Look at me. Do you see a sophisticated system? 3.8 million years of nature's engineering to learn from. In the natural ecosystem, everything that lives circulates forever. How? It all started with a crazy question: Can we create textile fiber by using nature's own process, by learning from the master nature herself, by imitating nature, like how a spider produces its web? That question led us to invent a brand-new way of making fiber out of wood and waste. A revolutionary natural fiber, the first of its kind. 10 years of scientific research, thousands of trials, and vigorous industrial scaling has led us to this moment, benefiting the entire global textile industry with a process so clean and pure, with zero harmful chemicals and dissolving. Zero. No compromise.
Because all T-shirts should be produced with only one liter of water, no harmful chemicals, side streams, or waste, just like nature designed it. We produce a textile fiber that breathes, lives, endures, warms over, over, and over again, and again. That's the way nature has always done it. Spinnova.
Good afternoon, everyone, and welcome to Spinnova's Capital Markets Day. My name is Virva Vesanen, and I'm the Head of Investor Relations here at Spinnova. I will be hosting this event this afternoon. This place where we are today is Spinnova's premises in Eteläportti, Jyväskylä, Finland. In the same building, we have also our joint venture, Woodspin's first factory. That's the first factory producing Spinnova fiber. We also have here Suzano, who is producing the raw material, the microfibrillated cellulose from eucalyptus wood to the Woodspin factory. Before we start, I would like to take notice of this disclaimer. There will be some forward-looking statements in the presentation, so please read the disclaimer. Today, we have announced our updated strategy, and we will be hearing more about the strategy from our CEO, Tuomas Oijala, and other management team members.
Here we have the agenda for this afternoon. We will now first have three different presentations. They will take about an hour, then we will have a break for 15 minutes. After the break, we will have more presentations, including our financial results from last year, which were also published this morning. We will end the day with a Q&A session. We will have all the management team members here on stage answering questions, and we will start with questions from the live audience here, and then we will have questions from all of you watching the webcast. So please send your questions through the chat function. So let's start the presentations. Please welcome on stage CEO Tuomas Oijala.
Great. Thank you very much, Virva. And, it's really special to be here addressing all of you. We've been working very hard during the last months on our strategy and on our plans, and it's a big day in many ways for Spinnova. But I think it's very special, as Virva said, to be able to be here on site. For me, this has a really big personal implication as well, because, you know, when I started this job or it was announced that I will start this job, I had the chance to come here with Juha, and Juha took me around in this facility, the man himself behind the invention.
When I saw what we really are doing there, I realized this is something real, and this is gonna be something big, and it really made me excited. I was extremely confident that we're gonna make this happen, and that's what we're here to give you a view on today as well. Before I go into my presentation, I'd like to reflect on a few things as well. I've had three months here now with the company. It's been really incredible to see the people that this company employs, the dedication and the talent and the experience that everybody has. And as we'll talk about our strategy, people will be one of the core assets that we have as well. The technology itself is really quite simple and quite elegant. There's really some scientific genius behind it.
And what's most amazing about it is most of the machinery that you saw and everybody knows about is actually coming from already existing industries. It's not. We don't need to do that many new things. But with our technology, we unlock this, and we unlock the power of all of that to make something happen. We've had the pleasure, during my three months, to meet many of our brand partners, to travel, to see the textile supply chain, to see many of our technology partners, and it's really great to see the commitment in the industry, but also that there's a lot of know-how there and a lot of learnings for us as well on how we can make this happen. I also want to thank the collaboration with Suzano.
I've had the pleasure of working with their management team and many of the talented people there as well, and we'll talk about that. I'm incredibly impressed by the professionalism and the skills in that company, some things that we will be benefiting from together. And of course, finally, I would like to acknowledge the board and all the people here for placing your trust in us. Now we're here to show you how we walk the talk. Spinnova has been on quite a journey over the past few years. Many great achievements, many product launches, many innovations, a lot of development.
But we thought it's really time to pause and think about what the next phase is going to be, how we really accelerate the scaling of the technology and accelerate how we create value for our customers and shareholders. So what we're going to be doing today is really reiterating what the market is, what the need is in the market, what our fiber is, why is it unique, and what value it provides. And we're going to talk about the technology, how we're going to scale the technology, how we're going to make sure the technology can make for something that's an attractive investment for our future technology customers.
And then finally, we're going to talk about how we're going to manage our financial position in a way that means that we can make our targets happen without the need for additional funding. It's very important to start, of course, though, with the mission. And this is really, one of the things that brings people to this company. It brought me to the company as well. And we have a clear, clear vision of how the future needs to look, and we have a mission. We've slightly changed the mission so that we are still on a mission to transform the raw material base of the textile ecosystem with our technology, but we are not manufacturing, we are innovating and engineering the most sustainable fiber in the world. And this is something that we will be very consistently following, and this guides us every day.
But it's very important, as always, to start with the market. This is really a fundamental premise of the whole case of why we believe in our technology and why we believe in Spinnova as an investment. The market is very large and attractive for Spinnova, and we expect that textile production is going to grow by over 30 million tons by 2030. And there are some very important demand drivers or trends in the market that are going to push the need for natural-like fibers. First of all, there is just an existing natural fiber demand. For example, you'll see jeans that Shahriare will present. Natural fibers are the only way that the designers want to work. There's also commitment to sustainable alternatives from brands across the industry.
I'm sure you've all seen that, and their deadlines are just getting closer and closer every year, but there aren't real sustainable alternatives there. We know that there's regulation push, especially in the European Union, that's going to give a lot of backwind to making new technologies happen. And maybe to sum it up, this is also a supply chain thing. There is going to have to be investment. We've estimated over EUR 20 billion of investment into production just for the man-made cellulosic fibers to keep up with the demand. In addition to that, just the traditional cotton supply chains will face troubles as well when the climate change accelerates. So there are things that are going to make this happen, and it's up to us then to capture the value that's going to be created in this industry.
We have, in our view, the solution. We have the fiber. So our fiber is, in our understanding, the only man-made fiber that can serve as a natural fiber alternative. And our fiber also has significant impact or reduction impact and potential on, on the climate footprint, and this is something that, that our, our brand partners in the supply chain are very interested in. We have the technology, so we have a patent-protected innovation. It's a technology that's easily scalable, and what's very important is that we have a world-class network of partners, technology companies, providing a lot of the machinery that can make this happen.
We'll highlight this a few times, but I want to reiterate as well that many of these companies will create significant new business for themselves as well by entering into the textile space, and we will be opening that door to them. Finally, but extremely importantly, that the same technology that we've been talking about and that we will be showing today can be used for multiple raw material sources. We're scaling up wood first. It's a very widely available feedstock, and we have a great partnership with Suzano, but we see that's just part of Spinnova's journey. Then, of course, the brand. We have a strong ingredient brand. It's recognized for sustainability already today. When I've been visiting partners around, the door is open, and that's great. I think the team here in Spinnova is doing a fantastic job.
Of course, the technology and the fiber, when it has a brand, it can help the brand customers, it can help the supply chain customers, like the spinners, and of course, anybody who invests in Spinnova technology will then benefit from the power of this brand, and this is an important part of the value creation as well. So of course, I'm here to give an introduction to the strategy overall before the team goes into this, but I just want to remind everybody before going into that, what it is that this technology does. Many of the people in the room now have had the benefit of seeing it in real life today, but for everybody online as well, you know, just so that when we talk about technology sales, it's very clear what we're speaking about.
So the Spinnova process and technology ranges from the mechanical refining to having a finished fiber coming out the other end of the production process. When we say that we deliver the technology, we are bringing the network of companies together to build the machinery to do that, and in some core parts of this, we even have our own delivery scope. But the main thing is that we have the know-how for the end-to-end process. We make it happen. We have the key to bring all of this machinery together to make fiber from pulp. And this is very important for everybody to understand as we talk about technology sales. So the strategy. First of all, it's important to reflect on why we chose this strategy.
I think it's, you know, there's been many good discussions, and we've had a lot of wise people working on this over the past month, and the reason that we've embarked on this journey is twofold. So first of all, we wanted to make sure that we are focusing on the part of the value chain where we really have a competitive edge, where we can add value, where we are doing something that others can't do as well. We decided that it makes most sense to us to focus on the technology part of the business rather than venturing further downstream. The complexities get quite big when we go further downstream.
And the other one, of course, is that we want to have a strategy where we can make this company EBIT positive without reaching or without needing additional funding, and we have a very clear path towards that. So what is the strategy? It's about technology sales. So we will be, as said, focused on selling the technology and delivering it with our partners to customers. It means our customers will be the ones who are building the facilities. Our customers are our technology customers. We sell the production capability to them. We see really great potential in two categories of customers. The first one is companies that are producing raw materials, and they benefit from getting a higher value add from using this technology to make fiber and selling it to the textile industry. Suzano is a great example of this.
Then we also have very good discussion with customers in the textile industry, where they maybe will be able to secure a better supply of fiber, a better fiber, and they'll have a much better business opportunity for themselves as well. But fundamentally, it's all about making a good business case for whoever invests in this production. And how we do that, and what we're gonna be doing then, is technology development. So it's very important for us to get at scale other raw materials to happen, but also, as Juha will be presenting later, to get the capital expenditures and OpEx of the mills to a competitive level where the investment case is one that's really good for whoever invests at the scale that it needs to be at.
And then, of course, we wanna make sure that we create demand for our technology customers, so that when they make investments in Spinnova technology, it's there. And we're gonna be doing that by working with the brand partners, working with the supply chain, to make sure that our fiber is widely accepted, to make sure that the properties of our fiber are exactly what's needed, so that it becomes a product that's so easy to use, that it's just a switch alternative from what they're using today. And basically, again, going back to our technology customers, makes it a great investment case for whoever is investing in the Spinnova technology. And finally, in our strategy, it's about focus on cash generation.
We are very clear in our targets that in the midterm, we want to get to an EBIT positive business, and throughout the strategy period that we've outlined and the targets that we'll talk about, we don't need additional funding to make that happen, and this is very important. It's about selling technology. It's about making sure the technology is ultra-competitive. It's about understanding our customers and making a fiber that works perfectly for their situation, and of course, doing it with a business model that is sustainable without the need for additional funding. This is the strategy in a nutshell, and of course, we have a great first step that was announced last week, and this is something we're extremely proud of, and we're very grateful for the good collaboration with Suzano that we have.
So we announced last week, Thursday, that we've signed a letter of intent with Suzano on how we'll go forward with building the next plant of the next scale of Spinnova technology. According to the letter of intent, Suzano will own and operate the mill, and the target capacity is 20 kilotons. So that's a pretty big step from the 1 kiloton that we have out here, and we think this is, you know, we are well on the way to make it happen, and this is a first clear signal that our business model can work the way that we're gonna be talking about it today.
We feel that it's very important to really be able to summarize our strategy on one page for all of you in the audience, for our employees, for our customers, so that it's very clear what Spinnova is doing, especially as we're going through quite a big shift in where we focus. It all starts with the mega trends that we see on the left side. So as I outlined, there's a natural fiber gap. There is not currently enough production increase happening to meet the needs of natural-feeling fibers, and this is a very important point for everybody to remember, and Shahriare will be giving you some hands-on examples of what that means. There's a climate crisis going on out there. It means that there need to be solutions, but it also means that there can be disruptions to supply chains.
Finally, there's a waste problem and lack of recycling, and we think all of these are tailwind for the shift in the industry to happen. Our mission, as said, is to really make this transformation happen, and we have the solution that you then see on the right-hand side. What our fiber can enable: it has that feel, it really helps with with the climate crisis, and our sustainability value proposition drives that with, with the emissions, with water, not using harmful chemicals, and of course, the circularity of the product. When you look at then our ambition and targets, we still have an ambition to get to 1 million tons of production, and what we want to be able to see on the way are these three targets you see below that.
So, as said, there's going to be investment in production of fiber. That's, that's a known. We want our technology to be the preferred investment that people go to when they're thinking about how to make this happen. We want to have a highly profitable and cash-generative business, and we want to have a lean organization with world-class experts so that we can make this happen. This is, this is our target. And then you'll see on the screen kind of our role in the value chain. So there are raw material sources that can be turned into pulp, and our role in green here is really then to be the one that has the technology, and together with our delivery partners, deliver to our technology customers. They will make fiber, and the fiber will be sold into the value chain.
So again, repeating, we are no longer going to be the ones selling the fiber. We're focusing on technology sales. And what we do then is really the research and development on fiber and technology, technology sales and delivery, and fiber market development. And again, by fiber market development, we really mean that we're gonna work proactively with our brand partners. We're still gonna do product launches, we're still gonna be working on supply chain validation, so that when somebody invests in our technology, this fiber is known to be something that can be used and really provides a lot of value for the value chain.
Our values, the Spinnova values, have carried us through the past few years, and we're gonna continue with them, and it's very important that we have these values 'cause it's, you know, how we lead, how we drive the culture, and that's really an essential part of a company like this going forward. And that leads me then to the discussion, of course, on the leadership team of the company as well. So, you know, we're making a big change, and to make this big change possible and to make these targets happen in reality, we need a great organization. And the first step that we've made here is to make decisions on the future leadership team of the company. So I'm really proud of the team that we've been able to build.
I've had the chance to meet many people on the journey in Spinnova, and now we're putting together a group of people who have the leadership skills needed, the experience in different industries, and a lot of knowledge and know-how in the different subject matters that they're gonna be driving forward now. And they, of course, will have great people in their teams as well. So we will have Ben Selby... And again, this is from May 1st onwards, just to be clear for everybody. But we will have Ben Selby, he's gonna be working as the CFO and Deputy CEO. Santeri Heinonen will be taking over as Chief Operating Officer. Lasse Holopainen, who's been General Counsel, will take over as Chief Revenue Officer, driving technology, sales, and delivery. He's got great experience from past career in technology licensing and technology selling.
Shahriare , with his background in the textile industry, will be driving our Chief Product and Sustainability Officer role, so really looking after our fiber product and making sure it's widely accepted. And then Juha will be the Chief Technology Officer, really making sure that this technology is something that's ultra-scalable and that can be built in a competitive way going forward. These people will also be, of course, talking today on how we make this happen. And then you've also seen that we also have said that in addition to changing the management team, we have started the change negotiation process with our organization.
So this is something that we started because as our strategy is to be able to reach our EBIT positive targets without the need for additional funding, we also need to have a cost base that sustains that. So we are going to align our organization with the strategy. This is the first step with the management team, and now we're going to start the process, which we've announced to our organization today. We're very confident that we're gonna have success with this change. We have good leadership. I think we have great, smart people in the company who understand why we need to change, and we're very confident that when we come out of the change, we're gonna be much stronger than we are today.
So with that, the next speaker will be talking about how we scale the technology selling part, but I will let Virva introduce him, so thank you.
Thank you, Tuomas. Let's welcome on stage Lasse Holopainen, Chief Revenue Officer. He will give us a deep dive of the technology sales.
Thank you.
Thank you, Virva. Thank you, Tuomas. Thank you, everybody, for coming here and taking the day. I'm a new face to many of you guys, so maybe a few words of introduction. My name is Lasse Holopainen, as it states in the slide, and I've been with the company for 2.5 years, roughly, working mostly with legal and IPR and, let's say, some strategic initiatives. And I'm really, really excited to take on this new role, and to use kind of my past years of experience in technology licensing with Nokia licensing operations, and to really realize this renewed strategy that we have published today.
I'm also grateful for the trust afforded to me by Tuomas and the board, and I'm confident that we can deliver on the vision. A few words on really the... What's the purpose? What's the purpose of this technology sales and delivery unit that we have established? And, it's the function or the goal of that unit really is to unlock the commercial potential of the Spinnova fiber. There has been a lot of amazing research and development done in the past, and now it is time to really unlock the floodgates and bring this innovation to the market.
Tuomas mentioned this letter of intent we signed last week with Suzano, and that is a great milestone, and it is finally some great news we can tell about the next scaling, next expansion of production of Spinnova fiber. And in that LOI, as mentioned, Suzano plans to own and operate the next production facility, and this is the model that we aim to replicate in our technology sales going forward. And it's also an important point of validation for that model, that we're gonna do it this way with Suzano. So, I can't start without talking a few words about the market as well. Well, Tuomas put it really well, that we have to mention it.
As you could already see from some of the previous slides, it is important to remember that we are addressing a high-growth market. It's facing massive capacity production investments, and these investments will happen regardless if we are there to contend for those CapEx investments. Because they need to, these companies, they need to satisfy the demand that is growing in the end product market. The global middle class is growing, and there's nothing we can do to stop that. The 3 million tons you can see here is just a part of that growth, because the market is looking for, you could say desperately looking for alternative fibers to have a natural feel. Growth of cotton production is constrained, and this increases the demand for these kind of fibers.
We know that the growth of synthetic fibers is also really fast, but these fibers cannot substitute fibers with a natural feel, just simply because of obvious differences in the, in the properties of the fiber. So these 3 million tons, this is only talks about, about these man-made cellulosic fibers and the growth expected in the coming years of production capacity. And we're not limited to that market, but this, this capacity expansion will happen, and we will be there, to contend with legacy alternatives, offering our technology for them to build on. So next step, who are our customers? And that's the next slide. So our customers are the companies who are planning to build production facilities for textile fibers.
In the value chain, which is kind of illustrated here in the top of the slide, these companies might be players who are operating in the raw material space, and wish to find kind of new value-added use cases for their raw material that they either produce or have access to in other ways. Suzano is a prime example in this category, and finalizing the selling of our technology for the next wood-based production facility remains the kind of the main top priority for us. ECCO is another example, who has access to this leather side stream raw material. And other examples include players in agricultural pulp or agricultural side stream, producing pulp from those.
An interesting example, a Southeast Asian company we met just some weeks ago, who is producing pulp from the side streams of their own agricultural operations and who was very interested in hearing what we could do to offer value to them, to their raw material. Our customers, moving on in the value chain, our customers can also be companies who are currently producing textile fibers. This is the obvious choice. These companies are already in the textile industry. They know the industry, they are producing fibers, and we are offering an opportunity for them to diversify their product portfolio, to provide an option, a sustainable option for the fibers. They might be manufacturing man-made cellulosics today, they might be manufacturing synthetic fibers today.
But we will be there fighting for the market share of this capacity expansion that will happen in the market. Still moving on in the value chain, another potential candidate still are companies that are current textile value chain players. They could be larger yarn spinners or fabric manufacturers who are interested in kind of expanding upstream in the value chain into the fiber space. There might be many reasons for this interest to expansion. One is the strategic expansion, but also to kind of mitigate risks that they are facing in the supply of natural fibers in those markets.
We also, naturally, as the last box on the right, we recognize that there are calls for broader industry coalitions in this market to kind of enable or increase the use of sustainable textile materials. And we are, of course, remain ready when these kind of opportunities might arise in the future. So how do we deliver? How do we sell and deliver this technology? That's, of course, key. We know that there's a market. We know the potential customer segments who we are working with. How do we then work with these guys? In the technology sales business, our plan is to act or operate as a reliable partner from end to finish through the life cycle of the investment process.
We start with the feasibility assessment jointly with the customer. We assess both the technical feasibility and the financial feasibility of the opportunity. In this instance or in this stage of the process, of course, it is critical that we are competitive in terms of operating cost and capital expenditures, so that we can be seen as an attractive investment, or the technology can be seen as an attractive investment. After agreeing on a project to go ahead, then we move to the execution phase. What is important to note here, I think, is that really the value that Spinnova has created over the years, just years and years of research and development, is really distilled or encapsulated by the intellectual property that we hold.
First of all, we have a global patent portfolio, which is great, but we have the know-how and other trade secrets, which are kind of carefully held. Which enables, or which kind of brings together, as Tuomas mentioned, brings together these pre-existing technologies in a unique way, to produce the fiber. With some additional, I will come back to that point, but some additional very specific proprietary technology that we will also deliver as part of these projects. But the intellectual property plays a major critical role. And in the execution phase, one material deliverable that we have is that we provide an operating license to the production facility.
We are not only providing an IPR license, we are not simply licensing, we are providing concrete deliverables to the customers. We are providing a process design documentation, sort of a reference design of a factory, if you will. We are providing very important services for the construction as well as for the operation of the factory. Then there are these certain, let's say, equipment, proprietary equipment that we deliver also. We will be the sole supplier of those, which really kinda bring together all this technology, this pre-existing, well-known technology to produce the unique Spinnova fiber. Our offering doesn't stop there. We support the delivery of the project with our delivery partners.
This is actually an important thing to note, that our plan is to work with strong partners, well-known, well-established, strong partners in the industry. They will be delivering most of this well-known technology directly to our customers. We are not taking all this equipment into our balance sheet because these are massive CapEx investments, and that will also limit our risks in the future. Also, as I mentioned, over the lifetime of the investment, we provide services and support. We make sure that our customers are happy, that their factories are producing. We even provide opportunities for production or capacity increases later on to pre-existing factories. And that's also in the roadmap.
I mentioned this very briefly, but maybe one slide about the process. As was mentioned, many of you here in the room today were able to kind of do the factory tour and see it with your own eyes, the process, but in very simplified form. We take the raw material, and it's refined mechanically. The pulp is refined, and then it goes into this mixing process. We create this suspension or dope that is then extruded through these nozzles into the drying phase of the process, and then it's collected, and post-processed, and so forth. This is the process. As mentioned several times, most of the equipment used in the process are pre-existing in the marketplace.
They are produced at scale, so the supply, supply chains exist for these, for this equipment. So scaling is not a difficulty in terms of building up production capacity. And, but what, what is unique is how we bring this equipment together. And, and there's very critical IP, of course, in, in the recipe section, and, some of, some very specific equipment in the, let's say, drying and, and the spinning, spinning part, which we will be delivering as part of these, part of these projects. But that kinda, our, our IPR is really that, what brings, brings these technologies together in a unique way. Of course, a, a critical item is to convince our customers, convince our customers of the value that the Spinnova technology brings.
I have mentioned this license and know-how, and the intellectual property many times, and ultimately, the value is based on these years of innovative work by our R&D colleagues, which has created this innovation. We provide our customers access to this IPR, along with very concrete deliverables, as mentioned: reference designs, services, and proprietary equipment that are used as well. We will provide value-adding services for the delivery phase of the factory, and for the operation, and even opportunities for growing the capacity of pre-existing factories. As mentioned, we will deliver these factories, these projects jointly with our partner network, and most of the actual manufacturing equipment is pre-existing.
This means that we are ready to deliver on day one. These supply chains are primed to deliver. Also in our partner network are companies that provide important contributions to the operation of these customers, for example, in the form of additives that are used in the recipe for producing the fiber. So we ensure that supply chain is also primed and ready for our technology customers. With this offering, we really aim to be an attractive investment opportunity. The technology will be a magnificent opportunity for our customers, and ultimately, the value of our technology is actually manifested in how they, how our customers will see, will sell the fiber that they produce.
So it's really manifested in the end product, and that's why I want to say a few words still about the end product and that market. In the chart here, which can be a bit confusing, but in the horizontal axis, you will see kind of the volume of existing fibers in the marketplace. So this kind of is an overview of different fibers currently existing in the marketplace, and this is the volume, and then on the vertical axis, you will see kind of the rough reference pricing points, price points for these fibers.
What we know is that there already exists a sizable market for novel fibers, which are, let's say, low volume, but maybe the cost levels are a little bit higher than, like, these very high volume commodity fibers. But what's important to note is that when we. Well, everyone can see the obvious here, that production, the cost or the pricing of the fiber goes down with the volume, when it goes to massive volume like polyester. So when production, this, what this tells to us is that when we can get our production costs down, when we lower our CapEx, our OpEx, we have an opportunity.
We can unlock massive markets, and that's kind of the message of this picture, is that wherever, whenever we kind of optimize the cost structure, then we can address a larger and larger share of the market. Another point, of course, or another critical element in unlocking these pockets of the market, is to make our fiber workable and applicable in different end product applications, and we'll hear from Shahriare later on, on how that will happen, and from Juha a little bit on the cost roadmap and the development roadmap. Many of you here are investors or potential investors or those watching the stream.
Therefore, it's of course important to underline and highlight that we want to make Spinnova an attractive investment also for our shareholders. The deliverables described in the previous slide, the licenses and the services, and the kind of design, reference designs, and so forth, they are also our foundation for our own value creation. The operating license under our intellectual property will carry fees, technology fees, which can be structured in different ways, as payments tied to project milestones or running royalties based on volume produced. The proprietary items we deliver to our customers will provide recurring revenue in addition to ensuring high-quality production for those customers.
Our world-class experts will support our customers throughout the process, and our future R&D efforts will yield capacity and efficiency increases, which will be made available to those customers. We also see possibility in unlocking value by bringing more opportunities for our partners, especially when the production volumes of Spinnova fibers start to scale more rapidly. And all these deliverables, they provide Spinnova with multiple and recurring revenue opportunities, creating sustainable value for the shareholders as well. Coming back to the key validation for our technology sales. In the letter of intent, we have agreed, as said, that the plant will be owned and operated by Suzano, and that this remains our top priority technology sales opportunity.
And we expect this opportunity to chart the path for future, future sales, technology sales opportunities. In the LOI, we have also agreed on criteria, which, with the fulfillment of these criteria would then provide Suzano with confidence to move forward into the pre-engineering phase of the project. And we have set a preliminary target size of 20,000 tons of nameplate capacity for the facility, and we see that integration with Suzano's existing infrastructure would provide great synergies for the production. In terms of timeline, we expect to be ready for pre-engineering phase during the second half of 2024. And pre-engineering work typically provides all the necessary information for making final decisions on the investment.
So today, we are standing or sitting here in the Eteläportti factory, which is built and operated by our joint venture company, Woodspin. This factory will continue to play a critical role in ensuring our future success. The continued development of our production process and fiber quality is reliant on the wonderful work that our colleagues here in Spinnova and Woodspin are doing in this very building. In addition to technology validation, Woodspin is critical in supporting the work we do with brands and our textile supply chain partners to ensure that our fiber is adopted, adopted by the end market. For these reasons, as we have already said before, maximum output or profitability is not our target here at this time.
But rather our focus is on doing the right things to ensure fiber quality and technology performance. We have updated and communicated our new targets, and with technology sales as a kind of a key strategic focus for Spinnova going forward, it's good to highlight these targets that relate specifically to technology sales here. We are targeting the technology sales to reach a cumulative production capacity of 30,000 tons in the short term, 130,000 tons in the medium term, and 450,000 tons in the long term. So sales of our technology, what kind of capacity that can bring.
We see this as realistic, considering both the rapid growth of the end market and the capital goods market that is supporting the end market, and the estimated adoption rate of our technology by industry players. I am really excited to be part of this journey and take on this role to realize the strategy that we have carefully crafted. So thank you very much.
Thank you, Lasse. That was very interesting to hear. Next, we will hear more about our technology roadmap. Please welcome on stage Chief Technology Officer and Spinnova's Co-founder, Juha Salmela. Welcome.
Thank you, Virva. Let me take some samples with me to make this a bit more interesting for from my part. Okay, thank you. It's great to be here again, talking about Spinnova technology. In this presentation, I'm gonna go walk you through a few different topics. I'll start with a little bit about the history, where we came from, what we are, what the technology is about. Then I'm explaining about the differentiator, why our fiber and how our fiber is different from anything else. And finally, I'm gonna spend quite a bit of time explaining our technology roadmap. I'm really excited. We have done a lot of work defining that now, understanding that even better than we did previously. Okay. Most of you, I hope, remembers where this all started, but let's recap.
It was this crazy idea at University of Oxford when I was listening how Professor Fritz Vollrath explained what are the similarities between spider silk spinning dope and elementary wood fibers' way of flowing. And actually, there are many similarities. So wood fiber, as it is in these trees, if we take that and then look and then do the pulp, paper pulp out of that, it's macroscopic, few millimeters long piece of natural fiber. But actually, when we put that fiber through a mechanical refining process, well known from pulp and paper processes, we can actually disintegrate it mechanically to microfibrils, which are the elementary building blocks of basically everything green we see around us. And not only that, we realized that this same process can be applied also to many other raw materials.
So as I said, basically everything around us, what is green, is based on cellulose. So if it's wood fiber, agricultural waste-based pulp fiber, namely wheat straw, barley straw, rice straw, even grass, if someone makes a pulp, the fiber actually looks the same. Recently, we have discovered that cotton, if someone produces a pulp from cotton, so textile waste, it's the same fiber for us. We put that through the same mechanical refining process, and out comes microfibrillated cellulose. Surprisingly, the same goes with collagen fiber, leather waste. This, I have to admit, this was a surprise to us, and we had a little, little bit luck there. But if you Google the structure of collagen and Google the structure of wood fiber, they seem very similar, and they behave the same in our process....
So, this guy here, this is 90% water, 10% fibers, 10% microfibrillated cellulose. And as you can see, no one can push this through any nozzles. But there is another of Spinnova expertise. We can modify that material, so that by adding rheology modifiers, so additives to water that allows these microfibrils to flow better, orient with the flow, twist, rotate there well. We can go from this material, whoops, into this hand lotion. So these are the same materials, only Spinnova has added the rheology modification, so way they flow. And here we can, I hope you can see this. We can actually pull a fiber out of that. I have to address if this would be viscose, I would not do this with this material.
So, this is actually good for your skin and cosmetics and all that. But, this is part of our IP and expertise, how to go from this to that hand lotion, and this is required for our technology. So then, this material, this hand lotion goes through our specially designed mechanical spider, if you will. So these nice nozzles and in the nozzle, fibers, microfibrillated cellulose or leather fibers, they orient with the flow, and out comes this, gel yarn, this guy. And then we apply only heat and evaporate the water, and out comes Spinnova fiber. Very simple, as we heard from Tuomas. Another way to present this technology in a nutshell is we have several feedstocks. They all go through one Spinnova process. Remember, we develop only one process.
It's very robust for different raw materials. The technology has four steps: mechanical refining, mixing, fractionation, spinning. In textile industry, it's called, for some reason, spinning, so extrusion through the nozzle and drying. There is actually now one word I want to draw your attention to, which we haven't been talking much before, it's the fractionation. This fractionation allows us to use also, how would I say? Raw material that has impurities. One very good recent example is textile waste. We have realized that this fractionation method allows us to accept, for example, synthetic contamination much more than other processes, to our knowledge. So, for example, viscose production has to get very pure textile waste. Our fractionation method, which is done after this rheology modification, it cannot be done on this.
You can't fractionate anything here or anything in the pulp phase. But after our rheology modification, we can fractionate, separate synthetic material or any other impurities, and only good quality material goes to our spinning process. Okay, that's, that's very important to remember. We have no harmful chemicals in our production process. It produces no wastewaters. One very important implication of that is that we didn't require any environmental permit for this factory, so because we don't have any washing cycles or anything like that. So there is only two byproducts, if you will. We evaporate the water, so that's 100% clear, evaporated water. We collect, and with that, we have also energy. We recover both, energy and water, reuse that in our process as much as possible, and, and reuse in other processes, if needed.
Out comes the fiber that is 100% recyclable by nature already. Here I show you one way to characterize textile fibers. If you remember, most of textile fibers are based on synthetic materials, so crude oil-based materials. Then remaining is mostly cellulose, natural or man-made cellulose. So synthetic plus cellulose makes 90% and more of all textile products. Then if we look the production method, it's either chemical intensive or mechanical. And if we have these scale or four squares, as we can see, Spinnova is the only mechanical cellulose, mechanical and cellulose-based production process. Very important to understand, and Shahriare will explain, then talk very much about what is the impact on the fiber level. Another very important thing is how we do blending in our process.
Here, I'm using textile waste as an example. If the raw material is wood, both goes the same way, but if we take textile waste as our starting fiber raw material, in Spinnova process, we don't have to do any blending in the fiber production phase. Our Spinnova fiber is 100% made of the selected fiber raw material, plus our additives. If we would be doing viscose with recycled textile content, first blending is done always at the pulp phase. You mix 30% textile waste and 70% virgin pulp, wood pulp, produce viscose fiber, which is just normal viscose fiber. Then, in the yarn production, let's say that the product is 50% cotton and 50% Spinnova or 50% viscose.
That's then the yarn and final product has only 15% recycled content in the viscose case, and 50% recycled content in Spinnova case. If you remember what these brands, brand partners, what they have promised, how much recycled content they will be using, I rest my case. Okay, then that's about the history and technology. Very exciting things, but now we get to really core of our technology development, and I'm really happy to show you the result of our technology roadmap work. I think our new president would put it something like this: Spinnova technology roadmap has three drivers. Number one, reduce CapEx, so capital investment cost. So make the investment more affordable. Number two, produce more with less, so increase productivity of the unit components. And number three, reduce operating expenses.
Here, in the following slides, I'm gonna show you how this looks. Let's start with the produce with more with less. We have calculated and evaluated what we can do to increase the productivity of our production units. In long term, we are seeing actually 3 times, so that with the same unit, we can produce 3 times more. I don't think I have to address how important this part is. We have two drivers. We have more, but mainly two drivers. It will be done through our proprietary technology, so nozzle technology, more nozzles per width meter. Of course, we are targeting higher and higher production speed, exactly as paper machines have been doing for years and decades.
And very important, I will address this many times during the talk, we are targeting so that that kind of development that which can be backward compatible. So, when we have new factories and new technology concepts on the nozzle technology, we can implement that to our existing capacity. So that way, our factories will have a long, long lifespan. They will continue to be efficient and produce fiber with efficient processes. Okay, produce more with less. Then, our industry or whatever the production method is, is capital intensive. We have seen from Lasse's presentation what the price range of the fiber is. So to me, that at the large capacity, we have to address all these three drivers.
I'm very happy to show you here that we are seeing 60%-70% decrease in short term on the investment cost, and another 60% in long term. This short term comes from firstly from producing more with less. Of course, with the same capacity, you have to pay to buy less units. That's obvious driver. But we are also addressing the drying concept very, very heavily together with our technology partners. So there are several ways to reduce the cost of the drying concept, which is the most expensive part of the whole investment. We are providing these units as modular. This technology is scalable and modular. They will come in certain sizes and very easily to copy them.
Again, I have to remind that this increment and changes can be implemented into already existing factories. The economies of scale is obvious for you. When we buy more, the first-of-kind is expensive, as we have here, but when we buy 100 of these or 1,000 of these, there will be economies of scale. Last is operating expenses. We are seeing here that in short term, we will be reducing 75% off the operating expenses. Major part comes through change of energy source. If we go from direct electricity, you know what the electricity has been recently. If we go from that to integrate with pulp mill or any other industry that provides low-pressure steam, very cheap steam, we can utilize that in our drying process.
That's a big driver. But then we also see very big development on the other side of this wall, what Suzano is doing on the MFC, so our raw material side, and also we expect reductions on the additive costs when we buy more and develop the recipe. Fixed costs are reduced with the produce with more, with less, of course. And long term, another 30% reduction. Then I have two slides, not the last, not the least. So for the future, non-wood raw materials are one of our support legs. We have demonstrated already quite a long time ago, together with Fortum and AB InBev, how we can utilize straw, agricultural waste, straw-based pulp. We have done garments and fabrics out of that.
Recently, we have been working with Renewcell on textile waste, so this kind of pulp. I have to emphasize technologies. Again, it's the same. It goes through exactly the same process. Our technology tolerates lower quality, so we tested Renewcell B quality pulp successfully, and we have everything still. We are concentrating on the wood, but our pilot facility is equipped with refining, spinning, so fiber production all the way to textile production. So when this is available, we have a way to demonstrate it, and then Lasse will guide the partners through the investment process. Last slide, I'm super happy to show you these brand-new shoes.
I don't think these have been ever in anyone's shoe, where no one has been wearing these, but together with ECCO, we have produced at Respin, jointly owned company producing Spinnova fiber from leather waste.... We own that together with ECCO. This fiber, all the shoe upper, as we call it, or as the industry calls this, gray part, is done from Spinnova fiber based on leather waste. And the shoe is done by ECCO. ECCO has successfully tested this in the field and laboratory, and I'm super happy to say that we are on the path of commercial product launch. So with this, I want to thank, so let's walk the talk. Thank you.
Thank you, Juha. Always inspiring to hear about the technology from the founder. Now, it's time for a 15-minute break. So, let's take a break and see you later with more presentations. Thank you. ... Welcome back to Spinnova's Capital Markets Day. Next up, we will have a presentation by Shahriare Mahmood, the Chief Product and Sustainability Officer of Spinnova, a person which has been referred to in the previous presentations, and, he is a true sustainability and textile industry expert. So we please welcome on stage, Shahriare.
Thank you, Virva. I can take over that. Good afternoon, everyone, and I hope you still have the energy and patience to continue. My job will be keep you excited, and probably some tangible example. I think I will be going to talk to you about what makes our fiber so attractive for the industry, and then why this kind of fiber is needed to the industry. Then second thing, of course, how we make sure that this product is adopted by the industry.
We have heard by now, throughout the presentations by my colleagues, that our focus is on technology sales, but we will be keeping doing the work that we have been doing so far with the fashion brand partners and textile industrial partners to develop the fiber in the scale that it can be adopted by the industry, and basically, it can be used by anyone in the industry. That's the main, main point. Let's get going. My presentation will be covering three different areas. First of all, of course, a very natural part, the sustainability. It has a lot of sustainability value proposition, a lot of sustainability element in the innovation and in the product itself. Then, of course, about the product we produce from the novel fibers.
You can see some of the examples here. We have been showcasing a lot. And then, of course, it will be followed by the adoption plan, that how the industry will be utilizing this great novel fiber. And then, of course, we have got excellent brand, so we'll be highlighting about that also, and that's very much needed because that give us some access to the industry. First, we talk about sustainability, and I think that we are very much aware of what is happening in the fashion industry, because I think that very naturally it is very close to us. We almost all use the fashion product, textile product, apparel product.
We know that the environmental impact, adverse environmental impact created by the fashion industry, and also what we often do not talk, that the textile industry itself is very much affected by the climate change. One of the concrete example is the decline in the cotton production. We see the decline because of the climate change, and that's actually. But we also know that how desirable this fiber is, the product made out of cotton, so it's very much needed. And we see from the market that there is a very natural need for the alternative source, alternative source of raw materials that is very close to, let's say, natural fibers like cotton. And we know that in the textile industry, we are trying out with the hemp or hemp type of flax type of fibers.
Many, many things are happening there. The reason is very simple: We are trying to reengineer something like cotton, because cotton is very much wanted. And, we know that it will be increasing, this, this demand, so Spinnova has the great potential to fill this gap. How? Spinnova has an end-to-end sustainability approach. First of all, the raw material. We utilize the raw material here, is fully traceable. As an example, our factory, Woodspin factory you have been visiting, it utilizes the wood pulp from Suzano, and that is FSC-certified, which already indicates it's traceable. And at the same time, our factory, Woodspin factory, is also FSC-certified. So end-to-end traceable, we exactly know from where this raw material is coming from, which is, by the way, a challenge for the other natural fibers.
Oftentimes, we don't know from where the cotton is coming from. And then, we have the production. We have been hearing a lot about the production. It's a zero-waste production. It's a fantastic, sustainable production method, but at the end, what we get is a bio-based product, a biodegradable product, and of course, recyclable. Juha has mentioned about that. And we have done some environmental impact analysis, which shows that it has 74% less CO2 emission, 98% less water consumption compared to conventional cotton. And of course, if we talk about the land use, this is also a concern. I think soon there will be a bit more concern because land use directly competing also with the food production. So that is something very important also that how less land is needed if we use wood-based raw material.
Of course, if we utilize textile waste-based pulp or the agri-waste-based pulp, that has even, even fantastic opportunities in this sustainability area. So we can see that the technology, if we provide to our technology customers, this has the, shall I say, even the lowest footprint. And this is a package that you can ever expect from one single fiber. We have a lot of other sustainable feature, but probably I will not get time to cover all those things. But these are something I believe that you would like to remember. Then, I don't know, I think I have been passing one chart more. We have heard about these great sustainability benefits, but not only sustainability benefits that is embedded into this innovation, but we have a great product that is needed by the industry.
This is perfectly fitting what in the industry is looking for. The reason is that Spinnova, as a novel fiber, it is not comparable to other man-made cellulosic fiber. We are in the, in this pool of man-made cellulosic fibers, but yet we are so different, and we are out of this pool through its properties. When you touch, when you feel, it's more closer to natural fibers. I think I'll be showing you some example. Like, this is one of the first product and one of my favorite. You can barely see any difference with 100% cotton. You will get chance to, to touch and feel. But if even as a... If I call myself as an industry expert, if nobody tells, I will consider it as a 100% cotton.
Then, we have also some other products, like I think this is one of the trouser that we produced by JACK & JONES. That's, that's basically also quite similar, kind of. Then we have been producing some demanding application. I think Juha has been wearing one adidas Terrex hoodie. That's also fits fantastic, nicely with cotton blend, and this has been a great proof of concept for our fiber in the early stage. I want to also remind that it's not only the properties, we also have some functional properties even. Like, Spinnova has some great feature, like a bit more anti-odor properties compared to other natural fibers. It has some good warmth value, and so on.
And then, what we have seen that there are a lot more functional properties, I think, yet to be revealed. We are working on that specific side. But, very important to show you that these products, all of these products, like, like here, I don't know camera is coming here or not, this Halti Parka, this has been a perfect example of outdoor product, that how nicely this is fitting in this kind of product. And I can tell you, you will be rarely using any man-made cellulosic fiber for this kind of application. So Spinnova has actually a great, shown a great potential in this kind of product range, and this has been chosen, I think, if I remember correctly, as a most sustainable product in 2024 in Finland. So that's, that's a great example.
And there are many, many other examples like this. But it is very important to remember that these all are not produced in the lab. This all produced in the industry, in the textile value chain, in the conventional textile value chain. So this is also one of the very important thing. We have been so far as early we have noticed that this has a great synergy with the cotton, so we have been more doing the analysis, research on the textile application level that is more fitting for cotton. It's mainly, and cotton is, you know, very much applied in the heavy, mid to heavyweight category, like this is one of the example. Also the Marimekko is one of the good example.
But we, we see that there are great, great potentials also with the other categories, like, denim, jeans. We all wearing this. I will be showing you that. Going forward, I think we will be focusing on more and more to get market, market, in the, in the, in the larger market, where, we have also potential with, different kind of application. We'll be blending also with different kind of fiber, like, like, for example, wool, to get even better warmth value, to get, to, to, blending with lyocell, for example. So there is no limit. Basically, we will be showing to the industry that, Spinnova can be blended basically with anything. We will, we will be showing the, showing the path.
And then we. I have to mention here that the application so far, what we have been showcasing, is really good enough for the market that we are addressing. This is already big market size, especially if we consider the denim market. Denim itself, an industry inside the textile industry, but it's very different industry. So if we consider market size, then this is already applicable. And with the new proof of concept, new developments, what we'll be showing to the world, that will have even bigger market size. I want to really highlight it because I have some personal attachment or experience from the denim industry, and I believed it from the very beginning that Spinnova has a great potential to apply in the denim or in the jeans. So denim when we say when it is fabric level.
Very important thing is that these kind of products is very demanding. You just can't put from some other fiber. There is some certain aesthetics like, you know, it's not lazy. Sometimes we see some of the products are very lazy. Probably you don't expect your denim to be this kind of lazy. Yeah, and this is—they are very, I think, what you say, very, very accurate on this kind of aesthetics thing. And what we have seen that there is excellent synergy, like we have been also trying to get some 100% cotton denim. I'll be showing you later. You can touch and feel. It's basically when we compare the touch and feel, it's basically very much comparable to 100% cotton.
So this is the 100% cotton one, and this is the Spinnova cotton blend. And you can touch that it is... Basically, if I don't tell you, you will say it's 100% cotton. So that's, I think, a great, great advantage of Spinnova. You cannot really, or I cannot say you cannot, but it's very difficult to really consider other man-made cellulosic fibers or synthetic fibers to get this kind of aesthetics and features in these kind of products. And we have been producing this with our partner, NZ Denim from Bangladesh, and we have been launching our first denim product in a show called Kingpins, which is actually very known in the denim industry, or you can say top show by the denim players, producers.
It was very important for us to get kind of a verification by the industry, by the experts. They say that it works. Well, I will say this is works, but I think we need some kind of external verification. So Kingpins, I think, was a great, great place to display this, and you can see probably one quote from an expert, industry expert, David Tring, that according to him, it was really where it fits greatly in this kind of application. Then I think I will be covering that of course, we have great sustainability features, advantageous. We do have a great product or what do you call product? I mean, a fiber and the products out of those fiber, but at the same time, we have a great brand.
I, I must acknowledge that because it has helped us to get the industry traction. We have been reaching to the industry because of this great brand, and this brand, of course, came from the sustainability features of, Spinnova. So this ingredient brand, what, you can see in the pictures, we have been, doing it with, with Halti and, Marimekko. So these are, these are some of the example how we do this ingredient branding, and it will, we strongly believe that this will be needed, and this will be helpful for our technology customers in the, in the, in the future. We will notice that. We will keep this brand alive. Then maybe you would like to know that, where we are going. This is so far what has happened this far.
We have been actually putting a lot of effort, but with the focus of technology sales, we are seeing it even more important to go to the industry. Tuomas has been mentioning about, he has been visiting some of our partners, and that was great. I mean, we have seen, we have got industry feedback, and we have been preparing ourselves accordingly. We have a very comprehensive industrial adoption plan. Till today, we have been doing most of our trials, I mean, when we do ourselves, the product development or R&D, product development means I'm saying this kind of products, textile products. We have been doing mostly in semi-industrial scale. It's still in the industrial environment, but maybe the size is not that big.
For example, in a yarn spinning line, you would put a few tens and hundreds of tons of fiber at the same time. But in our case, maybe we are taking a few hundred kilos. So that's the semi-industrial scale, but still it is in the industrial setup. But now we are doing, what we are doing, is really on industrial scale. If we want to commercialize, not if, we have to commercialize this fiber, and it has to work in industry commercially. So what we are doing now that we are getting our first R&D yarn spinning plant. There's a confusion. You have said about the spinning, that was the fiber spinning, but here I'm talking about the yarn spinning. So our yarn spinning plant, we have been establishing, that is, about to operate, and that is one of the big,
Step by Spinnova. We have been getting the machine from Rieter, one of the very known in the yarn spinning industry or the textile industry. And it is an industrial scale plant, although we will be doing R&D, but it's an industrial scale plant. And then, of course, we will be going to the industrial partners, textile industry partners. And what we want to do is that we will be producing some kind of guideline in all the textile processing stages, that anyone can basically take Spinnova fiber and then process it, do whatever you want. So that should be our aim, and that's happening in very short term already, and we have very good partners to support us that. But we, I should not also confuse you.
We, of course, will continue our collaboration with our brand partners, with our textile industry partners, and we still do that with the help of the fiber that we get from this Woodspin factory. This is an industrial scale factory, so we have a lot of production possibility. Of course, we have also, as Juha has been showing, there are also non-wood-based raw material. So those will be also very important, and we will be doing that from our pilot. There are, I think, countless opportunities, but I really want you to remember that Spinnova is something comparable really with cotton. So if you take some 100% cotton and Spinnova cotton blend, you will feel the same. The aesthetics should be same.
Unlike this one, made out of some man-made cellulosic fiber, that's... You probably understand something from the picture. So that's, I think, the biggest difference, and this is probably, I can confidently say something the industry is looking for. I hope you will follow our journey. There is more to come. Thank you very much.
Thank you, Shahriare. Next, we will talk more about some numbers because this is an investor event. Let's welcome on stage our CFO, Ben Selby.
Thank you, Virva, and thank you, Shahriare. Really cool to see the products in action here. So that's a hard act to follow on the financials, but I will do my best. So it's great to be here, and in this section, I'm gonna try to bring together some of the components that we heard about already today. So how the technology sales model will feed into the technology development that Juha talked about, and how that then combines with the market side that Shahriare talked about to drive cash flow generation for Spinnova. And I will also talk through then the new strategy targets that we have. And there are three things that I'd like you to take away from this section.
So first of all, hopefully everybody's got the message, but our strategy is focused on technology sales. Our customers are technology customers, and that of course means that the engine room for our revenue and profitability growth is coming from technology sales. Second thing, which is really important to say, is that this is a capital light model, and Spinnova is not investing into production itself. And everybody else, including myself, is super excited about the product and everything else, but that is obviously something that excites me a lot as the CFO, that we can do it on our own, and we're on the path to positive cash flow generation.
So if I jump into the business model, as said, the focus is now on technology sales, and we will deliver to our technology customers technology supported by partners, and in return, Spinnova will receive a combination of milestone-based upfront fees and then recurring fees. And 100% of those revenues and profits will then be recognized at the Spinnova group level. We still have our joint ventures, Woodspin and Respin, and as was said earlier, these are critically important for proving the concept and for generating demand for future technology sales, as well as for maintaining the brand by having production of fiber that can go into these great end products. But over time, the financial impact of these will reduce as the technology sales contribution is bigger and bigger.
But for now, there is an impact to the P&L in the short term, and we recognize the share of result in line with our ownership in these joint ventures. At the moment, you know, whilst we're ramping up and the focus is on getting to the next big technology sale, the operations in the joint ventures are not profitable, but we do have plans to work with that and to also bring some of the productivity improvements that Juha talked about to make those hopefully profitable in the future. For the avoidance of doubt, we are no longer having fabric sales as a part of our strategy.
So that is important that we have the development of the fiber and we work with the different industry participants that Shahriare talked about, but that is for development to support the market growth for our end technology customers. It's not a business that we are in ourselves. So again, just to sum up, it's technology sales that is the engine room of our growth going forward. And where does that all start from? So we have to create value for our technology customers, and we can then capture a share of that in our technology fees. And in order to basically move to the higher volumes we need in order to meet our longer-term strategic part targets, we need to see that the Spinnova fiber moves from a novel fiber into a mass-market product.
And this requires two things: It requires the product development that Shahriare talked about, and it requires the reduction in CapEx and OpEx costs outlined by Juha, so that the fiber can be produced at a cost that is more and more competitive compared to existing fibers in the market. And by doing this, it will enable the addressable market for the Spinnova fiber to grow, which will create further demand for our technology. The other important part of this is that it will drive add-on sales for us in the future, because, as you heard from Juha, we can also apply the productivity improvements to upgrade existing built customer facilities with technology upgrades to increase the capacity and be more productive.
I think the other thing to comment here is, you know, a reason why we are focusing on the technology sales model is that, by working with customers that have potentially a lower cost of capital than Spinnova, it's actually possible for them to capture more value from the technology customer, so from, from the technology, than if we would invest ourselves, because of course, they can get a higher return on the CapEx. So again, why, why are we doing this? We're focusing on technology sales because that's from an operational perspective, where our expertise sits and, and where we can differentiate ourselves. From the financial side, it's also the fastest path that we see to positive cash flow generation.
If I take an example of what we are working towards in terms of the technology sales on a project-level basis, you can see an illustration on the right-hand side of this slide. There will be a combination of upfront and milestone-based fees that are paid then from the engineering through to the construction period, that will be around 2 years. After that point, there will be also recurring fees, and these will start to kind of ramp up in line with the project. We anticipate that it's the same as what we've said previously, but something like a 2- to 3-year ramp-up period per project. You can also see here that we are building in to our expectations that we will have these capacity upgrades over time.
So that's where the bump comes in in the six-year part in this example here, where we would be generating add-on sales by selling a capacity upgrade to this project and this customer. So if I bring it back to then from the project level, which is shown here, to the Spinnova level, I think it's important to then talk about a few themes as well. So we announced and we talked about the letter of intent with Suzano, which is for a 20-kiloton plant. We do expect that the majority of our technology sales in the near to medium term will be for wood-based factories. But it's also critically important that we are building the technology sales and getting customers for non-wood as well.
You will see that that is clearly then a part of our targets as well when it comes to the capacity and the technology sales that we are selling. In the near term, from the Spinnova side, we are prioritizing in our negotiations with the technology customers, getting a larger share of upfront fees so that we can obviously move towards cash flow generation as quickly as possible. But over time, of course, we would like to increase our share of recurring fees related to the technology to build a nice, high-value, recurring fee business. On the cost side, for the delivery on the Spinnova side, we think that it is more scalable. Well, there are many benefits to working with technology delivery partners, of course, around the certainty of delivery.
But then from the financial side, we also think it makes it much more scalable for us to use that model, and it supports a lean cost base when we are working with partners. And then just to reiterate that again, from the, the cash perspective on the Spinnova side, as we ourselves are not investing in production, we do not need then additional external financing. So that brings me to our corporate-level strategy targets, and. We maintain this ambition to get to 1 million tons of Spinnova fiber capacity in the market. You've heard several times in, in the other presentations around the size of the market, the developments that we, that we are doing, and that demand for the fiber, we, we don't see any change to what we've been talking about in terms of the demand is there, and that is what we are striving for.
In this short, medium, and long term, we've also set then some more precise targets. So first of all, we have our cumulative technology sales, and here we're talking about then committed sales, where a customer is committing to build that volume. Within the short term, we are then targeting to have 30,000 tons, and so you can obviously draw your own conclusions that we've announced an LOI of 20,000 with Suzano. Of course, then we are also looking for other raw materials as well as part of that to achieve that target. In the medium term, we then have a target to get to 130,000 tons, and in the long term, to get to 450,000 tons of cumulative technology sales.
This then drives, of course, what we expect on the financial side. So that pipeline, which is what Lasse went through, that's then driving the basis for our financial targets. And in the short term and beyond, we do not expect to need external financing. In the medium term or by the medium term, at the latest, we are planning to get to EBIT positive, and in the long term then, to start to really generate a significant cash flow business with more than EUR 100 million of EBIT per year, and also that we would have more than 30% of our revenues to be recurring at that point.
I think it's good also to be transparent, and we wanted to kind of bring this to this discussion that, of course, there is upside and downside potential to the strategy targets as we've outlined, and so that you can at least hear directly from us what we see as the main kind of levers for what can bring those targets closer and what might potentially delay them. So on the upside, if our technology customers accelerate the timing of their investment decisions for new plants, this, of course, will have a positive effect on our targets. If we see a higher adoption of sustainable materials by consumer and brands than currently expected, that will drive, of course, value in the end market and boost the technology sales beyond what we have anticipated.
Likewise, that demand can be also supported by regulation of raw materials in the textile industry. Then finally, supporting particularly the technology sales for non-wood based raw materials, if there's a faster-than-anticipated ramp-up of alternative raw material pulp suppliers, this is an upside to our strategic targets that we outlined. On the flip side, of course, if customers, for whatever reason, delay their investment decisions, that will have an effect of pushing some of our targets further out. Then, of course, if we or our partners delay the delivery of technology projects, this will have a negative effect.
Then the last two points are obviously in our own hands, but if we are not able to achieve the CapEx or OpEx per ton reductions that Juha talked about within the time frames that we outlined, then this will also have an impact on our technology sales. And likewise, if we are not able to achieve the development of the fiber properties that Shahriare outlined in the time frame, then this could reduce the addressable size of the market for our technology customers and have an impact on our sales. So we hope you appreciate that we wanted to be transparent and give our views on the upsides and downsides here, but what we put on the previous slide, we are very confident around, and just giving you some extra color here.
So if I try to wrap up the business case and the business model discussion, and why also I'm super excited from the financial perspective. So the summary for me, first of all, we are operating in a very large EUR 200 billion market, where there's massive demand for new solutions to solve the mega-trend problems around climate change, waste use, recycling, and the need for natural fibers. So that's driving demand for the fiber, which drives demand for our technology. We're using a capital-light technology sales model, and this will help us to accelerate Spinnova cash flow generation. This isn't just speculation. We've got an LOI signed with Suzano, and we're working very closely with them towards the next phase. And also, we can do this not just on our own, but with partners.
So the ability to deliver these large projects is improved by working together with partners, and it also is a more financially scalable and lean way of working. There's also then a path for add-on sales and recurring revenues. And then finally, again, to reiterate, because repetition is the mother of all learning, we are not expecting to need additional external investments to achieve these strategy goals. So that wraps up the business model section, and we will also now talk around the 2023 financial results. So I would like to invite also Tuomas to join to talk through the business highlights before we look at the financials.
So I will just have the pleasure and honor of giving the quick business highlights from 2023, and then Ben will continue with the, with the key. So first of all, we had a EUR 1.9 million grant from Business Finland to do this work on new raw materials. And as Shahriare said, now we're opening the R&D yarn spinning line. That agreement was made last year, and actually, it should be opening any day now, and it's going to help us speed up our validation of fiber properties in the industry.
Sorry, your microphone is not working.
And my microphone. Should I do it again or...? I think you can see what's written on the slide, but then the last point here is the launch of the Halti jacket, which happened in Q2 last year. I just want to also, there's been, of course, some discussion, and Ben will talk about the key figures. And of course, it's very important for everybody to also understand the fundamentals of what have been driving revenue in the past years and what will continue to drive. And, of course, technology sale related to Woodspin has been the main driver of revenue and will be, and when Ben talks about the financial profile, I think that's very important for everybody to keep in mind as well. So Ben, please.
Take a look at the key financials from 2023. In 2023, our revenues decreased from EUR 24.3 million in 2022 to EUR 10.6 million in 2023. This reduction was mainly due to the phasing of the sales of technology and other services to Woodspin, including for the installation of this factory in this building here. The reason for the reduction in the sales was that the majority of the sales and the delivery was made during 2022, so it was really just a phasing part, and we have not made any new technology sales during 2023.
If I move on to the operating result, so our operating loss increased from EUR 13.1 million to EUR 20.9 million in 2023, and the key reasons for the increase in the loss were that we had also the ramp-up of the JV operations here in particular, and we didn't have that basically in 2022. So when the factory opened, then of course, we've had all of the costs associated with that, that we carry 50% of as the 50% joint venture owner.
Additionally, there were a lot of, let's say, increased expenses in other operating expenses that related to several, I could say, one-off projects, for example, related to the installation of our R&D spinning line that Shahriare talked about, as well as to the strategy and the IFRS process that we went through during 2023. So not necessarily kind of recurring events when it comes to the other operating expenses and the increase there. Our personnel expenses did also increase as the third biggest kind of contributor out of these. The average number of employees in 2023 was 10 higher than in 2022.
We did not actually hire that many new people in 2023, a net, net increase of one at the end of the year, but the average higher because of the full year effect of the hires made in 2022, having a full year effect in 2023. If I look then also at the investments that we made during the year, so we made investments into our joint ventures and also into our own R&D capitalizations, which increase... Or sorry, which decreased from EUR 17 million to EUR 9 million, and the majority of these were into the joint ventures, and they were lower than in 2023 versus 2022, as the majority of the CapEx for this facility was invested during 2022.
Think of a very important one for Spinnova, so our net cash position it reduced from EUR 74 million to EUR 54 million during the year, but it remains strong, and obviously, this is also partly behind some of the actions that we are taking proactively to make sure that we can get to positive EBIT without requiring external funding. And that is, of course, kind of a lot around the cost savings program that we have. So already, we had started an external spend reduction program, which will then reduce some of our other operating expenses run rate compared to 2023 going forward. And as you will have seen, we announced this morning a change in negotiations in Finland with our employees, with a targeted annual savings of up to EUR 1.4 million in personnel expenses, excluding share-based compensation.
That then translates into an estimated number of permanent reductions of a maximum of 16 positions, and an estimated number of role changes of a maximum of 5 positions. So again, taking kind of prudent actions, but also about aligning with the strategy that we have announced today. This then brings me to the financial guidance for 2024. During 2024, we expect that our revenues will be lower than 2023. This will be linked to the timing of revenues related to technology sales, and these obviously tie into then the delivery of the next production facility.
And as you saw me talk about, you know, the delivery phase can be around two years, so of course, we will not recognize all of the sales from our next one during this year. Our operating result is expected to improve from 2023, largely because of the actions that we're taking on the cost side. But we will continue to have an operating loss, and the total of our personnel expenses and other operating expenses is expected to be lower in 2024 than 2023. So that concludes the financial results update, and I will hand back to Virva. Thanks.
Thank you, Ben. Let's end the day with Tuomas' recap of all the presentations, and then let's go to the Q&A. So Tuomas, one more time.
And does the microphone work? Was that a... That was a yes, okay, good. Good to check first. So, as we end the day, as Virva said, it's important to reflect a bit on the presentations and maybe summarize a few key points that we hope everybody takes away, when you leave the session today, and we have ample time for good discussion with everybody then after that. So first of all, we're very excited about the new strategy that we're on, and there are a few key things that we highlighted throughout the presentations, but also visible on this picture. And that's, first of all, that there is a clear market opportunity.
There's a change, there's investment that's going to need to happen over the coming years to make sure that there's a shift happening in the textile industry. And we've got targets on what we want to do to make that happen, what kind of financial profile we can create, and we think we have a very clear role in the value chain that makes those targets possible. Even though... Oh, now it's not changing. There we go. So even though we have a long-term plan and a very clear vision for how we're going to go forward, we also have clarity on what needs to happen in 2024, as has been highlighted by the team in many of their presentations as well.
These targets are going to be our top focus, and our whole organization is going to be tuned to making sure that these happen. That is that we have the fiber development really to that industrial level, validated with the retail brands and the industrial partners, that they're ready to make this happen at big scale. We have product launches, we have a fiber, the production facility works, but it's about making it a fully scalable, fully drop-in fiber that anybody can use. We want to make sure there's sufficient industry adoption for the fiber. This is, this is not about selling fiber, this is about getting commitment from brands and commitment from the supply chain that this is something they can use. So when our technology customers invest, they have confidence that it'll be a good investment.
We want to have the first technology sale outside of our joint ventures, and we also want to make sure that we're developing the non-wood sales projects as well. So the technology works, and we have a pipeline of real discussions with non-wood-based projects, and we want to make those move forward. And then finally, the cost savings program, both on operating expenses, excluding our salary costs, but of course, our salary costs, as Ben mentioned, are an extremely important part, not for making 2024 possible, but making sure that the long-term plan can materialize. So we have a lot of work to do this year to make that happen. So I'd like to summarize then, also from my perspective, Spinnova as an investment and reflect a bit on this.
So first of all, there's a very large fiber, natural fiber alternative market demand, and we see that the global textile market is growing. We have a capital-light technology sales model, and we have a world-class technology. It's great. It's going to be great for our investors when they build, and it's going to be able to produce different raw materials. We have strong partners on board, and by that we mean that we have great work with the brands, with the supply chain, and especially on the technology delivery partners.
As I said, and this really is something that has even been inspiring to me, that the partners we're working with to deliver the technology, they see a huge business opportunity and, for, you know, for themselves, and that means that they're going to be putting their efforts in making sure this happens in a competitive way. We have a world-class team. I think Ben said it very well. I mean, this plan is based on realistic assumptions. It's based on a clear view and discussions with customers and supply chain partners that there is demand, and we understand what they need. Of course, there are risks and opportunities to this plan, but we're very confident that we're on the right track.
The LOI that we announced with Suzano is a great first step in the right direction, so that we understand how this really would look. It's not just, it's not just wishes and hopes, it's based on real discussions with them, and that's extremely important for us as well when we embark on this. And as you think of what questions you'll be asking us, and we will get the chairs ready, I'd like to leave you with this mission here to let it sink in. This is very important for us personally, that we have people committed. It's hard work to make this change happen. There's a lot of uncertainty. You need a winner's mindset to do this. I think the people that we have here have it.
They understand the brand partners, they understand the supply chain, and they understand how we make this something that can be a great investment, whoever builds Spinnova technology factory. So we're gonna go big, and we thank you for your attention, and we're then gonna be ready for questions after that.
Thank you, Tuomas, and all other presenters today. Now, let's move on to the Q&A session, and just give us a moment, we'll organize ourselves on the stage. Okay, guess we're ready to start with the questions. Do we have any questions from the live audience over here?
The audience.
Thanks. It's Robin from Carnegie. First of all, guys, thank you very much for very good presentations. Inspiring to listen to you. I have a question related to the technology sales to non-wood sort of customers. That seems to be sort of required in order to reach that, even the short-term target, 30,000 tons. I guess Suzano is looking for 20,000 tons, so I guess then the 10,000 tons would need to be most likely from non-wood customers. And when I look at the sort of history, I can see it took quite some time for Suzano to decide sort of to go ahead. Do you feel it's realistic that you can get sort of non-wood orders already in the short term?
Yeah, so I can, I can maybe start and then let Lasse finish off. But, I mean, of course, a lot of things have progressed during the last years as well, and all the progress that we've made with Suzano, validating the wood-based technology and the fiber we can produce, that all benefits the non-wood as well. So as Juha described, the technology is essentially the same, and all the learnings that we have now have taken us to a point where we're basically equally ready with both. And, and, all the confidence that we get from the work with Suzano is for sure gonna be something we can then show to the non-wood potential investors as well. So there's a lot of progress. I don't know if you guys have something you want to add to that?
Yeah, I think it's really important to actually thank and commend Suzano for this work because they are trailblazing in a way. They are in some sense de-risking some of the other potential customers that we have in the pipeline. So there's a lot of interest, that's clear, and there's a lot of opportunities for raw materials. And we've even tested in the past, kinda. We know that the technology works in other raw materials, and but yeah, we're confident that there is that this work that we're doing with Suzano will enable also those opportunities.
Can I ask, can you test other than wood also in this sort of bigger plant, or if you test non-wood raw ma- Oops, sorry, sorry. Oops.
Okay.
Juha, do you want to-
We will, we will be reporting that as a near miss, first of all, so.
Yeah. Luckily, the eucalyptus tree is still standing, growing strongly. Now, I was just wondering whether you can test the sort of bigger scale, non-wood raw materials, you know, here, or do you do a sort of test in the pilot plant, in the other smaller plant-
Mm
... plant in Jyväskylä, if you test non-wood-
Yeah
... raw materials?
Great question. Juha, you can...
I think, our piloting facilities on the other side of Jyväskylä are sufficient for this testing. So previously, when we tested wood-based material, I’m exactly sure, but about 10 tons production last year. So this kind of capacity, I mean, hundreds of kilos to tons is possible, and that's enough for the demonstration purposes.
And of course, this was, by the way, an important part of Lasse's presentation as well, that we want to have the capacity to test different raw materials. Because, of course, when we discuss with different tech customers, who would be the feedstock owners especially, we want to be able to go to them and say, "Hey, give us your pulp. We'll test it, show that we can make a fiber." That's obviously an important part of de-risking the investment for them as well.
And we have test facilities all the way, as we heard from Shahriare, all the way to Portugal, industrial scale yarn production, and through the supply chain, then to textile industry. So I think we have everything we need for this.
... demonstrations. And then another important thing, when that demonstration phase is done, then we have PDP package. We are now preparing the PDP package, which is the blueprint of the factory. And as said, it doesn't matter if it's wood or textile waste or agricultural waste, we give the PDP package, or we sell the PDP package to the technology customer, and then it goes on.
I understand. Thanks. And if I can, two more, sorry, for... I will-
We have time for more.
Then I'm not holding on to it all the evening. But I guess, so, sorry, at the end of the day, it all boils down to the quality of the product and then the cost to produce it. I guess everybody agrees the innovation and the need is there. Where do you stand now with the Suzano MFCs or the quality? Is it good enough to produce end product and the same sort of applications that you could do with the competitor MFC in the smaller plant? And then related to sort of the sales potential, on the cost side, could you describe what is the key cost when you show that OpEx will decline? What is the key cost of the coming down? Is it energy, or is it something else?
Can you reach something like below EUR 5,000, but, but on production? A lot of questions, actually, but important ones.
Yeah, I mean, maybe just quickly on the MFC, I mean, we had the release in January that we've with Suzano reached the levels that we need to have for the properties of the MFC. So the answer to that is that, you know, that's that part of our development is on... You know, has good progress, and we're on the way to having that, you know, done. And of course, then, as we've said, during many of the presentations, what needs to happen now with Woodspin is really to finalize the fiber property development end to end, so that it's ready for this kind of 100% industrial work, meaning that it's a drop-in product into our supply chain partners. So I think that's very important. But that's progressed as it should.
And maybe when it comes to the kind of cost and price, I'll let Lasse comment on that in the technology sales role, so.
Yeah. So in terms of cost, I think the big-ticket items are, you know, there is the raw materials and the additives that go into the product, and energy consumption, naturally. These were the ones that Juha was addressing in his presentation, that there is a clear roadmap to go. I don't think we've kind of given guidance on specific kind of what the ton or kilogram production cost would be. But it... Important when you think about pricing is that, you know, our technology customers will be negotiated the price with the end customers in the textile value chain.
Of course, we have a strong belief that there is a price premium in a product that is sustainable, that is, that there's a high demand. And we have even Shahriare mentioned a few interesting properties that our fiber could have. So we believe there is a value premium. But our goal, and our target, and mission really, is to bring the cost down in order to be competitive, in order for our customer to be confident in their kind of sale of the fiber. So the roadmap that was at least the illustrative roadmaps that were shared, I think we are very confident on those roadmaps.
Thanks. And final one, maybe to Ben. This is a bit of a boring question, but, I mean, we need to have some kind of idea, what is the sort of cash burn of the company per year? I mean, if there's a delay-
Mm
... what is it? EUR 20 million per year, the next two years, or roughly? I mean, we won't hold you accountable, but so we have an idea.
Yeah, I think it's an important question. I think you can see that our kind of cash usage was around EUR 20 million last year. Of course, there are some things which will kind of increase a little bit, that will have more of a full year effect of production on this Woodspin facility and our share of that. But on the flip side, you know, we are taking the actions on the run rate, and we already talked about reducing the personnel expenses by EUR 1.4 million maximum, and then also bringing down the kind of other operating expenses as well. So, I can't give you an exact figure, but as we said, we expect that it will be kind of lower than it was last year.
Of course, you know, there's also then less CapEx investment going into Woodspin as well because the plant has been installed.
Thanks.
Yes, thanks. Joni Sandvall from Nordea. Thanks for the presentations. Maybe one question related to the now signed letter of interest with, with Suzano, and you said that H2 or 6-12 months is the before, before pre-engineering phase is starting. So, so what are actually the main key KPIs now before the pre-engineering phase is starting?
Do you want to describe that, Lasse? So...
Yeah. So in the slides, we said we expect to be ready with those to start pre-engineering in the second half of 2024.
... Then there was some graphics about kind of when that could be completed within the next 6-12 months. But yes, so the question was about the key milestones and KPIs in the LOI. So there's milestones related to the specific qualities. It's actually the topics that we have discussed today. So some properties and qualities of the fiber itself that we can...
We get, let's say, some sign-offs from the supply chain, clearly that they say that, "This is, we're ready to go." And second is related to these OpEx and CapEx targets, that we reach certain fairly specific KPIs on those, and ensure that the process works with those kind of technical accomplishments as well. Anything-
Yeah, I mean, I think you described it well, that, you know, we are kind of. It's quite natural that the things that are prerequisites for an investment are prerequisites for all of our customers in the future as well, and that's what we, we'll be working on. And I think it was Lasse who kind of commended Suzano for the work. I mean, they also. Right, this is a full investment. There's a lot of other parts of this production as well, and they're also putting a lot of effort on their own side to make sure that we reach this, so there's really a joint effort and commitment on that side.
Okay. Second question from me. I think you had previously, you had commercial targets on how many brands you are targeting, and now you don't have those. So can you describe a bit what's the, in the medium term, your ambition with the brands? Are you quite selective which brands you are operating with, or is it now more in the hands of, let's say, Suzano, who they are willing to supply the fiber?
Well, there's probably two parts to that, and I, I can maybe introduce a bit, and, 'cause I think when you say who you would be collaborating with, I guess there's kind of who would actually be buying the fiber, and then who we would be working with, and, and maybe that's... I'd just like to differentiate those two, right? That first of all, right, we are shifting our strategy, so we aren't going to be selling- we're not selling the fiber anymore. And, and of course, then, you know, our customers will be responsible, you know, to make sure that their commercial go-to-markets, and which, which customers they work with, that's, that's up to them.
But then, of course, when it comes to, you know, which brands we work with to increase the adoption in the industry, maybe Shahriare can comment on that a little bit.
Yeah. I mean, this is very important that we, we work with the retail brand partners because, we, we get the confidence also from them. And as, as I have been mentioning during my presentations, that we will keep working with those partners. There are a lot of interest, but of course, we will be mostly focusing on the product application areas where Spinnova is suitable. So I would say there is no limit as such, but, I think, the partners we are working with at the moment, I think we will keep continue to work with them, and that's actually eventually create the market for our technology customers. So definitely we have to nourish those, those partners at the moment, and not only the brand partners, we, we definitely need to work together with the industrial partners.
They are the very big verifiers, because eventually they will be making it, the product, so it is working. So both in the upstream and downstream part of the supply chain, textile supply chain, we will keep working.
Okay, thanks. That's all for me.
One question concerning that: Do you have any budget for this kind of cooperation? I mean, you're not getting anything right away, so how big is your yearly budget for the cooperation?
Ben, you can maybe-
For the brand cooperation?
Mm-hmm.
Well, it's within our plan, and we're not giving a department-by-department breakdown, but of course. Well, I mean, first of all, it's mainly our own costs related to Shahriare's team, and the kind of equipment and so on, and work that we have here, and our R&D spinning line-
Exactly
... which is in our budget. And then, of course, brands are also very interested to work with us. We are not paying them, rather the other way around, for these kind of work and collaborations.
Do we have any more questions from the live audience? Still a few.
Antti Viljakainen from Inderes. Still continuing on the CapEx, OpEx topic, as it's obviously the key for our competitiveness. Which of these two will be more difficult for you to reduce from technology perspective?
Juha, do you want to take that one?
I think they first of all go hand in hand. So, this product productivity increase reduces also OpEx. So that way, I wouldn't say that one or the other one is more difficult. But me personally, I'm responsible of the technology development, so for me, reducing the or increasing the productivity is easier.
Thank you.
But that, that's my territory.
Thank you, and good luck for strategy period.
Thanks.
... Jari from the Finnish Climate Fund. Thank you for the presentations, very interesting. I just wanted to understand the potential role of Suzano in the new strategy, and especially in the technology sales. And given that they are your JV partner at the moment, that they are the supplier of key raw material, even to this facility, and do they have, for example, any kind of exclusivity in the technology sales business?
Yeah, this is a good question. So, I mean, it's quite simple that with the wood-based, raw, wood-based feedstock and what we do with that, the joint venture outlines that we work only with Suzano. But when it comes to the actual technology itself, and where we're able to apply it outside of wood-based, that's something that we basically will not have any limitations on being able to use. And of course, as Juha mentioned, you know, when it comes to wood-based, Suzano is doing the providing of the raw materials, so they're taking the pulp and turning it into MFC for us. When it's non-wood-based, we have developed the capability to do that refining of the raw material ourselves.
So, so this is very clear that with wood-based, it's with Suzano, and of course, we have a lot of focus on that because that's a massive feedstock, and we're quite far along. But, there's no such limitation when it comes to the non-wood-based.
Thank you.
If there is no more questions from the live audience, let's move on to the questions we have received through the chat. There are a couple of questions about the technology fee. Can we say anything about that? Now, we've said that in the short term we will have 30 kilotons the capacity, but can we say that how much that would be in revenue, or about this Suzano LOI, how much revenues are we expected to get from that?
Yeah, but I'll ask to you guys as well.
Well, I think the basic principle has been that there will be... in any investment, there will be a certain value for the customer, and we see that our innovation brings a part of that value to them, so we, well, therefore, we should be entitled to a reasonable share of the value of that investment. And that's what we have kind of taken as our guiding principle. We don't give- we haven't, and I don't think our plan is at this stage, to give specific details on what that share would be, but a reasonable share of the value of the final economic value of that investment for the customer.
Okay.
Yeah.
Do you want to add something?
I think you summed it up.
Yeah, and of course, you can see from our financial targets that we are expecting that with certain volumes, we're getting to a certain kind of EBIT level, so there's a clear logic-
Mm
... how to get there.
There was one question about this next factory. We earlier said that it would be 50 kilotons, and now Suzano is willing to, or is planning to build a 20-kiloton factory. Where, why is it smaller now? What happened?
Yeah, it's probably not a question of why is it smaller, it's more, what's the optimal size to start with, where we can start getting the economies of scale and have a perfect setup? That's the level that we've deemed that makes the most sense. But of course, that's the plan. You know, we are also working on finding opportunities to show that the market is bigger. You know, who knows where we might be able to even do more than that, so... But we think that's the optimum that we have right now.
Juha?
And maybe to add what I also said in my presentation, our technology is modular. It, it's based on certain size of production lines, exactly as a tissue machine. So you build a factory for some capacity, and if you have land beside it, it's very easy to upgrade or increase the production. And another thing is, if we install now 20-kiloton factory, and then introduce this capacity productivity increments, that will be then 30-kiloton factory, and so on. So these two things are important to remember. When we plan a factory, let's reserve a little bit land area beside the current factory, so that we can scale up if needed, and we always reserve possibility to upgrade the capacity.
This is a good point. Just if I can add on Juha's add-on, that these productivity increases, I mean, of course, some of them require a different, concept, like, like you described earlier, but, but also some of the productivity increases are coming with very small changes-
Exactly
... if you think about the big concept.
Yeah.
We're not saying that, you know, whoever built the facility has to come and tear down equipment and put something else-
Exactly
... in it. A couple of small components that are very cheap in capital expenditure compared to the big picture, and they can, you know, yield these, really significant increases.
Yeah.
This is, this is an important part of how we scale this as well.
Good, thank you. There is a question about this technology sales business model. Is there any examples from other industries, or other companies using this similar kind of model?
... One, if I may-
Please.
One example I would describe is in the semiconductor industry, a company that many of you might know, which is ARM. But in there, they are creating a reference design also, and selling that to manufacturers of an actual end product. But I think that's at least one element. But of course, there's licensing operations which are, let's say, pure IP licensing boutiques. We are not in that category. We are actually delivering tangible deliverables, reference design, services, and these proprietary items. So it is a bit of a unique combination. I'm sure there are examples, but not-
I think-
Yeah
... Tetra Pak has similarities-
They have some. Yes, they have some products also.
Very close to our industry, and they have at least similarities with our technology delivery.
Yeah. Then if we talk a bit about the fiber price, even though we're not gonna sell the fiber, can we give any indication that when the fiber will be scaled, would the price of Spinnova be roughly on par with organic cotton, lyocell, viscose, or polyester?
Yeah, maybe, Lasse, you want to comment on that again, so?
Yeah, I spoke a bit on the price in the previous question, but as I showed in one of my slides in the chart, where it shows the kind of volume versus price point, and we see that there is already a sizable market for these, let's say, lower volume, even though those volumes are already in the hundreds of thousands of tons. In the lower volumes, there is a market for novel fibers, especially when there's a let's say, a price premium that can be justified with some value add, which we believe our fiber inherently has.
So, you know, in the medium term, you can see that we are targeting that group of fibers to be able to our customers to be able to sell. And then there's naturally, these roadmaps lead to, and our mission is to make the technology so effective that our customers are competitive in the fiber marketplace, also in the high volumes. But we don't give specifics or talk specifics on the kind of pricing ranges. But that's the curve that we expect our fiber to follow as well.
Okay. Then we have a couple of questions about Woodspin's situation, so maybe it's good to still clarify what is Woodspin's role going forward. Someone is saying that, "How can you sell the technology when it isn't working here, and why has it taken so long to ramp up this factory?" How would we comment the situation with Woodspin?
Yeah, maybe just looking back first, of course, there were clear announcements from Spinnova already last year on some of the challenges with the raw material and other things, of course, that have had to be worked through. And now we're at a stage, as Juha mentioned earlier on the factory tour, that has been overcome. And to the question on: How can we sell the technology if it's not ready? Well, that's exactly what we've been discussing, that the purpose of Woodspin is to finalize the proof that this is going to be scalable at a large scale. That is very important for Suzano, and it's important for any other technology customer, for us to show that this is a good investment, and we're 100% confident that we can get there.
And that is, of course, maybe to the role of Woodspin, right? That it's very... And maybe there's questions coming on that, but there's a very clear focus this year at Woodspin, and Woodspin has an extremely important role to do this. But Woodspin will also, this year and, and in the near future as well, still be producing. We still want to be doing what Shahriare was talking about, doing launches with brands, creating demand, showing... And creating demand for our future technology customers, that this is needed. So Woodspin will be producing fiber, no doubt about it. And in the very long term, as Juha showed in his slide, there are opportunities to improve the productivity here as well, and change the financial trajectory for that, too. So-
Mm
... we have a very clear plan for that.
Would you say that we are committed to being an owner in Woodspin? There was also a question, that is our stake in Woodspin on sale?
Our stake in Woodspin, at least as far as we know, is not on sale right now. But, we have, as said, a very clear plan, and I think that carries to, so that's clear.
Let's see. There was a lot of questions here. One question about Respin: when do we expect to see positive news from, from that direction? We showed the shoe, but can we say anything else?
Well, I think that's... First of all, what's very positive is not just that we have a shoe, by the way, I'm wearing it as well. I just wasn't able to show it earlier. It's very comfortable, and that's because of, not because of our shoe making skills, I'm sure. But, I mean, it's, as Juha said, right, these shoes have gone through the rigorous testing that needs to happen. So that's very positive for us, that it shows that the product, the fiber product, works. And then, as said by Juha earlier, there is a plan to go for a commercial launch, which will be available for anybody who wants to try it. As far as the dates of that, we won't make any announcement today yet on the date.
Right. Then still more questions about Suzano and the tech sales. What if Suzano decides not to make the investment decision? What will happen then, and do we have any other tech sales customers then?
Yes, we have a pipeline. Of course, as I mentioned, Suzano is a critical and key customer, and we're happy that they are making progress and really excited about the opportunity. But naturally, we have to build a pipeline of independent leads and customers, and kind of push them forward on this customer path that we have built. So that's the option. We have to work hard with all our customers.
Mm.
You know, there's excitement, and I'm sure many are... We of course dedicate much of our resources to the Suzano project as well, and then, you know, if those resources will be redirected, then that's an alternative path. But, it can accelerate these other options. That's the, I guess, the plan B in that sense.
Mm.
Mm. And all the work we do with the wood-based helps with the non-wood.
Yes.
Yeah. There's also a question about the short term and our margin that we will get from the next factory, the Suzano factory. Do we have to give up some of our margin to get that deal done?
It's probably not, let's say, the right time to comment yet on the details of that, but as Lasse said, right, we have a clear business model where there's a value for the investment. We're entitled to our fair share of that value, and of course, we will make sure that we turn that into a healthy business.
Yes. A clarification about the no need to raise funding. Does it mean that investors don't have to be afraid of a dilution of the share?
Ben?
Yeah, I mean, we're saying that we have a plan to achieve these targets without needing to come to shareholders for more money.
Yeah. It's a strong message, but-
Mm
... we believe that we can do it. Okay, maybe we could end this Q&A session with one of my questions. What do you want Tuomas' people to remember from this day?
Yeah, that's our favorite question, and we've of course been repeating it several times. But I think there's a couple of key things that are very important, but they're also the reason that we're excited to be here. So first of all, right, there is going to be demand for new fibers, and there is going to be investments in technology to make new fibers. This is extremely clear. That the Spinnova fiber in itself is unique because of its sustainability value proposition, but Juha showed the difference between the materials. That really means a lot. We are the best alternative for that. But that we also have a clear roadmap, and this is a really personal favorite, and I love Juha's plans because they aren't based just...
I mean, there's more than just the graphs on the slide. This is based on very clear engineering plans on how to improve the productivity, and I think that's very important. There's a lot of questions on the price. Our job is to understand the business of the people investing in Spinnova technology, and the only way they'll invest is if they see that in the long term, those factories that they build will be profitable. That's very clear. And then the last thing, which is the previous question, which is, of course, something very important when we talk about a capital market stage, that we have a plan that doesn't require us to raise additional funding, and I think that sends a quite strong message to all the shareholders of the company. So that's the answer to that question.
Thank you, Tuomas. Okay, thank you everyone for watching today. Thank you, our management team, for very good presentations. And if you still have more questions, please send them to our IR email address. It's ir@spinnova.com. Have a nice day, everyone.
Thank you.
Thank you.