RECYCLING firm ECO Plastics is on course to secure the £15m it needs to increase its production capacity after a successful year which has seen revenues and profits soar as it recovers from a factory fire.
The Wallsend firm, formerly Aws Eco Plastics, says revenues for 2010 came in at £18.5m, up from £13.5m in 2009.
Company founder Jonathan Short says it has been boosted by its return to full production last summer after a huge fire in 2009 destroyed part of its Lincolnshire factory.
It has now launched a £15m funding round, with the money earmarked to increase production capacity by 40% and invest in new machinery.
ECO Plastics turns plastic bottles into flakes which can then be used to make new bottles and, recently, it improved the quality of its recycled flakes so they can now be used in food packaging.
The growth potential for ECO Plastics is demonstrated by the amount of plastic that is recycled today compared to five years ago.
In 2003, the UK collected 24,000 tonnes of plastic bottles. By 2009, this had risen to nearly 260,000 tonnes – a figure that is expected to have risen to 300,000 last year.
Managing director Short said the new fundraising round will allow it to increase the size of its plant to 140,000sqft from 100,000sqft. This will allow it the ability to increase production capacity by 200%.
Short said: “We are already ahead of expectations this January, although December was a struggle due to the bad weather. The company is performing well and our fundraising round will help us develop our growth plans for the future.”
He believes ECO Plastics will be able to achieve revenues of £35m this year and, by 2013, they will be up to around £65m. The company has reversed the loss it made in 2008, posting pre-tax profits of £900,000 in 2009.
Chairman Peter Gangsted said the funding round was progressing well: “We are mainly talking with existing investors but are open to other new entrants as well.”
Previous backers of the company include Newcastle-based private equity firm Northstar Ventures and the North East office of LloydsTSB Corporate Banking.
Gangsted said the company is in a market with both huge demand and growth potential and it sees this as the right time to expand further.
ECO hopes to close the funding round towards the end of the first quarter or the beginning of the second and work will begin on extending the factory later this year.