The company said in its FY2021 half-year results that revenue was down 39 per cent yoy to AUD$4.8m (US$3.4m). It also incurred a loss of AUD$10.8m (US$7.7m), an 88 per cent improvement from the same period last year, where it reported a loss of AUD$90.2m (US$64.5m).
Revenue mainly came from Hemp Foods Australia, which contributed 40 per cent – AUD$1.9m (US$1.4m).
In contrast, revenue from its operations in Europe – via Elixinol Europe – was down 70 per cent yoy to AUD$300k (US$214k). Gross profit from Europe was also down from AUD$300k (US$214k) to AUD$100k (US$71.5k).
Key reasons for the decline included reduced footfall into physical stores due to COVID-19 and regulatory uncertainty stifling CBD trade in the UK – one of its main markets.
“We have worked hard to reposition the business for turn around and as a result of enterprise-wide optimisation initiatives, are now in a strong position to capitalise on the improving US market outlook and Hemp Foods Australia’s dominant market position in the growing plant-based foods category.
“The UK remains challenging as a result of uncertain regulatory environment and we are being prudent in our approach there by adjusting our investment levels and continually evaluating how best to deploy our efforts and capital,” CEO Oliver Horn said.
The company previously said that major UK retailers have been reluctant to engage with the CBD category, as they have been waiting for the Food Safety Authority (FSA) to publish a list of CBD products that have been supported by valid novel foods applications.
The firm added that it would focus its investments in the US and Australia in the short term, while keeping a close eye on the evolving UK regulatory landscape.
E-commerce, retail driving Australia sales
Hemp Foods Australia recorded a slight revenue decline from AUD$2m (US$1.4m) to AUD$1.9m (US$1.4m) in the first six months of this year, while gross profit remained at AUD$600k (US$429k).
Its sales for the first half of this year had been driven by its e-commerce activities, new products and lower cost structure which enabled profitability.
The company said that its e-commerce revenue was up 54 per cent between FY2021 H1 and FY2020 H2. On the other hand, retail expansion continued, with its second product listed in Costco supermarket for distribution. This means that both its 1.5kg Hemp Gold protein tubs and previously listed hemp seeds branded Essential Hemp are available for sale in all Costco stores.
In terms of new products, the company has launched the new premium Hemp Gold range, which consist of protein powder and oil.
It said that it would continue to drive e-commerce growth as well as retail presence in Woolworths, and Coles.
As for medicinal cannabis, the company has appointed Health House as an exclusive distributor for the Australian pharmacy channel in June. This deal will see Elixinol’s products being distributed to 5,700 pharmacies and doctors.
In terms of new product plans, the company plans to develop functional foods supported by health claims, including immunity, digestive health, and mobility for the Australian market.
NPD in the US
The US market brought in revenue of AUD$2.6m (US$1.9m) – down from AUD$4.8m (US$3.4m) last year – while gross profit dropped from AUD$2.1 (US$1.5m) to AUD$1.8 (US$1.3m).
The company said that while the CBD category has not returned to pre-pandemic levels, there was increasing consumer acceptance and use of CBD products due to improved retail foot traffic.
It added that it would focus on CBD for pet wellness as well as products for beauty, mental, mobility, immune health in the US.