Hydrogen equipment maker ITM Power issues third profit warning in 8 months

ITM Power has issued a third profit warning in eight months as a review of operations highlights deepening troubles at the UK hydrogen equipment manufacturer.

The Sheffield-based maker of electrolysers that separate hydrogen from water, which is central to the country’s ambitions to develop clean energy supply chains, said on Monday that all its issues were “surmountable”.

However, it forecast lower revenues and deeper losses in its current financial year because of previously unrecognised losses on customer contracts, extra costs and inventory writedowns.

“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 earnings before interest, tax, depreciation and amortisation loss,” it said in a statement.

The company’s shares fell as much as 14 per cent on Monday morning and are now down more than 70 per cent over the past year. Its market capitalisation has collapsed to £575mn, from a peak of £3.5bn in 2021.

Founded in 2001 and backed by German industrial gas group Linde and British construction equipment manufacturer JCB, ITM is one of the UK’s biggest hopes for a homegrown manufacturing champion in the energy industries of the future.

ITM’s woes follow those of another UK clean energy manufacturing hopeful Britishvolt, a battery start-up that came close to collapse and has fallen from grace after a dramatic drop in valuation.

ITM is developing electrolysers that use renewable power to split water into oxygen and hydrogen — a fuel that can potentially displace hydrocarbons in industry, heavy-duty transport and heating for homes.

The company has issued three profit warnings since June, with its problems including losses related to delays at its flagship project at the Leuna chemicals complex in Germany.

ITM published a dire set of full-year results in September that revealed expected delays to its production plans and the resignation of long-serving chief executive Graham Cooley.

ITM plans to issue a strategic 12-month plan with its interim results at the end of the month as new chief executive Dennis Schulz, who came from Linde Engineering, attempts to turn the group round.

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

James Carmichael, analyst at Berenberg, said the latest disappointing update highlighted “the challenges the company has had delivering reliable technology and scaling up its manufacturing capability”. 

He added that the change of management would be positive in the long term but “there is a lot to do to turn the company around and regain market confidence”.