Close the Loop’s performance in its first full year reporting period as an ASX-listed company exceeded its key prospectus metrics, with the company saying it is entering the new financial year in a strong position to accelerate its growth momentum.
Its revenue of $89.2 million was 20.7 per cent above its prospectus forecast, and up by a third, or 32.3 per cent on last year. Its EBITDA of $14.3 million, was 16.3 per cent above the prospectus forecast, and 8.3 per cent higher than last year, while its net profit before tax hit $7 million, which was 17.2 per cent above the prospectus forecast, and 7.7 per cent above last year.
The company said strong organic revenue growth across all divisions contributed to significant earnings uplift. It says its acquisitions of Oceanic Agencies, Crasti & Co, and Alliance Paper, the latter of which took place after the year end, delivers on the prospectus strategy, and adds to sales and profitability levels. Oceanic Agencies added $4.4m to revenue, while Crasti & Co added $2.5m.
The company has a cash balance of $10.3 million. It says that robust growth is expected this year, and will come from both more earnings accretive acquisitions, and from organic growth.
Each division increased sales over the previous year, with standout performers O F Flexo surging by 45 per cent, and O F Resource Recovery, up by 33 per cent.
O F Pack was the biggest divisional earner at $27.4 million, followed by Close the Loop USA at $22.1 million. Between them, these big two divisions account for 55 per cent of revenue.
Foster International Packaging achieved revenue of $8.6 million, O F Resource Recovery $8.2 million, Close the Loop Australia $7.4 million, Close the Loop Europe $5.6 million, Oceanic $4.4 million, O F Flexo $3 million, and Crasti & Co on $2.5 million.
Joe Foster, CEO, said Close the Loop is the only ASX-listed company operating in all parts in the circular economy - from product design, manufacturing, collection and recycling, and then eventually recovering it as new packaging or secondary products, or simply packaging-to-packaging.
Speaking on the results Foster said, “We achieved strong organic growth in niche packaging and recycling, and increased sales from an increasing range of circular economy products. To meet demand, we increased production capacity, made further investment in resource recovery equipment and efficiency improvements, and added additional resources to implement new take-back programs.”
Foster also racked up the air miles during the year, he said, “We expanded our presence internationally, increasing our packaging presence in the US, and expanded the sustainable packaging business in South Africa through our Foster International Packaging division. Our Close the Loop USA division also reported a strong revenue increase in FY22, with a solid recovery from Covid-19 losses.”
He plans to maintain the growth trajectory through further acquisitions, increasing market share, and implementing recycling conversion. He said, “We enter the new financial year in a strong position to continue to deliver on our growth strategy and accelerate our growth momentum through further earnings accretive acquisitions, and organic growth, as we use our industry leading innovation to create new take-back, re-use and recycle programs, and circular economy solutions.”
The Group expanded its sustainable packaging business in South Africa via its Foster International Packaging division, following the withdrawal of the market leading competitor, Amcor. Foster International Packaging is a leader in the supply of sustainability flexible packaging products across a wide range of Southern African markets.
The new Alliance division is expected to grow revenues to $19.7 million in FY23 from $11.7 million in FY22, and see EBITDA rise to $2.4 million in FY23, from a loss in FY22. The revenue growth is being driven by new supply contracts, and investment in inventory to meet the increased demand for Alliance products.
The supply of TonerPlas following the fire in June is expected to fully recommence by the end of the year. Plans were already underway to upgrade the TonerPlas line in FY23 to meet increased demand, so these upgrades will now occur at the same time as the line rebuild, with the company taking the opportunity to realign and improve the production flow of the Somerton facility to allow for future growth.
The company is also examining possible expansion into packaging-related services from its US base in Kentucky, in addition to investigating further options for product take-back programmes.
