Spinnova has announced potential job losses, a restructure of its management team and a new focus on technology sales in an effort to turn around the company after FY sales and profit sank, with the news coming mere weeks after the collapse of alternative fibre peer, Renewcell.
As it prioritises short- to medium-term cashflow, Spinnova says it will focus on sales of its fibre technology, which transforms raw cellulosic fibre into fibre for use in textiles, to raw material partners and downstream textile manufacturers.
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The new focus aims to create positive cash flow for the business, without the need for additional funding.
Spinnova says the strategy is already in place, as last week it signed a letter of intent with Brazilian manufacturer Suzano for its next wood-based production factory.
Spinnova says it will provide technology for the site and says the opportunity to invest in future plants with Suzano remains at its discretion.
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FY financial results in brief
- Revenue at Spinnova for the year to December fell to €10.6m from €24.2m a year earlier.
- Operating losses widened to €20.9m from €13.1m.
- Loss for the period was €19.5m compared with €15.1m.
CEO Tuomas Oijala commented: “The current tough economic climate is not the easiest for scaling a growth company. During my first months, I have got to know our operations and people with the aim to bring clarity, focus and prioritisation. We are making progress step by step on our journey to increase the production volumes of Spinnova fibre and to bring the fibre to the market in product applications through our committed supply chain and brand partners. It is clear to me that macroeconomic trends, constraints in the global fibre supply chain, and the need for the textile industry to meet its sustainability targets present us with a significant and inspiring opportunity to capture.
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By GlobalData“If the global textile industry wants to shift its material base from conventional materials, such as cotton and polyester, to more sustainable alternatives, we need all the players in the textile value chain on board. Bringing a new material innovation like Spinnova to the market in larger volumes requires investments, incentives and long-term commitments from investors, textile industry players and policymakers.”
Outlook
In 2024, revenues are estimated to be lower than in 2023. The timing of revenues is linked to the timing of technology sales and delivery of the next production facility. The operating result is expected to improve from 2023 but to continue to be negative. The total of Spinnova’s personnel expenses and other operating expenses is expected to be lower in 2024 than in 2023.
Job losses and leadership shakeup
In accordance with Finland’s Act on Cooperation, Spinnova has today started negotiations to change its organisational structure as it targets a €14.m annual savings on staffing.
The restructure could lead to temporary and permanent layoffs in the company’s team. Spinnova estimates that up to 16 positions could be made permanently redundant, while up to five team members could see their roles changed.
Spinnova says the restructure will help it reduce costs and achieve its profitability targets. The company currently has around 76 employees at its Finland base.
The company also announced today changes to its management team. Its chief sales officer Allan Anderson and executive vice president of production scaling Teemu Lindberg will leave the business on 1 May 2024. Chief operations officer Petri Poranen has also decided to step down, due to health reasons.
Spinnova’s CEO, CFO and deputy CEO, COO, chief revenue officer, chief product and sustainability officer and chief technology operator will all remain in place.
Spinnova says it “continues to see a clear market need for new natural feeling and sustainable fibres” despite the developments. It claims its ambition to scale its fibre up to 1 million tonnes each year remains in place.
The news comes just weeks after textile-to-textile recycling company Renewcell announced it is filing for bankruptcy at the Stockholm District Court due to a lack of sufficient financing and not enough interest in recycled fibres from the wider fashion industry.
