Aurora Cannabis closing production facility in Denmark

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Canadian producer Aurora Cannabis is closing its remaining facility in Denmark and moving production to Canada in a bid to lower costs.

Edmonton, Alberta-based Aurora said it had been leasing the facility.

The move comes over one year after the company sold its Nordic Sky facility in Odense, Denmark, for roughly 7.5 million Canadian dollars ($5 million) on March 15, 2022.

That sale resulted in a loss of disposal of CA$1.3 million.

The sold facility “refers to a planned second facility in Denmark that the company did not proceed with opening due to the changes in the market,” a company spokesperson told MJBizDaily.

“This is not a reflection of our European business, as our business there remains strong with healthy margins and growth prospects,” the spokesperson said via email.

“However, the Nordic site had many unique challenges beyond our control, that despite our best efforts, could not be overcome.”

The spokesperson also noted that, “following a period of consultation with our employees, Aurora previously announced the closure of our Aurora Nordic facility in Odense, Denmark.

“This decision was not taken lightly, and impacted employees will be fully supported by the company. We thank them for their valuable contributions. ”

The exit caps off a troubled spell for Aurora in the Danish market.

In early 2018, Aurora had envisioned creating “Europe’s largest” medical cannabis producer in Denmark when it unveiled plans to become the second licensed cultivator to build a facility in the Scandinavian country.

The fully built-out facility was expected to produce a stunning 120,000 kilograms (132.3 tons) of medical cannabis annually – significantly more than the European market demands.

Germany, the largest medical cannabis market in Europe by far, imported only 25,000 kilograms of cannabis for medical or scientific purposes in 2022, an increase of 19% over the 20,769 kilograms imported in 2021.

Months before Aurora committed to Denmark in 2018, rival producer Canopy Growth Corp. unveiled plans to establish its own 430,000-square-foot production facility in Odense.

Canopy ultimately sold the facility to Australia’s Little Green Pharma in 2021.

In a conference call with analysts Wednesday, Aurora CEO Miguel Martin said the closure in Denmark is part of the company’s plan to achieve roughly CA$40 million in annualized savings.

The CEO said he expects the savings to be achieved by March 31, 2024.

“We made the decision to close our Nordic production facility in Denmark and will supply our very important European business from our Canadian footprint, which has much lower per-unit costs and a much more reliable supply,” Chief Financial Officer Glen Ibbott said.

“We believe this will allow us to compete even more effectively in the growing European market.”

Martin noted three “primary” challenges with the Danish facility.

“The first is the regulations on what would be traditional remediation of pathogens – whether it’s powdery mildew or other things – in that facility made it difficult to achieve the same yield and production that we get out of Canada,” the CEO told analysts.

“Secondly, the size of that greenhouse facility did not really lend itself to the same production efficiencies that we get at our indoor facilities in Canada.”

Lastly, Martin said European markets, “for whatever reason,” value Canadian product as having a higher quality and being more valuable to them.

Aurora shares trade on the Toronto Stock Exchange and Nasdaq.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.