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SunOpta Announces Second Quarter Results; Second Quarter Revenue Exceeds $150 Million for the First Time

August 02,2006
SunOpta Announces Second Quarter Results; Second Quarter Revenue Exceeds $150 Million for the First Time

TORONTO--Aug. 2, 2006--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced results for the three and six month periods ended June 30, 2006. All amounts are expressed in U.S. dollars.

The Company achieved record revenues for the three months ended June 30, 2006, realizing its 35th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 51.4% to $155,745,000 as compared to $102,858,000 in the second quarter of the prior year, led by a 48.3% increase in revenues within the Company's vertically integrated natural, organic and specialty foods operations. The Company's revenue growth in the quarter reflects an internal growth rate of 19.3%, and growth via acquisitions of 32.1%.

Operating earnings(1) for the quarter increased by 54.1% to $8,772,000 or 5.6% of revenues as compared to $5,693,000 or 5.5% of revenues in the previous year, driven by a 61.6% increase in operating earnings within the SunOpta Food Group. Net earnings in the quarter were $4,343,000 or $0.08 per diluted common share as compared to $3,307,000 or $0.06 per diluted common share in the prior year. Operating earnings for the six months ended June 30, 2006 increased 65% to $14,803,000 as compared to $8,973,000 in the prior year. Net earnings in the six months ended June 30, 2006 increased to $7,355,000 or $0.13 per diluted common share, a 35.8% increase compared to $5,400,000 or $0.10 per diluted common share after excluding a net unusual gain of $4,512,000 realized in the first quarter of 2005 mainly related to the initial public offering of Opta Minerals Inc..

In the second quarter, and on a year to date basis, the SunOpta Food Group reported increased revenues and operating earnings, when compared to 2005. In the second quarter revenues increased 48.3% while operating earnings increased 61.6%. On a year to date basis revenues increased 50.2% and operating earnings increased 78.6%. The improved operating earnings for the second quarter and first half were driven by strong aseptic packaged product revenues, the rebound in sales of oat fiber and addition of soy fiber, growth in organic private label fruit and tomato based products and revenue and cost improvements in the Canadian distribution operations. The SunOpta Grains and Foods Group experienced lower operating earnings for the quarter and on a year to date basis due to a significant decline in earnings within the Group's sunflower business where product margins were affected by crop quality issues from the 2005 crop and excess supply in international markets. The sunflower business is expected to rebound in the fourth quarter with the delivery of new crop, changes in planted seed varieties and an increase in irrigated lands.

Opta Minerals realized revenue growth in the second quarter and for the first half of 85.6% and 78% respectively due primarily to the February acquisition of Magnesium Technologies Corporation. Internal growth was driven by abrasive operations that were commissioned during 2005. Opta Minerals continues to pursue strategic transactions to complement its existing product portfolio.

The interest in the SunOpta BioProcess Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol continues to grow. Results for the second quarter reflect low revenues and margins due to contract timing, project and marketing costs. The Group has announced two new relationships in the last several months including a Joint Development Agreement with Royal Nedalco out of the Netherlands and an equipment supply contract with China Resources Alcohol Corporation (CRAC). The Group is expected to complete its current contract with Abener Energia S.A. of Seville Spain and the contract with CRAC in 2006.

SunOpta has reconfirmed its profit guidance for the year 2006 and has raised its revenue guidance from $540 - $550 million to $585 - $600 million for the 2006 year.

The Company remains well positioned for future growth with net working capital of $82,789,000 and total assets of $334,890,000. Year to date capital spending is $4,824,000 compared to $7,906,000 for the same period in the prior year. The long term debt to equity ratio at June 30, 2006 was 0.38:1:00, providing the Company further financial resources to invest in internal growth and execute on its acquisition program. Equity per outstanding common share has grown to $3.00 versus $2.73 at June 30, 2005.

Jeremy Kendall, Chairman and Chief Executive Officer of SunOpta commented, "I am extremely pleased with our internal revenue growth from the SunOpta Food Group of 21.5% in the quarter and 19.8% for the year. It is a testament to the continuing maturation of organic foods, healthy food products and growth of private label food products within these categories and supports our vision to continue to expand within these markets both through internal growth and selective acquisition. The Company is on track to achieve its goal of an exit rate of $1 billion in sales by the end of 2007."

About SunOpta Inc.

SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food markets. 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 SunOpta BioProcess Group which engineers and markets proprietary steam explosion technology systems for the pulp, bio-fuel and food processing industries. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.

Forward-Looking Statements

Certain statements included in this press release may constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to references to business strategies, competitive strengths, goals, capital expenditure plans, business and operational growth plans and references to the future growth of the business. These forward looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its interpretation of current conditions, historical trends and expected future developments as well as other factors that the Company believes are appropriate in the circumstance. However, whether actual results and developments will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to; general economic, business or market risk conditions; competitive actions by other companies; changes in laws or regulations or policies of local governments, provinces and states as well as the governments of United States and Canada, many of which are beyond the control of the Company. Consequently all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized.

For further information, please contact:

SunOpta Inc.                           Investment Community Inquiries:
Jeremy N. Kendall, Chairman & CEO      Lytham Partners, LLC
Steve Bromley, President & COO         Joe Diaz
John Dietrich, Vice President & CFO    Robert Blum
Susan Wiekenkamp, Information Officer  Joe Dorame
Tel: 905-455-2528, ext 103             Tel: 602-889-9700
susan.wiekenkamp@sunopta.com           diaz@lythampartners.com
Website:  www.sunopta.com

(1)Operating earnings is defined as net earnings before other income (expense), interest expense (net), income taxes and minority interest

SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended June 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                             June 30, June 30,
                                                2006     2005        %
                                                   $        $   Change
----------------------------------------------------------------------

Revenues                                     155,745  102,858    51.4%

Cost of goods sold                           128,399   84,352    52.2%
                                             -------------------------

Gross profit                                  27,346   18,506    47.8%

Warehousing and distribution expenses          3,834    3,361    14.1%
Selling, general and administrative expenses  15,337    9,497    61.5%
                                             -------------------------

Earnings before the following                  8,175    5,648    44.7%

Interest expense, net                         (1,748)    (594)  194.3%
Other expense                                   (194)    (203)  (4.4%)
Foreign exchange                                 597       45
                                             -------------------------

                                              (1,345)    (752)   78.9%
                                             -------------------------

Earnings before income taxes                   6,830    4,896    39.5%

Provision for income taxes                     2,087    1,354    54.1%
                                             -------------------------

Net earnings before minority interest          4,743    3,542    33.9%
                                             -------------------------

Minority interest                                400      235    70.2%
                                             -------------------------

Net earnings for the period                    4,343    3,307    31.3%
                                             -------------------------

Change in foreign currency translation
 adjustment                                    1,860     (635)  392.9%
                                             -------------------------

Comprehensive income                           6,203    2,672   132.1%
                                             -------------------------

Net earnings per share for the period

   - Basic                                      0.08     0.06
                                             =========================

   - Diluted                                    0.08     0.06
                                             =========================


SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the six months ended June 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
---------------------------------------------------------------------

                                             June 30, June 30,
                                                2006     2005        %
                                                   $        $   Change
----------------------------------------------------------------------

Revenues                                     289,057  189,081    52.9%

Cost of goods sold                           238,083  154,939    53.7%
                                             -------------------------

Gross profit                                  50,974   34,142    49.3%

Warehousing and distribution expenses          7,492    6,599    13.5%
Selling, general and administrative expenses  29,068   18,650    55.9%
                                             -------------------------

Earnings before the following                 14,414    8,893    62.1%

Interest expense, net                         (3,147)    (896)  251.2%
Other income (expense)                          (279)   3,832 (107.3%)
Foreign exchange                                 389       80   386.3%
                                             -------------------------

                                              (3,037)   3,016 (200.7%)
                                             -------------------------

Earnings before income taxes                  11,377   11,909   (4.5%)

Provision for income taxes                     3,490    1,589   119.6%
                                             -------------------------

Net earnings before minority interest          7,887   10,320  (23.6%)
                                             -------------------------

Minority interest                                532      408    30.4%
                                             -------------------------

Net earnings for the period                    7,355    9,912  (25.8%)
                                             -------------------------

Change in foreign currency translation
 adjustment                                    1,747     (800)  318.3%
                                             -------------------------

Comprehensive income                           9,102    9,112
                                             -------------------------

Net earnings per share for the period

   - Basic                                      0.13     0.18
                                             =========================

   - Diluted                                    0.13     0.17
                                             =========================


SunOpta Inc.
Condensed Consolidated Balance Sheets
As at June 30, 2006 and December 31, 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                                 June 30, December 31,
                                                    2006         2005
                                                       $            $
----------------------------------------------------------------------

Assets

Current assets

Cash and cash equivalents                          4,676        5,455
Accounts receivable                               68,209       57,608
Inventories                                       97,772       88,340
Prepaid expenses and other current assets          4,907        4,194
Current income taxes recoverable                       -        1,847
Deferred income taxes                                691          691
                                                 ---------------------

                                                 176,255      158,135

Property, plant and equipment                     82,690       77,257
Goodwill and intangibles                          77,565       58,262
Deferred income taxes                              5,519        4,473
Other assets                                       2,861        3,355
                                                 ---------------------

                                                 344,890      301,482
                                                 =====================
Liabilities

Current liabilities
Bank indebtedness                                 26,946       20,799
Accounts payable and accrued liabilities          59,127       50,688
Customer and other deposits                          450          544
Current portion of long-term debt                  6,377        3,518
Current portion of long-term payables                566          723
                                                 ---------------------

                                                  93,466       76,272

Long-term debt                                    59,831       55,538
Long-term payables                                     -          472
Deferred income taxes                              9,539            -
                                                 ---------------------

                                                 162,836      132,282
                                                 ---------------------

Minority interest                                  9,725        9,116
                                                 ---------------------

Shareholders' Equity

Capital stock                                    109,655      106,678
Contributed surplus                                3,401        3,235
Retained earnings                                 47,734       40,379
Cumulative other comprehensive income             11,539        9,792
                                                 ---------------------

                                                 172,329      160,084
                                                 ---------------------

                                                 344,890      301,482
                                                 =====================


SunOpta Inc.
Condensed Notes to Consolidated Financial Statements
For the three and six months ended June 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                                    Three months ended
                                                         June 30, 2006
                  ----------------------------------------------------
                                                  SunOpta
                     SunOpta Opta Minerals BioProcess and
                  Food Group          Inc.      Corporate Consolidated
                           $             $              $            $
                  ----------------------------------------------------

    Total
     revenues to
     external
     customers      137,287        18,260            198      155,745
                  ----------------------------------------------------

    Segment
     earnings
     before other
     income
     (expense),
     interest
     expense
     (net),
     income taxes
     and minority
     interest         8,168         2,396         (1,792)       8,772
                  ----------------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                    Three months ended
                                                         June 30, 2006
                  ----------------------------------------------------
                                                    SunOpta
                   SunOpta                         Canadian
                  Grains &     SunOpta SunOpta         Food    SunOpta
                     Foods Ingredients   Fruit Distribution Food Group
                         $           $       $            $          $
                  ----------------------------------------------------

    Total
     revenues
     from
     external
     customers     49,862      17,138  39,491      30,796     137,287
                  ----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest       2,273       1,774   2,870       1,251       8,168
                  ----------------------------------------------------


                                                      Six months ended
                                                         June 30, 2006
                 -----------------------------------------------------
                                                 SunOpta
                    SunOpta Opta Minerals  BioProcess and
                 Food Group          Inc.       Corporate Consolidated
                          $             $               $            $
                 -----------------------------------------------------

    Total
     revenues to
     external
     customers     256,558        31,305           1,194      289,057
                 -----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest       14,997         3,394          (3,588)      14,803
                 -----------------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                      Six months ended
                                                         June 30, 2006
                  ----------------------------------------------------
                                                    SunOpta
                   SunOpta                         Canadian
                  Grains &     SunOpta SunOpta         Food    SunOpta
                     Foods Ingredients   Fruit Distribution Food Group
                         $           $       $            $          $
                  ----------------------------------------------------

    Total
     revenues
     from
     external
     customers     89,016      35,251  70,587      61,704     256,558
                  ----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest       4,066       3,480   4,370       3,081      14,997
                  ----------------------------------------------------


SunOpta Inc.
Condensed Notes to Consolidated Financial Statements
For the three and six months ended June 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                                    Three months ended
                                                         June 30, 2005
                 -----------------------------------------------------
                                                  SunOpta
                    SunOpta Opta Minerals  BioProcess and
                 Food Group          Inc.       Corporate Consolidated
                          $             $               $            $
                 -----------------------------------------------------

    Total
     revenues to
     external
     customers      92,555         9,839             464      102,858
                 -----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest        5,054         1,621            (982)       5,693
                 -----------------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                    Three months ended
                                                         June 30, 2005
                 -----------------------------------------------------
                                                   SunOpta
                  SunOpta                         Canadian
                 Grains &     SunOpta SunOpta         Food     SunOpta
                    Foods Ingredients   Fruit Distribution  Food Group
                        $           $       $            $           $
                 -----------------------------------------------------

    Total
     revenues
     from
     external
     customers    38,956      16,647  10,230       26,722      92,555
                 -----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest      2,880       1,062     500          612       5,054
                 -----------------------------------------------------


                                                      Six months ended
                                                         June 30, 2005
                 -----------------------------------------------------
                                                 SunOpta
                    SunOpta Opta Minerals  BioProcess and
                 Food Group          Inc.       Corporate Consolidated
                          $             $               $            $
                 -----------------------------------------------------

    Total
     revenues to
     external
     customers     170,760        17,577             744      189,081
                 -----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest        8,396         2,458          (1,881)       8,973
                 -----------------------------------------------------


The SunOpta Food Group has the following segmented reporting:

                                                      Six months ended
                                                         June 30, 2005
                  ----------------------------------------------------

                                                     SunOpta
                   SunOpta                          Canadian   SunOpta
                  Grains &    SunOpta SunOpta           Food      Food
                     Foods Ingredients  Fruit   Distribution     Group
                         $           $      $              $         $
                  ----------------------------------------------------

    Total
     revenues
     from
     external
     customers     70,136      31,800    16,620       52,204  170,760
                  ----------------------------------------------------

    Segment
     earnings
     before
     other
     income
     (expense),
     interest
     expense
     (net),
     income
     taxes and
     minority
     interest       4,492       1,737       865        1,302    8,396
                  ----------------------------------------------------

CONTACT: SunOpta Inc.
Jeremy N. Kendall, Steve Bromley, John Dietrich,
Susan Wiekenkamp, 905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
Website: www.sunopta.com
or
Investment Community Inquiries:
Lytham Partners, LLC
Joe Diaz, Robert Blum, Joe Dorame, 602-889-9700
diaz@lythampartners.com

SOURCE: SunOpta Inc.

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