Organto Foods Inc., an integrated provider of organic and value-added organic fruit and vegetable products has announced its financial results for the three and nine month periods ended September 30, 2022. All amounts are expressed in Canadian dollars and in accordance with International Financial Reporting Standards (IFRS), except as noted.
Third Quarter 2022 Operating Results
- Third quarter sales of $4,574,574 versus sales of $4,298,282 in the prior year. Adjusting for the decline in the Euro versus the Canadian dollar, when measured in Euros sales increased by approximately 17%, representing the largest third quarter sales in the history of the Company and thirteenth consecutive quarter of record sales growth versus the same quarter in the prior year.
- Gross profit of $166,126 or 3.7% of sales versus $529,018 or 12.3% of sales in the prior year. When adjusted for the realized gain on derivative assets of $107,038 which is from currency hedging directly related to product purchases, adjusted gross profit(1)was $273,164 or approximately 6.0% of sales.
- Cash overhead costs for the quarter were 35.5% of sales, or approximately 27.0% after adjusting for non-recurring and investment spending, versus costs of 33.6% in the prior year. The increase in costs reflects investments in infrastructure and resources to support current and future growth initiatives which are expected to position the Company for future growth. These costs include expenditures of $385,839 related to retail branded product development and digital transformation activities, acquisition activities and corporate development costs, all of which are expected to generate positive future benefits.
"While the third quarter is traditionally a seasonally slower quarter in our business given the European vacation schedule and availability of locally grown crop alternatives, we achieved record third quarter sales as volumes accelerated in the back half of the quarter. This momentum has carried into the fourth quarter where our October sales were the largest monthly sales in the history of our Company and the impacts of our margin improvement initiatives are taking hold."
"Our third quarter margins were impacted by an extremely challenging macroeconomic environment including the effects of significant cost increases due to rising inflation, the rapid decline of the Euro versus foreign currencies and continued global supply chain challenges. We continue to take actions to address and mitigate these challenges, and remain confident that we are well positioned for growth as we head into the remainder of 2022 and beyond," commented Steve Bromley, Chair and Co-CEO of Organto and Rients van der Wal, Co-CEO of Organto and CEO of Organto Europe B.V.
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