Metacon will release its Q4 results on Wednesday. We anticipate a significant increase in revenue, primarily driven by the expected recognition of revenue from the large-scale order from Motor Oil. However, given the variable nature of raw material and consumable costs, which are expected to scale up with revenue, we believe EBIT will remain negative. In the upcoming report, we look for management’s comments on the demand situation and further insights into the company’s financial position.

We expect the company to be back to a growth pattern

We estimate that Metacon’s Q4 revenue will reach 32.3 MSEK, a sharp increase from 0.7 MSEK in Q4’23. This growth is mainly attributed to the anticipated revenue contribution from the Motor Oil order. Additionally, the comparison base is low due to weak deliveries in the same period last year, leading to a heavy increase in relative terms. However, revenue visibility remains low, as revenue recognition depends on the percentage of project completion, meaning actual figures may differ significantly from our estimates.

In the bigger picture, however, Metacon’s investment story is based on long-term commercial success, so we do not place too much emphasis on reported revenue in a single quarter. As such, we place more importance on ensuring that the Motor Oil order progresses as planned and monitoring the company’s new order intake. Notably, Metacon has not announced any new orders since the last Motor Oil order in Q3’24. However, in its latest report, the company mentioned ongoing projects of similar or larger scale and indicated strong market interest in Europe. Therefore, we will look for further updates on demand and potential new orders in the upcoming Q4 report.

Earnings are expected to remain negative

We forecast that Metacon’s Q4 EBIT will remain negative at -19.2 MSEK, as revenue and gross margins are still insufficient to cover fixed costs. Despite the expected increase in revenue, the variable nature of raw material and consumable costs means only a marginal improvement in operating loss is likely. Given the company’s relatively low debt levels, our net income estimate aligns closely with its operating profit.

From a cash flow perspective, we anticipate that the negative operating result will continue to put pressure on liquidity. At the end of Q3’24, Metacon had a cash position of 9.1 MSEK, later strengthened by a rights issue. As detailed in our recent research report, we estimate that the current funding will last until around summer 2025, based on a quarterly burn rate of 25–30 MSEK. We also anticipate that approximately 180–190 MSEK from the Motor Oil order will be released around the same time. This means that the liquidity situation is tight, and the burn rate over the coming quarters as well as the timing of when liquidity from the project is released will significantly influence whether the company will need to secure additional financing before generating positive cash flows from the Motor Oil order. Therefore, we are particularly interested in more details regarding the timing of cash flows from the Motor Oil order and the current burn rate in the upcoming Q4 report.

Financial target is likely to remain towards 500 MSEK revenue in 2025

Our current full-year revenue estimate for 2025 is 239 MSEK, with an EBIT estimate of -67.4 MSEK. While Metacon does not provide financial guidance, the company has stated that it is targeting revenues of 500 MSEK and reaching positive cash flow in 2025, which means that Metacon needs to secure one to two similar-sized projects as Motor Oil, depending on size, according to the company. Although we think it is likely that the company will maintain the target at this point of the year, our estimates are lower, due to the still weak market environment and the lack of new orders coupled with long lead times associated with large-scale projects.