Naturally Splendid Enterprises Ltd. (TSX-V:NSP, OTC:NSPDF) has said it will continue to focus on higher-margin products and commercial opportunities for its new plant-based line as it reports financial results for the three months ended March 31, 2022.
"We are continuing to implement our strategic plan focused on plant-based opportunities. The company is evolving the manufacturing capabilities and capacities of our existing certified food manufacturing facility as our product mix shifts to more plant-based entrees and appetizers from bars and bites,” Naturally Splendid CFO George Ragogna said in a statement.
“We have shifted our product mix due in large part to the 10-year Canadian exclusive manufacturing and distribution agreement that we executed with Australia's largest plant-based manufacturer, Flexitarian Foods. This agreement is renewable for a further 10 years.”
READ: Naturally Splendid Enterprises acknowledges receipt of more Plantein plant-based foods from Australia
“Naturally Splendid has also secured licensing rights from Flexitarian Foods for the exclusive use of the Plantein trademark in Canada. With the Plantein trademark now secured, we have completed all retail packaging and websites to support this brand,” Ragogna said.
He added that the company had attended several trade shows recently to promote the launch of the Plantein retail line as well as formed national distribution relationships with Canada's two largest distributors, Sysco Canada and Gordon Food Services.
The plant-based food manufacturing and technology company said the COVID-19 pandemic and the Canadian government’s extensive measures to curb the spread of the virus had affected sales of existing products as well as impaired the launch of new products during the first-quarter reporting period.
Naturally Splendid recorded sales of C$93,453 for the three-months ended March 31, 2022, compared to C$144,143 in the same period a year earlier. Cost of sales was lower at C$54,463 compared to C$221,587 in 2021.
It said sales of its private-label bars and bites business, branded hemp products, and Natera Sport products fell year-over-year during the quarter, but the company recorded sales of about C$50,000 for its new plant-based products.
“This is in line with the company shifting its focus to new plant-based entrees for contract manufacturing, private label and branded products, and will continue to sell to the international Korean market,” the company said.
Gross profit margins increased by 29% of sales in the three months from a year earlier due to higher margins in new plant-based sales.
Net loss and comprehensive loss was C$747,787 for the three months, compared to a loss of C$767,478 a year earlier, while selling and distribution expenses fell by approximately C$35,000 due to lower production costs.
Naturally Splendid has completed the design and begun the re-purposing of its existing certified food manufacturing facility in Pitt Meadows in British Columbia, CFO Ragogna said.
“All manufacturing equipment required to produce our plant-based entrees has been ordered with many significant components of the manufacturing line having already arrived at the Pitt Meadows facility.
“We will continue to receive our plant-based inventories from Flexitarian Foods while the manufacturing lines are still being set up in our own facility. Once the new manufacturing lines in our facility are commissioned, the company will see an almost immediate return by way of reducing product costs and improved inventory control, resulting in an anticipated increase in margins," he added.
Contact the author at jon.hopkins@proactiveinvestors.com