Oxo-biodegradable Plastic Bags Manufacturer

The value of a racing camel in the Middle East, Michael Laurier informed me, can be as much as $1m. So unsurprisingly, owners of camels do not want them mooching around and sampling the taste of discarded plastic bags. Apart from being indestructible and an eye-sore, a plastic bag can kill both marine and land creatures. It’s little wonder that we would all like to find a better alternative to conventional plastic bags.

Michael Laurier is chief executive of Symphony Environmental Technologies (SYM: AIM). When he reports interim results on 16 September, they should show that he is finally winning the battle to persuade the world of the merits of Symphony’s d2w plastic additive.

The wonder of the disappearing plastic

I have described this before, but essentially the addition of d2w at the extrusion stage of the plastic production process renders the plastic ‘oxo-biodegradable’. This means that it will degrade and disappear in a short space of time, leaving no fragments, no methane, and no harmful residues.

These claims have been disputed in the past, but as well as indulging in scientific argument, Laurier is now able to point to some genuine commercial success. It seems that major plastic bag users around the world have been convinced by the claims for oxo-biodegradable plastic and are starting to specify its use.

One of these is Inditex, the giant clothing retailer behind the Zara chain. It has devoted one of the 413 pages of its 2007 annual report (how many trees were chopped down to produce that?) to an explanation of its reasons for specifying plastic bags with the d2w additive.

Describing this element of its ‘sustainable store’ project, Inditex explains that d2w will result in the total decomposition of its plastic bags ‘in a natural way’ over an average period of one to two years, rather than the four hundred years that it takes a conventional bag to degrade. And it lists the following additional advantages of degradable plastic. It turns into water, carbon dioxide and biomass. It doesn’t need to be buried to biodegrade. It needs less raw material for its production. And it retains the properties of conventional plastic, such as being resistant and waterproof.

345 billion plastic bags are bad – which makes this breakthrough important

Symphony’s web-site features a ticking dial, showing the number of plastic bags used worldwide so far this year. The number is now over 345bn. That’s bad for the environment. But Symphony is successfully spreading the word of its technology far and wide. In recent months it has reported breakthroughs in three quite different parts of the world.

After extensive trials, the major Mexican food manufacturer, Grupo Bimbo, has decided to adopt d2w, and it will now appear in all the main supermarkets and retail outlets in Mexico City as well as elsewhere in Latin America. In India, Symphony signed a fifteen year distribution agreement with Luibeg International, which represents a syndicate of prominent plastic manufacturers and investors in India and has the backing of Government Agencies and the State Pollution Control Boards.

But when Laurier telephoned me he was especially excited about an event held in the Al Wasl ballroom of the Dusit Hotel in Dubai. This was the launch of d2w in the United Arab Emirates in conjunction with distributor Eco Polymers, a subsidiary of the Fujairah Plastics Group.

In case I did not believe him, Laurier sent me a copy of the invitation to this event, staged ‘under the patronage of His Excellency Dr Rashed Ahmed Bin Fahad, the UAE’s Minister of Environment and Water.’ Describing d2w as ‘just what we need’, the minister duly gave it his backing, a message that will not have been lost upon the event’s one hundred and fifty attendees, included amongst them the man responsible for all disposing of all the waste Dubai.

The Dubai Municipality, Sharjah Cooperative, Marks & Spencer, Aswaaq Supermarket Group, Emirates Environmental NGO, and the Al Safeer Group of Companies were all present to demonstrate and endorse d2w, and Symphony has already taken its largest ever order from the region.

A small company that’s staying on my radar Symphony has had its ups and downs, and has not so far rewarded its investors. But it appears to have a product that is unique and could have universal appeal. As a consumable product, satisfied customers should keep coming back for more, and these factors give Symphony real potential.

At the AGM in July, Symphony has already reported that sales of d2w in the first half of 2008 were 73% ahead of 2007, and although broker Edison is expecting a loss this year, it projects a £700,000 profit and earnings per share of 0.5p in 2009. Those numbers are predicated upon a 50% rise in annual revenues to £8.25m, but if the interims later this month are encouraging these forecasts may start to look pessimistic.

I’m excited about this company. It’s not one I’m buying right now, but it’s exactly the sort of firm I might look at in more detail in Red Hot Penny Shares in the months ahead. I’ll be keeping it on my “radar” in the meantime.

Best regards,

Tom Bulford
for The Penny Sleuth

P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.

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Oxo-biodegradable Plastic Bags Manufacturer

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