Edmonton-based Aurora Cannabis announced plans for restructuring Tuesday, including the move to close five facilities, and lay off staff.
Aurora Cannabis, a global leader in the cannabis market, announced a first set of layoffs in February, along with the departure of its CEO.
The company announced a series of additional changes intended to improve profitability on Tuesday, including a 25% reduction in Aurora’s sales, general and administrative staff, most with immediate effect, and an approximate 30% reduction in production staff over the next two quarters.
“Across our organization we continue to take decisive action and execute on our previously announced Business Transformation Plan,” said Michael Singer, executive chairman and interim CEO of Aurora, in a release.
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“With today’s announcement we have achieved our stated SG&A run-rate target and expect to operate at approximately $42 million for the first quarter of fiscal 2021. The further cost savings and margin improvement to be realized from our facility rationalization plan is another example of our commitment to deliver greater efficiency throughout the business.”
In addition, the company has initiated a plan to close five facilities over the next two quarters, “in order to focus production and manufacturing at the company’s larger scale and highly efficient sites,” says a release.
The facilities affected are the company’s smaller scale facilities, including Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie, and Aurora Eau.
Aurora expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the manufacturing of certain higher-margin products.
Canadian production will be consolidated into a few facilities, as production is ramped up at its European facilities.
The company also expects to record production asset impairment charges of up to $60 million during the fourth quarter, $140 million in charges in the carrying value of certain inventory.
“This has not simply been a cost cutting exercise. We have undertaken a strategic realignment of our operations to protect Aurora’s position as a leader in key global cannabinoid markets, most notably Canada. Both the Canadian facility rationalization and inventory revaluation are expected to improve gross margins and accelerate our ability to generate positive cash flow,” said Singer.