Canadian pot producer Aphria on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, sending shares plunging 17 per cent.
The COVID-19 pandemic has caused supply issues and delays in new product launches for cannabis producers as countries close their borders, companies scale back their work force and the absence of tourism-related dollars adds to the industry’s woes.
Aphria took impairment charges of $64 million in the quarter on its assets in Jamaica, Lesotho, Colombia and Argentina.
The company is looking at “mid- to long-term options” related to supply in those Latin American countries, including shipping products from Canada instead of growing it there, chief executive Irwin Simon told analysts in a conference call.
Simon added that consolidation is needed in the industry, but refused to comment on Aurora Cannabis Inc , with which Aphria has reportedly held unsuccessful merger talks in recent weeks.
“I’m not going to comment on Aurora because there is nothing to comment on... Nothing is happening there,” he said.
Lack of profitability has been a major concern for cannabis investors as companies have largely failed to deliver on initial promises of boundless growth in the nearly two years since Canada legalized recreational marijuana.
Aphria reported an adjusted loss of 14 cents in the three months ended May 31, while analysts’ on average were expecting a loss of 4 cents, according to IBES data from Refinitiv.
However, net revenue rose more than 18 per cent to $152.2 million as the virus outbreak led customers to stockpile on cannabis ahead of the lockdowns.
U.S.-listed shares of rivals Aurora, Tilray Inc, Canopy Growth Corp and Hexo Corp dropped between 4 per cent and 9 per cent.
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