NEL ASA ((NO:NEL)) has held its Q4 earnings call. Read on for the main highlights of the call.
The latest earnings call from NEL ASA presented a mixed outlook, highlighting both achievements and challenges faced by the company. While there was notable revenue growth and strategic partnerships, the call also revealed concerns over order intake and production halts. The sentiment was cautious, reflecting current financial strains and risks, yet there are promising signs for 2025.
Revenue Growth in Alkaline Segment
The Alkaline Electrolyser segment showed impressive revenue growth, increasing by 10% in Q4 2024 compared to the same period in 2023, and by 15% on a full-year basis. This segment delivered close to NOK 100 million in accumulated EBITDA over the past two years, showcasing its strong performance.
Improved Financial Performance
NEL ASA reported an improvement in EBITDA by NOK 42 million year-on-year in Q4 2024. The full-year EBITDA saw an improvement of almost NOK 100 million, with a positive cash flow from operations in Q4 2024, indicating a stronger financial footing.
Strategic Partnerships and Grants
The company secured a EUR 135 million grant to industrialize next-generation pressurized technology in Norway and formed strategic partnerships with industry leaders such as Samsung C&T, Trillium Transportation Fuels, and Korea Hydrogen and Nuclear Power, positioning itself for future growth.
Expansion in Manufacturing Capacity
NEL ASA expanded its manufacturing capacity to 1.5 gigawatts, with full automation, including 1 gigawatt in Norway and 500 megawatts in the U.S., enhancing its production capabilities and market reach.
Order Backlog and Cancellation Risks
The order backlog decreased from NOK 2.4 billion in Q1 2023 to NOK 1.6 billion at the end of Q4 2024, with NOK 600 million at risk for cancellation, highlighting potential challenges in maintaining order volume.
Challenges in PEM Segment
Despite a quarter-on-quarter improvement, the PEM segment faced a 12% revenue decline year-on-year, with full-year EBITDA worsening by NOK 35 million compared to 2023, indicating ongoing challenges in this area.
Temporary Production Halt
A temporary production halt was announced at Heroya due to lower order intake in 2023 and 2024, affecting organizational capacity and necessitating adjustments.
Provision for Credit Losses
NEL ASA recognized a provision for expected credit losses due to a customer entering bankruptcy proceedings in November 2024, reflecting potential financial risks.
Positive Outlook for 2025
Looking forward, NEL ASA expects higher order intake in 2025, with early signs of recovery and projects maturing towards financial investment decisions. The company remains focused on advancing its technology and expanding market reach, supported by a robust cash balance of NOK 1.9 billion.
In conclusion, NEL ASA’s earnings call reflected a cautious sentiment amid financial strains and risks. However, the company demonstrated strong revenue growth in key segments, secured strategic partnerships, and expanded its manufacturing capacity. Despite challenges, NEL ASA is optimistic about its prospects for 2025, aiming for improved order intake and continued technological advancements.