ITM Power overhaul yields mixed results

The road to profitability is still far from straightforward for hydrogen electrolyser manufacturer ITM Power (ITM). At its half-year results in January, the troubled company set out a 12-month turnaround plan for addressing its numerous operational difficulties. Management promised investors it would simplify its product portfolio, cut costs and streamline manufacturing processes. 

Now, with more than half of the year behind it, the company’s strategy has not been a resounding success. Pre-tax losses have widened year on year and the loss per share figure has increased. On the other hand, management said it has “rationalised” its portfolio and discontinued design work on some of its older product iterations. ITM’s primary focus is now its MEP30 electrolyser stack, a tool for producing zero-carbon hydrogen fuel.

According to a statement by chief executive Dennis Schulz, the company has also automated or semi-automated a number of its manufacturing processes in recent months. It plans to open a production plant in Germany in October, thereby giving it greater access to the European market. 

Although the positive impacts of the 12-month turnaround are not yet evident in ITM’s profit and loss statement, chief financial officer Andy Allen said the business has “greater clarity regarding our costs, and our balance sheet remains strong”. Full-year revenue did ultimately exceed the £2mn prediction management put forward in January. 

ITM has issued new guidance for the next financial year, with revenue from commercial projects expected to be between £10mn and £18mn. However, there’s still no foreseeable end to its loss-making streak, and the wider hydrogen market remains immature. Even though shares are down more than 62 per cent in the past year, we still think there’s too much uncertainty to prompt a rally. We remain at hold.

Last IC View: Hold, 94p, 31 Jan 2023