ITM shares plunge after further production delays

Shares in UK electrolyser maker ITM Power plunged by a third on Thursday after it flagged further production delays, in the latest blow to Britain’s aspirations to establish its own clean energy supply chains.

The company, which aims to become a leading manufacturer of equipment essential to the production of green hydrogen, said the hit to output would push revenues to the lower end of its £23mn to £28mn forecast for the 2023 financial year.

Its shares were down 34 per cent in morning trading in London on Thursday.

ITM said that while the delays to production of its new electrolyser technology made it difficult to assess the level of warranty provisions, they would “materially increase” above the previous financial year’s £3mn and might lead to a revision of its estimate for a full-year core earnings loss.

The latest hitch takes the group’s market capitalisation below £420mn, having peaked at £3.5bn in early 2021 when hydrogen stocks went into a frenzy.

The announcement further dents the UK’s hopes of building its own clean energy supply chains at a time when electric car battery manufacturing hopeful Britishvolt faces a cash crunch.

ITM, which is backed by the world’s largest industrial gas company Linde and construction equipment maker JBC, is hoping to produce electrolysers, machines that use renewable electricity to create hydrogen from water.

The profit warning builds on downbeat results last month when the Sheffield-based group announced the departure of longstanding chief executive Graham Cooley and retrenched on its target to have 5 gigawatts of production capacity in place by 2024.

Skye Landon, an analyst at Jefferies, said Thursday’s trading update “potentially signals some additional risk in the event of further delays”.

However, analysts have said the company’s future has been buttressed by a wave of regulation supporting the development of hydrogen in response to higher energy prices after Russia’s invasion of Ukraine.

Proponents of green hydrogen say it can help decarbonise heavy industries such as steelmaking and chemicals, as well as the heavy-duty transport sector.

But the speed of the rollout of clean energy technology has been thrown into doubt. The troubles for ITM highlight the growing pressures facing smaller companies attempting to make inroads into battery and clean energy manufacturing supply chains at a time of rising inflation and interest rates.

Despite the pressures, the company lowered its expectation for cash burn for the full year by £15mn because of cost control, bringing it down to between £95mn and £120mn. As a result, it expects to end the financial year with £240mn to £270mn of cash.