British hydrogen innovator issues third profit warning

BRITISH hydrogen pioneer ITM Power has stalled as it warned on profits for the third time in eight months amid production delays.

Shares in the electrolyser maker fell 12pc as it flagged losses on customer contracts as well as inventory writedowns.

Full-year results for the year ending April 30 2023 are now expected to be “materially different from the current guidance, with lower revenue and a higher Ebitda [Earnings before interest, taxes, depreciation and amortisation] loss”, the company said.

ITM Power bosses said that all the issues were “surmountable” but would require “focus, time and diligence”.

Based in Sheffield, ITM Power makes electrolysers which are used to make hydrogen. The clean-burning gas is at the centre of a boom in interest due to the race to slash carbon emissions.

Backed by Linde and JCB, ITM Power has been at the forefront of hopes for a hydrogen manufacturing industry in Britain.

The company, founded in 2001, is still relatively small in financial terms – with turnover of £5.6m in the year ending April 2022 and a gross loss of £23.5m. But it has attracted growing interest, with a contract backlog amounting to 755 megawatts as of June 2022, amid surging demand for electrolysers globally. It has floundered, however, due to production delays that have affected the amount of data it has to make warranty provisions.

Graham Cooley, who served as chief executive for 13 years, stepped down in September. Yesterday, his successor Dennis Schulz, in the job since Dec 1, said the company would come out with a new 12-month plan at the end of January. This is likely to see it focus on core products it can manufacture at scale and a “rigorous approach to capital allocation and costs”.

Mr Schulz said: “This is the challenge I was expecting when I joined ITM. For the company to develop from a R&D and prototyping entity, to a mature delivery organisation, we require firmer foundations.

“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.”

The company insisted its “core electrochemical technology works well”.

Mr Schulz was managing director of Linde Engineering, and has been involved in the company’s investment in ITM. Yesterday’s share slump means the company is now valued at £562m, down from £3bn in 2021.