Yahoo Finance Organigram warns of declining sales and writedowns, cuts 220 jobs
Organigram (OGI.TO)(OGI) is warning of declining sales and writedowns as the company delays its financial results, citing COVID-19 and “changing market dynamics.”
The New Brunswick-based company is also continuing to lay off workers as the pot producer slims down to fit a smaller legal cannabis market.
“As the company right-sizes its production to market demand and reviews its asset carrying values, it expects to report negative adjustments to inventories and an asset impairment on its Moncton facility,” the company said in a release on Friday.
“The company expects to report a decline in net revenue for fiscal Q3 2020 compared to fiscal Q2 2020 impacted by insignificant wholesale revenue being recorded in the quarter.”
Organigram said it has permanently reduced its workforce by about 25 per cent, impacting about 220 employees, including a small number who were not previously laid off temporarily.
Citing the impact of the COVID-19 pandemic, the company announced a temporary reduction of about 400 workers in April. Chief executive officer Greg Engel said at the time their return would depend in part on “growth in the market.”
“These decisions are never easy to make, but we are committed to ensuring the company is appropriately sized relative to market conditions,” Engel said in a news release on Friday. “With a reduced workforce, the company believes it can continue to meet current and anticipated near term demand levels.”
Organigram said on Friday that it has a total workforce of 609 employees, including 84 employees remaining on temporary layoff who may be recalled if and when needed as the business requires.
The staffing changes come as the company shifts production at its main Moncton indoor production facility, where 433 of its staff are stationed. Organigram said on Friday that it intends to slow production there in order to introduce new high-THC strains to meet market demand.
Layoffs have become a fixture of the cannabis sector in 2020. Organigram’s larger peers Aurora Cannabis (ACB.TO)(ACB), Canopy Growth (WEED.TO)(CGC) and Tilray (TLRY) have each eliminated hundreds of positions in similar moves aimed at improving financial performance.
Organigram is set to report its third quarter financial results on July 21, before markets open.
Toronto-listed shares fell 5.94 per cent to $2.06 at 11:59 a.m. ET.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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