Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) posted earnings results on Tuesday that show the company trimming losses as it tries to profit in a crowded Canadian market suffering from a downward slide in prices.
The fourth quarter and full-year financials were for the period ending Dec. 31, 2022.
Cronos posted net revenue of $22.9 million for the quarter, down 11.3% over the year, though the company managed skirt past the Yahoo Finance’s analysts’ average estimate of $22.1 million.
Net loss for the quarter was $78.8 million, an improvement from $133.8 million in the same period the prior year.
“2022 was a transformative year for Cronos in which we executed a business realignment, including a cost savings program, while staying laser focused on continuing to build our portfolio of borderless products,” said CEO Mike Gorenstein. “We exceeded our originally stated goal by saving $28.7 million in operating expenses in 2022, to right-size our cost structure to be more adaptable to the changing landscape we face globally in the cannabis industry.”
Earnings per share were for a $0.21 loss, $0.16 cents from analysts’ projected average of $0.05 loss per share for the quarter.
In a statement, Cronos attributed the year-over-year revenue slide to falling flower sales in a crowded Canadian adult-use market mainly due to price compression, as well as a weakening Canadian dollar amid its U.S. wind down.
Rising gains in the Israeli medical market has managed to offset those losses, the company said. Net revenue in Israel rose 128% in 2022 versus the year before.
Cronos’ Spinach brand also became the top edible line in Canada in January 2023.
“A significant amount of work went into building the Spinach brand and creating the right products for it,” Gorenstein said. “This achievement was validation of our innovation capabilities and is encouraging.”
Still, pricing pressures in Canada — where supply continues to outstrip demand — is only getting more severe, and worsened conditions could contribute to inventory write-downs on the horizon.
Cronos wrote in its financials filings that it is preparing for “these write-downs to continue as pricing pressures remain elevated,” though the company said in the Tuesday statement (and in less boilerplate fashion) that no inventory write-downs were taken in 2022 and reported $12 million in net profit in 2022 — a $29.5 million improvement from 2021.
The company ended 2022 with $878 million worth of cash and short-term investments.