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SunOpta Announces Third Quarter Results, Reports Record Revenues and Earnings

November 03,2004
SunOpta Announces Third Quarter Results, Reports Record Revenues and Earnings

TORONTO--Nov. 3, 2004--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced results for the three months and nine months ended September 30, 2004. All amounts are expressed in U.S. dollars.

The Company achieved record revenues for the three months ended September 30, 2004, realizing its 28th consecutive quarter of record revenue growth compared to the same quarter in the previous year. Revenues in the quarter increased by 59% to $80,142,000 as compared to $50,384,000 in the third quarter of the prior year. For the nine months ended September 30, 2004, revenues increased 55% to $223,588,000 from $144,436,000 in 2003.

Net earnings for the third quarter increased by 26% to $2,767,000, or $0.05 per diluted common share, as compared to $2,195,000 or $0.04 per diluted common share in the third quarter of 2003 (adjusted to U.S. GAAP). For the nine months ended September 30, 2004 net earnings were a record $10,663,000, an increase of 85% over the same period in 2003. Net earnings in 2003 included the recognition of certain tax loss carryforwards resulting in a low effective income tax rate. Earnings before income taxes increased by 52% in the third quarter of 2004, and by 104% in the nine months ended September 30, 2004, when compared to the same periods in 2003.

The third quarter results included a number of unusual operating expenses related to addressing the requirements of Sarbanes-Oxley, certain period costs incurred in the preparation of the initial public offering of Opta Minerals Inc., the Company's environmental division, and fees related to recent changes to the Company's banking arrangements. These costs totaled approximately $600,000 pre-tax.

The Company also stated that as a result of the poor soybean crop quality and low yields in 2003, the Company's specialty beans purchase contracts were insufficient to meet sales contracts late in the third quarter, resulting in incremental costs versus expectation, of approximately $500,000 pre-tax. The Company expects the 2004 soybean crop to improve significantly from 2003 and does not expect any shortage in soybean supply in the fourth quarter with margins returning to normal.

In addition, the Company incurred certain integration costs related to its Toronto and Montreal-based distribution operations during the third quarter which had a negative impact of approximately $600,000 pre-tax. These operations are expected to improve in the fourth quarter.

Internal revenue growth rate in the third quarter was 12%. Excluding grain revenues impacted by the short crop yield in 2003, the internal growth rate was 18% in the third quarter, in line with the Company's expectations and the year to date internal revenue growth rate of 19%. The Company's grain revenues impacted by the poor crop quality and yield in 2003 decreased 20% in the nine months ended September 30, 2004 when compared to the same period in 2003.

The Company continues to maintain a strong balance sheet, with working capital of $65,046,000 and total assets of $208,400,000. The long-term debt to equity ratio as at September 30, 2004 was 0.26 to 1.00. The Company has cash resources, including available lines of credit and an acquisition line, of approximately $50,000,000. These resources will be employed in the future to generate further shareholder value through internal growth projects and acquisitions.

Jeremy N. Kendall, Chairman and CEO of SunOpta commented that "on October 27, 2004, we pre-announced expected revenues and net earnings for the third quarter in order to provide timely disclosure of the issues the Company faced in recent months. As disclosed in our announcement, we're confident that a number of these issues are one-time or unusual in nature, and that the impact on future results will be minimized. I am delighted with our continued growth in both our revenues and net earnings and we remain focused on building shareholder value."

SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food markets. For the last six consecutive years, SunOpta was included in Profit magazine's 'Profit 100' list of the 100 fastest growing companies in Canada. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; the Opta Minerals Group, a producer, distributor, and recycler of environmentally friendly industrial materials; and the StakeTech Steam Explosion Group that engineers and markets clean pulping systems using patented steam explosion technology. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.

    For further information, please contact:
    SunOpta Inc.
    Jeremy N. Kendall, Chairman & CEO
    Steve Bromley, Executive Vice President & COO
    John Dietrich, Vice President & CFO
    Susan Wiekenkamp, Information Officer
    Tel: 905-455-2528, ext 103
    swiekenkamp@sunopta.com
    Website: www.sunopta.com

Note: This news release may contain forward-looking information. Actual future results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described in the Company's annual report to shareholders and in SEC filings. The attached consolidated balance sheet and consolidated statement of earnings are unaudited. The information provided here should be considered in conjunction with the other information included within the SEC Form 10Q March 31, 2004 filing.

SunOpta Inc.
Consolidated Statements of Earnings
For the three months ended September 30, 2004 and 2003
Unaudited
(expressed in thousands of U.S. dollars, except per share amounts)

                                  September 30, September 30,
                                          2004          2003         %
                                             $             $    Change
----------------------------------------------------------------------
Revenues                                80,142        50,384       59%

Cost of goods sold                      64,673        41,404       56%
                                  ------------------------------------

Gross profit                            15,469         8,980       72%

Warehousing and distribution expenses    1,547           221      600%
Selling, general and
 administrative expenses                 9,350         5,567       68%
                                  ------------------------------------

                                        10,897         5,788       88%
                                  ------------------------------------

Earnings before the following            4,572         3,192       43%

Interest expense                          (675)         (680)      -1%
Interest and other income (expense)       (169)          255     -166%
Foreign exchange gain (loss)               227          (171)    -233%
                                  ------------------------------------

                                          (617)         (596)       4%
                                  ------------------------------------

Earnings before income taxes             3,955         2,596       52%

Provision for income taxes               1,188           401      196%
                                  ------------------------------------

Net earnings for the period              2,767         2,195       26%
                                  ------------------------------------
                                  ------------------------------------

Net earnings per share for the
 period

   - Basic                                0.05          0.05
                                  ---------------------------
                                  ---------------------------

   - Diluted                              0.05          0.04
                                  ---------------------------
                                  ---------------------------


SunOpta Inc.
Consolidated Statements of Earnings
For the nine months ended September 30, 2004 and 2003
Unaudited
(expressed in thousands of U.S. dollars, except per share amounts)

                                   September 30, September 30,
                                           2004          2003        %
                                              $             $   Change
----------------------------------------------------------------------
Revenues                                223,588      144,436       55%

Cost of goods sold                      179,621      119,233       51%
                                   -----------------------------------

Gross profit                             43,967       25,203       74%

Warehousing and distribution expenses     4,144          628      560%
Selling, general and administrative
 expenses                                26,254       16,360       60%
                                   -----------------------------------

                                         30,398       16,988       79%
                                   -----------------------------------

Earnings before the following            13,569        8,215       65%

Interest expense                         (1,035)      (1,664)     -38%
Interest and other income                 2,238          465      381%
Foreign exchange gain                       442          425        4%
                                   -----------------------------------

                                          1,645         (774)    -313%
                                   -----------------------------------

Earnings before income taxes             15,214        7,441      104%

Provision for income taxes                4,551        1,671      172%
                                   -----------------------------------

Net earnings for the period              10,663        5,770       85%
                                   -----------------------------------
                                   -----------------------------------

Net earnings per share for the
 period

   - Basic                                 0.20         0.13
                                   -----------------------------------
                                   -----------------------------------
   - Diluted                               0.20         0.12
                                   -----------------------------------
                                   -----------------------------------


SunOpta Inc.
Segmented Information
For the three months ended September 30, 2004
Unaudited
(expressed in thousands of U.S. dollars)
                                                    Three months ended
                                                    September 30, 2004
----------------------------------------------------------------------
                                               StakeTech
                                                   Steam
                                               Explosion
                            SunOpta      Opta Technology
                               Food  Minerals  Group and
                              Group     Group  Corporate Consolidated
                                  $         $          $            $
External revenues by market
U.S.                         45,357     3,213        495       49,065
Canada                       21,078     5,111          -       26,189
Other                         4,882         6          -        4,888
                             -----------------------------------------

Total revenues to external
 customers                   71,317     8,330        495       80,142
                             -----------------------------------------

Segment earnings (loss)
 before interest expense and
 income taxes                 3,865       909       (144)       4,630
                             -----------------------------------------

Interest expense                  -         -        675          675
                             -----------------------------------------

Provision for income taxes        -         -      1,188        1,188
                             -----------------------------------------

Segment net earnings (loss)   3,865       909     (2,007)       2,767
                             -----------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                    Three months ended
                                                    September 30, 2004
----------------------------------------------------------------------
                 Grains
                and Soy                              Packaged SunOpta
               Products     Ingredients Distribution Products    Food
                  Group           Group        Group    Group   Group
                      $               $            $        $       $
External
 revenues by
 market
U.S.             19,937          16,188            -    9,232  45,357
Canada              287             481       19,374      936  21,078
Other             2,983           1,679            -      220   4,882
               -------------------------------------------------------

Total revenues
 to external
 customers       23,207          18,348       19,374   10,388  71,317
               -------------------------------------------------------

Segment earnings
 before interest
 expense and
 income taxes       369           2,482          590      424   3,865
               -------------------------------------------------------


SunOpta Inc.
Segmented Information
For the three months ended September 30, 2003
Unaudited
(expressed in thousands of U.S. dollars)

                                                    Three months ended
                                                    September 30, 2003
----------------------------------------------------------------------
                                               StakeTech
                                                   Steam
                                               Explosion
                            SunOpta      Opta Technology
                               Food  Minerals  Group and
                              Group     Group  Corporate Consolidated
                                  $         $          $            $
External revenues by market
U.S.                         36,885     3,798         82       40,765
Canada                        5,507     2,609          -        8,116
Other                         1,434        69          -        1,503
                             -----------------------------------------

Total revenues to external
 customers                   43,826     6,476         82       50,384
                             -----------------------------------------

Segment earnings (loss)
 before interest expense and
 income taxes                 3,257       834       (815)       3,276
                             -----------------------------------------

Interest expense                  -         -        680          680
                             -----------------------------------------

Provision for income taxes        -         -        401          401
                             -----------------------------------------

Segment net earnings (loss)   3,257       834     (1,896)       2,195
                             -----------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                    Three months ended
                                                    September 30, 2003
----------------------------------------------------------------------
                     Grains
                    and Soy                          Packaged SunOpta
                   Products Ingredients Distribution Products    Food
                      Group       Group        Group    Group   Group
                          $           $            $        $       $
External revenues
 by market
U.S.                 15,576      11,410            -    9,899  36,885
Canada                  126         289        4,599      493   5,507
Other                   203       1,231            -        -   1,434
                   ---------------------------------------------------

Total revenues to
 external
 customers           15,905      12,930        4,599   10,392  43,826
                   ---------------------------------------------------

Segment earnings
 before interest
 expense and
 income taxes           794       1,646           52      765   3,257
                   ---------------------------------------------------


SunOpta Inc.
Segmented Information
For the nine months ended September, 30 2004
Unaudited
(expressed in thousands of U.S. dollars)

                                                     Nine months ended
                                                    September 30, 2004
----------------------------------------------------------------------
                                               StakeTech
                                                   Steam
                                               Explosion
                            SunOpta      Opta Technology
                               Food  Minerals  Group and
                              Group     Group  Corporate Consolidated
                                  $         $          $            $
External revenues by market
U.S.                        125,417    10,918        933      137,268
Canada                       57,766    13,085          -       70,851
Other                        15,311       158          -       15,469
                            ------------------------------------------

Total revenues to external
 customers                  198,494    24,161        933      223,588
                            ------------------------------------------

Segment earnings (loss)
 before interest expense
 and income taxes            15,056     3,162     (1,969)      16,249
                            ------------------------------------------

Interest expense                  -         -      1,035        1,035
                            ------------------------------------------

Provision for income taxes        -         -      4,551        4,551
                            ------------------------------------------

Segment net earnings (loss)  15,056     3,162     (7,555)      10,663
                            ------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                     Nine months ended
                                                    September 30, 2004
----------------------------------------------------------------------
                   Grains
                  and Soy                           Packaged  SunOpta
                 Products Ingredients Distribution  Products    Food
                    Group       Group        Group     Group    Group
                        $           $            $         $        $
External
 revenues by
 market
U.S.               54,420      44,231            -    26,766  125,417
Canada                787       1,417       52,776     2,786   57,766
Other              10,313       4,673            -       325   15,311
                 -----------------------------------------------------

Total revenues
 to external
 customers         65,520      50,321       52,776    29,877  198,494
                 -----------------------------------------------------

Segment earnings
 before interest
 expense and
 income taxes       4,679       6,311        3,138       928   15,056
                 -----------------------------------------------------


SunOpta Inc.
Segmented Information
For the nine months ended September 30, 2003
Unaudited
(expressed in thousands of U.S. dollars)

                                                     Nine months ended
                                                    September 30, 2003
----------------------------------------------------------------------
                                               StakeTech
                                                   Steam
                                               Explosion
                            SunOpta     Opta  Technology
                               Food  Minerals  Group and
                              Group     Group  Corporate Consolidated
                                  $         $          $            $
External revenues by market
U.S.                        104,567     8,335        383      113,285
Canada                       16,538    10,060          -       26,598
Other                         4,406       144          3        4,553
                            ------------------------------------------

Total revenues to external
 customers                  125,511    18,539        386      144,436
                            ------------------------------------------

Segment earnings (loss)
 before interest expense
 and income taxes             8,237     2,269     (1,401)       9,105
                            ------------------------------------------

Interest expense                  -         -      1,664        1,664
                            ------------------------------------------

Provision for income taxes        -         -      1,671        1,671
                            ------------------------------------------

Segment net earnings (loss)   8,237     2,269     (4,736)       5,770
                            ------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                     Nine months ended
                                                    September 30, 2003
----------------------------------------------------------------------
                Grains
               and Soy                              Packaged  SunOpta
              Products   Ingredients  Distribution  Products    Food
                 Group         Group         Group     Group    Group
                     $             $             $         $        $
External
 revenues by
 market
U.S.            46,737        32,258             -    25,572  104,567
Canada             254           867        13,868     1,549   16,538
Other              797         3,609             -         -    4,406
              --------------------------------------------------------

Total
 revenues to
 external
 customers      47,788        36,734        13,868    27,121  125,511
              --------------------------------------------------------

Segment
 earnings
 before
 interest
 expense and
 income taxes    2,440         3,101           308     2,388    8,237
              --------------------------------------------------------


SunOpta Inc.
Consolidated Balance Sheets
As at September 30, 2004 and December 31, 2003
Unaudited
(expressed in thousands of U.S. dollars)

                                   September 30, December 31,
                                           2004         2003         %
                                              $            $    Change
----------------------------------------------------------------------

Assets

Current assets
Cash and cash equivalents                13,423       21,990      -39%
Accounts receivable - trade              37,421       26,241       43%
Inventories                              40,676       34,778       17%
Prepaid expenses and other current
 assets                                   6,588        2,524      161%
Income taxes recoverable                      -        1,686     -100%
Future income taxes                         667        1,172      -43%
                                   -----------------------------------

                                         98,775       88,391       12%

Assets held for sale                        584        6,007      -90%
Property, plant and equipment, net       58,683       44,761       31%
Goodwill and intangibles, net            43,890       25,084       75%
Future income taxes                       5,940        9,023      -34%
Other assets                                528          490        8%
                                   -----------------------------------

                                        208,400      173,756       20%
                                   -----------------------------------
                                   -----------------------------------

Liabilities

Current liabilities

Accounts payable and accrued
 liabilities                             28,198       24,670       14%
Customer and other deposits                   -        1,778     -100%
Current portion of long-term debt         4,776        3,840       24%
Current portion of long-term payables       755          740        2%
                                   -----------------------------------

                                         33,729       31,028        9%

Long-term debt                           31,962       21,196       51%
Long-term payables                        1,282        1,591      -19%
                                   -----------------------------------

                                         66,973       53,815       24%
                                   -----------------------------------

Minority Interest                         1,311            -      100%
                                   -----------------------------------

Shareholders' Equity

Capital stock                           104,484       96,636        8%
Contributed surplus                       3,384        3,384        0%
Retained earnings                        26,442       15,779       68%
Accumulated other comprehensive
 income                                   5,806        4,142       40%
                                   -----------------------------------

                                        140,116      119,941       17%
                                   -----------------------------------

                                        208,400      173,756       20%
                                   -----------------------------------
                                   -----------------------------------
    CONTACT: SunOpta Inc.
             Jeremy N. Kendall, Steve Bromley, John Dietrich,
             or Susan Wiekenkamp, 905-455-2528, ext 103
             email: swiekenkamp@sunopta.com
             website: www.sunopta.com

    SOURCE: SunOpta Inc.

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