Aurora Cannabis Inc. says it is halting construction of two production facilities to save over $190 million as part of a plan to strengthen its balance sheet.
The Edmonton-based cannabis producer says it will immediately cease construction of its Aurora Nordic 2 facility in Denmark to save about $80 million over the next year.
It is also indefinitely deferring completion of construction and commissioning at its 1.6-million square foot Aurora Sun facility in Medicine Hat, Alta. to conserve $110 million.
Aurora Sun was supposed to be the size of 21 football fields and 50 per cent larger than its Aurora Sky operation at Edmonton International Airport. As of last month, the company said construction was nearing completion.
READ MORE: Aurora Cannabis plant working to contain skunky smell at Edmonton airport
The construction halts come as the company reported net income of $10.4 million for the quarter ending Sept. 30, compared with net income of $104.2 million for the same quarter last year.
READ MORE: Aurora Cannabis shares down after company misses own Q4 revenue guidance
Chief financial officer Glen Ibbott pointed to the slow growth of cannabis retail stores, particularly in Ontario.
It’s been more then a year since Canada legalized cannabis for recreational use, starting with flower, seeds, plants and oils. However, the footprint of legal pot stores has been slower to develop in some provinces than others.
Aurora says net revenue was $75.3 million for its first quarter of fiscal 2020, up from $29.7 million for the same quarter last year, but down from the $94.6 million in the fourth quarter ended in June.
Analysts had expected revenue of $93.31 million, according to financial markets data firm Refinitiv.
Aurora says it produced 41,436 kilograms in the quarter, up from 29,034 in the last quarter. It will consider restarting development at the two facilities as demand develops.
This week, Alberta Municipal Affairs Minister Kaycee Madu said cannabis growers will no longer be classified as agricultural businesses and so won’t qualify for a tax exemption.
The change is to come into effect in the 2020 tax year, but does not apply to greenhouse operations or industrial hemp cultivation.
READ MORE: Commercial cannabis producers in Alberta to start paying property taxes
The company currently operates Aurora Sky at EIA in Leduc County and Aurora Mountain in Mountain View County, Alta., and Aurora Vie and Aurora Eau in Quebec.
It also operates Aurora Valley — an outdoor growing facility in Westwold, B.C. — as well as Aurora Ridge (formerly MedReleaf Markham), in Markham, Ont. and Aurora River (formerly MedReleaf Bradford), in Bradford, Ont.
Earlier this year, it opened the Aurora Prairie research facility in Saskatoon.
READ MORE: Aurora Cannabis investing in Saskatoon research centre
— With files from Karen Bartko, Global News
© 2019 The Canadian Press
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