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MarketScreener Homepage  >  Equities  >  Nyse  >  The Coca-Cola Company    KO

THE COCA-COLA COMPANY

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Companies Go to New Depths for Ocean Plastic in Recycling Push

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11/04/2019 | 09:07am EST

By Emre Peker

Companies seeking to cut plastic use are tapping a vast source of raw materials: ocean garbage.

Coca-Cola Co. recently unveiled a bottle made in part of recycled marine litter. Interface Inc., the world's biggest maker of carpet tiles, is weaving rugs with yarns produced from discarded fishnets. Startups are raising funds to fish for plastics and make new products.

"There's value in this, and if you do it right, it doesn't have to cost, " said Nigel Stansfield, Atlanta-based Interface's president for Europe, Africa and Asia.

Striking that balance presents a challenge for companies striving to do good, make money and avoid accusations of greenwashing, or making bogus environmental claims.

Douglas Rader, chief oceans scientist at the nonprofit Environmental Defense Fund, welcomed all the initiatives, even though they only scratch the surface. "The problem is massive in its scale," he said.

The weight of ocean plastic will rival that of fish by 2050, according to the U.K.-based Ellen MacArthur Foundation. Each year, roughly eight million tons of plastic leak into the ocean -- the equivalent of a garbage truck's worth of trash each minute -- because of poor or lacking waste-management systems. That amounts to about $10 billion worth of packaging materials based on market prices, the nonprofit's calculations show.

But snagging plastic from oceans and reusing it are difficult. Extended exposure to saltwater degrades plastic, making it more expensive to recycle, said Al Carey, executive chairman of North Carolina-based fiber company Unifi Inc.

The Ocean Cleanup, a nonprofit, raised $22 million to launch an autonomous floating trash collector in the Pacific last September, but it collapsed in December. Founder Boyan Slat recently presented a sturdier version but said more development is needed to make the project economically sustainable.

Overuse of plastics is the bigger problem, say environmentalists. Global plastics production nearly doubled to some 350 million metric tons annually since 2002 and is forecast to triple by 2050, according to industry association PlasticsEurope and the Ellen MacArthur Foundation.

"We're never going to recycle our way out of this plastic crisis," said Kevin Stairs, a chemicals and pollution expert at Greenpeace. Recycling makes people think there is a solution but, he added, "that's simply not the case."

Yet companies keep launching recycling initiatives, partly to meet consumer demand for more sustainable products and to bolster corporate-responsibility credentials. Adidas AG in 2015 unveiled a sneaker made partially from fishing nets recycled into nylon thread. Making 50 prototype pairs highlighted difficulties.

Adidas now has more than 450 products -- from Manchester United jerseys to jackets -- that it labels "ocean plastic." But unlike its initial sneakers, these aren't made of trash fished from the seas. Adidas instead uses plastics collected from coastal areas.

"We were looking for raw-material sources that could supply much larger quantities," said spokesman Stefan Pursche, adding that collecting plastic waste from beaches presented a more reliable option.

The switch highlights another obstacle to cleaning oceans: Abundant recycling-ready plastic on land diminishes incentives to fish for it. Instead, many companies are intercepting it at the shore.

"Plastic in the ocean at some point needs to be tackled, but at this point it's about turning the tap off," said Oliver Campbell, Dell Technologies Inc.'s packaging and procurement director.

Since 2017 Dell has recycled 27 metric tons of ocean-bound plastic collected within 50 kilometers (31 miles) of coastlines or waterways in the developing world. The company reuses the material for packaging and is expanding the initiative.

HP Inc. says it sourced 450 metric tons of trash at risk of reaching the sea in Haiti, equivalent to 35 million plastic bottles, to make ink cartridges and parts of laptops and monitors.

The tech companies, together with General Motors Co., Interface and others, founded NextWave Plastics in 2017 to commercialize supply chains that prevent plastic getting to oceans.

Mr. Campbell says the cost of ocean-bound plastics is similar to using other recycled materials and declining.

Unifi, which already produces polyester yarns from plastic bottles, recently unveiled a new fiber made from ocean-bound plastics. The supply chain is expensive and complicated but Mr. Carey said the company "listened to our customers and found an opportunity."

Several initiatives are paying fishermen and coastal communities to collect marine litter. Companies behind the efforts say they provide financial opportunities, raise consumer awareness and boost brands.

"People feel good they are contributing to something," said Alexander Taylor, who designed the Adidas sneaker using fishnets.

Interface's Net-Works program, launched in 2012 to collect abandoned fishnets in the Philippines, expanded to more than 40 locations, including in Cameroon. The project has recovered some 240 metric tons of fishing nets and supports the livelihood of 2,200 families.

Coca-Cola in October introduced its first plastic bottle made with 25% recycled marine litter. An initial run of 300 bottles shows chemical recycling can make damaged ocean-plastics reusable, the company said.

"The more we create the demand for these materials, the more people will be incentivized," said Bruno van Gompel, Coca-Cola's Western Europe supply chain director. "Even cleaning up beaches and the sea will become a new type of economy."

Hundreds of other entrepreneurs are crowdfunding startups to recycle ocean waste into surfboards, swimwear, chairs and backpacks.

François Van den Abeele launched Sea2See in 2016 with a EUR48,000 ($53,300) online fundraiser to recycle marine litter into sunglasses. The Barcelona-based startup sells its eyewear through roughly 3,000 shops world-wide and expects to nearly triple revenues to EUR4.5 million next year.

Mr. Van den Abeele's recycling method, which turns recovered plastic into pellets that can be used to make other products, is gold-certified by Cradle to Cradle, a California-based institute promoting sustainable design that Alphabet Inc.'s Google, Amazon.com Inc., Walmart Inc. and other multinationals use for ecologically responsible procurement. Sea2See plans to build a recycling plant and sell its pellets to other manufacturers.

"We're trying to give a new vision to trash," Mr. Van den Abeele said, "and hopefully using simple products to change the way people think."

Write to Emre Peker at emre.peker@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG -0.68% 277.1 Delayed Quote.53.07%
ALPHABET 0.94% 1339.39 Delayed Quote.28.18%
DELL TECHNOLOGIES INC. -0.46% 47.12 Delayed Quote.-3.58%
FASTIGHETS AB BALDER -0.24% 407.8 Delayed Quote.62.30%
GENERAL MOTORS COMPANY 0.65% 35.54 Delayed Quote.6.25%
HP INC. 0.89% 20.5 Delayed Quote.0.20%
INTERFACE, INC. 1.12% 17.13 Delayed Quote.20.21%
LONDON SUGAR 0.84% 348 End-of-day quote.4.19%
MANCHESTER UNITED PLC 2.24% 18.69 Delayed Quote.-1.53%
THE COCA-COLA COMPANY 0.42% 54.42 Delayed Quote.14.93%
WALMART INC. 0.94% 119.78 Delayed Quote.28.59%
WASTE MANAGEMENT 0.13% 111.62 Delayed Quote.25.43%
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Financials (USD)
Sales 2019 37 059 M
EBIT 2019 10 289 M
Net income 2019 8 885 M
Debt 2019 32 915 M
Yield 2019 2,95%
P/E ratio 2019 27,1x
P/E ratio 2020 24,4x
EV / Sales2019 7,18x
EV / Sales2020 6,91x
Capitalization 233 B
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 58,55  $
Last Close Price 54,42  $
Spread / Highest target 15,8%
Spread / Average Target 7,58%
Spread / Lowest Target -0,77%
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Managers
NameTitle
James Quincey Chairman & Chief Executive Officer
Brian John S. Smith President & Chief Operating Officer
John Murphy Chief Financial Officer & Executive Vice President
Nancy W. Quan Chief Technology Officer & Senior Vice President
Barry N. Simpson Chief Information Officer & Senior Vice President
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