Renewcell reduces production as demand wanes

Swedish textile recycler Renewcell has said that it has reduced its production capacity in light of a lack of sales during the month of November.

The company reported that over the period it had produced just 1,339 metric tonnes of its Circulose pulp material, while its total production output at its facility was 1,420 tonnes. “No metric tonnes were delivered to customers,” it was further noted.

As such, Renewecell said that it had made the decision to lower its production capacity “in order not to affect cash flow negatively”.

Its outlook for the month of December is also remaining pessimistic, as it forecasted production volume to remain below capacity “due to expected lower sales volumes”.

Earlier in November, Renewcell issued some lacklustre financials for Q3, with net sales for the three months to September coming in at 84.4 million Swedish krona and operating profit dropping to 50.5 million krona.

The disappointing results confirmed what Renewcell had already anticipated back in its guidance update during October, when it stated that it was experiencing a slower than expected flow of Circulose pulp fibre throughout the value chain.

While interest had been seen among fibre producers, the company’s acting CEO, Magnus Håkansson, who had been appointed to the position in early October, said that certain off-take agreements had not yet transpired into orders due to delayed production.

He concluded that Renewcell would continue to keep control over cash flow during this period while it sets its sights on ramping up sales and securing demand from brands and fibre producers.