Canopy shares plunge as pot producer posts another loss
2022.08.05 16:49
FILE PHOTO: A sign featuring Canopy Growth Corporation’s logo is pictured at their facility in Smiths Falls, Ontario, Canada, January 4, 2018. REUTERS/Chris Wattie/File Photo/File Photo
(Reuters) – Canopy Growth (NASDAQ:CGC) Corp posted another core loss on Friday, denting investor hopes that the cannabis producer would turn profitable anytime soon, sending its U.S.-listed shares down 10%.
The company’s quarterly gross margin was impacted by a decline in production, lower prices in the Canadian recreational business, a shift in business mix and fall in government payroll subsidies related to COVID-19 relief program.
Canopy has been focusing on premium high-potency offerings and has undertaken cost cuts through layoffs, exits from some international markets and store closures in its bid to turn profitable, after nearly four years of cannabis legalization in Canada.
“We expect cost savings to ramp in the second half of the year,” Chief Financial Officer Judy Hong said in a statement.
Canopy earlier this year extended its time frame to achieve profitability as fewer-than-expected retail stores and cheaper black market rates crimp sales at legal recreational companies.
The company, which had first aimed to turn profitable by the second half of 2022, now expects to turn in positive earnings before interest, taxes, depreciation, and amortization in fiscal 2024, excluding certain investments. Analysts estimate it will be delayed by another year.
The cannabis producer also took a hit of C$1.73 billion ($1.34 billion) in the quarter due to asset impairment charges and restructuring costs, forcing it to post a net loss from year-ago profit.
Canopy Growth, which operates primarily in Canada that accounts for roughly 50% of its sales, said revenue fell 19% to C$110 million in the quarter ended June.
The company posted an adjusted core loss of C$74.8 million in the first quarter ended June 30, compared with a loss of C
$63.6 million a year earlier.
($1 = 1.2886 Canadian dollars)
(This story corrects day in paragraph 1)
