In its latest December quarter report, ASX-listed Carbonxt (ASX:CG1) reported revenue of $8.8 million for the first half of financial year 2019.
Reaching revenue of $8.8 million means the company has exceeded its Prospectus revenue forecast of $8.2 million for the half year period. The result is also a 38% increase on the FY18 revenue of $6.4 million.
After experiencing a set-back in mid 2018 due to a delay in the commissioning of one of its manufacturing plants, the company is now back on track and targeting cash flow positive by June 2019.
Carbonxt reported that the previous equipment issues associated with new plant operations are now improved and the company is beginning to capitalise on the growing demand it is experiencing for its activated carbon (AC) pellet products.
Supported by the equity raising, completed in October 2018, Carbonxt has deployed the capital to expand its manufacturing facilities to meet the higher than anticipated demand for its AC pellet product.
Its Arden Hills pellet production facility is now operational and the costs associated with establishing the facility have significantly reduced and the company expects these to improve further this quarter.
Carbonxt Managing Director, Warren Murphy is pleased with the result this quarter. “We are pleased to see the production of pellets has stabilised and the costs of production has reduced considerably with the use of activated carbon from our Black Birch facility,” he said.
During the quarter the company began the supply of its powdered AC to major utility customers from its Black Birch facility and is ramping up the facilities production over the March quarter to 4,000 tons per annum. The facility has the capacity for up to 10,000 tons when fully operational.
“The move to supply more of our customers from Black Birch is also pleasing and we hope to continue this transition successfully over the next quarter,” Murphy said.
Strong regulatory tailwinds are also supporting the company’s growth and demand for its products.
The expected change to corporations benefits of reduced mercury in the Mercury and Air Toxic Standards (MATS) is no longer anticipated.
The newly appointed Environmental Protection Agency (EPA) Administrator Andrew Wheeler has stated that he does not believe there will be a weakening in the mercury standards or in the enforcement of the current MATS regulation – meaning that companies will still be required to meet the high standards of reducing mercury emissions as set out by MATS.
Furthermore, President Trump’s trade tariffs with China are driving demand from local businesses for a locally produced product.
Having already beat its prospectus revenue forecast the company is optimistic of further growth in 2019 and reiterated its expectation of achieving cash flow positive by June 2019.
This content is produced by Star Investing in commercial partnership with Carbonxt. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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