Aurora second-quarter earnings shed light on first recreational cannabis sales

Source New Cannabis Ventures

Source New Cannabis Ventures

"The Canadian consumer market provides an extremely good opportunity for us".

Cannabis seedlings are shown at an Aurora Cannabis facility, Friday, November 24, 2017 in Montreal.

Canada has been grappling with a legal cannabis shortage ever since recreational consumption became legal last October.

Licensed producers, meanwhile, are pointing fingers at the pace of Health Canada's licensing process, and supply chain bottlenecks not uncommon to a nascent industry. "We are going to have to see a better retail infrastructure in provinces across the country in order to see the level of sales that I think everybody is anticipating, but it's going to take some a couple of more quarters". "Consumer response to the legalization of cannabis has been strong", Cameron Battley, chief corporate officer, said in a conference call after markets closed.

The company also attributed a delay in ramping up production to logistical issues that came with moving staff and equipment from its main Aurora Mountain facility, also near Edmonton, over to its Aurora Sky facility when the latter obtained a license to produce on October 17.

Aurora reiterated in its forecast that it will achieve at least 150,000 kilograms of annual production capacity within the first calendar quarter of 2019, but said its current annualized operating capacity is 120,000 kilograms.

During its second quarter, Aurora said it increased cannabis production by 57 per cent to 7,822 kilograms and raised the amount it sold by 162 per cent to 6,999 kg, as it "significantly" scaled up its cultivation operations.

Aurora's average net selling price for dried cannabis was $6.23 per gram and $10 per gram for cannabis extracts.

"We are going to emphasize the product forms where we can generate the highest margins".

Aurora Cannabis Inc. lost $237.7 million in the second quarter of its fiscal year even though net revenues surged to $54.2 million as sales of cannabis increased five-fold.

The company attributed a loss in revenue of roughly $3 million due to the absorption of an excise tax slapped by the Canadian government on medical cannabis products, saying that until the government absorbed that tax on medical patients using the drug, Aurora would continue to cover it.

Also on Monday, Aurora said it completed its first commercial cannabis oil export to a pharmacy in Britain, where specialist doctors can prescribe it. "We are primarily a medical company and we are not going to be dumping all additional production that comes out from Aurora Sky and our Brantford facility to the domestic recreational market", Battley said.

Still, the company's gains are below those of rivals Canopy Growth Corp.

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