Legacy European hemp group HempFlax saw revenues rise 43% in 2020 to €14.5 million, driven in part by a 42% increase in sales of CBD, and a 1,089% increase in construction materials sales, the company announced this week. EBITDA rose 63% to €1.8 million, with before tax profits rising 616% to €659,000 from €92,000 in 2019, HempFlax reported.
Netherlands-based HempFlax, which has operations across Europe, said it recorded revenue growth in every category in its diversified portfolio that includes CBD; high-quality fibers for hemp based plastics; construction materials; horticulture and animal bedding; and genetics and farming.
CBD sales growth of 42% was driven primarily by white label goods supplied to the Jacob Hooy brand, which is sold through the Holland & Barrett chain of health food stores in the UK, HempFlax reported. The company said demand for CBD held strong as consumers prioritized personal wellness throughout the COVID-19 pandemic.
Building materials in demand
HempFlax said its tenfold growth in sales of construction materials is attributable mainly to its acquisition one year ago of Thermo Natur GmbH & Co. KG, a German maker of natural fiber insulation materials. The company said it sold about 630 metric tons of fiber-based insulation material in the second half of 2020 as Thermo Natur came under HempFlax management. That material went primarily to south Germany and Austria for residential construction, the company said.
HempFlax said the demand for hemp hurd for the natural building industry continues to rise steadily as hempcrete construction becomes more popular. The company described the sector as “booming, but facing longer supply times and a scarcity of construction materials.”
HempFlax sold 7,000 metric tons of hemp hurd in 2020, 80% for animal bedding and 20% for construction and other applications. Hurd sales for animal bedding rose by 14%, HempFlax said, noting 3.2 million households in the UK acquired a pet since the start of the COVID-19 pandemic.
Supplying Bugatti & Porsche
Fiber sales were further bolstered by demand for HempFlax’s highly refined hemp fibers which are used as an alternative to glass fiber in automotive parts production. That business grew by 12% last year as rising shipping costs increased demand for locally sourced fiber, HempFlax said.
The company turns out high-quality fibers for sustainable car parts for automakers Bugatti and Porsche, and is the only company in the world whose hemp fibers are certified under International Sustainability and Carbon Certification (ISCC) standards, which cover the entire supply chain of biobased feedstocks and renewables. The standards advance natural fibers as a sustainable alternative to to synthetic, mineral and wood fibers.
Still tough environment
Even coming off the banner year in 2020, hemp veteran Mark Reinders, HempFlax CEO, called for a smoother playing field for European producers.
“This has been achieved against the unfortunate backdrop of regulatory uncertainty – notably in the CBD sector, but also present across the whole industrial hemp industry,” Reinders said of HempFlax’s performance in 2020.
“That uncertainty threatens to stifle innovation and competitiveness,” Reinders said, calling on UK and EU lawmakers to lift maximum THC levels to 0.3% “on the field. ”Doing so would facilitate the breeding of more varieties and align the European regulatory framework with other countries, notably the U.S., Reinders said.
The European Parliament voted last October to increase the authorized THC level for industrial hemp plants from 0.2% to 0.3%, but the change is not expected to come into effect EU-wide until 2023.
Government support needed
“Direct government funding is also needed to incentivize the development of carbon-negative hemp supply chains across the region,” Reinders added.
HempFlax is a member of the Innovation Hub Oost Groningen, a research initiative exploring new commercial uses for natural raw materials. Together with the other corporate members – AVEBE and Nedmag – research is being carried out into innovations based on the raw materials of the three partners.
In other developments, HempFlax:
- Reported first quarter 2021 sales were up 27% on the previous year.
- Expects to harvest hemp from 2,100 hectares of European fields this year.
- Said it has submitted UK and EU novel food applications for CBD products, with the UK application recently receiving confirmation that it has passed key food safety administrative checks.
- Noted strong interest in the U.S. in the company’s combine harvester attachment for hemp which separates the flower, stalk and seeds for multi-cropping operation.
- Said it will modernize its headquarters in Oude Pekela, Netherlands this year, including adding solar installations that will make the group energy self sufficient, and will modernize the group’s German operations.
- Led the launch last summer of CanCheck.org, a free online CBD search tool that lets consumers trace CBD products from seed to shelf, with every link along the supply chain verified by blockchain.
- Launched a building supplies division, HempFlax Building Solutions GmbH, following the acquisition of Thermo Natur.
- Joined the CanXchange hemp commodities trading platform.