Spinnova H2'24 preview: 2025 already a critical year for the investor story

Translation: Original published in Finnish on 2/10/2025 at 7:15 am EET.

Spinnova will publish its H2 report on Thursday at 8:30 am EEST. Spinnova did not have any technology delivery projects in H2, so the company's revenue remained marginal at the end of the year. However, we expect Spinnova's loss and negative cash flow to have narrowed year-on-year due to the change in strategy and cost-cutting measures. However, for a development company like Spinnova, short-term numbers are largely irrelevant (especially as the company's financial position is still secure). Of particular interest is the update on the progress of the development of the pulp-based technology following the delay revealed at the end of the year. We expect the project to progress to a revenue-generating pre-engineering phase in H2'25. As a result, we expect the company's guidance for the current year to point to increased revenue and reduced losses compared to 2024.

Revenue, losses and cash burn have probably come down

In the comparison period, Spinnova delivered Woodspin the tail end of the Jyväskylä factory project, while in H2 Spinnova had no technology delivery projects underway. As a result, Spinnova's revenue has fallen sharply from last year and we forecast a 84% decline to 0.2 MEUR in H2. As we estimate that the project in the comparison period was roughly break-even for the company, we expect Spinnova's operating loss to have been reduced by around 13% to 8.6 MEUR in H2 as a result of the change in strategy and the related savings measures.

Spinnova's EBIT includes 50% of the net loss of associated companies (notably Woodspin). This item has no direct cash flow effect. In addition, Spinnova has continued to earn interest income on its hefty cash reserves, and the pace of investments has also slowed down following the change in strategy in the spring. The negative free cash flow has certainly eaten into the cash position, but we estimate Spinnova's net cash position at the end of H2 to be around 35 MEUR. Given the net cash position and Business Finland's favorable product development loan (around 8 MEUR in the first phase), we believe the company's cash buffer remains strong and will allow the company to execute its current strategy in all scenarios at least until the end of the decade, despite delays in 2024.  

Guidance provides indication of status of Suzano fiber mill project

We believe that the investment plan for the most advanced technology project, the Suzano pulp-based fiber mill, is the key to Spinnova's prospects. A delay due to an incomplete technical and economic analysis of the project was revealed in November, and no new timeline for the project has been given. In the financial statements, we therefore focus on the status of the project. We believe that its progress will continue to drive the company's revenue prospects in the near term. Based on our current projections, we expect the project to progress to revenue-generating pre-engineering by H2'25. In order to meet our expectations, Spinnova should guide for higher revenues this year compared to last year and a narrowing of the operating loss compared to 2024. Weaker guidance and/or a still unclear timeline for the Suzano project would, in our view, be a major disappointment for investors and raise growing questions about the near-term techno-economic competitiveness of modern technology.

We are also interested in any further information and concrete next steps for the further development of Respin with ECCO. From a share price perspective, we believe that the earlier-stage Respin is overshadowed by the Suzano project in the short term.