Carbonxt Group (ASX: CG1) reports higher sales in March quarter, shares soar - Kalkine Media

Highlights

• Customer receipts for the quarter ended 31 March 2024 surged to AU$3.6 million.
• Powdered Activated Carbon (PAC) sales witnessed significant growth of 56% YoY.
• Sales of Activated Carbon Pellets (ACP) increased by 37% QoQ.
• Construction of the new activated carbon plant in eastern Kentucky, the USA, is nearing completion.
• Through the Kentucky plant, Carbonxt aims to enter the US market and expand its presence in the liquid phase of the AC market.

Carbonxt Group Limited (ASX: CG1) has released significant financial metrics for the quarter ended 31 March 2024. Customer receipts for the period surged to AU$3.6 million, representing an 8% increase compared to the previous quarter.

PAC sales saw remarkable growth on an annualised basis, soaring by 56% compared to the previous corresponding period, driven by heightened sales in non-coal fired power station channels. The surge in PAC sales is particularly noteworthy as it represents a growing proportion of overall sales that are less influenced by seasonal fluctuations. This has contributed to enhanced plant efficiencies and a corresponding substantial rise in gross margins.

Meanwhile, ACP sales increased by 37% compared to the previous quarter.

On the operational front, Carbonxt provided an update on its Kentucky investment.

Kentucky plant nears completion

The construction of the new activated carbon plant in eastern Kentucky, the USA, is reaching its final stages. The present focus of CG1 is on commissioning activities, and operations are expected to start in early 3Q CY2024.

Initially, the plant’s capacity will be 10,000 tons per annum, with the potential for expansion to 20,000 tons per annum with a minor additional investment. Currently, Carbonxt holds a 35.5% ownership stake in NewCarbon, with the option to invest an additional US$4.5 million to increase its ownership stake to 50%. NewCarbon Processing, LLC is an equal joint venture of Carbonxt with Kentucky Carbon Processing (KCP).

Through the Kentucky plant, the company intends to enter into the US water market and also in the liquid phase of the AC market. The market is expected to grow with the implementation of Per- and Polyfluoroalkyl Substances (PFAS) rules. In January 2024, the global research team at BAML Securities conducted an analysis of the PFAS market, projecting further growth for the granular activated carbon (GAC) market due to the implementation of new regulations.

As the implementation of the PFAS regulations is expected, NewCarbon has opted to reconfigure the existing plant layout to incorporate the capability of directly manufacturing GAC, in addition to AC pellets production. The company anticipates that this modification will expedite the revenue growth of the facility, especially amidst a supply shortage in the GAC market.  

CG1 shares soar

Following the announcement, CG1 shares surged by 34.55% on 24 April 2024 to trade at AU$0.074 apiece. The shares have gained 48% in the last six months.