Bioplastics will represent the biggest growth segment for Melbourne-based Secos in the coming year, as the company reported $3m loss on $23.6m sales in the 2018/18 year.
The loss was 5.4 per cent greater than the previous year, on sales that rose by 5.7 per cent. Gross margin improved to 12.9 per cent from 11.2 per cent, while operating expenses continued their downward trend, they were $6m two years ago, $5.6m last year, and $5.2m this year.
Bioplastics represented most of the growth in sales, up by 30 per cent, while traditional plastic sales were steady. The company expects that trend to continue next year to an even greater degree as the divergence between the two becomes more prominent.
Secos says its investments this year in upgrading its Najing resin and bag plant and opening its new Malaysian resin plant made a major contribution to the figures.
The company experienced a sharp rise in demand for its proprietary compostable resins during FY18, which became its focus during the period. In the first four months of FY18, Secos secured orders valued at more than $300,000, which represented 164 per cent of the resin sales made in the previous full 12 months.
This strong demand continued into the December quarter, with resin sales for H1FY18 up more than 400 per cent year-on-year.
During the year Secos achieved growth in sales to Australian councils of 340 per cent in support of increased Organic Waste Diversion (OWD) Programs
It also secured a $1.5m Penrith City Council contract to provide compostable bags covering H2FY18 and FY19.
Throughout 2017 and into 2018, the Group experienced growing levels of demand for its bioplastic products, particularly its proprietary compostable resin as global brand managers move toward sustainable packaging solutions.
To cater for the increasing demand, the business invested in a new resin manufacturing facility in Malaysia which it opened in July. The new 30,000sq ft facility is 19km from Malaysia’s largest port, Port Klang, and can now provide resin to the domestic Malaysia market as well as the many growing markets across the globe.
The annual production capacity at Secos is 10,200 tonnes of bioplastic resins, 15,000 tonnes of cast film and 2000 tonnes of blown film and finished products.
Peak industry body, European Bioplastics, forecasts bioplastics production to grow by more than 280 per cent between 2016 and 2019 to nearly eight million tonnes per annum.
