ITM Power Announces Lower Revenue and Higher Loss in Update to Shareholders
Following the appointment of Dennis Schulz as new CEO on 1 December 2022, a detailed review of the Company’s operations is being undertaken. Whilst the process is ongoing, it has become clear that the outcome for the financial year ending 30 April 2023 will be materially different from the current guidance, with lower revenue and a higher EBITDA loss.
The balance sheet remains in a strong position with net cash as at 30 October 2022 of £318m.
Further details on guidance and importantly a strategic 12-month priorities plan will be presented with the interim results announcement scheduled for 31 January 2023.
We anticipate the strategic update to cover three main areas:
- Concentrating our portfolio on a core product suite, with robust product validation, and preparing for manufacturing at scale
- Our plans for future testing capabilities and automation
- A rigorous approach to capital allocation and costs
ITM has been going through a rapid transition phase towards volume manufacturing. Our core electrochemical technology works well. At this stage, we are testing and verifying the latest iteration of our state-of-the-art MEP 30 bar stack which we expect to deploy into existing projects.
The main factors which will impact the outcome for the financial year relate to losses on customer contracts, legacy commitments for earlier product generations causing on-site support costs, warranty provisions, and inventory write-downs originating from iterations of product designs during manufacturing. All the issues we have encountered are surmountable, appreciating that the changes will require focus, time and diligence.
In terms of warranty provisions, which were discussed at the time of our trading update in October 2022, uncertainty arises from the absence of long-duration field data for first-of-a-kind technology and as such, we expect to take a prudent approach.
Projects that are nearing contract closing are impacted as costs were underestimated when prices were originally negotiated and committed to.
Crucially, our customers have been extremely helpful in jointly minimising the impacts of delays to their projects and we are grateful for their support and trust.
Dennis Schulz, CEO, said:
“This is the challenge I was expecting when I joined ITM. For the Company to develop from an R&D and prototyping entity, to a mature delivery organisation, we require firmer foundations. Our 12-month plan will make ITM a stronger, more focused and highly capable company. The large-scale opportunities in the market are yet to come, and by putting these foundations in place ITM will be ready for the significant market demand ahead of us.”
About ITM Power PLC
ITM Power was founded in 2001 and ITM Power PLC was admitted to the AIM market of the London Stock Exchange in 2004. Headquartered in Sheffield, England, ITM Power designs and manufactures electrolysers based on proton exchange membrane (PEM) technology to produce green hydrogen, the only net zero gas, using renewable electricity and water.
Linde, the leading industrial gases and engineering company acquired a minority stake in ITM in 2019 and currently holds 16.2% of the company. At the same time, Linde and ITM Power formed a joint venture, ITM Linde Electrolysis (ILE), bringing together ITM Power’s expertise in PEM electrolysis and Linde’s world class engineering, procurement and construction (EPC) expertise to deliver turnkey solutions to customers.
In March 2022, ITM Power’s subsidiary, Motive Fuels, which builds, owns and operates green hydrogen refuelling stations, formed a joint venture with Vitol Holdings SARL, creating a partnership which will help facilitate the scaling up of production, distribution and demand stimulation for Hydrogen to Transportation.