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Driven by recreational marijuana sales in Canada, Cronos Group Inc.'s sales tripled in the past quarter, as the weed grower fell, according to its quarterly published results Tuesday.
Actions of Cronos
CRON, -2.84%
CRON, -6.22%
fell 3.7% to $ 8.08 in morning trading.
The Toronto-based cannabis company reported a net loss of C $ 7.04 million ($ 5.3 million), which equals 4 cents per share, after a C $ 1.10 million profit, or 1 cent per share, in the same quarter of the previous year. The company's sales increased 186% to C $ 3.76 million and sold 514 kilograms of pot during the quarter, an increase of 213%.
"Recreational cannabis was a big part of this quarter's revenue," said Executive Director Michael Gorenstein at the conference call following the results. Like Aurora Cannabis Inc.
CBA -3.74%
CBA -3.59%
Gorenstein, which released its first-quarter financial results, said the demand for recreational products is "very important" after the legalization of recreation in Canada on October 17.
Marijuana stock to watch for: Cronos Group, Heinz Cannabis Ketchup
Gorenstein told analysts that it was still too early to offer a detailed analysis of Cove and Spinach brand products, which sold well. "Prices vary by province and product line," Gorenstein said, adding that he expected Cronos to offer more information starting in the fourth quarter.
To further increase production, Cronos executives said that building 4 of the company, called Building 4, is expected to harvest its first marijuana crop by the end of 2018. Gorenstein said it would be able to harvest every three days and reach its annualized rate of return. in the second quarter of 2019.
Gorenstein highlighted the company's partnership with the privately-owned Ginkgo Bioworks Inc., established early this year. The agreement will allow Cronos to use its technology to produce eight targeted cannabinoids – the compounds that make psychoactive marijuana, among other things – on an industrial scale through industrial fermentation compared to growing marijuana plants. This will reduce the production costs of cannabis-related products and facilitate the production of cannabinoids that are not as prevalent in marijuana plants used to extract oil or flowers.
"At Cronos, we seek to build the most innovative cannabinoids company in the world, where we develop and research efficient processes to produce the full range of cannabinoids, not only. [tetrahydrocannabinol] and [cannabidiol]Said Gorenstein. "Our goal is to use the plant as a model, to learn and create differentiated ingredients by reconstituting cannabinoids in combinations with psychoactive effects or specific therapeutic benefits.
See also: Aurora Stock Declines, Profits Showing Cannabis Company Investments Still Top Winners
Cronos is second after Aurora
CBA -3.74%
CBA -3.59%
of several marijuana stocks that reported income this week. Tilray Inc.
TLRY, + 0.88%
should post its results after the closing bell Tuesday. Canopy Growth Corp.
GSC + 0.79%
CANNABIS, -1.41%
which received a $ 4 billion investment from Constellation Brands Inc.
STZ, -0.85%
should announce its earnings Wednesday before the opening bell.
Cronos shares rose 44.9% in the last three months until Monday, while the ETFMG Alternative Harvest ETF
MJ -1.44%
climbed 23.4% and the S & P 500 index
SPX, + 0.71%
lost 3.4%.
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