Nilar presents updated business plan, adopts new targets for the period up to and including 2027 and reviews the company's financing alternatives
INSIDE INFORMATION: Nilar International AB (publ) ("Nilar" or the "Company") today presents an updated business plan with a number of prioritized focus areas for the period up to and including 2027. The business plan includes both the launch of two new versions of Nilar's battery and significant investments in additional production capacity to reach larger volumes and thus increased cost efficiency. In parallel, Nilar intends to implement a number of measures to improve the Company's financial structure and financial position. In addition, the Board of Directors of Nilar has adopted updated operational and financial goals. Furthermore, the Board has decided to carry out impairments of parts of two production lines for current generation batteries of approx. SEK 69 million.
Nilar develops and produces one of the market's safest and most sustainable batteries. It is the only battery in the world that can be filled with new life and then reused and recycled when it has reached its full lifespan.
In February 2022, the Company implemented a new strategy with a focus on innovation and cost-effective production of the battery. The development of complete integrated solutions is carried out in collaboration with strategically selected system integrators. Since the launch of the new strategy, Nilar has achieved the goals set for 2022-2023 in all material respects:
- Strategic agreements have been signed with Enequi, Indutecc Renewable Solutions and McEnergy for jointly developed solutions aimed at Nilar’s prioritized customer segments.
- Since autumn 2022, Nilar’s ReOx® battery is produced and distributed, with new technology for oxygen filling, better performance, and quality improvements.
- In parallel, the development of battery and control systems for ReOx® 2 production start in 2024 is progressing, to continue to optimize and adapt the technology in accordance with Nilar's strategy.
- The objective of the plan for the expansion of the production capacity has been deliberately postponed in order to prioritize product improvements.
The development of Nilar's battery technology is proceeding according to plan, both quality and performance are continuously improving and since the first quarter of 2022 doubling the selling price was therefore possible. Nevertheless, it can be stated that further development of Nilar's batteries is necessary, both to offer the market a more attractive solution and for production costs per unit to be lower. Current production aims in the short and medium term to primarily contribute to continued technology development and deepened collaborations with existing and new system integrators to secure the Company's market position,.
The market is developing in the Company's direction and the demand for the type of energy storage that Nilar offers is developing strongly. Today, renewable power sources are estimated to account for 51 percent of electricity production in 2035 and 73 percent in 2050 in Europe1.
The green transition together with a clear electrification trend is driving the need to store energy when the wind blows and the sun shines, in order to be able to use it when the energy is needed. The growth rate of global energy storage capacity is therefore expected to increase 16 times, to a cumulative capacity of 1,468 GWh by 20312.
In this market development, Nilar assesses that the Company's safe and sustainable battery technology will have a very strong market position, not least as the current security situation makes strategic battery production in Sweden and Europe increasingly important. The company's long-term strategy is to ensure sourcing components and raw materials from European producers and suppliers.
Priority focus areas until 2027
Based on the strategy that began to be implemented in February 2022, Nilar today presents a developed business plan with three focus areas for the period up to 2027. In short, it is about the development of next-generation batteries (1), more resource-efficient production (2) and continued market establishment towards prioritized market segments (3).
1. New Nilar batteries provide better performance and reduced costs
In the first quarter of 2024, production of the next Nilar battery, ReOx® 2, is scheduled to begin. The new battery has several important updates, including an upgraded cooling system that improves battery performance. The production of ReOx® 2 will take place in the production facility with partially developed production lines and new technology.
In 2027, Nilar plans to start commercial production of a completely new generation of batteries with a larger size. The new battery is still based on Nickel Metal Hydride (NiMH) electrochemistry with a water-based electrolyte, but will be significantly more efficient from a production perspective and significantly more cost-effective. The cost efficiency is achieved through the reuse of active material, the size of the battery and economies of scale.
- Nilar's unique technology is the Company's main asset and together with our partners we reach the market segments where our batteries are most useful. The updated ReOx® 2 battery in 2024 and the all-new battery in 2027 are crucial for Nilar's ability to reduce costs and reach targeted profitability. At the same time, our established customer segments benefit from better performance, says Erik Oldmark, CEO of Nilar International AB.
2. Increased automation provides more resource-efficient battery production
In order to reduce production costs and at the same time enable the production of future generations of batteries in larger volumes, continued investments in Nilar's production capacity are required. In short, it is about increasing the degree of automation and efficiency in the production lines, which both streamlines productivity while reducing the need for operators.
Today, Gävle's six production lines are used to meet the deliveries within the framework of our collaborations with Enequi, Indutecc and McEnergy. In the financial model that forms the basis of the strategy, the need is estimated to increase to 16 production lines in 2027. In addition, production will need to be adapted to the larger batteries that Nilar intends to commercially start producing from 2027 and onwards.
- We need to develop Nilar's production capacity to enable more efficient production of Nilar's innovative solutions. Large parts of the existing production lines will be able to be used, which is why the costs will be significantly lower even if we are in practice building a completely new production facility, says Erik Oldmark.
At the same time, a review of the commitment in Paldiski, Estonia, is underway, partly to ensure a cost-effective production capacity as a whole, partly so that Nilar can take advantage of a leading position in battery recycling technology – an important part of Nilar's circular philosophy. Furthermore, the board has decided to carry out a write-down of parts of two production lines for current generation batteries by approximately SEK 69 million.
3. Growth ambitions
In order to ensure the goal of greatly increased sales volumes from 2027, Nilar intends to establish at least four new collaborations with established system integrators per year that already address prioritized markets and market segments. In the selection of system integrators, the ability to take overall responsibility for advanced energy storage solutions, that they possess a high level of technical competence and have the ability to reach large sales volumes in prioritized market segments, is evaluated.
Review of the Company's financing
To enable the launch of new and more cost-effective batteries together with a more automated production, Nilar is also implementing a number of important measures to improve the Company's financial structure and position.
Nilar assesses that the implementation of the business plan and the aforementioned focus areas until 2027 requires funding corresponding to approximately SEK 1.2 billion.
Nilar also assesses that there are good opportunities to obtain research grants and other support for electrification and green conversion. A number of such processes and applications have been initiated.
As previously communicated, Nilar is fully funded for the current year. Due to the Company's significant funding needs over the coming years, Nilar's board has also initiated a strategic review within which it will evaluate various alternatives to fulfil the Company's business plan. Such alternatives may include strategic partnership, a sale of the company, grants as well as issues of shares or debt instruments.
The European Investment Bank has signalled a favourable attitude towards the Company's initiative to, under certain conditions, renegotiate the terms of the EUR 17.5 million loan due in December 2025.
Key Milestones and updated financial targets
In light of the new business plan, Nilar also updates the Company's objectives:
Key milestones:
- Start of customer delivery of ReOx® 2 quarter one 2024
- Agreements with at least four new system integrators per year from 2024 to 2027
- A first production line for new generation batteries established in 2025
- Launch of the next generation battery in 2026
Financial targets (replaces previously communicated targets):
- A turnover that exceeds SEK 1.5 billion for the full year 2027
- Positive cash flow from the second half of 2027
- Long-term EBITDA margin of at least 25 percent.
For further information, please contact:
Erik Oldmark, CEO
+46 70 432 4444
[email protected]
Press contact:
Matilda Ekman Vråmo
+46 72-213 01 28
[email protected]
This information is information that Nilar International AB (publ) is obliged to make public pursuant to the (EU) 596/2014 Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above at the time stated by the Company's news distributor Cision at publication of this press release.
About Nilar:
Swedish-based Nilar International AB develops and manufactures batteries that are part of stationary energy storage systems. With better energy storage, society can support the increasingly stressed electricity grid by bridging imbalances between energy production and demand, especially important as the share of renewable energy sources increases. Nilar's battery technology is based on nickel metal hydride (NiMH) electrochemistry with a water-based electrolyte, which provides higher safety while allowing the components to be recycled and reused. Nilar has its headquarters in Täby and since 2012 all batteries have been developed and produced in the production facility in Gävle, which is powered by 100% renewable energy.
The Nilar share is listed on the Nasdaq First North Premier Growth Market under the ticker NILAR. FNCA Sweden is Certified Adviser. For more information see www.nilar.com.
Forward-looking statements
This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the group operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or that the assumptions on which it is based is correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of the date of this press release and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is required by law or Nasdaq First North Growth Market rule book for issuers.
1IEA Net Zero Emission Scenario
2Wood Mackenzie, Global energy storage market outlook update: Q4 2022
