Accsys Tricoya Hull Plant Under Threat Again -

ACCSYS TECHNOLOGIES plc has announced a review of its Tricoya plant in Hull is planned for the new year.

The news comes as the company published its interim results for the six months ended 30 September 2023, showing a 21% growth in revenue to €71.2m, and 30% growth in Tricoya production.

Accsys manufactures wood chips to make building products, and started expansion in the UK with the construction of a new plant in Hull in 2017.

Tricoya Plant Under Threat

The troubled plant saw a series of setbacks when its construction was delayed during the pandemic, and the Accsys, BP and MEDITE consortium disputed with its EPC contractor Engie Fabricom who had declared a force majeure, which wasn’t settled until August 2021.

In 2022, it emerged the Hull plant’s building costs had escalated from the €35m first invested to an eye-watering inflated cost of €120m. Accsys, which bought out the consortium partners, paused construction at Hull to await “the right time” to complete the Saltend plant.

Now, in its half-year update, Accsys says it “continues to believe in the market potential for Tricoya”.

However, the “current operating environment” and a shift of focus to the Accoya plant in Kingsport, USA, Accsys is once again undertaking a review of the “viability, strategic interest and financial capabilities” of its Tricoya UK plant in Hull, in early 2024.

Accsys reported an impairment loss (non-cash) of €7.0m in its half-year due to the Tricoya plant following an increase in market interest rates and volatility.

Overall the company reports “good product demand, higher average sales prices and increased production capacity.

Its 21% growth rate resulted in €71.2m revenue and product production volume of 28,807m3. There was a 2 percentage point decline in gross profit margin to 29%, reflecting higher raw material costs and wood inventory optimisation.

A 64% decrease in underlying EBITDA at €1.6m came from this volume growth and higher average Accoya prices offset by increased pre-operational costs at the new 43,000m3 Accoya plant in Kingsport, USA, ahead of its completion in mid-2024. Costs also stemmed from the Tricoya UK plant’s operating costs.

Other increased operating expenditure was on sales and marketing, executive recruitment and engineering costs.

Meanwhile, Accsys is taking actions to deliver annual cost savings of €3.0m amid net debt of €48.2m, an increase of €4.1m since the FY23 year end. It reflects capex of €2.0m, an increase in working capital and inventory position and scheduled loan interest payments.

The company has announced a fundraising of approximately €24m and an extension of its debt facilities.

Dr. Jelena Arsic Van Os, Accsys CEO, said: “In navigating the challenging macro-economic conditions of the first half of the year, our new management team has shown unwavering commitment in reshaping Accsys towards a less complex business model with increased execution focus.

“As we reflect on our business performance, we acknowledge and proactively address short-term obstacles. However, our confidence in our innovative product range remains unshaken, with the conviction that our Accoya and Tricoya premium offerings set us apart in the market, representing substantial untapped potential.

“To ensure delivery on this potential, the Company has raised today approximately €24m of new proceeds from our shareholders to improve near-term liquidity and enable us to finalise the construction of our Accoya plant in Kingsport, US, which alongside our wider operations, strengthens Accsys’s position for growth in both the medium and longer term.”

Outlook

The Accsys board does not expect trading conditions to improve materially until the middle of the 2024 calendar year with an improvement in product demand in Q4 FY24, aided by the unwind of distributor destocking that has taken place in recent months. However, despite these factors, given the current market backdrop and expected sales volume for the remainder of this financial year, the Board believes that the FY24 results will be below current market expectations.

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