Take a Bow – Ecofibre Releases Impressive FY2019 Results

The Australian hemp giant Ecofibre has released its full year results for FY2019, showing an impressive 519% increase in revenue from the previous year.

The first full year of commercialization for Ecofibre Limited (ASX:EOF) saw revenue rise from $5.7 million to $35.6 million, while its NPAT grew by 170%. The company's total assets also increased substantially in 2019, climbing from $11.2 million to $47.8 million.

Approximately 70% of the company's total revenue came from US independent pharmacies, while 84% of sales was generated from sales of its Ananda Health branded products.

Ecofibre continued to invest heavily in Ananda Health's education platform—known as CBD 360—in 2019, which also saw the brand launch additional topical and ingestible products to meet segment needs.

The company's previous 2017/2018 investment in Ananda Health's production capabilities is already beginning to pay off, is it has allowed for a significant margin expansion in the present. In aid of this, Ananda Health has established a significant network of quality distribution partnerships to provide greater operational leverage for its products.

Ananda Food also managed to establish in-house capability to deliver four HACCP certified core seed product lines, while also planting 705 hectares of hemp across Tasmania, Queensland and NSW. The company's planting activities have thus far yielded more than 900 tons of hemp seed, that will be used to fuel further expansions of the business.

Meanwhile, the company's other subsidiary, Hemp Black—which focuses on consumer markets such as fashion, athleisure wear, healthcare, composites and building materials—developed and filed patents in partnership with Thomas Jefferson University this year.

Ecofibre will have access to an exclusive commercial license to any IP developed during the partnership in perpetuity, while the infrastructure supporting Hemp Black's business model will be completed by 2020.

Hemp Black is in the process of developing additional end consumer products lines that will highlight core product attributes which include conductivity, sustainability, anti-odor and anti-microbial qualities. The company also established five core product lines in 2019, along with securing corresponding supply chains to support future growth.

Ecofibre saw an increase in cash and equivalents during the current financial year, with operating cashflows increasing by $2.4 million, while the company's financing cashflow grew to $25.1 million. Ecofibre senior management have confirmed that the company's balance sheet will be managed for low risk and strategic flexibility.

Funds from Ecofibre's EBITDA growth—and its previous IPO—will also be used to support its strategic investment program.

Disclaimer: Past performance is not an indicator of future performance.

Although Ecofibre does not provide detailed financial guidance at this time, the company has stated that for FY2020 investors can be advised that Ananda Health will continue to experience strong quality growth, thanks to the lack of market share and size limitations.

The company also already has existing product capacity to achieve "multiples of its FY19 sales" and expects to experience further scale benefits going into the next year.

Ananda Food is expected to experience steady sales growth in 2020 underpinned by quality clients,  while being capable of supporting much higher growth and scale benefits due to the company's previous organizational groundwork.

Hemp Black is also expected to begin early commercialization in FY2020, as it completes the building of its core business infrastructure.

Ecofibre's management team has stated that the company has "strong confidence in this significant long-term opportunity".

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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