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Meltron: Meltron: The CEO summarizes the situation

Meltron: The CEO summarizes the situation

After a few weeks in the role of acting CEO, there is reason to sum up the year that is soon to end, describe the current situation, and say something about the future prospects.

The year 2021 was also largely marked by the pandemic, the restrictions imposed, and the restraint in contacts, especially new contacts, which many of our existing and potential customers exercised. This has undoubtedly hampered Meltron's sales also in the second half of the year, which is below expectation. Recently, despite some new restrictions, it has become easier to discuss and arrange visits to potential new customers. We also see that customers' actual investments gradually increase, with regard to new construction as well as retrofitting.

Marketing and sales
Over many years, Meltron has built up direct contacts and direct sales to many large and well-known companies, primarily in Finland, such as Fortum, Neste, AkzoNobel, AGA, Metsä and UPM. The latter have now placed a number of continuous, smaller orders without any direct sales efforts on our part. We are also well advanced in discussions on major investments in some of their new facilities, where decisions are expected shortly, even though the investment itself is further away in time. All these customers conduct operations in many countries and our first contacts were made in other countries, primarily in Sweden.

During the year, we have successfully and in accordance with plan supplied our "flagship product" MEX, gas explosion proof lamps for rugged environments, to a globally leading pharma company. After the installation, which was somewhat delayed as a result of the pandemic, the customer is very pleased with the result in the form of strong and evenly distributed light. We anticipate many inquiries in the coming years from this customer and others in the industry. It must be considered almost unique that a small company as Meltron, at such an early stage of its commercial development, has succeeded in gaining the respect of and the opportunity to deliver to so many large companies.

Direct contacts with customers will remain our focus in the near future, even though Meltron's internal sales organization is small. In order to expand the channels, we have spent a great deal of time during the year on developing cooperation with several major international partners. In the autumn, we were able to disclose the first step of a cooperation with Huawei concerning Smart Cities. Huawei is building a comprehensive concept of monitoring and managing urban infrastructure with regard to traffic, air quality, energy, and much else, based on the development of IoT. Smart lighting plays a central role, of course, and our MRS streetlight with advanced optics caught Huawei's interest, as did several of our other products. We have already carried out a first stage of development to verify the communication and control of our lighting in the Huawei system. Discussions will commence shortly with a few cities in Finland on a first pilot project, although we expect it to be some time before this cooperation results in more extensive sales.

Over the course of the year, we have had similar discussions with a major international lighting company, which, in its search for special lighting products, showed interest in several of Meltron's products. These discussions are currently put on the back burner following a change of ownership and reorganization, but we hope that they will resume next year.

Recently, we have also discussed additional sales channels, for example, through specialized distributors. Our hope is that this will open new paths early in the new year.

Oman
Meltron has now been active in Oman for over three years, with our own locally contracted representative in the country. We have supplied lighting to a couple of pilot and demonstration projects, including an arena for equestrian sports, which is big in Oman.

With a new sultan in place and after a drastic lockdown during the pandemic, a major conversion programme known as Vision 2040 is now under way with the support of the IMF. The ambition is to attract foreign technology industries to build a capacity for 'Made in Oman'. In short, there is a willingness to place a number of initial orders for public projects - roads, streets, sports facilities - in exchange for pledges to conduct local assembly or production. We have come a long way in these discussions.

For the past year, we have been working together with a local, family-owned construction company in good standing with the government and authorities. This company will be our partner in a future local company.

Technology development and production
Meltron is a technology company and has a specialized and focused portfolio of lamps for tough environments, with our gas explosion proof MEX as the main product and a unique road and street lamp in MRS. Having seen a need for additions, we have developed a version with battery backup of our general industrial lighting PLS, as customers prefer to be able to buy also these special variants from the same supplier. We intend to develop battery variants of other products, primarily our high-bay lighting HB for large industrial halls. A gas explosion proof variant of HB is also included in the development plans for the near future.

We have furthermore complemented our range with an HB from another manufacturer, Zalux, to cover needs for which our HB is not suitable.

Assembly and production take place in our facility in Helsinki with standard components sourced from the world market, and we have experienced very long delivery times throughout the year. At the beginning of the year, we made some strategic purchases of components, which eliminated potential problems with our own delivery times. The situation remains difficult. Some special customized components are manufactured in Finland and in the Baltic States and have had less problems. The assembly is done in part by means of specially developed machinery. The premises and flows have been trimmed over the course of the year and do not constitute a constraint at the present time.

Cost reductions
We are now conducting a thorough review of our current expenses. We have renegotiated and greatly reduced the costs of our premises in Helsinki. We have renegotiated some other agreements towards lower fixed costs and more performance-based payments. We have an important patent portfolio with patents pending in several countries. It has, however, sometimes limited value and precision, and we are currently in the process of trimming the portfolio. We are streamlining and concentrating our efforts in general marketing, focusing on web communications. We will streamline our development activities. Overall, we are reducing our burn rate by more than a third of the current fixed costs per month as of the middle of the first quarter.

In addition, we are carrying out a no less important review of our supply chains and product costs to significantly reduce prices to customers.

Recruitment of CEO
The Board of Directors immediately initiated the process to recruit a long-term CEO based in Helsinki with a clear focus on international marketing and sales in a technology company. The recruitment process is well under way, and the interest is considerable.

The situation in view of 2022
Meltron is well positioned for the coming year, but there is no shortage of challenges: focused direct sales to new and existing industrial customers; partnership development; Oman, and, at a later stage, the Middle East; long delivery times and cost control; and an efficient production and organization.

Having said this, I want to conclude by expressing my confidence in our opportunity to become an important operator in the long term, with a variety of sales channels across a number of markets and in several industries.

Göran Lundgren
Acting CEO

For more information, please contact:

Göran Lundgren, Acting CEO of Meltron AB, telephone: +46 70 467 4040;
[email protected]
Meltron AB, Malmgårdsvägen 63, SE-116 38 Stockholm, Sweden.