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SunOpta Announces Third Quarter Results

November 01,2006
SunOpta Announces Third Quarter Results

MM Sunflower Gross Margin Losses

TORONTO--Nov. 1, 2006--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL)(TSX:SOY) today announced results for the three and nine month periods ended September 30, 2006. All amounts are expressed in U.S. dollars.

The Company achieved record revenues for the three months ended September 30, 2006, realizing its 36th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 26.5% to $145,463,000 as compared to $114,950,000 in the third quarter of the prior year. The Company's revenue growth of 26.5% represents consolidated internal growth of 15.8% and growth via acquisitions of 10.7%. During the quarter the Company's vertically integrated food operations realized internal growth of 18.0%. For the nine months ended September 30, 2006 revenues have increased 42.9% to $434,520,000 as compared to $304,031,000 in the prior year. This increase reflects internal growth of 17.7% plus growth via acquisitions of 25.2%.

Operating earnings(1) for the quarter were $3,547,000 or 2.4% of revenues as compared to $3,862,000 or 3.4% of revenues in the previous year. This decline reflects the impact of lower year over year quarterly operating earnings within the Company's sunflower operations of $2,425,000, including the impact of the previously announced gross margin losses of $2,100,000 for the write down of inventory and negative margins related to the previous year's crop. Excluding the results of the sunflower business, operating earnings increased 54.6% versus the previous year.

Net earnings in the quarter were $1,524,000 or $0.03 per diluted common share as compared to $2,088,000 or $0.04 per diluted common share in the prior year including the effects of the losses on sunflower. Operating earnings for the nine months ended September 30, 2006 have increased 43.0% to $18,350,000, including the impact of the losses on sunflower, as compared to $12,835,000 in the prior year. Net earnings in the nine months ended September 30, 2006 increased to $8,879,000 or $0.15 per diluted common share, as compared to $7,488,000 or $0.13 per diluted common share after excluding a net unusual gain of $4,512,000 realized in the first quarter of 2005 related primarily to the initial public offering of Opta Minerals Inc.

On a year to date basis, the SunOpta Food Group reported increased revenues and operating earnings, as compared to 2005. In the third quarter revenues increased 21.6% while operating earnings decreased 17.5%. On a year to date basis revenues increased 39.4% and operating earnings increased 52.2%. The improved operating earnings for the nine months were driven by strong growth in aseptic packaged products, the rebound in sales of oat fiber and addition of soy fiber, growth in organic private label fruit and tomato based products, growth in private label packaged products, revenue and cost improvements in the Canadian distribution operations and the full year effect of acquisitions completed during 2005. The Sunflower business is expected to return to profitability in Q4 with the harvest of the new crop. The Company expects a $4 million operating earnings improvement in its sunflower business over the next 12 months. During the quarter the SunOpta Food Group acquired the business and assets of Purity Life Health Products, a profitable distributor with revenues of approximately $50 million, providing a wide range of natural and organic beauty aids and health care supplements, strategically expanding capabilities within the Canadian Food Distribution Group.

Opta Minerals realized revenue growth of 98.2% in the third quarter and 84.7% for the first nine months of 2006, due primarily to the February acquisition of Magnesium Technologies Corporation and internal growth driven by abrasive operations that were commissioned during 2005. Operating earnings for the third quarter increased 113.1% and for the first nine months of the year increased 59.0%. Opta Minerals continues to pursue strategic transactions to complement its existing product portfolio and on October 4, 2006 the Group acquired Bimac Corporation (Bimac). Bimac provides consumable products to the steel industry to prevent heat loss, reduce oxidization, and remove impurities.

There continues to be a high interest in the SunOpta BioProcess Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol. Results for the third quarter primarily reflect the supply of proprietary steam explosion equipment to China Resources Alcohol Corporation (CRAC) for use in production of cellulosic ethanol from corn stover. The Group is expected to complete its current contract with Abener Energia S.A. of Seville Spain by the end of the year and its contract with Celunol Inc. in early 2007. The Group is actively seeking additional supply contracts and partners to further leverage its technology and overall leadership position in cellulosic ethanol.

SunOpta has reconfirmed its revenue guidance of $585 - $600 million for the 2006 year. Earnings guidance has been impacted by the write down within the Company's sunflower business. Excluding losses realized within sunflower operations, the Company expects to realize its annual earnings guidance figures.

The Company remains well positioned for future growth with net working capital of $88,501,000 and total assets of $368,655,000. Year to date net capital spending is $6,967,000 compared to $10,082,000 for the same period in the prior year. The long term debt to equity ratio at September 30, 2006 was 0.43:1:00, providing the Company further financial resources to invest in internal growth, capital projects and execute on its acquisition program. Equity per outstanding common share has grown to $3.06 versus $2.83 at December 31, 2005.

Jeremy Kendall, Chairman and Chief Executive Officer of SunOpta commented, "We believe we have made the necessary adjustment in our sunflower business model by focusing on proven genetics, simplifying our product line and increasing the percentage of irrigated lands where our crop is grown. We are pleased with our internal growth of 17.7% for the year and expect internal growth to continue to be in the 15-20% range, including our recently announced contract to supply refrigerated organic soymilk to a major retailer. While revenue growth is important, the Company remains primarily focused on growing the bottom line faster than the top line and has a number of margin improvement and cost cutting initiatives in place to achieve this.

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.

(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 nine months ended September 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

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



Revenues                                434,520       304,031    42.9%

Cost of goods sold                      360,854       251,592    43.4%
                                   --------------------------- -------

Gross profit                             73,666        52,439    40.5%

Warehousing and distribution
 expenses                                11,345         9,908    14.5%
Selling, general and
 administrative expenses                 44,203        30,214    46.3%
                                   --------------------------- -------

Earnings before the following            18,118        12,317    47.1%

Interest expense, net                    (4,893)       (2,082)  135.0%
Other (expense) income                     (294)        3,978  -107.4%
Foreign exchange                            232           518   -55.2%
                                   --------------------------- -------

                                         (4,955)        2,414  -305.3%
                                   --------------------------- -------

Earnings before income taxes             13,163        14,731   -10.6%

Provision for income taxes                3,424         2,190    56.3%
                                   --------------------------- -------

Net earnings before minority
 interest                                 9,739        12,541   -22.3%
                                   --------------------------- -------

Minority interest                           860           541    59.0%
                                   --------------------------- -------

Net earnings for the period               8,879        12,000   -26.0%
                                   --------------------------- -------

Net earnings per share for the
 period

   - Basic                                 0.16          0.21
                                   ===========================

   - Diluted                               0.15          0.21
                                   ===========================
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended September 30, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

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



Revenues                                     145,463   114,950   26.5%

Cost of goods sold                           122,771    96,653   27.0%
                                            --------------------------

Gross profit                                  22,692    18,297   24.0%

Warehousing and distribution expenses          3,853     3,309   16.4%
Selling, general and administrative
 expenses                                     15,135    11,564   30.9%
                                            --------------------------

Earnings before the following                  3,704     3,424    8.2%

Interest expense, net                         (1,746)   (1,186)  47.2%
Other (expense) income                           (15)      146 -110.3%
Foreign exchange                                (157)      438 -135.8%
                                            --------------------------

                                              (1,918)     (602) 218.6%
                                            --------------------------

Earnings before income taxes                   1,786     2,822  -36.7%

(Recovery of) provision for income taxes         (66)      601 -111.0%
                                            --------------------------

Net earnings before minority interest          1,852     2,221  -16.6%
                                            --------------------------

Minority interest                                328       133  146.6%
                                            --------------------------

Net earnings for the period                    1,524     2,088  -27.0%
                                            --------------------------

Net earnings per share for the period

   - Basic                                      0.03      0.04
                                            ===================

   - Diluted                                    0.03      0.04
                                            ===================

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

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

Assets

Current assets
Cash and cash equivalents                          4,057        5,455

Accounts receivable                               73,532       57,608
Inventories                                      109,396       88,340
Prepaid expenses and other current assets          5,390        4,194
Current income taxes recoverable                       -        1,847
Deferred income taxes                                691          691
                                            --------------------------

                                                 193,066      158,135

Property, plant and equipment                     82,942       77,257
Goodwill and intangibles                          84,128       58,262
Deferred income taxes                              5,375        5,854
Other assets                                       3,144        3,355
                                            --------------------------

                                                 368,655      302,863
                                            ==========================
Liabilities

Current liabilities
Bank indebtedness                                 39,938       20,799
Accounts payable and accrued liabilities          56,011       50,688
Customer and other deposits                          348          544
Current portion of long-term debt                  7,835        3,518
Current portion of long-term payables                433          723
                                            --------------------------

                                                 104,565       76,272

Long-term debt                                    67,593       55,538
Long-term payables                                 1,150          472
Deferred income taxes                              9,427        1,381
                                            --------------------------

                                                 182,735      133,663
                                            --------------------------

Minority interest                                 10,013        9,116
                                            --------------------------

Shareholders' Equity

Capital stock                                    111,511      106,678
Contributed surplus                                3,591        3,235
Retained earnings                                 49,258       40,379
Cumulative other comprehensive income             11,547        9,792
                                            --------------------------

                                                 175,907      160,084
                                            --------------------------

                                                 368,655      302,863
                                            ==========================
SunOpta Inc.
Segmented Information
For the three and nine months ended September 30, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

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

Total revenues
 to external
 customers         127,003        16,887           1,573      145,463
                 -----------------------------------------------------

Operating
 Income(1)           2,625         2,020          (1,098)       3,547
                 -----------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
                                                    Three months ended
                                                    September 30, 2006
                 -----------------------------------------------------
                                                      SunOpta
                   SunOpta                           Canadian  SunOpta
                  Grains &     SunOpta  SunOpta          Food    Food
                     Foods Ingredients    Fruit Distribution     Group
                         $           $        $             $        $
                  ----------------------------------------------------

Total revenues
 from external
 customers         45,740      15,268   36,733        29,262  127,003
                  ----------------------------------------------------

Operating
 Income(1)           (616)        382    2,392           467    2,625
                  ----------------------------------------------------
                                                     Nine months ended
                                                    September 30, 2006
                ------------------------------------------------------
                                                  SunOpta
                   SunOpta  Opta Minerals  BioProcess and
                Food Group           Inc.       Corporate Consolidated
                         $              $               $            $
                ------------------------------------------------------

Total revenues
 to external
 customers        383,561         48,192           2,767      434,520
                ------------------------------------------------------

Operating
 Income(1)         17,622          5,414          (4,686)      18,350
                ------------------------------------------------------
    The SunOpta Food Group has the following segmented
     reporting:
                                                     Nine months ended
                                                    September 30, 2006
                ------------------------------------------------------
                                                    SunOpta
                   SunOpta                         Canadian
                  Grains &     SunOpta SunOpta         Food    SunOpta
                    Foods  Ingredients   Fruit Distribution Food Group
                         $           $       $            $          $
                 -----------------------------------------------------

Total revenues
 from external
 customers        134,756      50,519 107,320       90,966    383,561
                 -----------------------------------------------------

Operating
 Income(1)          3,450       3,862   6,762        3,548     17,622
                 -----------------------------------------------------

SunOpta Inc.
Segmented Information
For the three and nine months ended September 30, 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
                                                    Three months ended
                                                    September 30, 2005
                           -------------------------------------------
                                                  SunOpta
                            SunOpta     Opta   BioProcess
                              Food   Minerals         and
                              Group      Inc.   Corporate Consolidated
                                  $         $           $            $
                           -------------------------------------------

Total revenues to external
 customers                 104,484     8,520       1,946      114,950
                           -------------------------------------------

Operating Income(1)          3,180       948        (266)       3,862
                           -------------------------------------------
The SunOpta Food Group has the following segmented reporting:
                                                    Three months ended
                                                    September 30, 2005
                   ---------------------------------------------------
                                                      SunOpta
                    SunOpta                          Canadian  SunOpta
                    Grains &     SunOpta SunOpta        Food     Food
                      Foods  Ingredients  Fruit  Distribution    Group
                           $           $       $            $        $
                   ---------------------------------------------------

Total revenues
 from external
 customers           38,105      15,841  28,217       22,321  104,484
                   ---------------------------------------------------

Operating
 Income(1)            1,399         929   1,068         (216)   3,180
                   ---------------------------------------------------
                                                     Nine months ended
                                                    September 30, 2005
                      ------------------------------------------------
                        SunOpta     Opta          SunOpta
                          Food   Minerals  BioProcess and
                          Group      Inc.       Corporate Consolidated
                              $         $               $            $
                       -----------------------------------------------

Total revenues to
 external customers    275,245    26,097           2,689      304,031
                       -----------------------------------------------

Operating Income(1)     11,577     3,406          (2,148)      12,835
                       -----------------------------------------------
The SunOpta Food Group has the following segmented reporting:
                                                     Nine months ended
                                                    September 30, 2005
                 -----------------------------------------------------
                                                      SunOpta
                    SunOpta                          Canadian  SunOpta
                  Grains &      SunOpta SunOpta          Food    Food
                     Foods  Ingredients  Fruit  Distribution     Group
                          $           $       $             $        $
                 -----------------------------------------------------

Total revenues
 from external
 customers         108,243      47,641  44,837        74,524  275,245
                 -----------------------------------------------------

Operating
 Income(1)           5,905       2,653   1,933         1,086   11,577
                 -----------------------------------------------------

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

CONTACT: SunOpta Inc.
Jeremy N. Kendall, Chairman & CEO
Steve Bromley, President & COO John Dietrich, Vice President & CFO
Susan Wiekenkamp, Information Officer Tel: 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 Tel: 602-889-9700 diaz@lythampartners.com SOURCE: SunOpta Inc.

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