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UK hydrogen equipment maker ITM Power said it was making “tangible progress” on its turnaround as it posted annual revenues that beat expectations following a string of profit warnings in the past 12 months.
The Sheffield-based manufacturer of electrolysers used to produce green hydrogen, which is central to global ambitions to cut carbon emissions, generated revenue of £5.2mn in the year to the end of April, ahead of guidance of £2mn.
The update comes amid a drastic overhaul at ITM aimed at simplifying the business and cutting costs, after the start-up issued three profit warnings over an eight-month period to mid-January.
ITM posted a 7 per cent decline in annual turnover on Thursday and a more than doubling of pre-tax losses, to £101.2mn, having warned investors earlier in the year to expect steeper losses due to delays to deliveries on contracts and inventory writedowns.
The start-up, founded in 2001, is one of Britain’s biggest hopes for a homegrown manufacturing champion in the energies of the future. However, it has struggled to make the transition from technology developer to a mature manufacturer.
Chief executive Dennis Schulz said on Thursday it was “encouraging to see the amount of progress” the company had made since the launch of its turnaround plan earlier this year, adding it was on its way to “becoming a highly efficient and reliable volume manufacturing company”.
Schulz took over as chief executive from Graham Cooley in December, moving from his previous role in the engineering arm of ITM’s biggest shareholder, Linde. He pledged to regain the trust of investors and customers, including by reducing the company’s product range and cutting headcount by a quarter.
Hydrogen is a relatively niche product used mainly in refineries and chemicals plants but is considered crucial to the shift away from fossil fuels because it does not produce carbon dioxide emissions when burnt.
Electrolysers are used to split water into oxygen and hydrogen. The alternative method of producing hydrogen — splitting it from natural gas — generates carbon dioxide emissions.
The International Energy Agency estimates electrolyser capacity will need to grow to about 560GW in 2030, up from an estimated 3GW this year, to meet clean energy goals.
In its results on Thursday, ITM also flagged a “temporary slowdown” in investors giving the green light to new projects due to high electricity prices, inflation and uncertainty about government support.
However, ITM Power said this had given it “breathing space required to focus on implementing” its turnaround plan.
Alex Smith, analyst at Investec, said the company’s recovery plan was “on track” and it was “successfully gearing up”.
ITM said it now expected to make revenue of £10mn-£18mn in its 2024 financial year, with an adjusted loss (earnings before interest tax depreciation and amortisation) of £45mn to £55mn.
ITM shares climbed almost 5 per cent per cent in afternoon trading to 91.46p.