Spinnova Sales Sink, Restructuring Ahead

Following a disappointing financial review of 2023, Spinnova announced a management shakeup, potential job losses and a new focus on technology in efforts to turn the company around and achieve its profitability targets.

“The current tough economic climate is not the easiest for scaling a growth company,” CEO Tuomas Oijala said in a statement. “We are making progress step by step on our journey to increase the production volumes of Spinnova fiber and to bring the fiber to the market in product applications through our committed supply chain and brand partners.”

More from Sourcing Journal

• Renewcell Gets More Time to Find Buyer While Lenzing Losses Balloon

• New York Pol Touts State's Natural Fiber Potential

• Consumers Want More Natural Fibers. Here's How to Innovate & Give Them What They Want

The news comes just weeks after fellow alternative fiber firm Renewcell filed for bankruptcy, with whom Spinnova teamed on a technology concept designed to facilitate scaling textile fiber made from waste last September.

“If [Spinnova] does not add value with high sustainability…they will see the same fate as Renewcell, which I am very sad about,” reads a LinkedIn post.

Spinnova’s results show that total revenue dropped to 10.6 million euros ($11.5 million) last year compared to $26.5 million the year prior. At the same time, the operating loss nearly doubled, hitting approximately 20.9 million euros ($22.8 million) compared to a loss of $13.1 million in 2022. In 2023, investments totaled 9 million euros ($9.8 million), dropping roughly half from the previous $18.5 million.

Spinnova said it has decided to prioritize short- to medium-term cashflows to “create the most value for stakeholders” by focusing on its fiber technology sales and delivering that technology with its partners. Those sales will be targeted at “where it creates the most value” with upstream raw material partners or downstream textile manufacturers.

“As we continue to make significant steps in the fiber, expanding its addressable market, as well as in the cost profile of technology investments, we will be able to offer an attractive solution for technology customers,” Oijala said.

The Finnish fiber firm also said it doesn’t expect needing additional external funding to reach its targets.

This plan is allegedly already in place, as the Adidas collaborator signed a letter of intent (LOI) with Brazilian manufacturer Suzano last week for its next wood-based production factory.

According to the LOI, Suzano plans to own and operate the next wood-based fiber production facility on its own site, and Spinnova will provide the technology. However, the opportunity to invest in future plans “remains at Spinnova’s discretion.” The two partners opened their first Woodspin factory last May.

Additionally, the sustainable textile innovator has a targeted annual savings of up to 1.4 million euros ($1.53 million) in personnel expenses, excluding share-based compensation. Spinnova estimates 16 permanent job cuts (a 21 percent reduction) and five role changes.

“The exact details regarding the extent and targeting of the potential layoffs will be clarified during the negotiation process,” the company said in a statement. Those negotiations will last until April 11.

However, chief sales officer Allan Anderson and executive vice president of production scaling Teemu Lindberg will be leaving the management team, though they will continue to support with the transition until the end of April. Chief operations officer Petri Poranean has decided to step down. As of May 1, Oijala will remain CEO, Ben Selby will remain CFO, and co-founder Juha Salmela will remain chief technology officer. Chief human resources officer Santeri Heinonen will become COO, general counsel Lasse Holopainen will become chief revenue officer, and chief sustainability officer Shahriare Mahmood will become chief product and sustainability officer.

“I would like to thank Allan, Teemu and Petri for their dedication and efforts in working toward Spinnova’s scaling and commercialization,” Oijala said. “We are also very happy that Allan and Teemu are both continuing to support our customers, employees and other key stakeholders during the coming months to enable a smooth handover and continued development of our business.”

As it stands, Spinnova’s 2024 focus areas and priorities include fiber development, sufficient industry adoption of said fiber and the first technology sale outside of existing joint ventures.

“If the global textile industry wants to shift its material base from conventional materials, such as cotton and polyester, to more sustainable alternatives, we need all the players in the textile value chain on board,” Oijala said. “Bringing a new material innovation like Spinnova to the market in larger volumes requires investments, incentives and long-term commitments from investors, textile industry players and policymakers.”

With that in mind, it’s hard not to think about up-and-comer Syre, the new textile-to-textile recycling project H&M committed to purchasing $600 million worth of recycled polyester from, earlier this month. And the fact that the Material Innovation Initiative reported that while global venture capital funding dropped 42 percent in 2023, material innovators saw a 10 percent rise in investment funding last year.

“I think the worry [around Renewcell] is a bit overblown. I think that we forget that in most new technologies and industries there will be a lot of failures in the beginning,” Nicole Rawling, co-founder and CEO of MII, said. “A lot of the time, the first movers don’t succeed. Just because one company fails, doesn’t mean that the industry is not viable or that there is no demand for next-gen materials.”

But per other research, Oijala’s remarks ring true: A joint analysis by Boston Consulting Group, Textile Exchange and Quantis said that, unless the industry ramps up the share of preferred raw materials, it risks facing a 133 million-ton deficit by 2030.

“To increase the share of sustainable materials in products, the whole textile industry value chain—from fiber innovators and producers to yarn, fabric and garment makers and to brands—must move onwards from sustainability targets to deepening their cooperation,” Spinnova said. “Furthermore, the transition to a more sustainable material base is not only demand-driven, but production capacity increases require investments into new technology and production capacity takes time to build.”