Cinis Fertilizer AB: Year-end report 2024

October - December 2024

• Net sales amounted to SEK 25.2 million (-)
• Operating profit/loss amounted to SEK -69.6 million (-14.0), negatively affected by one-off raw material losses
• Profit/loss after financial items amounted to SEK -96.7 million (-11.3)
• Earnings per share, before and after dilution, amounted to SEK -1.38 (-0.16)
• Cash flow from operating activities after changes in working capital amounted to SEK -24.1 million (-19.9)

Significant events during the quarter

• Cinis delivered another shipload of potassium sulfate and achieved a positive cash flow from operating activities in the month of October
• Extraordinary general meeting in Cinis Fertilizer was held on October 31
• Cinis established a green finance framework and successfully issued senior secured dark green bonds amounting to SEK 550 million. The funds are used to refinance existing debt, as well as general corporate purposes
• Cinis delivered an additional shipload, for the first time with a turning vessel delivering inputs

January - December 2024

• Net sales amounted to SEK 40.6 million (-)
• Operating profit/loss amounted to SEK -130.9 million (-36.1), negatively affected by one-off raw material losses
• Profit/loss after financial items amounted to SEK -166.8 million (-32.6)
• Earnings per share, before and after dilution, amounted to SEK -2.30 SEK (-0.45)
• Cash flow from operating activities after changes in working capital amounted to SEK -110.7 million (10.7)

Significant events after the quarter

• Cinis published a listing prospectus for green bonds and applied for listing on the Nasdaq Sustainability List
• Due to production disruptions and temporary congestion in the port, the company informed of lower sales and margin in Q4 2024
• Cinis sent another shipload of potassium sulfate. The cargo amounted to approximately 3,900 tons
• Cinis was granted local tax incentives in Kentucky
• Cinis entered into a collaboration with Wa3rm. The intention is to investigate the possibility for Wa3rm to structure the financing of production facilities that Cinis then leases and operates

CEO's comment

CHALLENGING START-UP YEAR WHERE SUSTAINABLE POTASSIUM SULfATE BECAME A REALITY

When I look back on 2024, I do so primarily with great pride, but of course also with certain frustration and disappointment. We can conclude that the ramp-up of production has taken longer than we expected based on what was agreed with our technical supplier. We had very high ambitions early on for how quickly we could scale up and trim production. Even though we did not reach where we wanted, I can see that during a challenging start-up year, we have produced and sold thousands of tons of potassium sulfate of the highest quality, fossil-free. Potassium sulfate that now reduces the carbon footprint of growers in over 25 countries, around the world.

Building and starting up a completely new production facility, which is also the first of its kind in Sweden, is not easy and it takes time. Just over 18 months after groundbreaking, we sent a first shipload of potassium sulfate, which has since been distributed all over the world. I am the first to regret that we have had challenges during the ramp-up, but it is not entirely surprising. I can nevertheless state that what we have achieved so far is unique for an establishment of this kind, which all industrial players who have visited the facility also confirm. We have shown that we can produce at a rate of approximately 75,000 tonnes per year, but we still need to increase availability at this level and then increase capacity further. We are working systematically with our technical supplier to take the facility the last step up to full production rate, and are making continuous progress.

It is also clear that Northvolt's production challenges have had a significant impact on us during the year. Although we were able to secure sodium sulfate from other suppliers early on, the cost per ton was significantly higher than the Northvolt price we had planned for, as was the freight, which has affected profitability. A lot of time and effort has also been spent resuming old, and starting new, dialogues about recycling sodium sulfate. The problem of residual flows of sodium sulfate in industry is growing and we see a clear need for our solution, but it takes time to convert this into deliveries. In the long term, I am convinced that this too will be realized because circularity is increasing day by day in society, as more and more people support the idea. The collaboration with Ragn-Sells is an important first step and a milestone in the work to increase the share of residual flows and compensate for the cost increases brought about by Northvolt. The fact that we are paid to receive the sodium sulfate shows that our fundamental idea is viable and that we are solving a growing problem for industrial players.

Globally, major industrial investments are being made where our offering fits very well into the new industries that are emerging. We are in discussions with around twenty industrial partners for the supply of sodium sulfate to future production facilities after Ascend Elements. Among the players are leading battery manufacturers, chemical industries, and pulp mills in Europe, North America, Asia and Australia. These will be incorporated into an updated expansion plan.

In these discussions with the battery industry, we have also identified an opportunity to build on the circular business by refining our by-product sodium chloride into a circular sodium hydroxide, caustic soda, an important input and relatively large cost item in the production of battery materials. This has the potential to strengthen circularity and profitability for both us and the battery manufacturers.

Our opportunity with Wa3rm is one of several financing options we are evaluating to realize our expansion plans. Wa3rm shares our belief that the future lies in utilizing and creating value from waste streams, and together we can refine more and more waste streams, including sodium chloride and excess heat. We see a possible collaboration where Wa3rm structures the financing of the production facilities and Cinis then leases the facilities and operates the production as an attractive opportunity for Cinis and our shareholders. This would mean that we can grow faster with new production facilities without having to bear the capex investment ourselves.

We continue to see good conditions for our establishment in the USA with the new administration, but of course we are closely monitoring developments regarding possible policy changes and trade barriers. We experience great support for what we are doing locally and at the state level, where we have already been granted tax incentives for the planned facility. In addition, there are strong drivers to increase domestic production and ensure an increased degree of self-sufficiency, where mineral fertilizers can play an important role.

I would like to extend a big thank you to our employees for your fantastic commitment and hard work during a tough start-up year. I would also like to thank our partners, shareholders and financiers who have supported us. Together we have made sustainable potassium sulfate a reality. With your continued support, we will work tirelessly to bring the plant in Örnsköldsvik up to full capacity and then continue to build circular industry in more locations.

Jakob Liedberg, CEO

For full report, please see attached file.

For more information, please contact:

Jakob Liedberg, CEO
jakob@cinis-fertilizer.com
+46 768 58 12 86

Charlotte Becker, IR and Communications director
charlotte@cinis-fertilizer.com
+46 730 37 07 07

Henrik Andersson, CFO
henrik@cinis-fertilizer.com
+46 705 70 87 53

This information is such information that Cinis Fertilizer is obliged to make public pursuant to the EU's Market Abuse Regulation. This report has been prepared with a Swedish and an English version. In the event of any discrepancies between the two, the Swedish version applies. This information was published, through the agency of the contact persons above, on February 13, 2025, at 08:00 a.m. CET.

About Cinis Fertilizer
Cinis Fertilizer is a Swedish green-tech company producing an environmentally friendly mineral fertilizer, potassium sulphate (SOP), by, among other things, recycling waste products from battery manufacturing and recycling, as well as the pulp industry and other industries. The patent protected technology uses half as much energy as today's production methods and the result is a fertilizer with low carbon footprint, a unique and circular contribution enabling sustainable agriculture. FNCA Sweden AB is Certified Adviser. For further information please visit: www.cinis-fertilizer.com.