The Canadian natural ingredients company has reported earnings of US$1.486m for the first three months of 2008, compared to $1.055m for the same period in 2007.
The first quarter results include $1.368m in professional fees because of the company's “investigation and related activities” into the write-down in the SunOpta Fruit Group Berry Operations. This resulted in a delay filing its 2007 annual report.
The company said that without these professional fees, adjusted earnings for the quarter would have been $2.423m, representing an increase in earnings of approximately 130 percent compared to the first quarter of 2007.
There was also a segment operating loss of $3,974,000 incurred within its berry operations. SunOpta said that without the impact of this and the professional fees, 2008 adjusted earnings would have been $4.847m, an increase of approximately 59 percent from $3.041m in 2007.
SunOpta had hefty pre-tax write-downs after it over-valued its berry stocks and it had delayed filing its 2007 results pending the outcome of the internal investigation.
Last week it finally announced its 2007 results with earnings of $407,000 for the year, compared to nearly $11m in 2006.
However, there was strong growth as revenues increased 34.5 percent to $804m in 2007, compared to revenues of $598m the previous year.
First quarter operating income
SunOpta has now reported that operating income (EBIT) for the first quarter of 2008 increased by 41.2 percent to $5.398m, compared to $3.822m in Q1 2007. Increases were offset by operating losses in the combined BioProcess & Corporate segment.
The SunOpta Food Group reported segment operating income of $6.228m compared with $3.781m the previous year. It was driven by strong results in the SunOpta Grains and Foods Group which realized an 86.9 percent increase in segment operating income. This was “due to strong sales and margins of non-GMO and organic grains and grains based ingredients and continued growth in packaged soymilk products”.
The SunOpta Ingredients Group also realized an increase in segment operating income of 45.4 percent, or $318,000, due in most part to stable revenues and margins offset by reduced administrative costs.
Steve Bromley, president and chief executive officer of SunOpta said, "The completion of our 2007 year end and related internal investigation precipitated the delay in the filing of our first quarter 2008 financial results.
“The results of the first quarter reflect strong growth and operating earnings in the company's core operations and incorporate the impact of the turnaround efforts in the Berry Operations and the costs to date of the Company's independent investigation.”
The company is the subject of class action lawsuits, including one action filed by New York-based law firm Murray, Frank & Sailer. This alleges that stockholders in SunOpta who bought their shares during the period August 8, 2007 through January 25, 2008, were misled by the company about its financial performance.
It claims that SunOpta and certain of its officers and directors "failed to disclose that SunOpta lacked adequate internal controls, improperly overstated SunOpta's earnings… and materially misrepresented that SunOpta's financial results were prepared in accordance with Generally Accepted Accounting Principles".
Another class action, filed on February 13 by Kaplan Fox & Kilsheimer, also of New York, adds that "the company shocked investors when it reported its anticipated financial results for 2007, disclosing for the first time that it expected to incur material write-downs and provisions in the range of $12m to $14m".
SunOpta believes the class action claims "are without merit and intends to vigorously defend itself".