MyEco Group Sales Rise 4.1% with Council Channel Surging Ahead

Sales Growth Driven by Council Channel and Retail Strength

MyEco Group Ltd (ASX:MCO) posted a 4.1% increase in total sales for Q3 FY26 to $4.0 million, marking the third consecutive quarter of growth. The uplift was largely fuelled by a 41.6% quarter-on-quarter surge in the council and waste management channel, which offset softer performances in retail and corporate segments. Year-to-date sales reached $11.8 million, a modest 1.7% improvement over the prior corresponding period.

The company’s flagship MyEcoBag® products continue to gain traction with major Australian retailers Coles and Woolworths, recording a 46.2% jump in Q3 sales year-on-year and a 35.0% rise year-to-date. These gains were, however, partially offset by a notable decline in sales to independent retailers, down 40.9% on the prior year, reflecting a comparative peak in orders from a single customer in Q3 FY25.

Within retail channels, MyEco branded Australian sales of $1.4 million were up 10.4% on the prior year but fell 6.0% quarter-on-quarter following a record festive season in Q2 FY26. Meanwhile, white label sales increased 14.4% quarter-on-quarter and 20.5% year-on-year, boosted by new orders from UK-based Home Bargains and global distributor BUNZL. This diversification signals growing international demand for MyEco’s compostable products.

Operational Improvements Lift Margins Amid Inventory Build-Up

Gross margin improved to 24.8% year-to-date, up 1.2 percentage points from the prior corresponding period, driven by operational efficiencies and a favourable product mix. However, the company reported a net operating cash outflow of $0.9 million for Q3, primarily due to increased inventory levels ahead of a planned launch of a new sustainable MyEcoBag® product range in Q4 FY26.

Cash receipts from customers declined slightly by $0.2 million quarter-on-quarter to $4.3 million, while payments to suppliers and employees rose by $0.8 million, reflecting the production ramp-up for the upcoming launch. Despite this, ongoing operational restructuring initiated in H1 FY26 continues to yield cash savings, with payments down $0.4 million compared to the prior year.

MyEco ended the quarter with a cash balance of $1.5 million and an unused $1.0 million financing facility, recently supplemented by $0.92 million raised through its Series 2 Convertible Note Program, as detailed in its recent $0.92M Convertible Note Raise. The company’s capital discipline and funding strategy aim to support growth initiatives without diluting shareholders excessively.

Council Channel Expansion and Regulatory Tailwinds

MyEco’s council and waste channel sales of $1.3 million in Q3 FY26 were up 2.1% year-on-year and 41.6% quarter-on-quarter, recovering from timing disruptions in Q2. The company supplies kitchen caddy liners and pet waste bags nationally, with growth prospects bolstered by expanding FOGO (Food Organics and Garden Organics) programs, especially in New South Wales.

MyEco is actively bidding in FOGO-related tenders, securing one win and a preferred tender status in Q3. The upcoming NSW government mandate from 1 July 2026, requiring organic waste separation by supermarkets, institutions, and hospitality businesses, is expected to drive further demand. The company plans to showcase its capabilities at the Coffs Waste Conference in May 2026, targeting councils and waste providers to deepen partnerships.

Corporate Channel and Resin Development Progress

Corporate channel sales, which are predominantly resin sales, increased 15.6% year-on-year to $0.7 million but declined 17.3% quarter-on-quarter amid market volatility in Malaysia. The group continues to invest in developing advanced compostable resins in collaboration with the Solving Plastic Waste Cooperative Research Centre and Australian universities, aiming to broaden application scopes for sustainable packaging.

Film sales remain a minor segment, with quarterly revenues of $0.2 million slightly down quarter-on-quarter but stable year-on-year. The company’s integrated approach from resin production to finished products positions it well to innovate within the sustainable packaging sector.

Outlook: New Product Launch and Market Expansion

Looking ahead, MyEco Group is preparing to launch a new-to-market MyEco® branded product in Q4 FY26, targeting both retail and online channels. The company is also pursuing new retail accounts domestically to expand its footprint beyond existing major supermarket chains.

In the council channel, MyEco plans to deploy new value-added services, including an online ordering portal for residents, to support councils newly adopting FOGO programs. The company’s operational restructure is expected to sustain cost reductions and enhance production flexibility through aligned partners.

With a solid cash position, recent funding, and strategic initiatives underway, MyEco Group appears poised to capitalise on regulatory changes and consumer demand for sustainable packaging, though the impact of the new product launch on sales and margins will be critical to monitor in coming quarters. The company’s progress follows its earlier operational turnaround and funding efforts, including a profit and EBITDA boost earlier in FY26, setting a foundation for growth amid competitive pressures.