Naturally Splendid Enterprises Ltd (CVE:NSP) (OTCMKTS:NSPDF) saw around a 46% increase in sales in 2019 as the health foods firm continues to expand its bars and bites business, while streamlining other operations.
The group operates a SQF Level 2 certified food manufacturing facility just outside Vancouver, and churns out brands, via its Prosnack subsidiary, like Natera Sport, Natera Hemp Foods, and the Woods Wild bar.
In the year to end December 31, 2019, the company posted sales of C$3,037,512, which was C$964,000 up on the C$2,073,776 recorded in 2018.
READ: Naturally Splendid Enterprises brings in C$1.5 million to spend on its certified food manufacturing facility
Sales for its branded hemp products decreased by around C$588,000 as the group focused more on its new Natera Sport products, where sales expanded by around C$661,000, the firm noted.
The year saw the group's loss widen to C$7,030,070 compared to a loss of C$1,611,361 in 2018, due to increased operating costs such as facility expansion and upgrades and new production employees. The bigger loss was mainly down to the group's sale of POS BPC Manufacturing Corp though, which gave it a gain of C$5,071,223 in 2018.
Craig Goodwin, Naturally Splendid's CEO, noted that last year the firm solidified itself as a "premium food manufacturing facility" even though there had been a number of challenges.
"The company made the decision to bring previous management back into senior roles. In particular I resumed the role as CEO and company co-founder and Bryan Carson increased his role, adding the position of CFO to his duties as vice president of operations," he said in a statement.
"Under this new management, the decision was made to focus on revenue-generating divisions and to suspend or eliminate operations that were not generating significant revenue or had the opportunity to do same in the near term."
Goodwin said the firm had suspended all cannabis extraction and cannabis edible opportunities to direct the focus on the rapidly growing plant-based diet market, while significant investment had been made to the manufacturing facility.
Two revenue streams
Prosnack generates revenue through two diverse revenue streams. Contract manufacturing represents 57% of revenue, while the remaining 43% is attributed to the firm's own brands, noted Goodwin.
In contract manufacturing, Naturally Splendid said it had secured significant clients in both the food service and retail sectors and continues to attract much attention from prospective clients. Due to non-disclosure agreements, several existing contract manufacturing clients, as well as clients with products in development, cannot be disclosed, it added.
Naturally Splendid said there was an increase in gross profit margins in 2019 of C$398,676 comparatively, which was offset by an increase in selling and distribution costs of C$1,086,661 and a decrease in administrative expenses of C$843,284.
The firm is now focused on its higher-margin products and new commercial opportunities, it added.
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