Categories Analysis, Cannabis

New products, global expansion might help Cronos Group beat Covid crisis

Reported profit for the first quarter, aided by double digit revenue growth

The cannabis market, which has been witnessing issues like low demand and the vaping crisis, is probably headed for a slowdown this year, with most pot producers facing the risk of write-downs due to pricing pressure. Last week, Cronos Group Inc. (NASDAQ: CRON) surprised everyone by reporting profit for the first quarter contrary to expectations for a loss, benefiting from one-time gains.

The Canada-based company is quite bullish about the recent expansion to Israel through a joint venture partnership, which is expected to be a key growth driver in the second half of the year and beyond. Like all businesses affected by the Covid-19 outbreak, Cronos’ future prospects depend on how the pandemic scenario evolves.

An ‘Essential’ Item

Curiously, the management claims the authorities have assigned cannabis the status of ‘essential commodity‘ during the shutdown, allowing unrestricted production. When it comes to sales, the prevalence of online sales in the adult-use market and the designation of recreational marijuana as ‘essential’ item bodes well for the company.

Mixed Outlook

While Cronos is set to roll out a slew of new products this quarter, after expanding the portfolio with successful launches in the last quarter, there is no doubt the macroeconomic headwinds would weigh on the business, at least in the near future. In a sign that the management is expecting near term challenges, it has constituted a risk committee and laid down a remediation plan.

“I would like to provide you an update on our remediation efforts in relation to the material weaknesses that we disclosed last quarter. We as a company are committed to instituting best practices for financial reporting. Our management with oversight from the audit committee, has initiated a plan, which we are working diligently to phase in over the course of 2020.”

Jerry Barbato , CFO of Cronos Group

The management expects to have all the cannabinoids transferred in the different strains by December 2021. And, the retooling activities currently progressing at Cronos’ Canadian facilities – for launching the new generation of products – might add to cost pressure this quarter. That is bad news as far as margin is concerned, which is already under stress due to pricing issues.

Global Trend

Prices in Israel will be lesser than those in Germany, where the company enjoys a decent market share. “We do expect the cost of production to be lower in Israel and I think we’ve highlighted that in previous calls just given the climate. So we expect that there’s still a good margin opportunity. But over time, we would expect to see similar trends as far as product mix is what we’ve seen in Canada,” said CEO Mike Gorenstein while addressing analysts at the first-quarter conference call.

Cronos’ shares had mostly underperformed the market last year. They plunged to a record low last month and have been hovering near the $5-mark since then, which is down 65% from last year. Obviously, this is not the right time to invest in the company, given the sluggish share performance and deepening uncertainty in the market. Most analysts recommend holding the stock.

Surprise Profit

Ending a losing-spree, Cronos reported profit of $0.20 per share for the first quarter when revenues more than doubled to $8.43 million, with most of the sales coming from markets outside the Americas. Though earnings declined year-over-year, they beat the market’s prediction. But the company is unlikely to sustain the recovery as supply chains remain strained due to disruptions caused by the pandemic.

[irp posts=”60860″] 

Ever since medical cannabis was legalized in Canada about two years ago, several countries in the western world followed suit, allowing the companies to expand their market share. With the number of pot producers growing steadily, especially after Arab nations like Lebanon legalized production, there are concerns of a major demand-supply imbalance.

Most Popular

HPE Earnings: Hewlett Packard Q1 2024 profit drops but beats Street view

Information technology solutions provider Hewlett Packard Enterprise (NYSE: HPE) on Thursday reported lower earnings and revenues for the first quarter of 2024. Earnings, however, exceeded analysts’ forecasts. First-quarter profit, excluding

After entering FY24 on a high note, Costco is all set to report Q2 results

Costco Wholesale Corporation (NASDAQ: COST) stands out in the retail space for its unique business model that enables the warehouse behemoth to grow store traffic and market share constantly. Currently,

Hormel (HRL) expects continued momentum from its foodservice business in FY2024

Shares of Hormel Foods Corporation (NYSE: HRL) soared over 13% on Thursday after the company delivered better-than-expected earnings results for the first quarter of 2024 and reaffirmed its outlook for

Comments

  1. Pingback: Academic Advisor
  2. Pingback: Business majors
  3. Pingback: MBA degree Cairo
  4. Pingback: grandpashabet
  5. Pingback: meritking giriş
  6. Pingback: madridbet giriş
  7. Pingback: Simulation Models
  8. Pingback: meritking
  9. Pingback: meritking
  10. Pingback: meritking
  11. Pingback: engineering majors
  12. Pingback: Required Courses
  13. Pingback: Biochemistry
  14. Pingback: meritking
  15. Pingback: grandpashabet
  16. Pingback: fuck google
  17. Pingback: fuck google
  18. Pingback: Fiverr Earn
  19. Pingback: Fiverr Earn
  20. Pingback: Fiverr Earn
  21. Pingback: Fiverr Earn
  22. Pingback: Fiverr Earn
  23. Pingback: Fiverr Earn
  24. Pingback: Fiverr Earn
  25. Pingback: Fiverr Earn
  26. Pingback: Fiverr Earn
  27. Pingback: Fiverr Earn
  28. Pingback: Hooled strip led
  29. Pingback: fiverrearn.com
  30. Pingback: fiverrearn.com
  31. Pingback: fiverrearn.com
  32. Pingback: hair loss
  33. Pingback: fiverrearn.com
  34. Pingback: clima para hoy
  35. Pingback: fiverrearn.com
  36. Pingback: fiverrearn.com
  37. Pingback: fiverrearn.com
  38. Pingback: fluffy bully
  39. Pingback: bewerto
  40. Pingback: multisbo rtp
  41. Pingback: porn
  42. Pingback: Fiverr.Com
  43. Pingback: fue
  44. Pingback: french bulldog
  45. Pingback: Warranty
  46. Pingback: Piano service
  47. Pingback: FUE
  48. Pingback: FUE
  49. Pingback: Office relocation
  50. Pingback: citi.com/activate
  51. Pingback: Classic Books 500
  52. Pingback: FiverrEarn
  53. Pingback: FiverrEarn
  54. Pingback: FiverrEarn
  55. Pingback: Fiverr
  56. Pingback: FiverrEarn
  57. Pingback: FiverrEarn
  58. Pingback: Streamer
  59. Pingback: FiverrEarn
  60. Pingback: FiverrEarn
  61. Pingback: Sefton Porn Stars
  62. Pingback: partners
  63. Pingback: neotonics reviews
  64. Pingback: Economics
  65. Pingback: Tips
  66. Pingback: FiverrEarn
  67. Pingback: FiverrEarn
  68. Pingback: live sex cams
  69. Pingback: live sex cams
  70. Pingback: FiverrEarn
  71. Pingback: FiverrEarn
  72. Pingback: FiverrEarn
  73. Pingback: FiverrEarn
  74. Pingback: FiverrEarn
  75. Pingback: FiverrEarn
  76. Pingback: FiverrEarn
  77. Pingback: FiverrEarn
  78. Pingback: FiverrEarn
  79. Pingback: garden
  80. Pingback: FiverrEarn
  81. Pingback: FiverrEarn
  82. Pingback: FiverrEarn
  83. Pingback: FiverrEarn
  84. Pingback: sikiş
  85. Pingback: cheap sex cams
  86. Pingback: fullersears.com
  87. Pingback: fullersears.com
  88. Pingback: grandpashabet
  89. Pingback: rare breed-trigger
  90. Pingback: grandpashabet
  91. Pingback: grandpashabet
  92. Pingback: Litigio fiscal
  93. Pingback: 늑대닷컴
Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top