Release Date: July 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NEL ASA (NLLSF, Financial) reported a solid cash balance of NOK1.9 billion, providing financial stability.
- The company has executed a cost reduction program, reducing personnel expenses and overall costs.
- NEL ASA (NLLSF) is making significant progress in technology development, particularly with its next-generation pressurized alkaline and PEM systems.
- The company has a large and increasing pipeline of projects, indicating potential future growth.
- NEL ASA (NLLSF) has strategic partnerships with major companies like Samsung E&C and Saipem, enhancing its market position.
Negative Points
- Revenue from contracts with customers declined by 48% compared to the previous year, indicating reduced project activity.
- The company reported a negative EBITDA of NOK86 million, reflecting ongoing financial challenges.
- Order intake was low at NOK71 million, significantly down from NOK311 million in the first quarter.
- Statkraft canceled a 40-megawatt alkaline electrolyzer contract, impacting the order backlog.
- Final investment decisions for projects continue to be delayed, affecting short-term order intake and revenue.
Q & A Highlights
Q: Given the clarity from the US on hydrogen regulations, are customers excited and moving forward with orders, or is this expected to pick up later? Also, what are the current lead times for orders?
A: The clarity around the 45V regulations will not lead to immediate order intake but may help mature projects get back on track, potentially leading to new orders from North America in the coming quarters. The projects driving order intake will likely be in Europe and the Middle East. Lead times remain around nine months to a year. - Hakon Volldal, CEO
Q: With the shutdown of Heroya, is the current lower OpEx level sustainable, or are there other factors at play?
A: The lower OpEx is partly due to reduced consulting costs and the Heroya shutdown. However, OpEx could increase with R&D activities and specific projects. The current lower run rate is sustainable, but fluctuations may occur based on project activities. - Kjell Bjornsen, CFO
Q: What are your expectations regarding the US clean hydrogen production tax credit and its conditions?
A: Specifics on what constitutes starting construction are unclear. Even if full electrolyzer purchase is required, it might only be a small part of total system CapEx. The $3 per kilogram credit for 10 years is financially committed, and the regulation is politically stable. - Hakon Volldal, CEO
Q: How should we view new orders in the alkaline business before the new pressurized solution is available? Are customers willing to wait for the new technology?
A: Many projects developed over years will proceed with current technology due to timing constraints. The new technology will not cannibalize existing offerings but will meet different time windows. Projects will often start smaller and expand, allowing for future technology integration. - Hakon Volldal, CEO
Q: Regarding the recent hydrogen bank auction in the EU, are you involved in any projects, and is the awarded premium sufficient to incentivize projects?
A: The EUR0.50 per kilogram premium is not enough to make borderline projects viable but supports already strong projects. The auction mechanism helps create clarity and speed for good projects, and we are actively pursuing opportunities from the auction. - Hakon Volldal, CEO
Q: Have you considered acquiring assets from electrolyzer OEMs that have gone into administration?
A: We have evaluated opportunities but have not found any technology portfolios that add significant value to our offerings. We remain open to acquiring useful equipment or assets but have not pursued major acquisitions. - Kjell Bjornsen, CFO
Q: Can you provide insights into the backlog and delivery plans for 2025, particularly for Q3 and Q4?
A: Some deliveries initially expected for next year are now planned for Q4, with substantial volume anticipated in Q3. However, these are estimates and not firm guidance, as delivery timing can shift. - Kjell Bjornsen, CFO
Q: What is your perspective on the current market conditions and future outlook for Nel ASA?
A: While 2025 will not meet earlier expectations due to slower market development, we remain confident in our long-term potential. Our focus is on reducing costs, preserving cash, and developing new technologies to improve hydrogen business cases globally. - Hakon Volldal, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
