Accsys revenue rises, but profit margins narrow

The AIM-traded firm put the growth down to strong product demand, higher average sales prices, and expanded production capacity following the launch of reactor four in September last year.

Accoya, one of its flagship products, saw a 20% increase in sales volumes, totalling 28,807 cubic metres.

The growth was particularly pronounced in the rest of the world and the rest of Europe markets, with increases of 42% and 28%, respectively.

Accoya for Tricoya production also saw 30% growth to 8,393 square metres, reaffirming Accsys’ confidence in the Tricoya market potential.

However, Accsys did report a two percentage point decline in its gross profit margin, to 29%, due to higher raw material costs and inventory optimisation for wood.

Moreover, the company faced a significant challenge with a 64% decrease in underlying EBITDA to €1.6m.

The board blamed the drop on increased pre-operational costs at the Accoya plant in Kingsport, US, slated for completion in mid-2024, as well as heightened operating expenditure in sales and marketing, executive recruitment, and engineering.

Accsys said it was actively pursuing strategic growth projects, including the successful performance of its Arnhem plant, ongoing efficiency improvements, and the construction of the new 43,000-metre Accoya plant in Kingsport, which was progressing as planned for completion and commercial operation in mid-2024.

However, the firm said it was reevaluating its Tricoya UK plant project due to the current operating environment and its focus on the Accoya plant in Kingsport.

The Tricoya UK plant’s viability, strategic interest, and financial capabilities will be reviewed early next year.

Accsys also reported an exceptional item of €1.2m related to organisational realignment and cost-saving initiatives, aiming to deliver annual cost savings of €3m or more.

Additionally, a non-cash impairment loss of €7m was recognised for the Tricoya segment, primarily due to changes in discount rates and market interest rates.

As of 03 September, Accsys had a net debt of €48.2m, representing a €4.1m increase since the end of the 2023 financial year.

That was attributed to capital spending of €2m, changes in working capital, inventory positions, and scheduled loan interest payments, partially offset by EBITDA generation.

In response to a challenging macroeconomic trading environment, Accsys announced a fundraising initiative to raise gross new proceeds of €24m and extend its debt facilities.

The funds would be used to complete the Accoya plant in Kingsport by mid-2024, strengthen its balance sheet, and provide additional working capital.

Accsys said it was taking decisive actions to secure the funds to support its growth strategy.

“In navigating the challenging macroeconomic conditions of the first half of the year, our new management team has shown unwavering commitment in reshaping Accsys towards a less complex business model with increased execution focus,” said chief executive officer Dr Jelena Arsic Van Os.

“As we reflect on our business performance, we acknowledge and proactively address short-term obstacles.

“However, our confidence in our innovative product range remains unshaken, with the conviction that our Accoya and Tricoya premium offerings set us apart in the market, representing substantial untapped potential.

“To ensure delivery on this potential, the company has raised today approximately €24m of new proceeds from our shareholders to improve near-term liquidity and enable us to finalise the construction of our Accoya plant in Kingsport, US, which alongside our wider operations, strengthens Accsys’s position for growth in both the medium and longer term.”

At 1101 GMT, shares in Accsys Technologies were down 4.68% at 60.05p.

Reporting by Josh White for Sharecast.com.