From January 1 2023 Re:NewCell AB (publ) (“Renewcell”) is reported as a group using IFRS accounting principles. The parent company, Re:NewCell AB, which contains all the business activities, will continue to report using the RFR2 accounting principles (see page 2). Comparable figures are therefore presented only for the parent company (and according to RFR2).
January – March, group
(IFRS)
- Net sales during the period amounted to SEK 29.7m
- Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK -80.3m
- Net profit/loss for the period was SEK -125.4m
- Cash flow from operating activities amounted to SEK -101.6m
- Cash flow from investing activities amounted to SEK -55.9m
- Earnings per share, both before and after dilution, amounted to -3.3 SEK per share
- The company’s net debt at the end of the period was SEK 1,006.5m of which leasing debt was SEK 319.7m
January – March, parent company
(RFR2, compared to the same period last year)
- Net sales during the period amounted to SEK 29.7m (2.0)
- Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK -86.0m (-46.3)
- Net profit/loss for the period was SEK -123.9m (-54.0)
- Cash flow from operating activities amounted to SEK -104.5m (-101.5)
- Cash flow from investing activities amounted to SEK -55.9m (-183.4)
- Earnings per share, both before and after dilution, amounted to -3.3 SEK per share (-1.8)
- The company’s net debt at the end of the period was SEK 686.9m (22.6)
Change in accounting principles
- Re:NewCell AB reports from January 1 2023 as a group according to IFRS accounting principles. The parent company continues to report according to RFR2, in accordance with Swedish law, and the parent company’s figures are therefore reported separately above in order to allow comparison between periods. See note 2 for further details.
Events during the quarter
- The ramp up has continued during the quarter and the production of prime quality pulp has increased successively from approximately 500 tonnes in January, to approximately 650 tonnes in February and approximately 1,150 tonnes in March. Total production during the quarter amount to about 3,350 tonnes of which approximately 2,400 tonnes were prime quality. 2,061 tonnes were delivered to customers.
- On March 22 a fire occurred at Renewcell’s textile recycling plant Renewcell 1 in Sundsvall. The fire occurred in a shredding unit and a filter unit in the shredding area at Renewcell 1. After a clean-up and repairs production was restarted on March 31.
- On March 28 a Letter of Intent was signed with China Textile Academy Green Fiber Co. Ltd., an innovative Chinese lyocell fiber producer, concerning a long term commercial collaboration around man-made cellulosic fiber production. The agreement affirms the two companies’ intent to work together to supply lyocell textile fibers made using Circulose®, the 100% recycled textile pulp made by Renewcell, to global fashion brands in the coming years.
- On March 30 Renewcell and the leading Chinese viscose manufacturer Tangshan Sanyou announced the next step in their partnership to make fashion circular that stretches back to 2018. The two companies’ new shared ambition is to offer manufacturers and brands Circulose® viscose fibers made from 100% recycled textiles in commercial quantities starting in 2024.
Events after the quarter
- During the month of April 1,600 metric tons of prime quality pulp were produced in Ortviken. Total production was 1,700 metric tons and 1,350 metric tons were delivered to customers.
- On April 28 Renewcell’s lenders agreed to extend the company’s existing credit facility with an additional amount of up to SEK 75m to support the company during the ramp-up of Renewcell 1 in Ortviken.
CEO’s comments
Promoting the circular economy is an important challenge in all sectors and for many governments. The EU has recently decided on new rules to promote the circular economy, with a particular focus on textiles and fashion. The USA is also focusing hard on sustainability and circularity with the IRA program which is intended to support the green transition. China has also defined in the 14th five year plan “increased efficiency in resource allocation” as a priority with the ambition to establish a recycling industry covering the whole of society by 2025. It is clear that Renewcell is coming at the right time and has a promising future.
The ramp up of Renewcell 1 in Ortviken is continuing and we are successively increasing production in a controlled way every month. Using the experience we have built up in our Kristinehamn plant we can solve many issues quickly. We work systematically to steadily increase production every day. During Q1 we have been at an average capacity utilization of 22%. We are now aiming to increase production towards full capacity utilization at the end of the year. I do however have full respect for the complexity of a ramp-up such as ours, but we are well on the way.
The fire which occurred on March 22 started in a shredder and then spread to a filter and was put out within two hours. It was limited to one shredder and to one filter unit where a number of filter socks were damaged. After putting out the fire and making an assessment and plan we were able to inform that we would be up and running again within two weeks. The factory started up again after 10 days. The cost for the clean-up and repair work is estimate to about SEK 2m.
We have met with a number of customers during the quarter and I have personally been in New York and met customers as well as joining the Intertex trade fair in Shanghai in early April. When we meet fashion brands the message is clear that our customers are seeking a sustainable business model where they are also able to verify that they have green fibers in their textiles. During Intertex our partners Sanyou and Yibin published that they will increase the share of Circulose™ from 30% to 50% during the second half of 2023 and up to 100% during 2024.
So far during 2023 we have launched with PVH feat. Shawn Mendes classics reborn, Cos tee modern classics, TRIARCHY denim Cellcius and Ganni denim. An overview of all the launches can be found at https://circulo.se/en/.
During the quarter we have discussed with our lenders and during April we took up an increased credit facility of 75 MSEK as a complement to support the company during the ramp-up of Renewcell 1.
In summary I can state that the customer interest is still strong and our production and sales teams work systematically and are taking significant steps in the right direction. I believe that we are well positioned to be fully ramped up to the annual capacity level of 60,000 tonnes at the end of 2023 and can thereafter scale up further to 120,000 tonnes during 2024.
Stockholm, May 2023
Patrik Lundström, CEO.
Invitation to presentation of Renewcell’s Q1 report
Re:NewCell AB (publ) (‘Renewcell’) will publish its report for Q1 2023 on Wednesday, May 3, at around 08.00 (CET). On the same day, at 10.00 (CET) the Company’s CEO Patrik Lundström, and CFO Toby Lawton will present the report in a live webcast.
The presentation will be webcasted live by Infront Direkt Studios and will be made available afterwards on-demand at www.renewcell.com. Participants will have the opportunity to ask questions in a Q&A session following the presentation. The presentation will be held in English.
The live webcast can be accessed at this link: https://youtube.com/live/dnTzieg33yk
The recorded webcast, report and presentation materials will be published on Renewcell’s website www.renewcell.com after the broadcast.