TechnologyAurora Cannabis growing storage to prepare for derivatives launch next fall
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Aurora Cannabis Inc. is building up inventory in anticipation of the legalization of edibles and vaping products next fall, but insists that won't interrupt its sales growth and march to profitability.
Production is expected to grow to 25,000 kilograms in the current quarter ended June 30, but an unspecified portion will be held out of the market, said chief financial officer Glen Ibbott on Wednesday.
"What we're trying to do is learn from the challenges of the industry last year and the initial launch of consumer legalization — we absolutely have to have sufficient inventory to launch these products properly," he told a conference call to discuss the company's third-quarter results.
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"So if that means taking a little bit of revenue out of Q4 and putting it into inventory, into new products, then that's what we'll do."
Supply shortages and the slow opening of retail cannabis stores in some parts of Canada have plagued the industry since consumer legalization last October.
Ottawa has indicated edibles containing cannabis and cannabis concentrates would become legal for consumers in October, but the exact timing of product approvals and sales is still unknown.
Edmonton-based Aurora is focused on developing an initial supply of vape pens, edibles and concentrates — the most popular products in U.S. states where they are legal — and will leave beverages for a later time when that market is better known, Cam Battley, chief corporate officer, said in an interview.
Two more licenced cannabis shops open in Saskatoon
Two more licenced cannabis shops open in Saskatoon
On the conference call with financial analysts, he said Aurora's growth in medical cannabis sales and patients in the three months ended March 31 should that fears of softening demand after retail sales were allowed were unfounded.
Aurora nearly doubled production to 15,590 kilograms, with the majority of the volume harvested in the last half of the quarter, as the company's Aurora Sky facility in Edmonton and Bradford facility in Ontario ramped up, taking company-wide capacity to 150,000 kilograms per year.
Revenue from Canadian consumer sales rose 37 per cent to $29.6 million, exceeding medical revenue of $29.1 million, which was up 12 per cent as Aurora's patient count rose five per cent.
The cost per gram of dried product fell to $1.42 from $1.92 but the average net selling price was also down, to $6.40 from $6.80 per gram.
"In this phase of the sector's development, I would say, absolutely, that the number one critical success factor is the ability to produce and sell an enormous volume of cannabis," Battley said. "And we have got that in spades."
'We want to be good neighbours:' Pot plant deals with stink at Edmonton airport
EDMONTON — A skunky smell greeting travellers at Edmonton's airport doesn't mean stinky critters are running loose in the area. The scent is coming from the Edmonton International Airport's new neighbour, Aurora Sky, one of the world's largest cannabis facilities, which produces more than 100,000 kilograms of marijuana per year. Aurora Cannabis, the company that operates the facility, is going to great lengths to mitigate any pot odour wafting over to the airport, as well as local hotels and outlet stores.
Aurora reported a $158-million loss on net revenue of $65 million in the quarter ended March 31, compared with a loss of $238 million on revenue of $54 million in the prior quarter.
Analysts had expected a net loss of $52.6 million on net revenue of $77 million, according to Thomson Reuters Eikon.
Lower than anticipated extract sales drove the miss relative to his revenue estimate of $72 million, said analyst Douglas Miehm of RBC Dominion Securities, although medical sales performed better than forecast.
"We view the results as a mixed bag for Aurora," he said in a note, adding shareholders will like its on-track production growth.
Rival cannabis producer Tilray Inc. CEO Brendan Kennedy said Tuesday he thinks the tight Canadian consumer cannabis market will reach a supply-demand balance in the next 18 to 24 months.
In response to a question, Battley said no one really knows what maximum demand will be, noting there's plenty of room for growth in the Canadian consumer market and there will be growing demand from international markets for products from Canada.
Five things to watch for in the Canadian business world in the coming week
TORONTO — Five things to watch for in the Canadian business world in the coming week: Tilray update Tilray Inc. will release its first-quarter results on Tuesday. The Nanaimo, B.C.-based company's CEO recently identified the U.S. and Europe as the focus of its future investments, and said it will not purchase "overpriced supply assets" in Canada. Inflation numbers Statistics Canada will release its consumer price index for April on Wednesday. The agency last reported the annual inflation rate rose to 1.9 per cent in March, in line with economists' expectations, as price pressures strengthened for fresh vegetables, mortgage interest costs and auto insurance.
Companies in this story: (TSX:ACB)
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Aurora Cannabis losses growing faster than expected, shares fall.
Aurora Cannabis Inc. sales and losses both grew faster than expected in its fiscal third quarter, according to an earnings report released late Tuesday that sent shares about 2% lower in after-hours trading. Canada-based Aurora (ACB)(CA:ACB) reported fiscal third-quarter losses of C$160.1 million, or 16 cents a share, versus losses of C$20 million, or 4 cents a share, in the year-ago period. Aurora grew gross revenue to C$75.2 million, up from C$16.1 million in the year-ago period. After excluding excise taxes paid to the Canadian government, Aurora reported net revenue of C$65.2 million.
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