ITM Power, a UK manufacturer of hydrogen equipment, said that it had made “tangible progress” in its turnaround after posting annual revenues which exceeded expectations. This was following a series of profit warnings over the past year.
The Sheffield-based producer of electrolysers that are used to create green hydrogen – which is crucial to global ambitions of reducing carbon emissions – generated revenues of £5.2mn for the year ending April. This was ahead of the guidance of £2mn.
ITM has been undergoing a major overhaul to simplify the business as well as reduce costs. This comes after three profit warnings were issued by the company over a period of eight months, ending in mid-January.
ITM reported a 7 percent decline in its annual turnover and a more-than-doubling of losses before tax, up to PS101.2mn. Earlier in the year, ITM warned investors to anticipate steeper losses because of delays in deliveries and inventory writedowns.
The 2001 start-up is Britain’s best hope for a future manufacturing leader in energy. It has, however, struggled to transition from a technology developer to an established manufacturer.
Dennis Schulz, the chief executive of the company, said that it was “encouraging” to see how far the company has come since its turnaround plan was launched earlier this year. He added that the company was well on its way to becoming “a highly efficient and reliable manufacturing company”.
Schulz, who had previously worked in the engineering division of Linde, ITM’s largest shareholder, took over from Graham Cooley as CEO in December. He promised to restore the trust of customers and investors, by cutting the product range by a quarter and reducing headcount.
Hydrogen, a niche product that is used mostly in refineries and chemical plants, is crucial for the transition away from fossil fuels as it produces no carbon dioxide when burned.
Water is split into hydrogen and oxygen using electrolysers. Carbon dioxide is produced by splitting hydrogen from natural gas.
To meet the clean energy targets, the International Energy Agency estimates that electrolyser capacities will need to increase to approximately 560GW by 2030 from an estimated 3GW in 2018.
ITM’s results from Thursday also noted a “temporary pause” in the approval of new projects by investors due to high electric prices, inflation, and uncertainty regarding government support.
ITM Power, however, said that this gave it the “breathing room” needed to implement its turnaround plan.
Alex Smith, an analyst at Investec said that the company was “on track”, and was “successfully geared up”.
ITM now expects to make revenues of £10mn – £18mn for its 2024 financial period, with a loss adjusted (earnings after interest tax, depreciation and amortization) of £45mn – £55mn.
ITM shares rose almost 5 percent per cent to 91.46p in the afternoon.