The Edmonton-based cannabis producer announced on Wednesday that it aims to save a further $40 million by the end of next March, which marks the end of the company's current financial year.
"This gradual reduction puts us squarely on track to reach our next financial milestone, which is achieving positive free cash flow," explained the company's CEO, Miguel Martin, during a conference call with analysts.
Free cash flow is an indicator of a company's financial performance, as it encompasses the money a company earns after accounting for the expenses that support operations.
Achieving profitability has been difficult across the cannabis industry in Canada, where lack of demand, strict regulations and a strong illicit market have hampered the financial performance of most companies. Many, including Aurora and its rivals, resorted to layoffs, facility closures and product line evaluations to cope with such conditions.
Aurora, which continues to sell in several European markets, recently decided to close its Nordic production plant in Denmark and rely on its Canadian facilities to supply the market.
Canadian facilities offer lower unit costs, superior quality and a much more reliable supply, argued CFO Glen Ibbott on Wednesday's conference call.
"We believe that this change, in addition to reducing costs, will enable us to be even more competitive in the growing European market, where we already occupy a substantial leadership position," he said.
For the company as a whole this fiscal year, he stressed that Aurora aims to derive at least 5 million per quarter from the elimination of less efficient activities, and at least a further 5 million from cost-cutting initiatives.
He also expects the company to save around 2 million per quarter in interest as it repays the remainder of its convertible debt, which amounts to around 80 million. Mr. Ibbot assured that Aurora intends to repay the debt at the end of this fiscal year.
Aurora Cannabis on Wednesday posted adjusted earnings before interest, taxes, depreciation and amortization of $310,000 for the quarter ended March 31, which compared with a loss of $10 million for the same period last year.
Net sales totalled $64.0 million for the third quarter, compared with $50.4 million for the same quarter last year.
Aurora reports that medical cannabis revenues for the quarter totalled $38.0 million, compared with $39.4 million a year earlier, due to the limited supply of high-demand products in certain European markets, as the company experienced production problems at its Nordic production facility.
Cannabis consumption revenues amounted to 14.5 million, compared with 10.3 million in the same quarter last year.
One of the company's strong points was Bevo Agtech, a supplier of vegetable and flower plants that Aurora acquired last year.
Aurora earned 10.8 million in plant propagation revenues from Bevo during the quarter, which Martin attributed to the seasonality of the business.
Bevo's revenues, he explained, are highest in late winter and spring.
source: https://www.lapresse.ca/affaires/entreprises/2023-06-14/plan-de-transformation/aurora-cannabis-repart-a-la-recherche-d-economies.php