Sales Be Damned, Spinnova Remains Committed to Scale

Spinnova is taking 2024 in stride, financially speaking.

The Finnish fiber firm’s technology sales strategy and key partnerships progressed throughout 2024, with revenue and operating results “in line” with expectations. The news comes after Spinnova restructured operations following a fiscally fraught few years.

“Our mission is to change the raw material base of the textile industry. We decided that we will do this by helping the industry build production lines that take sustainably produced pulp and turn it into a natural cotton-like fiber,” CEO Tuomas Oijala said in the financial statement bulletin. “This solves existing fiber supply chain challenges, improves sustainability metrics of final products, and supports circular fiber supply chains.”

According to the annual report published this morning, Spinnova’s operating loss—which amounted to about $21.87 million (20.9 million euro) in the previous year—decreased to $19.1 million. The net loss decreased by 14 percent to $17.6 million.

“Obviously, there’s a lot more work to do,” Oijala said on the Thursday morning call. “Now the focus is going to be very much on getting the technology to the point where we can show the cost competitiveness of it, and that’s going to enable the next big moves to happen.”

With a renewed strategy centered around “creating shareholder value,” Spinnova will focus on a capital-light model that generates income from “the value our fiber production technology adds to our customers,” Oijala said.

“These revenues are expected to come from the planning and engineering of facilities, delivery of proprietary equipment, and licenses and service agreements to enable operations,” he continued. “Although our focus is no longer on fiber production and sales, we continue to be active in co-developing our fiber product with brands and textile suppliers, which demonstrates and grows the addressable market for the Spinnova fiber.”

While Spinnova signed a letter of intent (LOI) with long-term partner Suzano last March, the agreement outlining the latter’s plans to invest in the former’s technology hit a few bumps.

“Technology development of fiber spinning has progressed well in terms of increasing the output of the fiber drying units, and the main sub-processes have already been validated separately,” Oijala said. “However, validating process efficiency metrics at targeted capital and operating expenditure levels at the Woodspin factory for the entire process from pulp to fiber was not met during 2024, and therefore, the pre-engineering phase was delayed from the planned timetable at the end of 2024.”

Alternative plans are underway, however, to solve the fastest way to validate these processes and enter the next phase of the project: scaling the fiber production.

“It is important to note that based on brand and supply chain feedback, we have demonstrated that we can make good fiber, and our focus is now on ensuring efficiency and cost-competitiveness of future factories,” Oijala said.

Also of note? Spinnova declined to provide financial guidance for 2025 due to an uncertain outlook, considering that outlook is largely dependent on getting the Woodspin project to the next phase. The Scandinavian next-gen textile innovator hopes to update financial guidance for 2025 in the coming months.

“One of the critical things that is under work continues to be the ongoing planning with Suzano on the fastest way to validate the end-to-end process efficiency metrics of the Spinnova technology, which is needed in order to move forward to the next phase of the scale up of the wood-based Spinnova fiber production,” Ben Selby, Spinnova’s chief financial officer and deputy CEO, said on the call. “Whilst that planning is going on, we have decided that, at this time, it does not make sense to provide financial guidance for 2025, as that will be such a key component in the outlook.”

While Woodspin deviated from the plan, Respin fared slightly better.

A letter of intent (LOI) was signed with Ecco last summer regarding the future plans for the 50/50 owned joint venture. Both agreed to scale up operations and work together to reach a final decision on how to proceed with the facility’s production, scaling and commercialization. At this stage, however, the Adidas collaborator said it’s “unlikely” that a product will launch during the first quarter of 2025. However, the market will be updated on Respin’s next steps before the year’s second quarter begins.

“We have very, very positive feedback from some of the market players that we’re discussing with of this can be interesting,” Oijala said. “We are, as I said, committed to scaling up operations.”

Over on the consumer market, Spinnova saw success.

Bestseller launched T-shirts under the Jack & Jones brand in April, marking the first commercial product made with Spinnova fiber. Jack & Jones, along with Vero Moda and Rukka, produced Summer Olympics 2024 collections for Danish and Finnish athletes using Spinnova fiber as well. Spinnova teamed with the premium, Helsinki-based brand Ask Scandinavia on a limited-edition work tote bag inspired by Nordic design, too. An LOI was signed by Puma in December as the Re:Suede sneaker maker intends to use the fiber for its sportstyle division.

“The partnership with Bestseller and Jack & Jones has been very important to show that we can get volume products to the market and get good feedback on them,” Oijala said. “The partnership with Puma sets out our commitment to give them fiber in the short-term from Woodspin, but also in the long-term for future facilities.”

Also of note was the Valmet agreement, stipulating the machinery manufacturer will be the exclusive partner to supply process equipment to Spinnova’s technology customers—doubling down on the belief that technology sales are the “most valuable driver for rapid cash generation,” chair of the board and co-founder of the company Janne Poranen said in Spinnova’s 2023 annual report.

The long-term partner supports the Scandi group in increasing the competitiveness of fiber production technology by lowering the capital and operational costs. The partnership is valid for four years and is expected to open a portfolio of new technology customers in the material processing and pulping industries, per the bulletin.

“This collaboration with Valmet accelerates our development, pairs us with an established industrial partner experienced in delivering similar projects and expands our technology sales to a pool of new customers,” Oijala said.

As Spinnova continues implementing its technology sales strategy, the Respin co-owner said it does not plan to make its own investment in fiber production in the short to medium term. As such, Spinnova also doesn’t expect to need additional external financing to reach its strategy targets. For a refresher, this tech uses a mechanical process to give the wood-based fibers the look and feel of naturally cellulosic ones, like cotton.

“Our job, our revenue, is going to come from selling of the technology, selling our related services to our customers who are the ones investing into fiber production capability. They’re also the ones selling the fiber,” Oijala said. “We’re going to be doubling down on technology development to get our production costs and capital expenditure per ton down.”

However, the Marimekko partner did acknowledge that potential customers’ willingness to buy its technology depends on providing sufficient warranties and an attractive investment case. Factors impacting the investment case are the expected fiber sales price and Spinnova’s ability to lower investment and production costs.

“Working with brands allows us to see the demand. It allows us to understand where this fits. It has given us a lot of important feedback,” Oijala said. “Again, here to highlight that we are helping the industry solve the problem with natural fibers.”

All in all, the year fiscally unfolded as expected.

Revenues “decreased significantly” as the technology project to Woodspin’s production facility was completed in 2023. Specifically, revenue dropped by 92.8 percent year over year, from $11.13 million to around $800,000. Operating loss decreased about 12 percent year over year—from -$21.9 million to -$19.2 million—attributed to a smaller number of employees, lower cost impact of stock options and a cost savings program.

“During the first half of the year, we completed a difficult, but important, restructuring program to ensure we can effectively implement our strategy and to ensure our cost base is in line with our strategic costs,” Oijala said. “I want to thank everyone for their leadership, collaboration and resilience in making this happen. We now have a stronger and clearer organization in place.”

Investments also declined, primarily because of investments into the in-house R&D yarn-spinning machinery made in 2023. Net cash positioning “remained strong,” totaling $42.8 million by year-end.

“There are all sorts of macro uncertainties and so on in the world. But I think where we stand and how we see the outlook for the demand for new fibers is that the long-term demand continues to be there,” Selby said. “And then if we translate that into technology sales and technology customers, we continue to see a very high level of interest from customers—including Suzano—who we are working very closely with on the planning of the next steps.”