Solar Foods H1’24 preview: Eyes on the progress of Solein commercialization

Translation: Original comment published in Finnish on 9/24/2024 at 7:15 am EEST.

Solar Foods will publish its H1 report on Thursday at 9:00 am EEST. In its listing prospectus, the company provided an estimate of H1 revenue and net income, so the report should come as no surprise in terms of numbers. The most interesting part of the report, in our view, relates to the progress of Solein's commercialization, with key milestones being the joint product launch with Fazer earlier in the year and the post-review product launches with Ajinomoto of Japan and the achievement of self-affirmed GRAS status for commercialization in the US. The company's results announcement can be viewed on inderesTV at 10.00 am here.

Losses reduced due to grants

Solein production at Solar Foods' new Factory 01 only started in April, so no significant revenue was generated during the period. With the production capacity of Factory 01 and the opening of the US market, the company will be in a better position to forge new partnerships and advance the commercialization of Solein. Despite Solar Foods' growth incentives and the increased size of the organization, the company expects a net result of -2.5 MEUR for the first half of the year, compared to around -4.0 MEUR in the prior year period. The performance level is significantly supported by various grants, of which the IPCEI grant from the European Commission (IPCEI notification granted to the company) totals 110 MEUR, of which the company has received a funding decision for 33.6 MEUR to date to promote the hydrogen economy. Figures for H1'23 are not yet available except for revenue and net income. For the first half of the year, we forecast an EBIT of -2.0 MEUR. At the end of H1'24, the company had cash and cash equivalents of EUR 24.2 MEUR and a net cash position of EUR 3.3 MEUR, which we believe will cover the company's financing needs for at least the next 12 months as stated in the listing prospectus.

No guidance or financial targets; interim report can provide additional visibility into timeline of strategy process

Solar Foods currently has no guidance or financial targets for the current year. In its listing prospectus, the company announced that it had launched a new strategy process in the fall that would set new growth targets. We do not believe that major strategic directions should be expected as part of the half-year report, but any additional visibility on the timing of the strategy process would be interesting.

The initiation of coverage report on Solar Foods, published in a couple of weeks ago, is still very topical and freely available here.