Spinnova’s growth ramped up in the second half of 2022, with six-month revenue rising 194 percent to 16.6 million euros ($17.6 million) on a 6.5-million-euro ($6.8 million) loss.
After opening its first Woodspin factory for zero-waste fiber production in February, the Adidas, Marimekko and Bestseller collaborator will build a second facility to advance its manufacturing technology and scale production volume.
In a Nutshell: The sustainable and circular textiles producer, which makes textile fiber out of wood or waste, such as leather, textile or agricultural waste, free of harmful chemicals, nearly quadrupled total investments in 2022.
Through the full year, investments totaled 16.3 million euros ($17.3 million), up from 2021’s 4.4 million euros ($4.6 million). Approximately 12.5 million euros ($13.2 million) was spent to finish building the inaugural Woodspin facility in October.
The Woodspin factory, which Spinnova operates with wood pulp producer Suzano in a 50/50 joint venture, will increase production capacity this year. Located in Jyväskylä, Finland, the facility powers the partners’ goal to increase fiber production to 1 million metric tons by 2031.
Spinnova, whose technology makes textile fiber out of wood or waste from leather, textile or food, also plans to launch its first products using Suzano micro-fibrillated cellulose (MFC) as a raw material in 2023.
“We still feel that fortunately there is still demand in the market for our type of fibers,” said Spinnova CEO Kim Poulsen in a presentation on the company’s annual results. “I think the mid- and long-term targets are intact in a way that there’s positive sustainable demand available for the products once we start moving ahead.”
Poulsen, who assumed the CEO role in August, said that the fiber producer is still in the feasibility planning stage for the second Woodspin factory, “where we have to dig a little bit deeper just to make sure that we make the right decision.” With both size and location still up in the air, the next plant is on deck for completion after 2024.
Woodspin isn’t the only joint venture where the H&M Group and The North Face partner is seeing positive results. Spinnova piloted its Respin material with premium footwear brand Ecco, creating a fiber from leather waste that is now being commercialized.
Now Spinnova and Ecco are moving forward with a feasibility study and are in the pre-engineering stage of the first commercial factory planned for the Netherlands.
The Finnish fiber manufacturer increased its headcount to 75 at the end of 2022, up from 58 the year before. The company invested in its project delivery and commercial teams, according to Ben Selby, chief financial officer of Spinnova.
Net cash declined in 2022 to 76.3 million euros ($80.7 million). In the prior year, Spinnova had 100.1 million euros ($105.6 million) in cash and cash equivalents.
Spinnova didn’t disclose specifics in its upcoming full-year guidance estimates, indicating that 2023 revenues are estimated to decrease in 2022, largely due to the uncertain timing of the final investment decisions of the next Woodspin and Respin plants.
The timing of these projects is expected to impact technology revenues, as it is unclear which year the revenue will be generated.
Losses during 2023 will mount as the company continues expanding.
Selby reiterated that Spinnova expects to be EBIT positive by 2027.
Spinnova estimates that it will publish its annual report for 2022 around the 14th week of 2023, with the its annual general meeting scheduled for May 4, 2023.
Net Revenue: For the second half of the year, Spinnova’s revenue rose 194 percent to 16.6 million euros ($17.6 million) from 5.6 million euros (approximately $6 million) in the year-ago period.
Spinnova’s 2022 revenue increased 300 percent to 24.3 million euros ($25.7 million) from 6.1 million euros ($6.4 million) in the year before.
Net Earnings: The material innovator took a 6.5-million-euro ($6.8 million) loss in the second half of 2022, widening from the 4.1-million-euro ($4.3 million) loss in the 2021 period. Earnings amounted to a per share loss of 13 cents (14 cents), compared to a per share loss of 10 cents (11 cents) in the second half of 2021.
Selby attributed the losses to spending on new hires, as well the cost of building new sites and general inflation.
Losses widened as well, with net losses reaching 12.3 million euros ($13 million), deeper than the 7.1-million-euro ($7.6 million) loss in the year prior. Earnings totaled a per share loss of 28 cents (30 cents), compared to a per share loss of 36 cents (38 cents) in the second half of 2021.
CEO’s Take: When asked about the comparison on the price of Spinnova’s fibers compared to cotton, Poulsen said, “it is more expensive, and it should be, right?”
“Now that we’ve been producing with a pilot, eventually we have said that gradually when we get bigger and hit critical mass, the price point will get lower,” Poulsen said. “The CapEx per ton would become lower. So the difference is big, but in the midterm we need to get closer. But we’d still like to offer a premium price because of what we do.”