US/CANADA: Leading Brands losses grow in FY

Leading Brands has posted a slip in sales and a rise in net losses for its latest fiscal year.

The US-based soft drinks company, which operates primarily in North America, said late last week that net sales for the 12 months to the end of February dipped to US$31.1m from $45.8m in fiscal year 2007. Net losses subsequently grew, to $5.4m from $3.5m.

The company blamed the loss of distribution for Hansen energy drink in April last year, the elimination of third-party distribution revenue related to the exit, and lower co-pack revenue following the consolidation of its two bottling plants into its Edmonton facility for the fall in sales.

In February last year, Hansen Natural Corp. announced that it was dropping Leading Brands as the Canadian distributor of its Monster Energy, Lost Energy, Joker Mad Energy and Hansen's energy products, choosing instead to side with PepsiCo Canada.

The net loss increase, meanwhile, was blamed in part by the introduction of legislation in Canada in January, which reduced the corporate income tax rate. The result was an income tax expense and a reduction of the value of the company's future income tax asset by around $950,000.

"We raised net proceeds of approximately $9m in August of last year to allow us to properly react to the surprise loss of the Hansen distribution agreement and complete the shift to reliance upon our own brands," said Leading Brands' chairman and CEO Ralph McRae. "That evolution is now complete and we have accomplished it using about half of the monies raised. The balance will be judiciously invested, over time, to maintain the high level of growth of our brands.

"This was a difficult and unfortunate process for us to endure, but we now look forward to a bright and self-sustaining future which - to a much greater extent - is within our control."

McRae added that the recent addition of Die-Hard Sports Energy Drinks has completed what he described as "an impressive and significant line-up of beverages that can stand 'toe to toe' with any in the industry".