The soft drinks group Leading Brands said on Friday that its second quarter revenue reached US$12.481m, a significant fall from the US$15.56m it made in the same quarter of the prior year.
Net income was US$301,000, compared to net income of US$759,000.
In a statement the company said net income was affected both by a one-time, non-cash charge for stock-based compensation and the recognition of an existing income tax asset.
Leading Brands chairman and CEO Ralph D. McRae said: “As we previously announced, commencing this fiscal year, our largest co-pack customer changed the way in which we bill them from a full case cost to co-pack fee basis. That simple adjustment reduced our revenues by more than US$4,100,000 in Q2 alone and US$6,900,000 over the first half of the year, but did not impact net income.”
He said that if the status quo had been maintained, the company would have reported record first half revenues of approximately US$31.6m, a US dollar denominated increase over the same period last year of 17%.
McRae said: “While such a large percentage of our volume is concentrated in our bottling operations, we will from time to time experience revenue fluctuations of this nature. Again, they do not impact our profitability, just our stated revenue.”
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He added: “Continued growing pains in our plants, including a 60 day delay in the start up of our new carbonated line, materially higher utilities costs and a lack of focus on the bottom line in our US subsidiary contributed to lower profitability than we otherwise might have anticipated. Although definite improvements were seen in our plants during the quarter, they did not materialize fast enough to get us back to the performance levels of prior years. We have also taken several appropriate steps to improve profitability in the US.”
