The value creation plan follows a month-long review of the company’s operations, management and governance.
The review has led to a shake-up in management of the company, with Rik Jacobs, president and chief executive officer, and Alan Murray, chairman of the board, announcing they will step down from their respective positions effective Nov. 11. Katrina L. Houde, a SunOpta director, has been named interim CEO and Dean Hollis, another director, has been appointed chairman of the board.
In a Nov. 9 conference call to discuss third-quarter results, it was Houde who laid out the company’s four-pillar plan.
The first pillar is portfolio optimization.
“We continue to review our product offerings and our focus on simplifying our portfolio,” she said. “We will invest in areas where we have structural advantage and will assess the impact of exiting product lines where SunOpta is not or cannot be effectively positioned.”
The second pillar is operational excellence.
“We are committed to ensure food safety and improve in our quality performance in all areas of our business and this always has to be our first priority,” Houde said. “Beyond that, we need to maintain our reliability and responsiveness to ensure we have satisfied customers. At the same time we have identified significant savings opportunities in both procurement and logistics.”
For its third pillar, SunOpta will focus on go-to-market effectiveness.
“In order to increase top- and bottom-line growth we need to optimize our customer and product mix in existing channels while also penetrating new channels that have high potential to add revenue and margin,” she said.
The fourth and final pillar is process sustainability
“This is probably one of the most important areas as it will set the standards for all operations, guide our culture and motivate our people to find ways to constantly improve SunOpta,” Houde said. “It is about further inventing critical business process and implementing best in class tools in operations, finance and sales.”
While Houde indicated that specifics of the value creation plan remain in the early stages, she did point to several near-term actions that have been taken to drive results.
“Within portfolio optimization we have initiated the closure of the facility in San Bernardino, California, U.S., and moving to an entirely co-pack business model,” she explained. “This decision is expected to generate at least $4 million of annual EBITDA improvement.
“In the operational excellence pillar, we are engaging third-party support across the supply chain to help us capture a significant savings while also further enhancing food safety and quality. We will centralize non-grower related procurement and logistics and drive supply chain excellence, strategic sourcing and product design to cost.
“To become more effective in our go-to-market strategy, we will shift our sales and marketing focus toward a channel-based system as opposed to the current regional structure. Additionally, we have identified numerous areas of opportunity to drive incremental sales, for example, food service. Beyond the customers we serve today has been identified as a substantial white space opportunity for the company and appropriate resources will be deployed to develop this area.
“Finally, in the area of process sustainability we have formed a project management office to manage all critical activities and plan the interrelated work streams from the four pillars. Focus will be directed toward simplifying and strengthening the organization, improving the plan operating levers, augmenting flexibilities and capacities, investing in systems that can provide detailed data on supply chain and manufacturing processes to support commercial strategy and optimizing working capital.”
SunOpta sustained a loss of $3.355 million in the third quarter ended Oct. 1, which compared with income of $314,000 in the same period a year ago. Revenues for the third quarter totaled $348.732 million, up from $277.213 million a year ago.
For the nine months ended Oct. 1, the company sustained a loss of $17.712 million, which compared with earnings of $7.597 million in the same period a year ago. Revenues were $1.049 billion, up from $828.756 million.