Aurora Cannabis Inc. is ending some of its European activities as the cannabis producer chooses to consolidate its presence on the continent amid low demand for medical cannabis, according to an internal memo obtained by BNN Bloomberg.
Aurora told its employees last week that it would close its offices in Portugal, Spain and Italy while cutting its European workforce by a quarter in some countries and their regional offices, according to the memo. The Edmonton-based company will shift its European cannabis production to its Danish facility while acquiring the remaining 49% of its Danish business that it does not yet own, the company said.
“Like the Canadian recreational market, several European medical markets in which Aurora currently operates have not grown as quickly as we expected,” the company said in its memo.
“To achieve the international component of our business transformation plan, Aurora Europe needs to simplify its operations. We need to reduce operating costs and focus on immediate revenue opportunities in key markets ”.
An Aurora spokesperson verified the authenticity of the internal memo when BNN Bloomberg received it. The spokesperson did not say how many of his European workers will be affected by the job losses.
Aurora's presence in Europe mirrors the similar efforts of some of its Canadian competitors in establishing a foothold somewhere on the continent to supply the nascent European medical market. However, Aurora had to suspend its European operations in December after failing to obtain the necessary permits from Germany to import and distribute medical cannabis from Canada. The company resumed sales in Europe in February.
However, Aurora's international sales reached just $ 4 million in its most recent quarter, which is less than six percent of its total revenue for that three-month period.
As part of its restructuring, Aurora said Mads Ulrik Pedersen, the company's Danish operations manager, will now be promoted to chairman of all of its European operations, effective immediately. Additionally, Aurora said it will continue to service its Italian operations where it has a two-year supply contract to supply Italy with at least 400 kilograms of medical cannabis per year.
Office closures and job losses are the latest steps Aurora has taken as part of a company-wide restructuring effort that has seen around 1 employees laid off, production facilities shut down in Alberta, Quebec and Saskatchewan and a billion dollar write-down of assets after reporting a disappointing string of quarterly losses.
The company said it expects to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by the end of the year.