Aphria posts bigger-than-expected loss even as customers stockpile cannabis

Took impairment charges of $64 million in the quarter on the value of its assets in Jamaica, Lesotho, Colombia and Argentina

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Canadian pot producer Aphria Inc. on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, as coronavirus-related lockdowns disrupted tourism and supply chains.

U.S.-listed shares of the company fell about 4 per cent in premarket trading.

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.

However, net revenue rose more than 18 per cent to $152.2 million (US$113.86 million) as the COVID-19 pandemic led customers to stockpile on cannabis ahead of the lockdowns.

The outbreak has also caused supply issues and delays in new product launches as companies scale back their workforce to essential employees only, while the absence of tourism-related dollars has also been a big worry for cannabis companies.

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Aphria took impairment charges of $64 million in the quarter on the value of its assets in Jamaica, Lesotho, Colombia and Argentina.

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The company reported a quarterly net loss of $98.8 million, or 39 cents per share, in the three months ended May 31, compared to a profit of $15.8 million, or 5 cents per share, a year ago.

On an adjusted basis, the company’s loss of 14 cents was much wider than analysts’ average expectation of 4 cents, according to Refinitiv IBES.

U.S.-listed shares of rivals Aurora Cannabis Inc., Tilray Inc., Canopy Growth Corp. and Hexo Corp. dropped between 1 per cent and 3 per cent in trading before the bell.

? Thomson Reuters 2020

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