Cardia restrategises: closing Brazilian plant; focusing on Asia Pacific

Australian bioplastics and film maker Cardia Bioplastics is closing its Brazilian facility to focus on its Asia Pacific operations. This comes against the backdrop of Cardia’s merger with Stellar Films and from which the additional production capacity is a key strategic benefit of the merger, enabling Cardia to deliver on the growing demand for its Biohybrid hygiene films without extensive investment into new capital equipment. Cardia has the opportunity to further increase its blown film extrusion and bag making capacity through limited capital investment into Cardia's Chinese and Stellar's Malaysian production plants.

Meanwhile, it will close its Brazilian operation as it continues to require significant investment into equipment and working capital to deliver on existing sales opportunities for finished products such as retail carrier bags, says the public-listed Cardia.

The integration of the group's operations will deliver preferred packaging solutions to its global customers. The group benefits from the pull-through of Cardia Compostable and Biohybrid resins for the manufacture of cast films at Stellar's manufacturing plants.

Stellar Films operates plants in Melbourne and Port Klang, Malaysia, and has customers in more than 27 countries. It owns 50.8% of Akronn Industries, which manufactures silicone-coated paper and film products in Nilai, Malaysia. Akronn's Malaysian operation will silicone coat Biohybrid cast films and convert them to film release liners for the personal care and hygiene industries.

The merged group will benefit from the complimentary geographic presence of both Cardia and Stellar operations. With its three manufacturing plants located in Australia, China and Malaysia, Cardia says it is well positioned to supply the growing demand of its expanding Asia Pacific customers. Asia Pacific is the fastest growing market of the A$72 billion absorbent hygiene products industry.

To increase Asia Pacific market share, the group will prioritise its financial resources to ensure production output is optimised in this growth region.

Despite the discontinuation of its film and bag making operations, Cardia will remain committed to the Brazilian market place. Governmental regulation will be the key to ensuring market success of bioplastics in Brazil. In this context, on 5 February 2015, the City of São Paulo has taken first steps and issued the inter-secretarial city ordinance 01/2015 that prohibits the distribution or sale of plastic bags to consumers in all shops in São Paulo. Only reusable bioplastic bags will be regulated for use by traders after a 60 day transition period. Exact bag specifications are currently being finalised by São Paulo’s Municipal Urban Cleaning Authority. Pending the enforcement of this ordinance by the City of São Paulo, mandating the use of renewable and lower carbon footprint plastics, Cardia expects Brazilian bag makers to place resin orders as Cardia resins, technology and specifications deliver on this mandate.


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