Itaconix PLC (AIM:ITX, OTCQB:ITXXF) has been unable to reach satisfactory commercial terms with one of its major existing merchandising customers in North America for supply in 2024, it said in a statement.
As a result, revenues and adjusted EBITDA for both 2024 and 2025 are expected to be below management's previous expectations, though gross profit margins at the detergent ingredient supplier will improve.
In the statement, Itaconix added it had taken a strategic decision to decline low-margin business and focus on diversifying the revenue base.
Discussions with the particular merchandiser on 2024 pricing and volumes are continuing and some orders are possible but the upshot is likely to be much lower demand from this customer in 2024.
Reflecting that, group revenues in 2024 are now expected to be between US$6.0 million and US$6.5 million against an unaudited US$7.9 million in 2023, itself a record and a 40% rise from 2022.
As a part of the new strategy, Itaconix said it is adding new detergent customers in Europe and North America and expanding the use of its plant-based performance ingredients into new markets.
John R Shaw, chief executive, commented: "Enhancing our revenue structure and increasing gross profit margins, while impacting our near-term revenue streams, paves the way for our next stage of growth.
“We are positioning ourselves to better capture the commercial value of our performance ingredients with new customer wins, new volumes in non-detergent uses, and important new product development initiatives.
“I believe the strategic efforts we are taking now will advance our long-term revenue growth and profitability objectives."