Canadian company Village Farms announced an increase of 11% in net sales for the nine months ended September 30, 2016. Net sales increased $11,381 to $118,194 compared to $106,813 for the nine months ended September 30, 2015. The increase in net sales is due to an increase in supply partner revenues of 67% over the comparable period in 2015. Company product revenues decreased (3%) for the nine months ended September 30, 2016 versus the nine months ended September 30, 2015 due to lower tomato pounds as a result of crop issues primarily relating to TOV and beefsteak varieties at the Canadian facilities.
"The third quarter results were somewhat challenging. While we continued to deliver on increasing our sales penetration as a result of our increased supply partner capacity, our Canadian asset product margins were adversely impacted by crop issues resulting in a reduction in yields for the quarter, especially on our TOV and beefsteak varieties,” according to Michael DeGiglio, Chief Executive Officer. “While we continued, year over year, to reduce our cost of production as a result of continual improvements in labour and lower energy and fuel charges, our lower yields in the third quarter effectively returned our Canadian cost of sales to 2015 levels solely due to lower production volumes. We have managed through the crop issues which resulted in lower than historical yields.”
Net loss
The net price for all tomato pounds sold increased 3% for the nine months ended September 30, 2016 versus the nine months ended September 30, 2015, which was driven by the increase in the volume of specialty tomatoes sold. Pepper prices were flat while pepper pounds decreased (16%) over the comparable period in 2015 and cucumber prices increased 2% and cucumber pieces increased 19% for the nine months ended September 30, 2016 over the comparable period in 2015.
Over the period the company reports a net loss of $2,436. During the same period a year before the net loss halted at $392. The increased loss is primarily a result of a decrease in the change in biological asset, lower margins on supply partner volumes and higher selling, general and administrative expenses.
Michael DeGiglio stated: "We continue to demonstrate success increasing our market share due to the addition of 65 acres of capacity from our new supply partner in 2016. As a result of this expanded market share in the northeast and southeast U.S., we remain confident for a stronger 2016/2017 winter operating performance. We are excited about the fourth quarter and 2017 as a significant Texas customer has expanded our product lines to adjacent states and one other large retailer is in the process of expanding our product lines to additional west coast distribution centers."
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