Spinnova: Woodspin and PUMA sign a non-binding letter of intent for securing SPINNOVA® fiber

Translation: Original published in Finnish on 12/11/2024 at 07:24 am EET

Considering the capacity of Woodspin’s pre-industrial plant, the contract is hardly significant for Spinnova even in a favorable scenario. We estimate that PUMA could be an attractive partner for Suzano, which is to invest in manufacturing SPINNOVA® fiber on an industrial scale. Thus, the cooperation could generate indirect benefits for Spinnova’s technology sales in the long term, but it requires Spinnova and Suzano’s progress in promoting Suzano's plant investments and successful product launches for Woodspin and PUMA.

Woodspin's fiber planned to be used in PUMA's collections

Spinnova announced yesterday that Woodspin, the manufacturer and seller of SPINNOVA® wood-based fiber, and the global sports brand PUMA, have signed a multi-year letter of intent to secure the availability of fiber volumes. Woodspin is a joint venture between Spinnova and Suzano. The letter of intent is a non-binding agreement for securing SPINNOVA® wood-based fiber from Woodspin. Spinnova and PUMA are cooperating to develop SPINNOVA® fiber products for future collections, especially for products in PUMA's Sportstyle category.

From Spinnova’s viewpoint the clearest benefits of the cooperation are indirect

The capacity of Woodspin’s pre-industrial plant in Jyväskylä is 1,000 tons per year. Within its current strategy that focuses on technology sales, Spinnova is not investing in increasing Woodspin’s capacity. Thus, we estimate that the recent agreement between Woodspin and PUMA is not directly financially significant for Spinnova, even though moving the Jyväskylä plant, which has so far been used for technology development, even to partial production use could slightly reduce Woodspin's net loss and capital requirements in the near term. Spinnova recognizes a share of Woodspin's net profit corresponding to its 50% ownership in its EBITDA, so Woodspin's potential deliveries to PUMA will not be visible in Spinnova's revenue.

Indirectly, we find the agreement interesting for Spinnova, as in the longer term PUMA could be a high-volume customer for Woodspin’s other owner Suzano. Suzano is still planning to  build a 20,000-ton SPINNOVA® fiber plant, although due to technical and economic reasons, the project has been delayed from the original schedule (comment found here). Suzano’s strategy also includes breaking into the textile fiber market in the longer term, so when the first plant is completed and successful, the company’s goal is to scale up production volumes with new investments. To achieve this, Suzano naturally needs brand customers like PUMA with high volume potential and aiming at significant emission reductions. Therefore, we believe the PUMA cooperation, if expanded, could support Spinnova’s technology sales to Suzano, which obviously requires progress from Spinnova and Suzano in advancing Suzano's factory investments and the success of product launches with Woodspin. However, there is no immediate change pressure on our Spinnova forecasts or risk profile (i.e. required return) based on the recent agreement between Woodspin and PUMA.