Cereplast Q&A snapshot

A lot of press releases from bioplastic company Cereplast came out the past two weeks and since I’ve been planning to write an article about them for ICIS Chemical Business‘ February 8 issue, I might as well post a shorter version of my interview with the company today.

I had the pleasure to interview Cereplast’s CEO Frederic Scheer late December and got great information about the company’s plans for 2010. Two articles were already written for ICIS news last week although they’re for subscribers only.

US bioplastics firm Cereplast to move ops to Indiana-04/01/2010-ICIS News

Cereplast to expand European bioplastics distribution-04/01/2010-ICIS News

But here’s a brief snapshots of my interview as a sneak peek for my February 8 article:

Q: How did the business fared in 2009?

Scheer: Last year was a very challenging year for us because we are in an industry that is still at its infancy. Bioplastic resins are generally more expensive to traditional resins so when the entire economy is shrinking, the environment is not the top priority anymore as everybody is thinking about survival. We are expecting 2009 revenue to be around $3-$4m. The restructuring program that we started last year, however, is helping us not only to survive but to do things that are critical for our business. We shaved a lot of costs and we were able to successfully raised money three times, in early January, in July and in December last year.

Q: When do you expect to complete your restructuring program?

Scheer: We expect its completion by the end of first quarter this year. We decided to get out of California completely as the cost of manufacturing and even just running our R&D facility in California is still unsustainable for us. We are moving our operations and R&D in our new plant in Seymour, Indiana, and we are already in the process of starting our Indiana plant as well. Another move that we have completed is entering into an agreement with one of the largest (if not the largest) compounder in the US. We will announce more details about this in the first quarter as we finalize the terms of the contract with them.

Q: What’s your financial expectations in 2010?

Scheer: With the contracts that we’ve announced in 2009, we expect to being close to break-even by mid-2010. The largest contract we finalized last year was with packaging company Georgia-Pacific. We are expecting their products incorporating our bio-resins to hit the shelves sometime in the first quarter of this year. We expect to start seeing commercialization of some of our customers’ products using our resins in the second quarter.With the cost restructuring and product commercialization from our customers, we are looking at higher revenue streams for 2010.

Q: What are your strategies and objectives for 2010?

Scheer: We plan to be more aggressive and active in sales and marketing for 2010. We recently expanded our current distribution agreement with A.Schulman, and they will now distribute our products all throughout Europe. In South America, we have good success last year and we expect our success in this region to even grow larger in 2010. We have a couple of things going on in Chile and Argentina aside from Brazil. I am actually pleasantly surprised to see South America embracing the concept of environment and sustainability and they are willing to spend to get it done. We are also looking at China as clearly this country is becoming the manufacture center of the world and having a presence there makes a lot of sense. We actually have a lot of US clients –representing 25% of our sales, that ship our resins to Asia primarily China.

In terms of research and development, we are looking at different kind of feedstock to work on as it makes sense to consider the availability of local feedstock wherever our resins are being manufactured. One of the key thing for us is to make sure that we can adapt to the raw materials that will have the lowest environmental footprint.

Of course, we already announced our plans to develop algae-based monomers. Our plan is to use the biomass waste after companies extracted the oil they need from algae. Right now, algae companies plan to sell the biomass to the cattle industry but we believe that there is more value to obtain from these materials. We are already able to incorporate the treated biomass into some of our resins although still at low levels for the time being. The challenge is to be able to access steady flow of biomass and then have a system in place that allows us to transform that biomass into a material that is useful for our processes. We will do this with a partner and hopefully this will come to market 5 years from now.

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Recent news from Cereplast:

Cereplast, Inc. Moves to Up-list Shares to Trade on a Senior Securities Exchange

Cereplast, Inc. Expands Bioplastic Resin Distribution with A. Schulman, Inc. in Europe

Cereplast Moves Operations to its Indiana Facility – Yahoo! Finance

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