The newly listed Close the Loop Group (ASX: CLG) is off to a solid start, accelerating growth momentum as it reports an increase in revenue of 22.6 per cent on pcp and pro forma NPBT up 67.7 per cent on pcp.
Announcing the company's results today for the half-year ending 31 December 2021 (1H22), Group CEO Joe Foster said: “The second half of 2021 was a milestone for both the combined company and the sector, as Close the Loop Group became the first company to list on the ASX that provides full circular-economy solutions.
“Our oversubscribed IPO has demonstrated the appetite the market has for trusted sustainable businesses and has significantly increased our capability to reduce the amount of waste that ends up in landfill and instead have it recycled into new products.”
The company recorded pro forma revenue at $40.7 million, underpinned by strong growth in both the packaging and resource recovery businesses, generating EBITDA of $7.4 million. Pro forma NPBT is reported at $4.97 million.
“We close out the half year in a strong financial position, on track to meet end-of-year forecasts on a pro forma basis,” Foster said, noting all divisions are performing well against forecast.
“The expertise gained through both sides of the merger bodes well for future operations, broadening of services to our various customer bases and acquisitions,” Foster said.
Despite challenging operating conditions due to Covid restrictions in various jurisdictions, Foster said the company has performed well through its ability to rely on complementary business units.
“This strong financial performance was driven by our USA operations trading ahead of budget, along with the addition of new services in the EU, and has us well placed to meet end-of-year forecasts,” Foster commented.
“Operationally, we have made headway on our growth strategy acquiring two strategically compelling businesses, Oceanic Agencies and post reporting period, Crasti & Co, that will further strengthen Close the Loop Group’s ability to provide a broad range of products to meet the growing need for a circular economy solution as it fits well into our take back and circular economy program.
“We are already making headway in creating synergies for O F Packaging customers in determining how we can use our Close the Loop Group recovery and reuse capability to create new take-back programs that also help them improve their ESG credentials into their supply chains.”
Foster said the company is seeing strong demand for recyclable ready packaging and recycled content, which are products that are readily available through the company's various divisions.
“With foreign exchange movement and raw material increases putting margins under pressure, these adjustments are being passed on when possible,” he said.
According to the Group's overall financial review, its O F Packaging businesses experienced strong sales during the period, improving throughputs and refining manufacturing equipment lines and operations. The O F Flexo division has traded ahead of budget throughout the period with high demand for locally produced packaging containing high percentages of recycled content and more recyclable ready packaging. The business in South Africa achieved strong sales growth which drove improved performance. The resource recovery division is showing positive growth following strong demands from international markets for recycled cardboard with stable prices.
For the Close the Loop division, the US business has gained momentum as trading conditions rebounded strongly with collection volumes approaching pre-Covid levels. Europe continues to track to budget. Australian operations were impacted by lockdown activity in several jurisdictions, as the recycling business is volume-based. However, volumes have increased in November and December.
In closing comments, Foster said: “We are extremely pleased with what we have achieved in the first few months as a listed company. In addition to developing our core products, we have secured two reputable businesses that will enhance our operations and commitment to excellence and dedication to the environment and assist the company to achieve its full year EBITDA forecast. Our strong financial position has us well placed to continue to execute on our expansion strategy and grow Close the Loop into a global leader in the circular economy.”
With locations across Australia, Europe and the United States, Close the Loop Group comprises two merged secondary business groups, Close the Loop and O F Pack. The combining of these two entities has enabled the delivery of end-to-end solutions across packaging and consumables to a variety of markets, with advanced innovation in product development, as well as end of life take-back and recovery systems for complex commodities to reduce waste to landfill.
The O F Pack division will be exhibiting at AUSPACK 2022 on stand C170.
