(Reuters) - Aurora Cannabis (ACB.TO) (ACB.N) on Tuesday announced a new round of staff reductions and plans to shut five facilities over the next two quarters, as the COVID-19 pandemic pummels the cash-crunched cannabis industry.
For most marijuana companies in Canada, which legalized recreational cannabis in October 2018, profits have proven elusive due to fewer-than-expected retail stores, cheaper rates on the black market and slow overseas growth.
The industry has been further hit by the COVID-19 crisis, which has also upended financial markets, making it harder to get investor dollars.
To survive the challenging times, Aurora has cut its selling, general and administrative (SG&A) workforce by 25% and will lay off 30% of production staff over the next two quarters, it said.
Shares of the company were up 2.7% at C$19.05.
Aurora in February announced the exit of founder and Chief Executive Officer Terry Booth, 500 job cuts and impairment charges as it came under fire for its aggressive global expansion amid uncertain demand.
Other pot producers including Canopy Growth (WEED.TO), Tilray Inc (TLRY.O), Sundial Growers Inc (SNDL.O) and Hexo Corp (HEXO.TO) have also cut their workforce, emphasizing a push towards faster profitability as investors grow impatient.
Aurora expects SG&A expenses to be around C$42 million ($31.07 million) in the first quarter of fiscal 2021, compared with C$75.1 million, excluding severance costs, recorded in the third quarter.
The company has been keeping a tight rein on its spending and in May doubled down on its plans to keep capital expenditure below C$100 million in the second half of the year, while adding it was on track to be profitable next fiscal year.
Aurora, scheduled to report its fourth quarter results in September, said it expects production asset impairment and other charges of up to C$200 million in the quarter.
Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli