Translation: Original published in Finnish on 06/09/2026 at 07:15 am EEST

Betolar announced yesterday that it will focus its operations on two growth areas, Critical Infrastructure Protection and Metal Extraction Technology, and lay off 5-10 employees. On the same day, the company announced that it had been granted 2.1 MEUR in support from an EU-funded project. The announced measures will reduce personnel costs and provide cash flow in the form of grants, which will ease Betolar's short-term financial position but do not constitute a long-term financing solution. The company aims for a positive EBITDA by the end of the 2027 financial year, which, in our view, relies crucially on the commercial breakthrough of critical infrastructure protection solutions, as the commercialization of metal separation technology is set for a clearly longer timeframe. In our view, the announced measures will push the acute financing need further into fiscal year 2027, whereas we previously expected the need to arise at the beginning of fiscal year 2027. The key to financing needs is revenue development, for which visibility is currently very limited. We view the releases as slightly negative overall, as the reduction in personnel resources suggests that commercialization has progressed more slowly than expected, at least in the areas targeted for cuts. The slight downward pressure on our estimates does not change the overall picture for the stock, which means our target price and investment view remain unchanged.

Focus on two key areas

Betolar announced it would focus its operations and commercialization efforts on two strategic growth areas: Critical Infrastructure Protection and Metal Extraction Technology. According to the company, demand in these areas is growing globally, and Betolar's material technology expertise provides a competitive advantage in developing resource-efficient solutions. At the same time, the company announced it would lay off an estimated 5-10 employees for financial and production-related reasons to address the weakening demand for low-carbon products. According to the company, customer deliveries and projects for protection solutions, metal separation, and blast furnace slag forwarding continue without interruption, and the changes do not affect the financial guidance, which expects 2026 revenue to grow significantly year on year.

The move is strategically significant as development and commercialization investments are being shifted away from previous areas. In practice, concrete solutions for the construction industry and some mining applications appear to be completely outside the scope of development, while in the short-term business, the company relies heavily on critical infrastructure protection solutions. The biggest question marks relate to the business model of the protection solutions, and especially to how much of the delivery consists of Betolar's high-margin proprietary material technology and how much is a lower-margin total delivery implemented through the partner network. These factors are key in determining the structure of the hedging business's margin and capital requirements.

The announced layoffs are significant given the company's size: 5-10 persons account for 18-36% of the company's average number of employees in Q1'26 (Q1'26: 28). We estimate that personnel costs will decrease by roughly 0.4-0.8 MEUR annually as a result, weighted towards the latter half of 2026 and beyond. The impact depends on the nature of the layoffs: the wording in the release regarding a "significant and permanent" reduction in work suggests a more permanent adjustment, and potential redundancies would front-load severance pay costs.

Support for demonstrating the viability of metal separation technology

In the afternoon, Betolar announced that it had been granted a 2.1 MEUR support under the MINERVA project funded by the EU LIFE program. The project develops and pilots solutions to enhance the recovery of critical raw materials and reduce mining waste, and it will be implemented in the Sokli mining area in Eastern Lapland. Betolar participates in the project as a technology provider, and its role is based on metal separation technology, which enhances metal recovery from mining fractions and utilizes process side streams in the production of low-carbon circular economy cement. Betolar's share of the costs is 3.4 MEUR, of which 2.1 MEUR is support. The project duration is of around 3.5 years, and the support will be drawn down as the project progresses. The support has no impact on the company's financial guidance.

The support is in line with the company's strategic focus and supports the development of metal separation technology. We consider this opening strategically positive, as it brings credibility to the technology through competitive EU funding and a designated industrial pilot site. However, in our view, scaling the technology to an industrial level still requires significant resources and time, and thus its value creation potential can only be realized in the longer term. Although the costs incurred by Betolar for the project (3.4 MEUR) exceed the grant received (2.1 MEUR), we estimate that the grant will lighten the company's financial burden. This is because we suspect the development costs mainly arise from activities that promote the commercialization of the technology, and which the company would likely have maintained even without a separate project.

Short-term forecast risks are high, and the our view remains unchanged

We estimate that the releases will cause at least slight downward pressure on our estimates. Personnel costs and revenue are subject to downward pressure, while other operating income is subject to upward pressure due to support entries. Critical for short and medium-term estimates is additional information on the commercialization and business model of the primary revenue driver, the infrastructure protection solution. Visibility on this is currently low, so the risks associated with our near-term forecasts are high. Despite the slight downward pressure on our estimates, our recommendation and target price remain unchanged, and we will review potential estimate changes in connection with the next company update.