SunOpta to Close California Juice Processing Plant as Reports Q3 Loss
11 Nov 2016 --- SunOpta is to close its juice processing and packaging plant in San Bernardino, California, following a strategic review of the business, as the Canadian organic food group reports a $3.4m loss in the quarter.
SunOpta said that closing the juice processing and packaging plant would lead to at least $4m of ebitda (earnings before interest, tax depreciation and amortisation) a year, which would be inked into the company's balance sheet by the first quarter of 2017.
It is unclear at this stage how many staff work at the plant or whether they would lose their jobs because of the closure.
Juice processing is a key part of SunOpta's business. In 2011, it acquired San Bernardino-based Lorton's Fresh Squeezed Juice for $2.5m, expanding its business into the processing and packing of citrus based ingredients.
The closure follows SunOpta’s wide-ranging review of its operations, management and governance, aided by Oaktree Capital Management, the food investment vehicle which has invested $85 in SunOpta in exchange for a stake in the company.
The $85m funding was used to pay off debt and follows a plea from its largest shareholder Tourbillon Capital Partners for SunOpta to sell itself owing to its anxiety about SunOpta's financial performance.
Katrina L. Houde, interim CEO of SunOpta said: “The due diligence that Oaktree undertook was extensive and allowed them to immediately bring forward recommendations for a value creation framework that will drive more reliable results, reshape our operating platform to focus our product portfolio and marketing support resources, and allow us to truly instill a system and culture of operational excellence that is achievable and sustainable over the long-term.”
SunOpta said the review has also led to “significant savings opportunities” in procurement and logistics and that it would work with third parties to cut costs.
In its Q3 results, SunOpta, which specializes in organic GMO-free and speciality foods, reported a loss of $3.4m, compared to a loss of $0.2m the year previous. Revenues were up 26 percent on the year to $348.7m.
Across its Global Ingredients division, revenues were $137m, down 8.9 percent on the year amid lower crop input sales.
Across its Consumer Products division, revenues were $211.6m, up 67 percent on the previous year, helped by increased sales of individual quick frozen (IQF) fruits.
Houde added: “There is broad recognition that SunOpta is a unique company with quality products and a number of competitive advantages that can be fully developed.”
“While we have known that focus and execution were paramount to success, working with Oaktree has allowed the company to immediately address several legacy issues, identify opportunities to drive margin expansion, invest in ways that augment revenue growth, all while continuing to innovate and pursue the highest of quality control standards.”
