- Organigram (TSX:OGI) has reported a 14 per cent decrease in net revenue for the second quarter of 2020, ending February 29
- Net revenue fell to C$23.2 million from $26.9 million in the corresponding period last year
- Cost of sales increased by 45 per cent compared to last year, while marketing, sales and general administrative expenses were also up 144 per cent
- With a reduced workforce as a result of COVID-19, the company is prioritising its most efficient and least labour-intensive production efforts
- Organigram (OGI) is currently down 11.55 per cent to $2.22 per share, with a market cap of $363.17 million
Organigram (TSX:OGI) has reported a 14 per cent decrease in net revenue for the second quarter of 2020, ending February 29.
Net revenue fell to C$23.2 million from $26.9 million in the corresponding period last year. The company cited lower sales in recreational flower and oil products as one of the key factors behind the decrease.
Organigram also noted increased competition and evolving customer preferences as attributable factors.
The cost of sales increased to $15.8 million, compared to $10.9 million in the second quarter of 2019. Organigram says that this was primarily due to high post-harvest costs, initial production inefficiencies and inventory write-offs of approximately $1.3 million.
Further attributable to a less profitable quarter was the increase in sales, marketing, general and administrative expenses. This segment grew a significant 144 per cent from $5.7 million last year to $14 million.
Despite the disappointing performance, Greg Engel, CEO of Organigram, said that the results reflected continued execution in the face of ongoing industry challenges.
“We introduced new products such as our Edison Bytes chocolates, Edison Limelight dried flower and Trailblazer vape pens and continue to elevate the Canadian consumer’s cannabis experience.
“These products have been well received with strong customer demand to date and we look forward to further roll-outs in the space,” he added.
On April 7, Organigram announced the temporary layoff of approximately 45 per cent of its staff base, or roughly 400 employees, as a result of COVID-19.
With the reduced workforce, the company is expecting reductions to its cultivation, harvest, production and packaging capacity. However, it plans to supplement production with its existing inventory levels.
In the meantime, Organigram says that it will focus on leveraging its automated and most efficient lines of production in an effort to make up for the decrease in manpower.
Organigram (OGI) is currently down 11.55 per cent to $2.22 per share at 1:14pm EST.