Growth in polymer demand continues for Itaconix

Plant-based polymer technology company Itaconix updated the market on its first half on Tuesday, reporting that growth in demand for its polymers had continued in the six months ended 30 June.

The AIM-traded firm said unaudited revenues for the period totalled $1.4m, representing 26% growth over the equivalent period in 2020, and a 36% decline from the second half of 2020.

Revenues for the first half were expected to be lower than the second half of 2020 due to the order patterns of major customers, the board said.

As a result of the overall increase in revenues, unaudited EBITDA losses were in line with management expectations.

Revenue growth for the period was led by strong product volumes in odour control applications with new and recurring orders spread across North America, Europe, and Asia, driven by the success of customer products,” the board said.

The company added that it was planning to add a new odour control product, expand into at least one new application, and increase marketing efforts with broader promotional activities in the second half.

As highlighted in its trading update on 8 June, the board said order fluctuations were occurring in detergent applications as brands and retailers adjusted inventories due to uncertainties around consumer buying habits, as countries emerged from Covid-19 lockdowns.

As a result, unaudited revenues in that area for the first half were flat year-on-year, due to a sharp decline in monthly volumes at the end of the period.

Interest in new detergent products based on ‘Itaconix TSI’ continued, with new detergent brands and new formulation projects starting by the end of the year.

The company’s directors said they were “confident” in the “sizeable revenue potential” from current and new customer projects, but they expected order fluctuations to continue in the second half.

Revenues in personal care applications for the period were less than the same period in 2020, and “substantially less” than the second half of 2020, as shipments in the last part of 2020 were sufficient to meet customer needs during the lockdowns in North America and Europe.

The board said it expected some further delays in new orders, but remained “confident” of the overall major market potential for Itaconix ingredients, particularly as the firm developed new products and increased marketing efforts to accelerate revenues from personal care.

Delivery costs and times for key raw materials were increasing as suppliers continued to struggle with shipping delays caused by the Covid-19 pandemic and disruption throughout the supply chain.

The company said it had implemented product price increases and adjusted raw material purchasing and inventories to assure supply and mitigate potential further cost increases.

Net proceeds from the recent $1.5m fundraise had been used for additional working capital, in particular to improve the cost and certainty of the company's raw material and finished goods supply chain, given current volatility.

The fundraise strengthened the firm’s balance sheet, the coard said, with net cash at period end on 30 June standing at $1.4m.

“We continue to make significant progress capitalising on the revenue potential in every household for our plant-based technologies,” said chief executive officer John Shaw.

“Supply chain delays with both our customers and our suppliers are causing some short-term issues, but our revenue opportunities are growing through the increasing recognition of the value of our ingredients in sustainable consumer products and through new additions to our offering of plant-based products.

“Underlying consumer demand for these products also remains strong.”

At 1542 BST, shares in Itaconix were down 30.08% at 7.53p.