Cann Group Limited

Cann Group reported FY23 revenue from sales of products and services of $13.78 million, up 115% versus FY22, and total income of $21.68 million. Deborah Ambrosini said the increase reflected new and repeat orders from Mildura, plus other income including the FY23 R&D rebate accrual and a gain on sale of the Southern facility, land and buildings. Operating expenses rose as Mildura came online, with higher cultivation, manufacturing and staffing costs, along with higher interest expense from rate rises and additional depreciation and amortization after Mildura began amortizing in the last quarter of FY22. Looking ahead, management said production is moving from about 3 tonnes to 8-9 tonnes this year, with a goal of 12.5 tonnes, and that economies of scale should improve product margins in FY24; EBITDA profitability was described as likely in FY25 and the company said its current focus is on scaling quality production and converting it into sales rather than giving a specific revenue forecast.

Peter Koetsier framed FY23 as the company's pivot point and repeatedly stressed that the business is transitioning from buildout to commercialization. He said the “airplane has now taken off,” Mildura quality has arrived earlier than expected, and the company is now focused on scaling quantity, broadening genetics, and signing longer-term customer and supply agreements to build a more stable revenue base. His tone was upbeat and patient, but he also emphasized that the near-term priority is domestic market execution before expanding more seriously overseas.

Deborah Ambrosini highlighted the financial lift from the ramp-up in Mildura, noting sales of $13.78 million, total income of $21.68 million, and the contribution from the FY23 R&D rebate accrual and the gain on sale of the Southern facility. She said operating expenses increased as expected because the company officially brought Mildura online, which drove higher cultivation, manufacturing, staffing, interest, and depreciation/amortization costs. Her message was that FY24 should benefit from economies of scale as production rises, with margins expected to improve as output increases.

Analysts asked whether Cann can sustain its growth rate, and management said it would be “very surprised and very disappointed” if growth did not continue, given the move from 3 tonnes toward 9 tonnes and then 12.5 tonnes. On product mix, management said dried flower is still the mainstay for the next 12 to 18 months, while vapes and edibles may come later, and that high-quality flower should support better margins. Questions on profitability, automation, customer base expansion, and the capital raise drew a consistent answer: the facility is largely built, automation such as a multi-head filler is being added to speed production and create third-party packing revenue, and EBITDA profitability is the FY25 target. On the capital raise, management said the target was $11.7 million, $4.46 million had been raised in the rights issue, and the shortfall process was still ongoing.