By Rithika Krishna
(Reuters) -Tilray Inc on Monday pledged more cost cuts and reported a surprise quarterly profit as savings from its reverse merger with Aphria benefited the Canadian cannabis producer, pushing its shares more than 12% higher.
The company also forecast $20 million more in cost cuts over the $80 million originally planned from the merger that created the world's largest cannabis producer by sales in May last year.
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.
"We will look to expand brands into different categories, geographies and products and there will be some additional acquisitions that will compliment some of these brands," Chief Executive Officer Irwin Simon told Reuters.
Including the combined company's growth, Tilray's revenue grew 20% to $155 million in the second quarter, but missed analysts' average estimate of $170.55 million, according to Refinitiv IBES data.
Simon attributed the miss to market saturation and related competitive challenges in Canada and said Tilray is responding to those challenges by adjusting product prices, a strategy he expects will help the company gain some lost market share.
On U.S. decriminalization of cannabis, Simon said he was "very much" expecting some form of legalization to take place last year, adding that "we are just a couple of years away before anything happens."
Expectations of policy changes, including federal decriminalization, have raised prospects for the U.S. cannabis industry.
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.