excluding the unusual items, operating income would have been approximately US$37.1m.

Sales for the year were however higher at US$1.1bn from US$1bn.

The impact on the full-year results was largely due to a fourth quarter when an operating loss of US$1.7m was made compared to a profit of US$4.2m. Management said the loss came from “a number of items that the company believes are not reflective of normal operations”.

During the quarter the company recorded reserves for inventory in addition to realising low-margin sales in an effort to reduce inventory exposures which cost US$2.4m.

SunOpta incurred US$2.2m of costs due primarily to downtime and spoilage stemming from an equipment failure at the Allentown pouch facility, a further US$0.2m of costs as a result of a non-recurring logistical issue reported in the third quarter, and also recognised US$4m in higher costs as a result of the acquisition accounting adjustment related to the Sunrise’s inventory sold subsequent to the acquisition date.

The company also booked US$1.9m in expansion and start-up costs related to the east coast aseptic and premium juice facilities, and recognised a benefit from the reversal of stock-based compensation which was mostly offset by costs associated with ongoing litigation. 

Excluding these items, operating income during the fourth quarter would have been approximately US$8.8m.

The firm made a loss from continuing operations in the fourth quarter of US$13.6m compared to an income of US$5.1m.

Sales for the quarter did however increase 26.3% to US$316.4m.

“Our fourth-quarter results were impacted by a number of one-time charges and unfortunate operational events, but we are confident the issues have been addressed and should not impact our overall targets for 2016,” said Rik Jacobs, president and CEO of SunOpta.

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