Aurora Cannabis to lay off 700 staff, expects $60M charge, plans to close 5 facilities

CANNABIS CAPITALISM IS STILL CAPITALISM

Jeff Lagerquist Yahoo Finance Canada June 23, 2020


(THE CANADIAN PRESS)More


Aurora Cannabis (ACB.TO)(ACB) plans to close five facilities, lay off roughly 700 workers, and expects a $60 million charge in the coming quarter, the company said Tuesday.

The Edmonton-based cannabis producer said the moves are part of its business transformation plan announced in February, which resulted in the loss of about 500 jobs at the time.  

1200 JOBS LOST IN TOTAL 2020

An Aurora spokesperson confirmed to Yahoo Finance Canada that “approximately 700’ workers will be laid off as a result of Tuesday’s announcement.

“These changes include an approximate 25 per cent reduction in Aurora's (selling, general and administrative staff), most with immediate effect, and an approximate 30 per cent reduction in production staff over the next two quarters,” the company stated in a release.

Aurora said the recent retirement of president Steve Dobler was part of the company’s “corporate headcount rationalization.”

The five facilities slated for closure include Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau.

As a result of the headcount reductions and facility shutdowns, the company expects to take an asset impairment charge of up to $60 million during the fourth quarter of 2020. The company also expects to record a charge of up to $140 million over the value of inventory, predominantly trim, “to align inventory on hand with near-term expectations for demand.”

Trim refers to the excess leaves snipped from the buds of marijuana plants. The by-product is used to make extractions, tinctures, hash and edibles.

“This has not simply been a cost cutting exercise. We have undertaken a strategic realignment of our operations to protect Aurora's position as a leader in key global cannabinoid markets, most notably Canada,” chief executive officer Michael Singer stated in the release.

“Both the Canadian facility rationalization and inventory revaluation are expected to improve gross margins and accelerate our ability to generate positive cash flow. We believe that we now have the right balance for the long-term success of Aurora.”

Symbol                                             Price        Change

ACB.TO Aurora Cannabis Inc.       19.18   +0.63

ACB Aurora Cannabis Inc.               14.02         +0.30

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.