OLDS - Sundial Growers is further reducing its workforce and curtailing cannabis cultivation and harvest activities in response to current market conditions and the COVID-19 pandemic.
The company’s chief executive officer made the announcement yesterday.
"Reducing our cultivation and harvest activities while drawing down inventory are strategic choices we are making to improve cash conversion and control our variable production costs,” Sundial CEO Zach George stated in the company’s April 9 press release.
The newly announced changes to operations include a focus on accelerating sales of inventory and further reductions to its workforce.
Headquartered in Calgary, Sundial has facilities in Olds and Rocky View County.
The company did not disclose the number of staff affected or what locations they were working at.
Approximately 65 per cent of the impacted employees are being temporarily laid off, according to the company.
As per new Alberta government guidelines, they can be called back to work for the company in the next 120 days.
“This allows Sundial to respond quickly to increased market demand or employee absenteeism as a result of COVID-19, by accessing furloughed employees quickly,” the company’s statement reads.
Sundial says it will continue to cover the cost of employee health and dental benefits for all employees temporarily laid off.
“The company appreciates the challenges this decision will present to its valued employees and their families and has made every effort to provide those impacted with clear direction on how to access government-sponsored wage loss programs,” the company’s statement reads.
Curtailment of harvest and cultivation activities is a temporary measure, the company said, adding current processing levels will be maintained to meet anticipated demand.
“These actions are consistent with Sundial's long-term goals of reaching sustainable profitability and optimizing our asset base,” said George.
The announcement comes on the heels of an executive shake up at the company in January and another announcement that month that the company was targeting to reduce costs by $10 million to $15 million.
That included laying off an undislcosed number of staff, which company officials said accounted for less than 10 per cent of the company’s workforce.
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With the additional layoffs announced yesterday, company officials now expect to realize annualized net cost reductions of approximately $28 million.
Sundial reported a $145.9 million net loss in its fourth quarter, according to filings released on March 31.
It also spent $19 million in the fourth quarter completing construction of additional grow rooms and a processing building at the Olds facility.
“While Sundial has achieved several important milestones over the past year, the company has also faced a number of internal and external challenges including operational difficulties, excess leverage, poor cost controls, regulatory delays and rapidly evolving industry conditions,” said George during the company’s fourth-quarter and 2019 year-end conference call and webcast.
“In spite of challenging cannabis market conditions, as well as the pressures COVID-19 is placing on the broader economy, reaching profitability in 2020 is a top corporate objective,” George added later in the call.
