Solar Foods H2’24 preview: Review on the progress of Solein's commercialization

Translation: Original published in Finnish on 02/24/2025 at 08:03 am EET

Solar Foods will publish its H2 report on Thursday at 9:00 am EET. Due to the early development stage of the company, it is futile to expect significant revenue, and our attention is focused on comments regarding the progress of Solein's commercialization in the US and the development of the balance sheet. The review period has been eventful: The company launched Solein in the US, announced a new strategy and financial targets in connection with the CMD, and was listed on Nasdaq Helsinki.

We expect losses to have decreased thanks to subsidies and capitalization

Solar Foods’ production started in the new 01 demonstration plant in April. Solein has been sold to Singapore throughout the review period, and the product was launched in the US in November. We do not expect the company's key market area to have generated significant revenue during H2, and our revenue forecast is 0.1 MEUR. More important than the realized revenue are the comments on Solein's reception in the US.

Despite Solar Foods' growth investments and growing organization, we expect the adjusted operating loss to have decreased to 2.1 MEUR from 3.4 MEUR in the comparison period. The performance level is significantly supported by various grants, of which the IPCEI grant from the European Commission (IPCEI notification granted to the company) totals 110 MEUR, of which the company has received a funding decision for 33.6 MEUR to date to promote the hydrogen economy. Solar Foods capitalizes a significant portion of its expenses on its balance sheet due to the long-term impact of the expenses. Solar Foods’ earnings level is practically determined by recognized grants and capitalized expenses, so in addition to the income statement, cash flow must also be evaluated to get a comprehensive picture. In H1, the cash flow effect of subsidies was larger than the impact on the income statement (i.e., the company recognized subsidies front-loaded), but we expect this effect to have reversed in H2. In connection with the preview, we raised our H2 cost estimates and added a one-off item related to the expenses caused by the listing.

We do not expect guidance, but increased visibility on new funding sources would be positive

We do not expect Solar Foods to issue a guidance due to the early stage of its business development, and the company's financial targets also focus on the periods 2027-2030 and 2031-2035. It is, however, clear that the company should be expected to grow within the limits of the 01 production facility’s capacity and a growing cost structure. With the share price decline, equity has become a more expensive way to finance the growth strategy, so any comments regarding other sources of funding (including possible subsidies, debt financing and licensing opportunities) are of particular interest.