Canopy Growth’s share price fell more than 11% late Friday morning after the cannabis company reported a $1.72 billion non-cash writedown in its most recent quarter. had forced to post a loss of more than 2 billion.
Posted at 11:39 a.m.
The Smiths Falls, Ont.-based cannabis producer’s share price retreated about 40 cents to $3.29 after reporting a first-quarter net loss, which compared to a net profit of more than 389 million in the same period last year.
The impairment charge for the quarter ended June 30 related to Canopy’s cannabis business and came as its business-to-business recreational cannabis sales fell 38% year-on-year, due to price compression and competition. increased.
These conditions prompted the company to launch a sustained cost reduction plan involving the retooling of its facilities, the revision of its sourcing strategies, the implementation of flexible manufacturing processes and the reduction of professional and office expenses. some thirds.
Under the plan, 243 Canopy workers in Canada, Europe and the United States lost their jobs in April, part of a series of layoffs Canopy and its rivals have carried out during the coronavirus pandemic. COVID-19.
Canopy expects its measures will create between $100 million and $150 million in savings over a 12-18 month period and help it achieve profitability by better aligning supply with demand.
“The cost reduction program announced earlier in the quarter, combined with strong expense discipline, contributed to a significant decline in operating expenses in the quarter,” said Canopy’s Chief Financial Officer, Judy Hong, in a statement.
“We expect cost savings to increase in the second half of the year, which will allow us to continue our path to profitability even as we continue to invest in strategic growth initiatives, including in BioSteel and our American THC ecosystem. »
The net loss suffered by the company behind the Tweed, Tokyo Smoke and Doja brands was $5.23 per share, compared to a loss of 84 cents per share in the second quarter of 2021.
Analysts had expected the company to post a net loss of $111.6 million, or 28 cents per share, according to forecasts compiled by financial data firm Refinitiv.
Net revenue for the quarter was $110.1 million, down 19% from $136.2 million in the same quarter last year.