ECS Botanics welcomes another record quarter driven by demand for cannabis products

ECS Botanics ASX December 2021 quarter demand cannabis products
For the December quarter 2021, ECS Botanics posted $1.4 million in revenue, which is 308% higher than the previous corresponding period.

Medicinal cannabis and hemp producer ECS Botanics (ASX: ECS) has welcomed another consecutive record quarter for the three months ending December 2021 (Q2 FY2022).

The company achieved $1.4 million in revenue, which was 58% higher than Q1 FY2022 and up a whopping 308% on the previous corresponding period.

Driving the ongoing growth was strong demand for ECS’ cannabis oil products and dry flower in Australia and international markets.

While revenue rose, ECS curbed operational outlays with $607,000 used – down 48% on Q1 FY2022.

Wellness business

The wellness division also had a strong Q2 FY2022, bringing in $564,000 in revenue. This was underpinned by hemp seed oil orders from both major Australian retailers Coles (ASX: COL) and Woolworths (ASX: WOW).

Another positive development during Q2 FY2022 for the wellness division was a distribution agreement with Metcash.

Metcash is providing a direct approach to Australia’s largest independent supermarket chain IGA and Richies Supa IGA.

The chain has 84 stores across Australia and has agreed to stock ECS’s hemp seed oil.

Growth strategy

ECS says it is well positioned to capitalise on the significant demand for its products and continue increasing sales and revenue.

To facilitate this, the company is streamlining its production and manufacturing to accelerate speed to market, while also improving quality, systems and unit cost.

Commenting on the company’s Q2 FY2022 performance, managing director Alex Keach said it has laid a “strong foundation” for the remainder of the financial year and beyond.

“We have considerably grown our revenue, while keeping a careful eye on costs.”

“We expect to continue this trend through the recently secured agreements with both Sun Pharma and Cannvalate, as well as other pending orders from local and international customers.”

The company is also in discussions with several potential customers both within Australian and overseas with “multiple agreements pending”.

Mr Keach noted existing customers were also ordering greater than the minimum value of their contracts.

“This is a strong sign of the market demand, and we anticipate robust growth from the long-term strategic agreements we signed this quarter,” he added.

The company’s outlook internationally is also further bolstered by loosening of regulations in Germany, which bodes well for the remainder of Europe. The German coalition government will allow controlled sale of cannabis to adults for recreational purposes in licenced shops in the coming years.

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