by Green Plastics
In March, the company relocated its manufacturing facility from Hawthorne, Calif., to the new facility in Seymour, Ind., which occupies 105,000 square feet on 14 acres of industrial land. The new manufacturing facility would be capable of producing approximately 80 million pounds of bioplastic resin once operating at full capacity, and would allow the company to deliver stronger financial performance from increased operational efficiencies and greater capacity.
As a result of relocation, Cereplast reported a decline in sales due primarily to the ramp up of the new facility. However, the operating efficiencies achieved at the Seymour facility, as well as lower cost of doing business in Indiana as compared to California allowed the company to report stronger gross margins, which increased from 8.6% in the second quarter of 2009 to 30.8% in the second quarter of 2010.
Going forward, the company reported significant new client additions during the first half of 2010 and expect a ramp up in orders on older contracts. To date Cereplast reported agreements to ship 16 million pounds of bioplastic resins in 2010, representing up to a 400% increase in shipments over 2009. As a result, the company expect revenues for 2010 to increase more than 190% over last year to between $8 million-$10 million as demand for its products remain strong as a result of contracts and commitments it is securing from around the world.
Moreover, the company has recently announced two multi-million dollar agreements to bring its bio-plastics to the European marketplace. In August, Cereplast announced a multi-million dollar contract with RI.ME. Masterbatch S.r.l., based in Italy, to supply bioplastic resins for use in its masterbatch process for adding colorant to bulk, uncolored resins. The company will supply its Compostable 3000 film grade for use in RI.ME.’s masterbatching processes for the production of items such as carry out bags and compostable trash bags. Cereplast will begin shipping its bio resins in September 2010 and is currently in discussions to extend the contract on other RI.ME. product lines. The initial contract runs through December 2011.