CEO's message
From the Q2 – 2023 report
Expected weak quarter but financing secured
The fourth quarter turned out to be very weak as previously announced, but Cell Impact’s sales will gradually increase in the coming quarters, albeit from a low level. During the quarter, financing for the company's ongoing development was secured, the cost reduction program announced in July 2023 was concluded and an additional cost reduction program was initiated. Our full focus is now directed toward developing both customer projects and taking further steps in Phase II, our productivity and profitability program.
As we reported several times during the fall, the fourth quarter was very weak, both in terms of revenue and results. We continued to face challenges in the form of delayed orders and a reduced demand for flow plates. As a result, turnover went down during the quarter, amounting to 0.8 SEK million (17.4), a decrease of 95 percent compared with the corresponding quarter in 2022. Turnover for the entire year amounted to SEK 47.3 million (76.8), a decrease of 38 percent. The low turnover affected the results for the quarter and the full year, but the impairment need identified in the final phase of the second ongoing rationalization and cost reduction program also played a role. The operating loss for the quarter was SEK -38.8 million (-29.1) and the loss for the year totaled SEK -119.5 million (-103.5).
The company’s sales will gradually increase in the coming quarters, not least thanks to the 22 million SEK order Cell Impact received from the company’s largest customer, as we announced in early October 2023. Our invoicing in January 2024 was twice as high as for the entire fourth quarter.
Rationalizing, streamlining and capitalization
In addition to the cost reduction program we announced in August, another cost review was carried out during the fourth quarter 2023. These programs, once fully implemented in the spring 2024, will lead to a reduction of Cell Impact’s workforce to about 50 people, more than halving the previous headcount. We will continue to closely monitor the company’s costs. Furthermore, Stefan Axellie and Pär Teike decided to leave the company. Malin Lundberg was appointed as new CFO, and I was appointed interim CEO. We both have many years’ experience working for Cell Impact.
During the quarter, we successfully carried out a rights issue, raising approximately SEK 129 million before issue expenses. In accordance with what was published in the prospectus, we expect that this capital injection will allow us to finance operations into 2025. Following the rights issue and despite the cost reduction program, we were able to secure internal core knowledge in all essential areas, which is crucial for delivering on existing projects and ensuring our long-term development.
Continued interest from existing and prospective customers
We continue to see interest in Cell Impact’s products and technology from existing customers as well as past and new prospects. This includes a variety of activities, all of which are prerequisites for larger orders in the future. These activities involve both initial design support where together with the customer we help optimize their sketches for large-scale, high-quality production as well as developing test tools and prototypes to evaluate customers’ designs and finished products. In several cases, we have also conducted prototype manufacturing of flow plates using full-scale tools.
Simultaneously, work is continuing to develop Cell Impact’s business within electrolysis. The production of hydrogen through electrolysis is growing quickly and around the world, large sums are being invested to develop and produce electrolyzers. During the fourth quarter, Cell Impact was involved in several customer projects aimed at developing flow plates for electrolyzers. We aim to convert some of these projects into larger business deals in 2024.
“The production of hydrogen through electrolysis is growing quickly and around the world, large sums are being invested to develop and produce electrolyzers.”
Continued work within Phase ll program
Cell Impact has previously demonstrated that Cell Impact Forming™ is a cost-effective and scalable process that enables high-volume, high-quality forming of flow plates. During the fourth quarter, we were also able to verify crucial improvements to two of the steps in the manufacturing process for flow plates in our Phase II project: a new punching technique and a faster, ore stable welding method. In January 2024, we installed the first of three new fully automated laser cutting machines with higher capacity than our previous equipment, providing a more stable and flexible process for prototypes and medium-sized volumes.
High confidence and commitment
We continue to experience significant interest in our products and confidence in Cell Impact as a participant in the green transition. This is something we’ve noticed not only from customers and suppliers, but also from the many investors who have chosen to be part of our journey. Without their trust, nothing would work.
The same applies, not least, to Cell Impact’s employees who are fully focused on and committed to our continued development. Thanks to all of our employees, both those who remain and those who had to leave us but who made valuable contributions to our business, we have strong momentum. A special thanks goes to our former leaders Pär Teike and Stefan Axellie as well for their valuable contributions over many years.
We have a positive spirit and outlook along with loyal customers and interesting prospects. Cell Impact offers unique and cost-efficient forming technology that results in high quality and good scalability, which will lead to excellent earning opportunities for our customers. As new interim CEO, I want to express my gratitude for the trust placed in me. It is with the greatest confidence that I approach this important mission: To make Cell Impact a leader in cost-effective and high-quality manufacturing of flow plates for fuel cell and electrolyzer manufacturers.
Daniel Vallin, Interim CEO
Karlskoga, February 2024