Sun-Rype Reports Q2 2012 Financial Results

TSX:  SRF

KELOWNA, BC, Aug. 9, 2012 /CNW/ - Sun-Rype Products Ltd. (TSX:SRF) ("Sun-Rype" or the "Company") today released its financial results for the quarter and two quarters ended June 30, 2012.

Financial Highlights

Sun-Rype's net sales in the second quarter of 2012 were $38.1 million compared to $35.9 million in the second quarter of 2011. The Company's net income in the second quarter of 2012 was $16,000 or $0.00 per share, compared to a net loss of $1.4 million or $0.13 per share in the second quarter of 2011.

The Company's net sales in the first two quarters of 2012 were $77.1 million compared to $71.4 million in the first two quarters of 2011. The Company's net income in the first two quarters of 2012 was $1.5 million or $0.13 per share, compared to a net loss of $1.0 million or $0.09 per share in the first two quarters of 2011.

"The increase in gross profit from higher sales, together with lower operating expenses, increased results from operating activities in the second quarter of 2012 by $2.3 million and increased net income by $1.5 million, compared to the second quarter of 2011," commented Dave McAnerney, President & CEO. "Results from operating activities in the first two quarters of 2012 increased by $3.7 million and net income increased by $2.5 million, compared to the first two quarters of 2011."

The increase in Sun-Rype's net sales in 2012 is primarily due to a 2011 business acquisition, and in the first two quarters of 2012, due to the impact of a one week longer reporting period. 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 $3.4 million in the second quarter of 2012, and $5.3 million in the first two quarters of 2012.  There are no sales from the Naumes acquisition in the comparable periods of 2011.

Sun-Rype's quarterly reporting dates reflect business activity ending on the last Saturday of June. Due to a shift in the calendar, the reporting period for the first two quarters of 2012 was one week longer than the first two quarters 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 two quarters of 2012 resulted in $2.8 million higher net sales than in the first two quarters of 2011.

Outlook

Despite reporting net income in the first two quarters 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 apples and certain concentrates which escalated in 2011 to record and near record levels are expected to remain at elevated levels through 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 (Loss) (Unaudited) (in thousands of Canadian dollars, except per share amounts)
				For the quarters ended								For the two quarters ended
					June 30, 2012				June 25, 2011				June 30, 2012				June 25, 2011
Net sales				$	38,109			$	35,937			$	77,130			$	71,437
Cost of sales					(31,737)				(30,946)				(63,264)				(59,111)
Gross profit					6,372				4,991				13,866				12,326
Sales and marketing expenses					(2,997)				(4,116)				(5,096)				(7,451)
Distribution expenses					(1,776)				(1,759)				(3,701)				(3,811)
General and administrative expenses					(1,415)				(1,185)				(2,706)				(2,409)
Results from operating activities					184				(2,069)				2,363				(1,345)
Finance costs					(174)				(61)				(403)				(214)
Income (loss) before income tax					10				(2,130)				1,960				(1,559)
Income tax recovery (expense)					6				693				(503)				538
Net income (loss) for the period					16				(1,437)				1,457				(1,021)
Other comprehensive income
Foreign currency translation differences for foreign operations					16				-				2				-
Total comprehensive income (loss) for the period				$	32			$	(1,437)			$	1,459			$	(1,021)
Basic and diluted earnings (loss) per share				$	0.00			$	(0.13)			$	0.13			$	(0.09)

 

SOURCE: Sun-Rype Products Ltd.

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