Shares of cannabis producer Aphria Inc. (TSX:APH) were up 2.57% close to the top of the noon hour on October 16. The company released its fiscal 2018 first quarter results on October 13.
Revenue climbed to $6.1 million, up 7% from $4.3 million in the fiscal first quarter of 2017. Aphria also posted gross profit of $7.9 million over $3.7 million the previous year. The company again lowered cash costs and reported its eighth consecutive quarter of positive EBITDA. Leadership continues to emphasize its position as one of the lowest-cost cannabis producers on the market.
Aphria hopes that its low cash costs will power the company heading into recreational cannabis legalization in July 2018. Costs of dried cannabis per gram decreased from $1.67 to $1.60 due to an achievement of economies of scale and the completion of the Part 2 expansion. Cash costs dropped to $0.95 from $1.11 per gram.
Recreational cannabis has been projected to grow into an $8 billion industry once legalization kicks in. There are still some significant challenges as far as distribution and sales are concerned. Some provinces like Ontario and New Brunswick have unveiled a system in which the government will control sales. Consumer advocates have warned that the black market will maintain a foothold as the public sector is not prepared to meet the forthcoming demand.
Shares of Aphria have increased 27% since being relisted on the TSX in March 2017. The low-cost producer is still a fantastic value for those looking to buy into this industry.
