Metacon reported its Q4’2023 result this morning. The quarter’s revenue (excluding other operating income) was significantly below our estimate. However, with the reduced business activity, costs were also down, and consequently, the adjusted operating loss came in somewhat better than our estimates. According to Metacon, the revenue decrease was primarily due to the extensive and planned strategic restructuring work during the fourth quarter.

Revenues significantly below our estimates

Metacon Q4 revenues decreased to 0.7 MSEK, which was markedly below our estimate of 22.5 MSEK. Revenues during the quarter were mainly attributable to progress on ongoing projects. The decrease was partially due to a shift in focus from small products to larger projects. However, high interest rates and delayed investment decisions have led to longer procurement times than expected for many customers.

Adjusted operating loss remained relatively stable

Adjusted EBIT for Q4 was still negative. It did, however, come in somewhat better than our estimate. This was mainly due to the low level of business activity, which led to the cost of Raw materials and consumables decreasing to -3.2 MSEK (Q4’22: -11.1). Cash flow for the period was -33.1 MSEK; consequently, the company’s cash and cash equivalents decreased to 27 MSEK. Interest-bearing liabilities increased to 28.0 MSEK (Q3’24: 18.3 MSEK), where the increase relates to new loans. However, we note that Metacon completed a rights issue in early 2024 that brought in about 100 MSEK before costs, which should cover the company’s immediate financing needs before the planned investment projects.

Outlook focuses on pursuing large industrial projects

During the quarter, the company executed its shift in focus toward the industrial sector and larger projects. This meant its products and smaller systems had to take a back seat in favor of Metacon’s investments in the industrial sector. The company is convinced that this is the wise long-term choice to maximize value growth and realize the company’s full potential going forward. Additionally, the company believes that pursuing larger projects has the potential for higher revenues and increased profitability, which can be achieved with fewer customer projects. We find this logic to be well grounded, although we don’t necessarily expect the results of this shift to become evident in the short term. With the rights issue behind it, Metacon aims to start manufacturing its own electrolyzers. The electrolyzers will be manufactured in Europe according to EU standards using PERIC-licensed technology. The company has previously commented that additional funding might need to be secured for the electrolyzer factory. We see the terms of this funding as a key short-term driver for Metacon’s investment story. The company is also working on finalizing an agreement to let PERIC license the manufacturing and sales rights for Metacon’s HHG systems for the Chinese market.