CEO’s Review

Spinnova solves the environmental challenges of the textile industry with a sustainable textile fibre

Spinnova’s story begins in 2009, when founders Janne Poranen and Juha Salmela worked with microcellulose research at VTT Technical Research Centre of Finland. They began investigating whether wood fibre could be spun into textile fibre in a similar manner as a spider spins protein into a spiderweb. Janne and Juha determined that it could be possible, so they refined and patented this process over the following years into a validated technology platform.

Spinnova’s technology allows for the production of SPINNOVA® fibre from multiple raw material inputs, including wood pulp, leather waste, agricultural waste, recycled cotton and other textile waste. SPINNOVA® fibre is 100 per cent recyclable, quickly biodegradable, contains no microplastics and can be produced without dissolution or the use of harmful chemicals or harmful additives.

HALF-YEAR REPORT
JANUARY-JUNE 2023
(31 August 2023)

COMMENTS BY INTERIM CEO BEN SELBY

“In May, our joint venture Woodspin officially opened the first factory producing wood-based SPINNOVA® fibre, with almost 100 guests visiting the facility in Finland. Spinnova finalised the technology installations during spring and the technology handover was completed successfully. The factory has since May been fully operated by Woodspin. The ramp-up is ongoing, gradually increasing the production run-rate of the machinery. The planned capacity of the plant is to produce one thousand tonnes per year of sustainable textile fibre.

Suzano Finland as raw material supplier to Woodspin continues to develop its production process to improve the quality of the wood-based micro fibrillated cellulose (MFC) produced and efficiency of its process. While Suzano develops its MFC process it is expected that the first Woodspin facility will mainly be used for R&D to test new MFC batches and that commercial production volumes will be limited in the short term. To meet customer commitments Woodspin used alternative wood-based MFC from Scandinavia during the first half of 2023. The first commercial deliveries of fibre based on this alternative raw material have now been sent from the factory. Spinnova’s textile development work continues, and we are planning to launch our first products using Suzano MFC once the raw material has reached the needed quality level.

Together with Suzano, we have been gathering the learnings from the first Woodspin plant to support the decision making for the next Woodspin factory investment. Spinnova is actively working with Suzano to improve the efficiency of the wood-based raw material (MFC) process and the quality of the MFC produced. At the same time Spinnova continues to further develop the technology concept to reduce capital expenditure per tonne of fibre produced compared to the first Woodspin plant. The market opportunity and ambition level with Suzano to scale Woodspin’s production capacity remains unchanged.

Following the agreement with ECCO to proceed towards commercialising leather-based fibre at Respin, we have started a feasibility study of the first commercial factory for Respin, which is planned to be located in the Netherlands.

Spinnova sees great potential in fibre produced from other raw materials such as textile waste and agricultural waste, and we continued to invest into research and development during the first half of 2023. We were pleased to receive a grant of approximately EUR 1.9 million from Business Finland in July to focus on research into these raw materials as well as research into recycling SPINNOVA® fibre and developing more energy-efficient raw material refining. We expect this to open new opportunities for Spinnova to expand its business by adding new raw material refining and fibre recycling components to its technology offering.

Another great brand cooperation effort came to fruition at the beginning of April, when the Halti Cyclus unisex parka hit the stores. The parka is made from environmentally friendly SPINNOVA® fibre and cotton and dyed using Imogo’s sustainable technology from Sweden.

In June, we entered into a yarn development co-operation agreement with Tearfil, the visionary spinning mill based in Portugal, whereby Tearfil will operate our R&D yarn-spinning line. The yarn-spinning line is intended for product development, and it will be located at Tearfil’s facilities, in Europe’s most significant textile industry hub in Portugal. This will improve our access to global textile markets.  

I’m pleased that our revenues grew during the period. Our revenues increased to EUR 8.8 million from EUR 7.6 million, driven mainly by technology sales. Our operating result was approximately EUR -11 million compared to EUR -5.8 million. The decline in operating result was expected as we were ramping up our and our joint venture operations and had increased personnel costs. During the period our investments of EUR 6 million continued to be primarily into the Woodspin joint venture.

Today Spinnova announced a strategic review. The review will focus on prioritising areas in the strategy that in the short- to medium-term deliver the fastest time to positive cashflow generation and that create the most value for the company’s stakeholders.

I would like to thank our dedicated team and partners for all their hard work in the first half, thanks to which we were able to achieve significant milestones in our development, most notably the handover of the technology installation to Woodspin.”

Ben Selby
CEO (interim) and CFO