NEL ASA ((NO:NEL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, NEL ASA presented a mixed sentiment, with notable achievements in quarter-on-quarter revenue growth and improved EBITDA, signaling positive trends in cost management and execution. However, the company faces significant challenges, including a year-on-year revenue decline and regulatory hurdles in Europe. Despite these obstacles, NEL remains optimistic about future orders and partnerships, though delays in investment decisions pose ongoing challenges.
Revenue Growth Quarter-on-Quarter
NEL ASA reported a robust quarter-on-quarter revenue growth, with revenue from contracts with customers reaching NOK 303 million, marking a 74% increase from the previous quarter. This rebound highlights the company’s ability to recover from earlier setbacks and capitalize on emerging opportunities.
Improvement in EBITDA
The company showcased its improved cost management and execution capabilities with an EBITDA of minus NOK 37 million, a significant improvement from the previous year’s minus NOK 90 million. This progress underscores NEL’s commitment to enhancing operational efficiency.
Significant Cash Reserves
NEL ASA ended the quarter with a substantial cash balance of NOK 1.757 billion, ensuring financial stability amidst market challenges. This strong cash position provides a buffer against uncertainties and supports ongoing investments in growth initiatives.
New Orders and Contracts
The company secured notable new orders, including a follow-on equipment order from H2 Energy in Switzerland for a 2.5 megawatt electrolyzer and FEED studies for projects exceeding 100 megawatts in Northern and Southern Europe. These contracts reflect NEL’s expanding market presence and potential for future growth.
Partnerships with Industry Leaders
NEL ASA maintained strong partnerships with industry giants such as Samsung, Reliance, and General Motors. These collaborations enhance the company’s market credibility and innovation capabilities, positioning it well for future advancements in the hydrogen sector.
Promising Next-Generation Alkaline System
The development of a next-generation pressurized alkaline system marks a significant technological advancement for NEL. This system reduces the footprint by up to 80% and system CapEx by up to 60%, while also offering substantial energy efficiency improvements.
Revenue Decline Year-on-Year
Despite quarter-on-quarter growth, NEL experienced a 17% decline in year-on-year revenue, reflecting the challenging market conditions in 2025. This decline underscores the need for strategic adjustments to navigate the evolving landscape.
Cash Flow from Operating Activities
The company faced weaker cash flow from operating activities compared to the third quarter of 2024, attributed to payment milestones. This highlights the importance of managing cash flow effectively to sustain operations.
Challenges in Meeting Demand
NEL is encountering delays in final investment decisions for projects, which impacts order intake and future revenue projections. Addressing these delays is crucial for maintaining growth momentum.
Regulatory Challenges in Europe
Strict hydrogen regulations in Europe are posing challenges for project realizations and undermining demand. NEL emphasizes the need for more regulatory flexibility to support early movers in the industry.
Staff Reductions
To control expenses, NEL reduced its workforce from 430 to 354 employees. This strategic downsizing reflects the company’s response to market challenges and slower demand.
Forward-Looking Guidance
Looking ahead, NEL ASA remains focused on strategic investments in research and development, particularly in next-generation platforms. The company continues to prioritize projects like the 2.5 megawatt electrolyzer order from H2 Energy and FEED studies for large-scale projects in Europe. Despite a weaker cash flow from operating activities, NEL’s healthy cash balance and reduced cash burn rate position it well for future growth.
In conclusion, NEL ASA’s earnings call highlighted a blend of positive achievements and ongoing challenges. The company’s strong quarter-on-quarter revenue growth and improved EBITDA demonstrate effective cost management and execution. However, year-on-year revenue decline and regulatory hurdles in Europe remain significant obstacles. NEL’s strategic focus on partnerships, technological advancements, and financial stability positions it for potential growth in the evolving hydrogen market.