Re:NewCell

April - June
Group, IFRS, (compared to quarter 1 2023)

• Net sales during the period amounted to SEK 84.8m (29.7)
• Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK -59.3m (-80.3)
• Net profit/loss for the period SEK -105.4m (-125.4)
• Cash flow from operating activities amounted to SEK -34.7m (-101.6)
• Cash flow from investing activities amounted to SEK -13.8m (-55.9)
• Earnings per share, both before and after dilution, amounted to SEK -2.8 (-3.3)
• The company’s net debt at the end of the period was SEK 833.6m (1,006.5) of which leasing debt was SEK 316.7m

January - June
Group, IFRS

• Net sales during the period amounted to SEK 114.5m
• Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK -139.6m
• Net profit/loss for the period SEK -230.8m
• Cash flow from operating activities amounted to SEK -136.3m
• Cash flow from investing activities amounted to SEK -69.7m
• Earnings per share, both before and after dilution, amounted to SEK -6.2

Events during the quarter

• The ramp up towards the production capacity of 60,000 tonnes per year (approximately 5,000 tonnes/month) continued during the quarter. The production of prime quality dissolving pulp increased gradually from 1,600 tonnes in April, to 2,100 tonnes in May and 2,200 tonnes in June. 5,848 tonnes were delivered to customers during the period.
• Renewcell had its Annual General Meeting on 16 May. More information is available on www.renewcell.com.
• Renewcell’s lenders supported the company with additional short term credit facility of SEK 75m on 28 April. As of the 30 June half of this credit facility had been utilised.
• Renewcell was named the winner in Fast Company 2023 World Changing Ideas Award for the Sustainability/Energy category and Drapers Sustainable Fashion Award for the Sustainable Textile Innovation category.
• On 10 May Renewcell announced a partnership with TextileGenesisTM for Circulose® Pulp-to-Retail transparency
• On 21 June Renewcell achieved the Recycled Claim Standard certification for the Renewcell 1 factory
• On 29 June the company completed a directed share issue of 3,333,333 new shares to Swedish and international institutional investors, raising gross proceeds of approximately SEK 240m.

Events after the quarter

• During the month of July, Renewcell 1 produced 3,000 tonnes of prima quality dissolving pulp. Total production was 3,100 tonnes and 2,800 tonnes were delivered to customers.
• In July the CEO exercised warrants of series 2019/2023.
• On 15 July Toby Lawton, CFO, announced that he will leave his position at Renewcell for a similar position in another company. Renewcell has started the process to recruit a new CFO.

CEO comments

The consequences of the ongoing war in Ukraine, including the high level of inflation and a weaker level of demand, continue to negatively impact global economic activity. The recovery is slower than expected in many sectors, including the textile and fashion industry, and the after-effects of the different crises in recent years are still present. But there are also clear signs of improvement, for energy, transport and raw material costs. Despite this backdrop we see the interest in sustainable fashion continuing to grow and more and more brands setting clear targets for their businesses. Most recently Inditex increased the pace with an aim that 40% of their fibers in 2030 should come from circular sources.

We have made a number of improvements in our production processes and now see these giving clear results. We have increased from a capacity utilization of 32% in April to approximately 45% in June and over 60% in July while at the same time producing over 90% prime quality with good process control. We are beginning to get to know our production line, allowing us to start and stop production with very low levels of quality losses. The reason we have seen the good production development is that the rebuilds we have made during the quarter have already delivered results, even if they are not 100% fine-tuned. The problem with dust in the shredding area has reduced as we have implemented a number of actions that give a noticeable effect while at the same time we have further improvement actions to make in this area.

During June we raised SEK 240m in order to repay a short-term credit facility and give the company a financial base allowing us to focus our energy on ramping up. I was happy to see that we received good support from our shareholders despite the difficult equity markets. We continue to keep tight control over the cost level and cash flow during the ramp up, which is the reason our cashflow development is going in the right direction. I believe that, with this rate of improvement, we are well on the way to 60,000 tonnes and thereafter to 120,000 tonnes of annual production capacity. The challenge going forward is to secure that volumes of yarn, fiber and textiles made from Circulose® are present in sufficient quantities in all parts of the value chain in order to avoid bottlenecks, while at the same time our partners in the Circulose® Supplier Network get the chance to convert for as many fashion brands as possible.

Within sales and marketing we continue to build the value chain and during July and August launched the Circulose® Supplier Network (CSN) at the three global textile exhibitions Premier Vision in Paris, King Pin in New York and the Shanghai Yarn Expo. Circulose® Supplier Network is about giving a number of yarn and textile manufacturers the possibility to be the first to launch products based on Circulose®. We have also seen a number of launches, including with Calvin Klein/soft skater, Triarchy, Shawn Mendes collection together with PVH and Classic Retold basic knits with COS. H&M also continue to have new product launches within their existing lines. Another important part of the company’s development is to create traceability in the value chain. CIRCULOSE® was certified by TextileGenesisTM during the quarter, with the aim to achieve “Pulp to Retail Transparency”. More work is ongoing in this area and we expect to also incorporate physical traceability in the near future.

There is no doubt that the world is transitioning towards green and circular product flows. More and more entrepreneurs, companies and investors see how the transition creates some fantastic business opportunities. In particular this will impact on the trend driven textile industry where brands are increasing their efforts to move to circular product flows, not only to meet future regulatory requirements but also to increase consumer loyalty and their bottom-line profitability. In summary we are now increasing our production capacity every month in a stable way with a large proportion of the pulp produced within specification. The focus now is on filling the value chain in order to reach a stable flow and supply of Circulose®.

Invitation to presentation of Renewcell’s Q2 report

Re:NewCell AB (publ) (‘Renewcell’) will publish its report for Q2 2023 on Tuesday, 29 August, 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 and will be made available afterwards. 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://www.youtube.com/watch?v=fz35Ma15VfE&ab_channel=DirektStudios

The recorded webcast, report and presentation materials will be published on Renewcell’s website www.renewcell.com after the broadcast.