(Reuters) -Canadian cannabis producer Tilray Inc on Monday reported a surprise quarterly profit helped by savings achieved from its reverse-merger with Aphria and pledged more cost cuts, pushing its shares more than 12% higher in premarket trading.
Tilray also pledged an additional $20 million in cost cuts over the $80 million originally planned from the merger. Tilray and Aphria combined in June 2020, creating the world’s largest cannabis producer by sales.
Tilray’s earnings, the first for the quarter ended November from a major cannabis producer, could help calm investors frustrated by slow regulatory progress and a lack of profitability after years of overspending by Canadian pot sellers.
Tilray’s shares were up nearly 13% premarket at $7.22. Shares of other major Canadian cannabis producers, including Canopy Growth Corp, Hexo Corp and Cronos Group Inc, gained 2% to 6% after Tilray’s report.
On an adjusted basis, Tilray posted a profit of 3 cents per share in the second quarter ended Nov. 30, while analysts were expecting a loss of 9 cents per share, according to Refinitiv IBES estimates.
The company’s revenue grew 20% to $155 million, but fell short of analysts’ average estimate of $170.55 million. Chief Executive Officer Irwin Simon attributed the miss to market saturation and related competitive challenges in Canada.
Simon said Tilray is responding to those challenges by adjusting prices of its products, a strategy he expects will help his company gain some lost market share.
The company posted a net income of $6 million, compared with a loss of $89 million a year earlier.
(Reporting by Rithika Krishna in Bengaluru; Editing by Ramakrishnan M. and Shinjini Ganguli)