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Interim Report January–June 2023
ChromoGenics invests in the future with increased marketing initiatives and continued cost focus
Second quarter 2023
- Net sales amounted to SEK 3.8 (2.8) million, an increase of SEK 0.9 million or 32 percent compared to the corresponding quarter in 2022.
- Operating expenses improved by 3.7 percent to SEK -17.4 (-18.1) million.
- EBITDA amounted to SEK -10.2 (-13.9) million, an improvement of 26 percent.
- Cash flow before changes in working capital amounted to SEK -10.5 (-14.7) million, an improvement of SEK 4.2 million compared to Q2 2022. The improvement is driven by the improved operating profit during the quarter.
- Profit/loss for the period amounted to SEK -11.9 (-15.6) million, an improvement of SEK 3.7 million or 23 percent compared to the corresponding period in 2022.
- Earnings per share (basic) amounted to SEK -0.07 (-0.9)
Significant events during the quarter
On May 17, ChromoGenics announced that its Board of Directors had resolved, subject to subsequent approval by the company's Annual General Meeting on June 21, 2023, to carry out a new issue of shares and warrants with preferential rights for the company's existing shareholders. The subscription price has been set at SEK 0.1 per unit, which corresponds to a subscription price of SEK 0.1 per share. The outcome of the issue was published on July 14.
The company is publishing its annual report for 2022 on May 31.
Interim period 2023 (January–June)
- Net sales during the period decreased by approximately SEK 1.7 million compared to the corresponding period the previous year. This change derives primarily from a drop in export sales of approximately SEK 6.4 million that was to some extent offset by an increase in domestic sales.
- Despite high inflation and a negative exchange rate trend, total operating expenses amounted to SEK -36.6 (-44.1) million, a decrease of SEK 7.8 million that is mainly due to increased cost efficiency in the form of lower costs in general thanks to, among other things, positive effects from in-house production of sputtered film.
- EBITDA amounted to SEK -21.5 (-30) million, an improvement of 28 percent.
- Cash flow amounted to SEK -26.7 million compared to SEK -36.1 million in the same period in 2022.
- Profit/loss for the period amounts to SEK -24.9 (-33.2) million, an improvement of SEK 8.3 million compared to the corresponding period in 2022. The improvement derives largely from lower costs.
- Earnings per share (basic) amount to SEK -0.1 compared to SEK -1.95 the previous year.
Comments from the CEO
Uncertainty in the construction and real estate industry, primarily in Sweden, continued during the quarter, which, combined with higher financing costs, led to a decrease in the number of building starts. The summer has seen record-high temperatures and power disruptions throughout the world, particularly in southern Europe. The impact of the changing climate has become a reality for more and more people.
ChromoGenics has the market's most sustainable solution that contributes to lower electricity consumption, decreased CO2 emissions, and, in particular, lower peak consumption when temps are at their warmest. It will become more important to reduce peak consumption to ensure the functionality of power grids, particularly in southern Europe and the USA, and we can contribute to this with concrete and measurable solutions.
Focus on sales
During the quarter, we continued to have a high level of activity in sales and marketing. We received several smaller orders from new markets, the United Arab Emirates, the Netherlands, Germany, France and Greece. These are admittedly smaller projects, but important steps that bode well for the future since they come from new partners who are demonstrating their confidence in us by using our technology.
New collaborations were started with Thomsa Glass in Benelux and Future Glass in the United Arab Emirates. We also received a first small order from the German window manufacturer Enersign, which specializes in premium windows for sustainable properties and passive houses and has sales in Europe and North America. These are interesting segments for us.
We are involved in a growing number of large projects, both in Sweden and abroad. We are not seeing that we are losing projects, but the decision-making process is taking time, which has negatively impacted our order intake.
Currently, we do not view growing our sales organization as the right path for us to increase our sales. We have good activity in Sweden and Norway with our own sales staff. Internationally, we continue to believe that the right path for us is to collaborate with competent companies in the glass industry and benefit from their regional networks, trust and customer relationships.
We see positive development in several markets with good growth in inquiries. However, it has taken longer than we have wanted to convert to booked orders.
We are now preparing a digital marketing campaign with the aim of driving sales of and raising awareness for ConverLight in select European markets. The campaign will launch in the fall.
Stability and cost control
Since March, our production has been reliable and robust, and we feel that we have resolved many of the challenges we have wrestled with previously. We manufactured dynamic glass for two assisted living residences in Sweden, a segment where we would like to grow. We also manufactured glass for a small number of projects in Germany, the Netherlands, Abu Dhabi and France. The cost of raw materials relative to net sales, adjusted for inventory changes, continues to improve.
Despite high inflation, we lowered our overhead somewhat. We also succeeded in stabilizing production without making additional investments. Today, we see that our machine park has the potential to deliver very good profitability for the company without further investments as sales increase.
Both earnings and cash flow improved by around SEK 4 million in the quarter, despite relatively weak sales.
During the quarter, we carried out a rights issue to be able to continue with our market expansion. We are proud and grateful for the confidence our shareholders are showing in us, not least that almost all major owners participated in the issue.
We thus have a good starting point to grow and improve the result: Stability in production and a sought-after product that is relevant and ISO-tested. Our full focus is now on converting customer interest into booked orders and thus growing toward profitability and positive cash flow.
Fredrik Fränding, CEO
Uppsala 8/25 2023
This report is available for download at https://chromogenics.com/press-releases/
For more information, please contact:
Fredrik Fränding, CEO: +46 72 249 24 62
Anne-Marie Gullman, CFO & Head of Investor Relations: +46 76 136 01 15
This information constitutes such information that ChromoGenics AB is obligated to disclose in accordance with the EU Market Abuse Regulation. The information was submitted by the above-mentioned contact persons for publication on August 25, 2023, at 8:30 AM CET.
This statement has been made in a Swedish and English version. In the event of any discrepancies between the Swedish and English text, the Swedish text shall prevail.
ChromoGenics is a proptech company producing smart dynamic glass that improves indoor environments and well-being and lowers buildings’ energy consumption, operating expenses and impact on the climate. The company’s product ConverLight® Dynamic is based on a unique patented technology from the Ångström Laboratory in Uppsala, where electrochromic coatings are sputtered onto plastic film. The result is a dynamic film that can be laminated between glass layers, which provides buildings with good solar protection and lowered environmental impact from production, transport and use. The dynamic film is easy to transport and can be applied by local partners in the glass industry, which means it is possible to avoid long-distance shipping of bulky glass. All of ChromoGenics’ products strive to follow the key words environment and health. This means a focus on environmentally friendly material, lower energy consumption, increased access to daylight and views and improved indoor comfort.
The company’s production facilities in Uppsala have been financed in part by a conditional loan from the Swedish Energy Agency. ChromoGenics’ share (CHRO) is listed on Nasdaq First North Growth Market, and Vator Securities is the Certified Adviser.