Canopy Reports Increasing Cannabis Loss, No Longer Expecting a profitable 2021
Canopy Growth Corp. says it will no longer be profitable this year, pointing out the supply and market share challenges in its home country of Canada.
The new forecast was released on Friday with Canopy’s fiscal second quarter results, in which the company reported a skyrocketing loss due to lower total revenues.
Canopy’s adjusted EBITDA loss of $ 162.6 million ($ 130 million) for the three months ended September 30 was significantly worse than the previous quarter’s EBITDA loss of $ 63.6 million.
Canopy reported a net loss of $ 16.3 million for its second fiscal quarter.
The company announced that it will continue to cut spending and is well on its way to realizing cost savings of $ 150 million to $ 200 million before the first half of fiscal year 2023, which begins in April 2022.
Canopy wrote off an additional CA $ 87 million in inventory, citing excess Canadian inventory “resulting from lower sales compared to projections”.
“Achieving profitability is still our top priority. We are focused on increasing market share in Canada, improving our product mix and meeting our cost saving commitments, ”CFO Mike Lee said in a statement.
Total net sales decreased 3% from the previous quarter to $ 131.4 million in the second quarter.
Canopy has shifted its profitability outlook and is now focused on stabilizing its market share in the Canadian recreational cannabis market over the next six months.
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Canopy, along with other major manufacturers in Canada, has seen a significant loss of market share this year.
No Canadian licensed manufacturer currently owns more than 14% of the total Canadian leisure market.
In November 2020, CEO David Klein said that Smiths Falls, Ontario-based LP was “firmly” on track to deliver positive Adjusted EBITDA, a measure of profitability, before the end of March 2022 – the company’s end of fiscal year 2022 reach.
“In new industries where the potential is immense, progress is seldom in a straight line. With a focused strategy, foundation for growth and our burgeoning US ecosystem, Canopy is uniquely positioned to win as the industry matures, “said CEO Klein in a statement announcing the company’s latest quarterly results.
As a result, the company said it is taking steps to improve its Canadian recreational business by increasing the supply of sought-after high-THC floral products and new product launches.
The company also said it had delivery issues for the past three months.
In Canada’s top-selling segment, dry grass, Canopy’s sales for adult use decreased 11% to C $ 56.8 million for the quarter.
Sales of oils and softgels for adults were just $ 5.5 million, 21% less than the previous quarter.
Recreational Drinks, Edibles, Topicals, and Vapes sales increased 15% but were only CAD 9.2 million.
Canadian medical cannabis sales declined 6% to $ 13.1 million in the second quarter.
Canopy said it had $ 2 billion in cash as of September 30.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq Exchange.