Shares in Itaconix PLC (LSE:ITX, OTCQB:ITXXF) slumped after the polymer ingredients company announced a drop in revenue and widening losses, as supply disruptions and cost inflation took their toll.
The AIM-listed group, which designs and makes plant-based specialty polymers for use in cleaning, hygiene and beauty consumer products, reported revenues of US$2.6mln for the year to 31 December 2021, down from US$3.3mln the year before. Underlying losses (adjusted EBITDA losses) widened to US$1.6mln from US$993,000.
The gross profit margin dropped to 27% from 35.1%.
The company attributed the fall in revenue to order cycles from the stocking and rebalancing of customer inventories in response to the Covid-19 pandemic.
It noted that revenues recovered in late 2021 and are continuing to grow in the first half of 2022.
"Even with a growing commercial base and expanding technology platform, 2021 showed that we are not immune to the macro forces affecting consumer product industries,” said Itaconix CEO John R Shaw.
“Customer inventory cycles accelerated as companies overstocked leading to an extended destocking period. Incoming raw materials and outgoing customer shipments had longer delivery times and higher costs. The supply of other ingredients into our customers' products had major supply disruptions that delayed the use of our products,” Shaw explained.
The company added major new customers last year, and following successes across all applications, its plant-based polymers are now essential ingredients in around 130 brands around the world, it said.
"We are just starting to tap into the potential of our proprietary plant-based technologies to accelerate the transition of brands and consumers to a low carbon economy, with over 95% of our 2021 revenues derived from plant-based products,” Shaw said.
Looking ahead, Itaconix said it entered 2022 in a much better position to succeed in the current environment of higher costs and supply constraints. It has raised its prices and will continue to do so if costs rise further.
“Although market volatility will continue in 2022, our achievements on major customer projects in 2021, are generating substantial commercial progress in 2022 that will add to our expanding base of recurring revenues,” it concluded.
Itaconix shares fell 18.72% to 4.43p midmorning, having dropped as low as 4.12p earlier.