Close the Loop (ASX: CLG) has provided a business update for its 2H25 year-to-date financials ending April 2025, saying the company is expecting a sharp decline in EBITDA – about 50 per cent lower than 1H25.

It said its revenue for 2H25 has remained steady and broadly in line with the first half of the financial year, at approximately $99 million, but the 50 per cent dip in EBITDA follows several factors including:

• Underperformance in the company’s refurbishment and IT asset disposition (ITAD) operations in North America, and
• The poor performance in the refurbishment business (Close the Loop Renewed Solutions), exacerbated by a software virus in April 2025 along with a range of other production challenges. New processing controls have been implemented to prevent this occurring again and the event is considered non-recurring, but the virus caused significant processing delays, inefficiencies and reduced sales in this business.

Operational developments – North America

In response to the challenges experienced in the North American refurbishment and ITAD segment, the company has identified and is expected to appoint a new CEO, with effect from 1 July, for its North American refurbishment and ITAD operations.

The company said this leadership change is aimed at stabilising performance and driving growth in what remains a “strategically important geography” for the business.

The Mexicali plant continues to ramp up its production capabilities. It confirmed that as of June, two printer refurbishment lines are fully operational, and a new line focused on computing and gaming accessories has also been brought online.

The company expects a laptop refurbishment line to be operational before the end of the financial year. These additions are expected to enhance throughput and help reduce elevated inventory levels across the North American network.

Packaging and recycling

The company said its packaging businesses in both Australia and South Africa have performed well and are on track to deliver single-digit earnings growth for the year.

Conversely, the cardboard recycling facility in Laverton, Melbourne has been shut down as part of management’s ongoing review of non-core and/or unprofitable operations.

It said this decision reflects its focus on optimising its portfolio and concentrating resources on higher-value, scalable business units.

TonerPlas operations and government grants

Close the Loop has also notified both the NSW and Queensland governments that it does not intend to proceed with the construction of new TonerPlas plants in those states in the near term.

As part of this decision, the company will return grant funding previously received from the NSW Government. Despite this, Close the Loop said it continues to accept postconsumer soft plastic from across Australia and supply TonerPlas material manufactured in its Victorian facility to meet national demand.