Naturally Splendid Enterprises Ltd (CVE:NSP) (OTCMKTS:NSPDF), the plant-based food manufacturer, posted what it called satisfactory first-quarter numbers as it worked through the challenges of the coronavirus (COVID-19) pandemic and continues to optimize operations.
The group runs a SQF Level 2 certified food manufacturing facility near Vancouver, and churns out brands, via its Prosnack subsidiary, such as Natera Sport, Natera Hemp Foods, and the Woods Wild bar.
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Naturally Splendid recorded sales in the first quarter of C$720,255, compared to C$772,803 in the same quarter of 2019. The sales mix was different compared to last year with an increase of export bulk seed sales, which sold at a lower gross margin.
The group said it saw decreased sales in its private-label bars and bites business of around C$16,000, while branded products recorded virtually the same figure.
Sales remained relatively stable in branded hemp products, showing a decrease of around C$29,000, while the new Natera Sport products remained stable recording a slight decrease by approximately C$8,200, it added.
For the three months to March 31, 2020, the company posted a net loss of C$1.32 million, versus a loss of C$1.1 million in the same quarter of 2019.
The increased deficit was put down to factors including the additional production employees and quality assurance costs needed for SQF2 certification compared to the same period last year, along with increased costs in developing strategic plans as COVID-19 began to take hold in North America, the company said.
"Quite obviously, prior to the pandemic, our expectations for Q1 were set considerably higher," Naturally Splendid CEO Craig Goodwin noted in the results statement, adding that he was proud of the efficient transition made to the factory and operating procedures amid the challenges.
"We are seeing many of our contract manufacturing clients begin to recover sales as well," he said.
"Covid-19 appears to be accelerating the growth trend for plant-based nutrition even though this category was already outperforming practically every other retail market food category. We will continue to focus our resources and capital in this rapidly growing category and look forward to bringing on new opportunities in a timely manner."
Naturally Splendid is focused on private label and branded sales and re-establishing its presence in international markets such as the US and Korean markets.
"The company is continuing to focus on plant-based nutritional products while resuming exporting bulk hemp seed to South Korea," the group told investors.
"Market opportunities for NSE will continue to include both domestic and international destinations. Additionally, Prosnack Natural Foods Inc has been proactively securing new private label clients," it added
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