Spinnova H1'24 flash comment: The big picture played out much as we expected

Translation: Original comment published in Finnish on 8/22/2024 at 9:00 am EEST.

Spinnova released its H1 report this morning. Spinnova's revenue and operating loss decreased and cash burn slowed down from the comparison period. This was largely in line with our expectations. As expected, the company also reiterated its guidance for the current year. For the investment story of a development company like Spinnova, the short-term figures are of limited relevance, while the comments on the technological developments largely repeated what was published in H1 and over the summer. Our preliminary assessment is that the report will not significantly change our expectations on the progress of the company's technology projects. 

Revenue, losses and cash burn came down along expected lines

Spinnova's revenue in H1 decreased by 96% to 0.4 MEUR, slightly below our estimates.  The sharp drop in revenue was a foregone conclusion prior to the report, as Spinnova delivered the tail end of Woodspin's first factory project in the comparison period and there were no technology projects underway in H1. However, Spinnova's operating loss in H1 decreased by about 10% to 10 MEUR. The loss decreased year-on-year, as the technology project in the comparison period generated little (if any) margin, while savings measures and a reduction in the costs of the stock option program also reduced the loss. The loss was slightly higher than we expected, reflecting a slightly more moderate than expected change in income statement items. In terms of cash flow, however, the report was better than we expected, as the cash flow from operating activities was only -4.5 MEUR due to the faster than expected collection of Woodspin's receivables. Investments amounted to 3.5 MEUR, mainly related to the capitalization of Woodspin. As a result, Spinnova still had just under 54 MEUR in cash at the end of H1, which was slightly above our estimate. The cash is sufficient to cover the capital needs of the company's current strategy in all scenarios, at least until the end of the decade.   

Company repeated its guidance and planned timeline for Suzano project

Spinnova reiterated its guidance for the current year, according to which the company's revenue in 2024 is expected to be lower than in 2023. Spinnova expects the operating result to improve this year compared to 2023, but to be negative. This was fully expected. Regarding technological development, which was one of our main points of interest in the report, no significant new information or comments were provided, at least not at the first glance. However, as expected, the company reiterated the known timeline for Suzano's first technology project, which is still expected to move into the pre-engineering phase and already generate revenue for Spinnova during H2. Regarding the recent letter of intent between Spinnova and ECCO for the further development of Respin, the comments were, as anticipated, a repetition of the company's earlier announcement. Overall, based on our initial assessment, there do not appear to have been any unexpected spurts or setbacks in technology development, so we see no immediate need to change our expectations regarding the timelines for Spinnova's projects in the short or longer term, at least for the time being.

The initiation of coverage report on Spinnova, published in May, is still very topical and freely available here. A video interview with Tuomas Oijala, CEO of Spinnova, conducted in June can be viewed here (subtitled in English) and the company’s H1 webcast today at 10 am EEST can be viewed here.