Interim Report January–June 2020

ChromoGenics adopts a position for accelerated growth

Q2 2020

  • Net sales for the period amounted to SEK 4.0 (12.5) million, and earnings amounted to SEK -18.9 (-18.3) million, which corresponds to earnings per share of SEK – 0.03 (-0.11).
  • ChromoGenics continued to be affected by the coronavirus pandemic during the second quarter, which resulted in delayed orders from the company’s customers. Order intake and invoicing have been postponed in 2020. Net sales in the current year are therefore expected to be lower than net sales in 2019. An action program to reduce the company’s operating costs was initiated at the beginning of April. The cost savings will have the greatest affect in the third quarter. Under the program, ten positions were terminated as of June 30, and 70 percent of the staff were furloughed in Q2 2020, with work time reduced to 40 per cent.
  • Operating profit amounted to SEK -15.5 (-17.6) million, which is an improvement of SEK 2.1 million compared to the corresponding period in 2019.
  • Cash and cash equivalents amounted to SEK 36.1 (14.9) million on June 30, 2020.
  • The installation of two sputtering machines in the company’s premises in Uppsala has been completed, and the machines are fundamental for the company’s future operations. The next step is to verify, adjust and finetune the manufacturing process to the accompanying control system. The staff that are working on this have not been furloughed or terminated.  
  • The Annual General Meeting of ChromoGenics AB (publ) resolved on May 14, 2020, to carry out a 1:100 reverse stock split, which means that one hundred (100) shares will be merged to create one (1) new share.
  • During Q2, orders of SEK 4.7 million were received from Kraftstaden in Trollhättan and Humlegården and Kungsleden in Stockholm. Order volume for Q3 2020 amounts to SEK 9.7 (25.4) million.
2020 2019   2020 2019   2019
SEK million Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec
Net sales 4,0 12,5 9,2 11,2 45,2
EBITDA -14,0 -15,6 -31,0 -29,2 -67,0
Net income -18,9 -18,3 -38,4 -34,6 -77,9
EPS before dilution, SEK -0,03 -0,11 -0,07 -0,29 -0,34
EPS after dilution, SEK -0,03 -0,11 -0,07 -0,29 -0,34
Cash and bank end of the period 36,1 14,9 36,1 14,9 24,9

Events after the end of the period

  • During the month of July, the furloughs expired at ChromoGenics due to the summer vacation period. The furloughs, which have been ongoing since April 1, 2020, reduced the working hours of 70 percent of the staff to 40 percent.
  • On August 17, Jerker Lundgren stepped down as CEO and Leif Ljungqvist was named the new CEO of ChromoGenics.
  • August 18 was the record day for the 1:100 reverse stock split, through which one hundred shares were merged to create one share. The reverse stock split decreased the total number of shares from 707,334,300 to 7,073,343. 

Comments from the CEO

As the newly appointed CEO, I am looking forward to the task of, together with all of the competent people at ChromoGenics, creating the conditions for improved sales, with a goal of positive earnings. It will be very exciting to help bring technology developed in Sweden within Clean Tech to a market that has long requested the kind of products we can deliver.

One of the keys for success are our sputtering machines, which create conditions for building stable industrial quality and significant volume growth within the construction and real estate industry. Through our qualified sputtering machines, ChromoGenics gains its own primary sputtering capacity under its own quality assurance. This will serve as the foundation for the company’s dynamic products. By investing in its own sputtering machines, ChromoGenics will be able to control the entire production process, which creates conditions for developing into the natural first choice for the central component in the dynamic glass of the future. We are thereby creating a stable industrial structure with a focus on delivery of laminated performance glass and cooperation with a geographically diverse range of partners. We can thereby also create the conditions for efficient transports of heavy glass and reduce the environmental impact of distribution as well.

The schedule for the installation of the sputtering machines was negatively impacted as of March when a number of foreign consultants were called home due to the ongoing coronavirus pandemic. However, the installation process in the second quarter proceeded largely according to plan, and the first machine has been installed. Our own staff played a large role in saving some time during the spring through their own efforts. The coronavirus pandemic is creating challenges, though, through travel restrictions for our foreign consultants, who are needed to deploy the machines.

A lot of focus is now being placed on adjusting and anchoring the production process line with the concept of surface coating plastic film using a roll-to-roll process. It is estimated that the adjustment of the process for wolfram oxide will be completed in November and the corresponding adjustment for nickel oxide in December. ChromoGenics’ investment in its own sputtering machines makes it possible to improve the gross margin and significantly improve the stability of the quality and sustainability of our entire production process from an environmental perspective.

The gigantic and impressive machines have considerable production capacity for applying metal and oxide coatings to the outermost nanothin layer and creates several different possible alternatives and business opportunities for applications other than laminated glass. Since we currently have a relatively low volume need for sputtered film as an input product for the manufacturing of dynamic glass, there is a significant overcapacity in our machines, which could open for possibilities of establishing multiple income sources for example in the Nordic market for medical technology and electronics.   

A number of our customers are large, well-known construction companies and property owners who place repeat orders. The large orders expected in the spring/summer of 2020 have been delayed, which has pushed the company’s order intake and invoicing to later in the current year. The order backlog amounted to SEK 9.7 million at the mid-year point. ChromoGenics’ net sales in 2020 are therefore expected to be lower than net sales for full-year 2019. Despite the difficult situation due to the coronavirus, we receive questions daily about our products, which means that the market is increasingly becoming aware of the glass technology ChromoGenics has developed. The key to ChromoGenics’ success is gaining customers’ trust for our unique offer in performance glass for buildings.

The company works constantly to meet customer demands on function, quality, environmental gains, and property-related financial gains. This is what holds the operations together and is a determining factor in ChromoGenics’ future development. The objective is to start an ISO certification process during the first half of 2021.

The second quarter started with the introduction of an action program that aims to keep operating costs down. As of April 1, 70 percent of our staff have been working 40 percent of their normal hours, and some employees unfortunately had to leave the company. We have also reviewed agreements and costs while also strengthening the quality organization with new procedures. Staff working with the deployment of the sputtering machines have been working full time for the entire period.

Leif Ljungqvist, CEO

Contact:
Leif Ljungqvist, CEO
Lars Ericsson, CFO and Head of Communications
Tel: +46 (0)18 430 0430
E-mail:
info@chromogenics.com

This information constitutes such information that ChromoGenics AB (publ) 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 27, 2020, at 08:30 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.


About ChromoGenics
ChromoGenics offers dynamic glass with controllable heat- and light transmission and static glass with world leading performance. The company’s unique technology ConverLight® provides sustainable solar control for increased indoor comfort and energy efficiency. ConverLight also contributes to Green Building certifications. In 2016 the company started commercial sales to real estate projects in Scandinavia.

ChromoGenics is located in Uppsala, Sweden, and the technology is derived from the world leading research center at Ångström Laboratory at Uppsala University. The plant has been partly financed by a conditional loan from the Swedish Energy Agency. ChromoGenics share (CHRO) is listed on Nasdaq First North Growth Market with Erik Penser Bank as Certified Adviser, e-mail: certifiedadviser@penser.se, tel.: +46 (0) 8 463 83 00. http://www.chromogenics.com

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