INOV Experiences 25% Export Sales Surge Since Last Quarter

INDUSTRY.co.id - Jakarta, 01 November 2023 – PT Inocycle Technology Group Tbk (INOV: IJ) Indonesia’s leading and largest PET waste recycling company recently announced its financial results for the 9M23.

INOV reported sales of IDR 464.4 billion in 9M23, indicating a 13.0% YoY decrease but showing a slight 2.8% QoQ growth in 3Q23. The significant growth in 3Q23 was primarily driven by increased export sales of its re-PSF, which constitutes approximately 72% of the total sales.

The report emphasizes a notable increase in exports of re-PSF with a 25% QoQ increase in 3Q23, primarily due to the demand for re-PSF products used in bedding goods. Export demand had been weak during the pandemic but began showing signs of a rebound in 2023.

Overall, the contribution of export sales to total sales remained relatively small but showed a slight increase, rising from 10% in 9M22 to 11% in 9M23. INOV achieved a strong gross profit of IDR 33.1 billion in 3Q23, representing a robust 34.8% QoQ growth, which brought the total gross profit in 9M23 to IDR 87.2 billion.

These achievements can be attributed to the improved margin of re-PSF products in 3Q23 and the implementation of cost optimization and efficiency practices during the quarter. The gross profit margin increased from 15.6% in 2Q23 to 20.5% in 3Q23.

In addition to recovering export demands, this achievement underscores the fact that INOV's recycled products meet international quality standards and it is attracting global demand.

“The global focus on ESG and Carbon Credit is gaining momentum, Governments, industries, as well as consumers are more aware and invested in businesses that can deliver good quality recycled products derived from clean technology waste processing,” INOV’s Director, Victor Choi explains.

“We have more than 30 years of experience and we continue to scale up our business, the Inocycle Technology Group is well positioned for future growth.”

Despite infrastructural challenges for waste collection in an archipelagic country, Inocycle has managed to be involved in waste collection from more than 9 locations throughout Indonesia, along with further support from its group, thereby establishing the Company as the largest capacity for absorbing and recycling PET waste in the country.

INOV currently has a capacity of 40,000 tons per year with the recycling capacity spread across small to medium cities in Indonesia. This is in line with INOV’s goal of creating as much a value chain for PET waste in different cities. As of September 2023, INOV alone has collected more than 21,000 tons of waste.

In addition to infrastructure, the Company must also contend with other challenges such as distribution costs, maintaining relationships with aggregators, as well as foreign exchange challenges. Despite the strong gross profit highlighted in their quarterly report, INOV's financial performance was significantly affected by the weakening of the Rupiah against the USD. This is due to the USD denomination used in most of the Company's loans.

INOV managed to record adjusted EBITDA figures of IDR 17.9 billion in 3Q23, representing a 71.0% QoQ increase. This brought the total adjusted EBITDA figures for 9M23 to IDR 41.1 billion. It's worth noting that these adjusted EBITDA figures do not include the impact of forex losses, as the Company believes that forex losses do not accurately reflect the core business activities of the Company.

In addition to the Company's efforts to reduce loan leverage through both organic and inorganic strategies, INOV anticipates that the high potential for a rebound in export sales will help offset the forex losses incurred due to their loans.