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Home / Business / Aphria CEO says $ 1 billion black vapes market is the biggest competitor

Aphria CEO says $ 1 billion black vapes market is the biggest competitor



For Aphria Inc. and other cannabis companies with ambitions of market dominance, the billion-dollar market for illegal evaporators in Canada remains the largest competitor.

"There's probably $ 1 billion in vape sales in the black market," Afria

APHA, -3.35%

APHA, -3.63%

CEO Irwin Simon said by phone late Thursday. "The illegal market today is the biggest market out there."

When asked if it was Africa's biggest competitor, Simon said, "Without a doubt."

Aphria reported its fourth-quarter tax revenue on Thursday after the closing clock, provided fiscal 2020 guidelines and also made profits ̵

1; both rare among cannabis businesses.

The Canada-based weed producer reported fiscal fourth quarter net income of $ 15.8 million ($ 11.9 million), or 5 cents per share, compared to a loss of $ C5 million, or $ 0.43 per share, during the period since.

Its fiscal 2020 guidance was probably one of the other reasons why stocks rose more than 30% in the extended session on Thursday. In the conference call, executives said they expected net income after tax in the region of $ 650 to $ 700 million. Simon said the company aims to achieve a $ 1 billion interest rate by the end of the fiscal year.

Read: Marijuana delivery service Eaze scales back $ 1 billion ambitions, documents show

About half of estimated 2020 revenue comes from pharmaceutical distribution, the result of the acquisition of CC Pharma, which closed this year. Aphria paid € 18.92 million ($ 21 million) in cash to former CC Pharma shareholders.

Aphria's recreational cannabis sales grew 158% to $ 18.5 million from the previous quarter, or roughly 15% of the company's $ 128.6 million net income for the fiscal quarter ended in May.

Analysts surveyed by FactSet had estimated revenues of $ 104 million. There were not enough projections from analysts to form a reliable consensus on net income or earnings per share.

Aphria said it sold 5.5 tonnes of pot, with a cash cost per gram of $ 1.35.

Africa's cannabis is priced very aggressively and in some locations around Ontario, consumers will line up on the day new shipments arrive and buy out the stock, according to a source familiar with the purchase of mass cannabis. Aphria's lower brands offer the most tetrahydrocannabinol at the cheapest price. It offers a high-end brand called Broken Coast.

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Simon said one of the reasons the company is seeing success is because it strives to keep its growth costs as low as possible. Because marketing in Canada is very difficult under the strict Health Canada regulations, Simon said Aphria is able to keep prices low since there are fewer marketing costs to cover.

"In the last company I ran, my marketing budget was 20% of my costs," Simon said. "Right now, I want to get Aphria's brands in the hands of many consumers. We make sure it's available and priced right, and it speaks to consumers."

When it comes to the company's plans to enter the food and evaporator market, Simon said the plan is similar to what it does with the recreation pot today: to price it properly and make sure it gets in people's hands.

The investment with Pax Labs Inc., a San Francisco-based vape maker, will help because of Pax's brand awareness.

Aphria's results also benefited from the $ 50 million the company received from Green Growth Brands Inc.

GGBXF, -5.21%

GGB, + 0.00%

after the company's hostile takeover bid failed. Green Growth launched the bid after card sellers released a report that questioned several of the company's assets and pointed out alleged wrongdoing by former executives related to multiple acquisitions.

Aphria said it will receive another $ 39 million in November from Green growth.

See also: Short sellers increase bets for cannabis shares to fall

Aphria share increased 31.9% in premarket trading on Friday, but has fallen 9% this year, with the S&P 500 index

SPX, -0.90%

increasing 18%. The potato sector overall has a weak summer as scandals increase.


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