Connect with us

Hi, what are you looking for?

Wednesday, May 25, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Business

Cronos reports US$134M Q4 net loss on closing of Peace Naturals facility

The firm’s annual losses reached US$396.1 million

Cronos reports US$134M net loss in Q4 after closing Peace Naturals facility
Peace Naturals branded products at the company’s facilities in Kibbutz Gan Shmuel, Israel. Photo via Cronos

While producer Cronos Group Inc. (TSX: CRON) (Nasdaq: CRON) is generating new sales, the firm is reporting heavy impairment charges related to the incoming closure of its Peace Naturals facility in Stayner, Ontario.

On Tuesday, the company released its earnings results for the three months ended Dec. 31, with net sales up almost 27 per cent to US$25.8 million from US$20.4 million in the previous quarter.

Cronos said its revenue gains are due to continued growth in Canada’s adult-use market, and more sales in Israel’s medical market.

Adjusted earnings before interest, taxes, depreciation and amortization improved by 42 per cent in the fourth quarter, to a loss of US$27.4 million from a loss of US$46.8 million.

But after non-cash impairment charges on assets totalling US$122.8 million, the firm recorded a net loss of US$133.6 million — down significantly from net income of US$77.7 million in the third quarter, when it made US$132.9 million from gains on revaluation of derivative liabilities.

Read more: Cronos releases delayed Q3 results, adds US$236.1M impairment charge

The fourth-quarter charge is related to the Peace Naturals closure, which was also revealed on Tuesday. Cronos says that after evaluation of its global supply chain, it’s made the decision to shut down the Ontario-based campus by the end of the year.

In addition to a related US$$119.9-impairment charge on assets, the firm says it expects further charges of US$4.5 million related to the exit. Those include employee-related costs including severance, relocation and other termination benefits.

“As we continue to execute our asset-light approach and focus on brands and [research and development], we will continue to leverage our joint venture with Cronos GrowCo and other contract manufacturing partnerships moving forward,” CEO Kurt Schmidt said in a statement.

In its third-quarter earnings — which were delayed until Feb. 18 — the company posted a US$236.1-million impairment charge.

Cronos ended the fourth quarter with US$887 million in cash and cash equivalents.

In 2021, net revenue was up 73 per cent to US$64.6 million, from US$37.2 million in 2020.

But the firm’s annual net losses skyrocketed over 400 per cent to negative US$396.1 million, from negative US$73.1 million. In 2019, Cronos recorded net income of nearly US$1.2 billion.

Company stock fell around 4 per cent Tuesday to C$4.37 on the Toronto Stock Exchange.

 

Follow Mugglehead on Twitter

Like Mugglehead on Facebook

Follow Nick Laba on Twitter

nick@mugglehead.com

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Health and Safety

Science doesn't know yet, but one psychedelic researcher is chasing clues to see if it can

Canada

As more medium-to-small producers came into play this year, great weed started hitting legal shelves at fairer prices

Culture

Punishments for possession include caning and the death penalty. Despite a global trend of reform, The Fine City remains staunch in its anti-drug stance

Analysis

While legal weed businesses decry enforcement of their accounts, the platform says it's keeping its all-ages community safe