OptiCept Q4 morning result: lower sales than expected

OptiCept reported weaker than expected revenues for Q4 this morning. While the company has managed to decrease its cost base YoY, operating profit (EBIT adj.) was also lower than our estimates, due to a high activity regarding the OliveCept installations. As a result of a weak olive oil season with poor harvests, climate change and a slow economy, customers are choosing to hold off on placing orders until grants have been approved. Thus, OptiCept has decided to temporarily reprioritize its efforts and shift the investment in olive oil to solid foods as a priority area. While this means a lower growth outlook for OliveCept, the shift should allow for better commercial focus, which we find critical for the company's growth to be successful.

Sales was weaker than expected

OptiCept’s Q4 revenue decreased by -47% to 0.9 MSEK, below our estimates of 1.9 MSEK. The lower revenue compared to Q4’22 is mainly due to that the company has billed significantly fewer machine parts during the quarter. However, the lower revenue does not reflect an impact on earnings, as billed costs are also expensed on the total result. However, the reduced sales in the form of machine parts do not affect the result because the company buys back the finished machines from the supplier, which affects the costs. Revenue from FoodTech amounted to 0.6 MSEK (Inderes Q4’23e: 1.4 MSEK) and also PlantTech revenue was lower than our estimates, 0.22 MSEK (Inderes Q4’23e: 0.6 MSEK).

Cost-saving efforts resulted in decreased operating loss

Throughout 2023, OptiCept has implemented cost-saving measures to decrease external costs and personnel expenses, which started to take effect in Q3’23. However, due to a high activity regarding the OliveCept installations, the operating profit (EBIT adj.) was lower than our estimates and amounted to -23.1 MSEK. EPS (adj.) amounted to -0.57 SEK, which was also lower than our expectations, due to a lower revenue, still high fixed costs and high interest expenses. OptiCept also reported a weaker cash flow than expected, mainly due to a lower operating profit than we anticipated. Although the directed issue and redemption of warrants during the quarter somewhat offset the depressed cash flow, the company’s net cash at the end of the period amounted to 14.2 MSEK. However, after the Q4 report was released the company communicated a directed share issue to FPS Food Process Solutions, OptiCept’s partner within sold foods, which will strengthen the cash position by some 10.3 MSEK, before deductions for costs attributable to the transaction.