We hosted Mårten Hellberg, CEO at OrganoClick, at Today’s ABGSC Investor Days seminar. Among other topics, Mr. Hellberg discussed the latest status of potential new contracts within Non-woven & Techincal Textiles (NWT). Currently, the technical approval process has been completed with one counterparty, while some final production tests are ongoing with another. There are also talks being held, at different stages, with many other non-woven producers. In the current climate of high oil prices and an uncertain future oil supply to Europe, we believe this will accelerate the transition away from plastics and increase the demand for alternatives, such as biobased binders, given that petrochemical products (mainly plastics) account for ~10% of global oil consumption.
Looking to move towards a leaner business model
Currently, OrganoClick has fairly cumbersome production processes within its Biocomposites (BC) and Functional Wood (FW) segments, which do not support particularly high margins at OrganoClick’s current scale. Although this has been discussed before, Mr. Hellberg reiterated today that a significant strategic shift may be in the cards, wherein the company instead adopts a leaner business model centered around selling only the chemical additives used in the final production, while outsourcing the production itself. This would be similar to the model currently in place in NWT, and we argue such a change will lead to improved margins. We also believe this would make sense strategically, as OrganoClick’s primary expertise lies in producing and developing the chemical additives. Currently, the target is to reach 20% EBIT margin (and 40% gross margin), but we believe the long-term margin potential could be even higher given the mentioned shift in business model. However, we stress that ...
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