Sun-Rype Reports Q1 2012 Financial Results

TSX: SRF

KELOWNA, BC, May 10, 2012 /CNW/ - Sun-Rype Products Ltd. (TSX:SRF) ("Sun-Rype" or the "Company") today released its financial results for the quarter ended March 31, 2012.

Financial Highlights

Sun-Rype's net sales in the first quarter of 2012 were $39.0 million compared to $35.5 million in the first quarter of 2011. The Company's net income in the first quarter of 2012 was $1.4 million or $0.13 per share, compared to net income of $0.4 million or $0.04 per share in the first quarter of 2011.

In the third quarter of 2011, the Company acquired the business and assets of Naumes Concentrates, Inc. (the "Naumes acquisition"). This acquired business recorded net sales of $1.9 million in the first quarter of 2012.  There are no sales from the Naumes acquisition in the comparable first quarter of 2011.

Sun-Rype's first quarter reporting reflects business activity ending on the last Saturday of March. As a result of a shift in the calendar, the first quarter of 2012 was one week longer than the first quarter of 2011, and correspondingly the fourth quarter of 2012 will be one week shorter than the fourth quarter of 2011. Management estimates that the additional week of business activity in the first quarter of 2012 resulted in $2.8 million higher net sales than in the first quarter of 2011.

"The increase in Sun-Rype's net sales in the first quarter of 2012 was due primarily to the impact of a one week longer quarterly reporting period and the 2011 business acquisition", commented Dave McAnerney, President & CEO. "Higher gross profit resulting from higher net sales combined with lower operating expenses, in particular sales and marketing expenditures, resulted in higher operating income and net income in the first quarter of 2012 compared to the first quarter of 2011. Increased interest costs incurred on debt, including advances to fund business acquisitions made by the Company in 2010 and 2011, impacted net income in the first quarter of 2012."

Outlook

Despite reporting net income in the first quarter of 2012 after three previous quarters of reported losses, the Company is facing continuing challenges. Market data indicates that sales in the shelf-stable juice category, in which the Company derives approximately 60% of its net sales, are in decline. It is unclear whether these declines are permanent. The Company is continuing to focus on launching innovative products and broadening geographic distribution of its products. The strong competitive pressures experienced on branded products in 2011 are anticipated to continue in 2012.

Prices of certain concentrates which escalated in 2011 to record and near record levels are expected to remain at elevated levels through 2012. Prices of apples are also expected to remain at elevated levels in 2012.

The Company has announced plans for new product launches to its customers. There is no certainty that the incremental sales from these new products will exceed associated product and launch costs in 2012.

A significant improvement in profitability over 2011 is not anticipated in 2012 without material reductions in the costs of key raw material inputs.

Sun-Rype Products Ltd., based in Kelowna, BC, is a manufacturer and marketer of fruit-based juices and snacks.  Sun-Rype is a publicly traded Canadian company with its common shares listed on the Toronto Stock Exchange under the symbol SRF.

Additional Information

The foregoing are financial highlights only. Management's Discussion and Analysis and consolidated financial statements and accompanying notes of Sun-Rype Products Ltd. for the year ended December 31, 2011, are available on the Canadian Securities Administrator's website at www.sedar.com and on the Company's website at www.sunrype.com.  Additional information relating to Sun-Rype's operations can be found in the Company's Annual Information Form, filed with all applicable Canadian securities commissions and available for viewing on the Canadian Securities Administrator's website at www.sedar.com and on the Company's website at www.sunrype.com.

Forward Looking Statements

Statements contained in this press release, which are not based on historical fact, including without limitation, statements containing the words "may", "will", "plans", "intends", "expects", "anticipates", "believes", "estimate", "continue" and similar expressions, constitute "forward looking information" within the meaning of applicable Canadian securities laws.  Forward looking statements contained in this document may involve, but are not limited to, statements relating to the Company's objectives, priorities, strategies, actions, targets, expectations and outlook.  Forward looking statements are necessarily based upon assumptions and predictions with respect to the future, including but not limited to the factors referred to below.  As a result, forward looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied thereby.  These risks, uncertainties and other factors include, but are not limited to, changes in the consumer packaged goods industry and external market factors, as well as the factors referred to in the Company's Annual Information Form dated March 7, 2012, and its other filings with the applicable Canadian securities regulatory authorities.  In light of these uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward looking statements.  Except as required by law, the Company assumes no obligation to update or revise such information to reflect later events or developments.

Sun-Rype Products Ltd. Condensed Consolidated Statements of Comprehensive Income (unaudited) (in thousands of Canadian dollars, except per share amounts)
		For the quarters ended
		March 31, 2012		March 26, 2011
Net sales		$	39,021	$	35,499
	Cost of sales		(31,527)		(28,165)
Gross profit
			7,494		7,334
	Sales and marketing expenses		(2,099)		(3,335)
	Distribution expenses		(1,925)		(2,052)
	General and administrative expenses		(1,291)		(1,213)
Results from operating activities			2,179		734
	Finance costs		(229)		(163)
Income before income tax			1,950		571
	Income tax expense		(509)		(155)
Net income for the period			1,441		416
Other comprehensive income
	Foreign currency translation differences for foreign operations		(14)		-
Total comprehensive income for the period		$	1,427	$	416
Basic and diluted earnings per share		$	0.13	$	0.04

 

Don VanderZwaag, CA
Vice President, Finance & CFO
Sun-Rype Products Ltd.
1165 Ethel Street
Kelowna, BC  V1Y 2W4
Tel:  [phone]
Fax: [phone]
[email protected]\ 

or

Dave McAnerney
President & Chief Executive Officer
Sun-Rype Products Ltd.
1165 Ethel Street
Kelowna, BC  V1Y 2W4
Tel: [phone]
Fax: [phone]
[email protected]

www.sunrype.com