Biome warns of ongoing slowness in bioplastics division

(Sharecast News) - Bioplastics and radio frequency technology specialist Biome Technologies reported challenges in its bioplastics division, alongside positive developments in its Stanelco RF technologies division, in an update on Monday. The AIM-traded firm said the bioplastics division was facing production and regulatory difficulties with two key customers, leading to subdued revenues in the first quarter.

Despite initial expectations that the issues would be resolved by mid-2024, the company said it had become evident that significant revenue recovery would be delayed until later in the year as technical validations were finalised.

Additionally, the North American coffee packaging market - a crucial segment for Biome - was showing signs of reduced buoyancy compared to previous periods.

In contrast, the Stanelco RF technologies division had secured several major contracts, including a significant one in 2023 and three additional large contracts announced this year.

The contracts were expected to generate substantial revenue in 2024, supporting the division's diversification into new applications within the scientific glass industry and high-value medical markets.

Biome said the division was currently focused on designing and building these systems, with deliveries scheduled for the latter half of the year.

Given the delays in the Bioplastics division, the board said it now expected group revenues for the year ending 31 December to be significantly below market expectations.

However, the impact on revenue was anticipated to be partially offset by higher margins and lower overheads.

As a result, Biome Technologies projected a small underlying EBITDA loss for the year.

"Working capital management will be a significant focus for management in the second half of the year as the RF division completes four large system builds and the bioplastics division stocks its raw material pipelines ahead of anticipated customer ramp-ups in North America," the board explained in its statement.

"In these circumstances, the board is examining ways to ensure that the group has sufficient working capital going forward.

"As of 30 June, the group had an unaudited cash balance of £0.6m, no bank debt and convertible loan notes outstanding of £1.3m."

At 1002 BST, shares in Biome Technologies were down 42.86% at 40p.

Reporting by Josh White for Sharecast.com.