The Secos Group Ltd (ASX: SES) share price is lifting after the company released its earnings for the financial year 2021 (FY21).
Right now, the Secos share price is trading at 34 cents, up 6.25% on its previous closing price.
Secos share price jumps on $2.5 million profit
Here's how the producer of sustainable packaging performed over FY21:
- Net profit after tax of $2.5 million, up 318% on FY20's $1.1 million loss
- $30.8 million of revenue, a 43% increase of that of FY20
- No dividend
The company reported $30 million worth of sales, with year-on-year sales growth of 126.6%.
The company's traditional film business saw weaker sales due to COVID-19 impacts on demand and a line breakdown in January which was resolved in March.
Secos' compostable resins, films, and bags recorded double-digit growth. Its compostable bags segment grew well as a result of councils implementing household 'food organics garden organics' (FOGO) programs and demand for dog waste bags.
Secos ended the period with $11.3 million of cash and no debt.
What happened in FY21 for Secos?
FY21 was a busy period for Secos. The company increased its film and bag production capacity at its plant in China and installed more equipment at its operation in Malaysia.
It also increased its asset utilisation rates in its current compostable operations and added more compostable resin capacity at its Malaysian bio-resin plant. Finally, it secured a new facility in Malaysia to meet the demands of an expanding compostable market.
Secos also completed a $15 million placement in FY21. The funds were to go towards equipment and working capital to expand its biopolymer capacity in Malaysia and China.
In July 2020, Secos announced Woolworths (ASX: WOW) was to stock its products in 82 select stores.
Secos also entered into a supply contract with Jewett-Cameron Trading Company Limited to supply its dog waste bags to big-box retail stores in the Americas.
What did management say?
Secos chair Richard Tegoni commented on the results, saying:
The momentum to solve the world's plastic waste crisis is building and has resulted in strong demand for compostable packaging and products globally. SECOS has delivered vastly improved results in 2021 but most importantly… has established itself as one of the key global participants in the bioplastics and environmental packaging space…
The company's excellent results were achieved despite very difficult global trading conditions hampered by COVID-19 restrictions and the impact the virus has had on the world economies generally. During the year, SECOS experienced significant worldwide shipping challenges. However, SECOS staff managed its supply chain well and maintained strong customer service levels to deliver on its growth targets.
What's next for Secos?
Here's what those interested in the Secos share price might want to keep an eye on in FY22:
Secos has already announced some news that might boost its bottom line in FY22.
In July, Secos announced Woolworths will stock some of Secos' products in 203 of its stores.
Additionally, the company's council business has continued to expand.
Secos expects more growth in biopolymer resin and film sales in FY22. The growth is expected to be delivered through new opportunities and expanded manufacturing capacity.
It will also work on growing its MyEco branded products' market share in both Australia and the United States.
Finally, the company recently announced it has invested in a new Australian Research and Development centre for bio-based products.
Secos share price snapshot
The Secos share price has gained 61% in 2021. It is also 142% higher than it was this time last year.
