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Eric Wang, the longstanding CEO and managing director of Ecofibre (ASX: EOF), has resigned after more than seven years with the medicinal cannabis and hemp technology company that has recently been in the throes of an aggressive restructuring program.
Wang joined the company in 2016 as chief financial officer and executive director, at a time when annual revenue was less than $100,000.
Dividing his time between the USA predominantly but also Australia, he took on the leadership in December 2017 and steered Ecofibre through its 2019 initial public offering (IPO), helping the group hit annual revenue of $50 million pre-COVID and achieve unicorn status for a brief moment as a $1 billion company.
With backing from Countplus founder Barry Lambert who had strong motivations for the company due to the treatment possibilities that medicinal cannabis presented for his granddaughter who suffers from paediatric epilepsy, Ecofibre witnessed rapid sales growth of its Ananda Professional CBD oil in the USA in tandem with development breakthroughs from its Hemp Black textiles.
However, a downturn in the medicinal cannabis market in 2021 took a major toll on the company, and Ecofibre has struggled to recover with its market capitalisation now sitting below $50 million.
Chairman Vanessa Wallace, who will act as interim CEO and managing director in the wake of Wang's immediate departure, has thanked the longstanding leader for his 'unwavering commitment and drive' for Ecofibre and its shareholders in building and growing the company.
"I would like to thank all of my fellow shareholders, staff and leadership team, and directors for all of their support and commitment over the past seven years," Wang says.
At the company's recent annual general meeting (AGM), Wallace explained that a restructuring and refocusing of the business under way since late 2022 was 'imperative'.
"We must address what we can control, and get back to cash positive operations with robust growth platforms ASAP," she said, following a financial year when Ecofibre reported a loss of $39.9 million, depressed by $12.4 million in impairments, not to mention a $3 million cut to revenue due to transport, weather and harvest issues.
Ecofibre has seen green shoots for the Hemp Black business, securing deals with Under Armour and Cruz Foam, but in the September quarter the division's revenue dropped 31 per cent due to an 'expected, temporary decline in biomedical yarn sales'.
In a trading update at the end of October, Wang noted this as well as weaker Ananda Health sales, although this was partially offset by a better performance from Ananda Food following initial shipments of Smitten Cat Litter to Woolworths Group (ASX: WOW).
"We remain focused on returning the business to positive operating cashflows. Our cost reduction program that was successfully implemented in 2H23 continues to benefit the business, and further savings have been delivered," he said on 31 October.
"With the commissioning of new production lines largely complete, the timing of scaling these new initiatives is an important part of our cash positive plan in the second half."
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