(Reuters) – Canadian pot producer Aphria (APHA.TO) APHA.O on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, sending shares plunging 17%.
The COVID-19 pandemic has caused supply issues and delays in new product launches for cannabis producers as countries close their borders, companies scale back their workforce and the absence of tourism-related dollars adds to the industry’s woes.
Aphria took impairment charges of C$64 million in the quarter on its assets in Jamaica, Lesotho, Colombia and Argentina.
The company is looking at “mid to long-term options” related to supply in those Latin American countries, including shipping products from Canada instead of growing it there, Chief Executive Irwin Simon told analysts in a conference call.
Simon added that consolidation is needed in the industry, but refused to comment on Aurora Cannabis Inc (ACB.TO) (ACB.N), with which Aphria has reportedly held unsuccessful merger talks in recent weeks.
“I’m not going to comment on Aurora because there is nothing to comment on… Nothing is happening there,” he said.
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.
Aphria reported an adjusted loss of 14 Canadian cents in the three months ended May 31, while analysts’ on average were expecting a loss of 4 Canadian cents, according to IBES data from Refinitiv.
However, net revenue rose more than 18% to C$152.2 million ($113.86 million) as the virus outbreak led customers to stockpile on cannabis ahead of the lockdowns.
Reporting by Shariq Khan in Bengaluru; Editing by Amy Caren Daniel