Welcome back, everyone, to ABG Investor Days. My name is Henric Hintze, and I'm an Equity Research Analyst here at ABG. With me now, I have a company that I cover, OrganoClick, and the company's CEO and co-founder, Mårten Hellberg, here to present for us. Please go ahead.
Thank you, Henric. Nice to be here and nice to see so many people in the audience. Yeah, my name is Mårten Hellberg. I'm CEO and co-founder of OrganoClick. My journey with this company started 18 years ago when I met two Swedish professors, one professor in organic chemistry at Stockholm University and one professor in cellulose chemistry at the Swedish University of Agricultural Sciences, and they had, since the mid-90s, thought about this problem. Today, we have 30 million tons of plastics coming out into the ocean every year. This is a problem that does not disappear. We have to do something about it, and this was exactly what they had done research on since the mid-90s, when they started to think about how can we use nature's own chemistry in order to replace fossil plastics and fossil chemistries. This is a research called biomimicry.
That is, you're looking into how different natural types of chemistries or different types of functions are building up in nature. What they had studied was what is the chemistry behind a tree becoming so strong, or why do some leaves become water-repellent, or why do some trees burn less good than other trees. What are the natural molecules doing this in nature? Based on that fundamental research, we founded OrganoClick with the mission to try to replace fossil plastics and different hazardous chemicals with bio-based solutions. The technology that we started off from is something we call OrganoClick, or the modification of cellulose. We click on organic molecules to the surface of cellulose. The cellulose fibers is the core material in wood, in paper, in textiles, and different types of industrial textiles called nonwovens, which I will tell you a little bit more about.
By changing the different molecules that we click on, we can give these materials improved water repellency, improved strength, we can give them grease resistance, and also fire-retardant properties. So we have a technology platform from which we create different types of material solutions. And what we supply in the end is the green chemical products that are used by material manufacturers to create different functions on their materials. Today, 18 years later, we are focusing on three different business areas where cellulose is the core component. That is the nonwoven industry, which is an industrial type of textile, something in between paper and normal textiles. So it's like a soft paper, which is used in a number of different types of applications. And here we are replacing fossil-based plastic binders, which have been used to get the mechanical properties of nonwoven materials.
And we are replacing that with bio-based binders, where we are using biopolymers from different food waste streams. So we're using waste to create binders that can improve the strength of these materials. The other segment which we are working with is textile waterproofing. There traditionally, one has used a chemical called PFAS, fluorocarbons, which many of you have heard about. They are also used in fire retardants or fire-extinguishing types of agents. And they have been poisoning the waters in Ronneby, Uppsala, and so on that most of you have heard about. And here we are replacing PFAS with natural fatty compounds that are found on the leaves of trees, which creates the water repellency of leaves. Last, we are also working with wood protection, where we traditionally have used biocides and heavy metals.
And here we're using natural minerals in order to create a physical barrier towards rot fungus instead of a toxin to the rot fungus. Today, we are a green chemical company listed at Nasdaq First North since 2015. We have our headquarters production and R&D up in Täby, where we have created a factory which has 20,000 tons of capacity per year. Last year, we had revenues of SEK 146 million, an increase of 27% from the year before. And we export now to 20 markets with 40 employees. Luckily, it's not only ourselves that see what we are doing is good. We have received a number of awards and prizes over the years. One of the most interesting, I think, is the Textile Innovation Award, which is from the nonwoven industry. And we also have the Climate Solver from the WWF.
If we move into the different types of business areas which we are working in, first of all, the nonwovens and fiber technology business area, where we are supplying the binders, which I told you about. This is a niche area. The market is about SEK 2-SEK 3 billion per year, and we are working towards industrial companies that are producing the nonwovens materials. This area, it's a lot of different applications. So we are working toward tabletop producers. I always get very happy when I find our products in real life. Here's a napkin produced by our customer, Duni, and that is actually here in the hotel, so I found this on the toilet here, and so here are our binders, the thing that is creating the strength in this material, so about 15% of this napkin is produced by us up in Täby.
Other types of applications, the biggest area is hygiene applications. So if you look into diapers or feminine care products, the soft materials that are in these products are made from nonwovens. And they also contain binders in order to create the strength. Finally, wet wipes, agricultural textiles, and also packaging areas are areas where you find nonwovens. But our products are only 5%-15% of the material. So it's an ingredient component into this material. So this is what we are selling. This creates also quite big. It's very difficult to get into these applications. You have to do a lot of tests, a lot of development projects together with the customers. But once you're in, it's very, very difficult to get kicked out. So it's a very sticky business, as we call it.
And we have been able now to implement our products in some major nonwoven products. But we are also now having a lot of projects with different manufacturers in this area. But our biggest customer so far is the Duni Group. The second business area which we're working in is the textile waterproofing business or our consumer brands. Here we are packaging our chemical products in consumer packages instead of in industrial packages. OrganoTex has now become the leading waterproofing product in the Swedish market. Here we have more than 500 resellers. So we have salespeople that are targeting outdoor retailers, sport retailers, and so on. Now this year, we are also the leading brand in the Netherlands. And we're growing very rapidly with high double-digit numbers in this business area at the moment. And I have to say, also very happy that here it's good margins.
This is the area where we have the best margins. This is also a niche market. The market on a global basis is about SEK 2 billion . The European market is about half of that. We are now really getting more and more market share due to the fact that we have the absolutely most sustainable product. We are the only company in the world that has created a 100% bio-based textile waterproofing product. All others have some type of plastic components in them, or they have PFAS or other types of problematic chemicals. Finally, we have the wood protection area where we're working towards professional building companies. We're collaborating with Bergs Timber, who is the leading wood impregnation company in Sweden. This market is also a niche market, SEK 5-SEK 6 billion SEK on a global basis for the wood protection chemistry.
And we are now really moving forward to start collaborating with new wood impregnation companies in other countries. Here we launched a new product only two years ago, which we have seen to have excellent properties. We have tested it both in Europe but also in tropical environments. And we have excellent wood protection properties also towards termites with this new technology. So this is a new thing for us since two years back. So really happy about what we have been able to develop here. Up in our factory, we have also our R&D center. We have six brilliant chemists that are working with further developing our products every year. We have more than 20 patent families covering our different technologies. And we also have a pilot lab where we can mimic our customers' processes both in the nonwoven industry, the textile industry, and the wood industry.
We have created a very good infrastructure for further developing our products there. There we also have our factory where we have created a capacity of producing 20,000 tons per year. Last year, we produced around 4,000 tons. We can increase the production and the delivery a lot without having to add more cost or do any more CapEx. We have really good scalability right now in our factory. If you look at the financials from this year, where the first six months were about on break-even at a net level, we can really increase the volumes without having to add a lot of cost. There is scalability in our business today. From the factory, we ship out in tank trucks to big industrial customers like Duni. We ship out in medium-sized containers. And we also have filling lines for the consumer products.
We have all the capacity to produce and ship the different products that we supply today. If you look into the type of customers that we are working with, as I mentioned, within the nonwovens segments, we have big industrial customers like Duni. We have Ahlstrom, another one that's the second-largest nonwovens producer in the world, which has launched now a number of products with our binders. We have a Finnish company called SharpCell and Magnera, who the one that have heard about us before. We have talked about Glatfelter, which we signed a deal with one and a half years ago. They have merged with another company called Berry, and they created Magnera. So Magnera is the world's largest producer of nonwovens today, and they are now on our customer list as well.
For our functional wood and for our consumer brands, it's mainly retailers that we're working with. If you look at OrganoTex, we have Houdini, for example, a brand that we are collaborating with. Naturkompaniet and the whole Fenix Outdoor Group is one of our major customers. XXL in the Netherlands, Bever, have 70% of the Dutch outdoor market. They have now started to sell almost only OrganoTex in their stores, and so the Netherlands has become the second biggest market for us for OrganoTex, and SPORTLER is the leading outdoor chain in Italy, which we also signed an agreement with last year, so we have really grown a lot on the European market during 2024. If you look at the financial performance, this is a graph showing the sales development and EBIT development since we got listed at First North in 2015.
During this year, we have had an average growth rate of 20% per year, including the quite poor performance in 2024. In average, we have increased the revenue with 20% per year over this year. We've had a very long period of continuous growth. Looking at the EBIT, we believe that we would reach actually a positive EBIT already in 2020. Something happened in 2020, which affected us quite a lot. That was the pandemic, which made some of our launches that some customers were planning to do. They got postponed. They had to, yeah, they came later. We had quite tough years in 2021 and 2022. In 2023, when in particular Duni launched this product, that was, of course, very positive for us.
Now we are just about to a little bit more, then we are on the break-even on an EBIT level. It's not far away now. Looking into more the last five years, we can see that we have been growing here as well, except for this year, which has been also tougher for us with the building sector in particular, which have decreased a lot during the last year. But if you look at the gross margin, it has actually improved a little bit even during this last little bit more tough year, which have also made that the EBIT and the operating cost, it's on the same level as last year, which have created that we are slightly better actually on an EBIT level compared with last year. A little bit more growth now, then we will be on a break-even level.
If you look at the cash flow from operating activities, it has improved every year now since 2021. Running 12 months, September 2024, it was actually positive with SEK 6 million. We have reached now a positive cash flow from operating activities. We have a lot of depreciations from all the machineries. That is why the EBIT is below cash flow from operating activities. We have a very positive trend now for the cash flow. 2025, I'm really looking forward to that as we are now really focusing on continuing the growth for the OrganoTex segment and also for the nonwoven segments. Looking into what has happened during the last year, we have taken a lot of new customers.
For OrganoTex, we have signed deals with the XXL Group, the Bever Outdoor Group, with Friluftsland, which is the leading outdoor chain in Denmark, with A.S. Adventure, the leading outdoor chain in Belgium, SPORTLER, the leading outdoor chain in Italy, and Bauhaus for BIOkleen. So these are all new customers that next year will be the first year when they are full year with these customers. What has happened in the nonwoven segment? Well, we have been affected by quite a bad restaurant market. So this is something that has affected us. But we have also launched some new products with our customers, like this coffee lid, which is made from a nonwoven, which is then pressed together into a coffee lid. So this is launched together with a company called PulPac, which have developed this type of product.
And that is now starting to be sold in some coffee chains in Sweden. Focus 2025, well, for the nonwovens segments, we are really focusing on finalizing a number of customer projects that we are working on. We have 10 projects now in production phase. That is the phase when they are testing our binders in the real production machinery. We hope to be able to sign some deals with these customers during next year. In the green coating segments, OrganoTex, well, we are just working on to continue the growth. We have been growing with more than 30% this year so far. So it's really good, strong development within this segment. And for functional wood, we are focusing on export markets like Germany. And sales growth and profitability, that is highest on our agenda right now. So thank you very much for your attention. All right, Henrik.
Thank you very much for that. Let's move on to some questions then. So first, let's dig into the nonwovens segment a bit more. So you got your initial big success with Duni there almost two years ago now. And then lately, you've seen some headwinds from the restaurant market, which is one of the important end markets for Duni's products there. Could you just tell us a bit how we should think about this segment going forward regarding other applications beyond tabletop and things like that? What other projects do you have going?
Well, first of all, I think tabletop is the application where we will take more market share moving forward. We really have good projects with other actors within this segment. And I mean, Duni is the biggest brand on the market, but there are other actors that are very big as well.
And Duni just two days ago, they made a press release that they are the first company in the world that got Nordic Swan label on this product, which they were very happy with. And I think that will also be very important for other actors to move forward as well. So we're thinking about it. I think this will be more like a ladder type of growth. It will not be like for OrganoTex. It's more steady growth. This is more when we finalize the project, then we take a new big step. It's very binary in that sense. When a project is finalized, then we get good volumes. But it's very difficult to say exactly when a project will be finalized. But this is how I foresee this.
Yeah, so much like the Duni bump that you got two years ago. Yeah. All right.
And then the green coatings and maintenance product segment has gone very well this past year. Could you just dig into a bit more the success factors here, the new customers you've signed and what you see going forward in this segment?
Two big success factors. For OrganoTex, it is we have the absolutely best sustainable product on the market. No one else has anything that is equal to us in terms of bio-based content, fossil-free raw materials, and so on. And also the functionality is performing very well. We got Best in Test with Utemagasinet a few years ago for our product, also in functionality. And the price is on the same level as our competitors. So we don't have any obstacle there. So that is one of the success factors.
The other one, we have a great sales team, really passionate salespeople that are working super hard to find new retailers, find new distributors, and so on. And yeah, everybody, they like us. Our customers like us. That is the simple question in the end. That sounds good. So looking at margins then, you say that the big driver of margins going forward will be increased volumes and better utilization of the production facilities that you have right now. Could you dig into that a bit more? Will it mainly be just leveraging your fixed costs here, or is there anything you can do on the gross margin as well? Well, if you look at the gross margin that we are reporting, we have two components there. One is the gross margin from variable costs, which is just the raw materials and production costs.
But then we also have a big portion of fixed costs, which is the factory, all the people working in the factory, and so on, which we also include into the gross margin. So it's exactly what you say. One big factor for us is to increase the volumes. We are running the factory with 4,000 tons last year. We have a capacity of 20,000 tons. Can you imagine when we split out all the fixed costs on four or five times the volume than we sell today? That is one part. The other part is our consumer products have much higher gross margins from variable costs compared with our industrial products. So the product mix that we now have and that we have seen during the last year is very positive for our gross margin in overall.
Higher volumes and continue to build the consumer business will really increase the gross margin. Our long-term target here for our reported gross margin is 40%. We believe this is something that we can reach. Now we are at 28%, but this is a matter of volume. Creating more volume that is splitting out the fixed cost on higher sales and also the product mix.
Yeah. Yeah. To follow up on the product mix question then, could you maybe talk a bit about why the margins differ between the segments and what kind of the magnitude of the difference is?
The easy answer there is how the markets look like. We are working with market-driven prices. In the consumer brand segments, we sell our products at similar prices as our competitors, which are non-bio-based and have the problematic chemicals that we are replacing.
We have the cost of the raw materials are not that high, to be honest. For the nonwoven segments, it's more competitive. We are competing against plastic binders, which is going up and down a little bit depending on the market situation. So there we have to, we can have a little premium, but we cannot have too much premium compared with the plastic binders. So that is why it is like it is.
Yeah. All right. Finally, the functional wood segment, we've seen weakness here for quite some time because of the construction market. Are you getting any signals from the customers or end markets on when you think you can see a return to growth there?
Yeah. We believe that the building market is now on its bottom level.
This is the feeling when we're talking about with customers and how the construction industry is developing in general. So hopefully, second half of 2025, we can start to see more positive outcome in this segment again. But it's been two very tough years in this segment. I mean, constructions have gone down with more than 50% during this last year in general. So we have been affected of that, of course.
Yeah. All right. And then maybe finally, you've previously expressed an ambition to shift the business model in the functional wood segment a bit. Could you just explain that briefly and maybe give us an update?
Yeah, we are really working on that right now. So historically, we've been selling the final wood to the building sector, but now we are shifting to selling the liquid to wood impregnation companies.
This is something that we are working very hard on. So I would say in 2025, we will start to see that this business model is coming more into reality.
All right. Very good. Thanks a lot for that. Thank all of you for listening.
Thank you.