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Itaconix - Trading update

Itaconix (LON:ITX) has issued a trading update for the financial year to 31 December 2019. The company is in an important commercial ramp-up phase for its sustainable speciality polymers used as functional ingredients in household and personal care products.

Main features of the update include: (1) Revenue growth of 78% for the first three quarters (to 30 September); however, delays in some customer projects mean that full-year (FY) revenue growth is expected to be below previous market expectations. We interpret this to mean growth no longer exceeding 100% year-on-year. (2) Underlying earnings (EBITDA) for the second half (H2) of the fiscal year to be in line with H1. (3) Year-end net cash expectation unchanged, as improved working capital position offsets a slower improvement in EBITDA.

Our revised FY 2019 revenue forecast of £1.2mln represents a growth rate of 72%. Although this is not as high as we previously forecast, we believe that it demonstrates a tangible growth trajectory. Specific commercial developments in the current year have included:

  • Continued growth for Itaconix’s non-phosphate detergent additives in North America, and first orders for this product in Europe.
  • Further growth from existing customers in the hair-styling polymers segment, and first purchase orders for the new Amazetm SP hair styling product being produced under the partnership with Nouryon.
  • Demand for the ZINADOR odour removal polymer continuing to expand into leading household brands and new regions through the company's collaboration with Croda.
  • Also, Itaconix completed the disposal of the legacy gum business, which completes the company’s transition to a sustainable speciality polymers company (note - CEO John Shaw appointed August 2018).

We are forecasting revenue growth of 100% per year in 2020e and 2021e, and convergence to profitability, with potential for significantly higher profitability in the years to follow.

Quick facts: Itaconix PLC

Price: 1.5499 GBX

AIM:ITX
Market: AIM
Market Cap: £4.17 m
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Financial results and forecasts
Growth drivers
Management
Market conditions
Milestones & inflection points

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