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Digging into Aphria’s Cost of Production

Aphria’s costs

In this part of the series, we’ll discuss how Aphria’s (APHQF) production costs have evolved in the last four quarters, just as we did for MedReleaf (MEDFF), Aurora Cannabis (ACB), and Canopy Growth (WEED) earlier.

Cost evolution

In the chart above, we can see that though Aphria’s costs per gram have seen a falling trend sequentially, its fiscal 2Q18, which ended in November 2017, saw a spike. Its cost per gram in this quarter rose to 2.13 Canadian dollars from 1.61 Canadian dollars a quarter ago.

The above cost is what the company calls the “all-in” cost of its dried cannabis. It’s net of accessories costs, cannabis oil conversion costs, and any plant inventory adjustments.

The company further reports a pure cost of production per gram, which is an “all-in” cost net of amortization and packaging costs. In fiscal 2Q18, this cost stood at 1.45 Canadian dollars, which rose from 0.95 Canadian dollars in fiscal 1Q18.

Different reporting structures

Each of the companies (HMMJ) we’ve discussed has a different reporting method for its price and cost structure. These differences add complexity to an analysis of these companies on a comparative basis.

However, the price and cost structures discussed in this series can provide some basis for comparison of the evolution of prices and costs in recent quarters.

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