NEL ASA ((NO:NEL)) has held its Q1 earnings call. Read on for the main highlights of the call.
In the latest earnings call, Nel ASA presented a mixed sentiment, reflecting both challenges and opportunities. The company reported a significant revenue decline and operational losses, yet it balanced these with robust order intake and strategic partnerships. Despite facing hurdles in the alkaline segment and project uncertainties, Nel’s strong cash reserves and focus on next-generation technology development provide a positive outlook for the future.
Record High PEM Order Intake
In Q1 2025, Nel ASA achieved a record high order intake for its Proton Exchange Membrane (PEM) solutions, marking the highest level of bookings in the company’s history. This surge was primarily driven by the demand for containerized solutions, showcasing the growing market interest in Nel’s PEM technology.
Collaboration with Samsung E&A
Nel’s strategic collaboration with Samsung E&A was a highlight of the earnings call. This partnership not only strengthens Nel’s market position but also saw Samsung E&A becoming the largest shareholder with a 9.1% stake following a NOK 353 million private placement.
Successful Cost Reduction Measures
The company has implemented successful cost reduction measures, including a temporary halt at the Herya facility. These adjustments are expected to lower the cost base throughout 2025, aligning with Nel’s goal of achieving a sustainable cash burn rate.
Development of Next-Generation Technologies
Nel continues to invest in research and development for next-generation alkaline and PEM technologies. Notably, the development of a promising pressurized alkaline prototype indicates Nel’s commitment to technological advancement and future market leadership.
Healthy Cash Reserves
With over NOK 2 billion in cash reserves, Nel is well-positioned to navigate market challenges. This strong financial footing provides the company with the flexibility to continue its strategic initiatives and investments.
Significant Partnerships
Partnerships with industry leaders such as Samsung E&A, General Motors, and Reliance underscore Nel’s strong market presence and technological reliability. These collaborations are pivotal in enhancing Nel’s competitive edge in the industry.
Significant Revenue Decline
The earnings call revealed a 69% decline in revenue for Q1 2025 compared to the same period in 2024. This drop was attributed to lower activity levels in the alkaline segment, highlighting the challenges faced by Nel in this area.
Negative EBITDA
Nel reported an EBITDA of minus NOK 115 million for Q1 2025, indicating continued operational losses. This underscores the financial challenges the company is currently navigating.
Challenges in Alkaline Segment
The alkaline segment experienced a significant revenue drop due to reduced activity and delays in project milestones. This remains a critical area of concern for Nel moving forward.
Risk of Project Cancellations
Projects valued at NOK 300 million in Nel’s backlog are at risk of delay or cancellation. These risks stem from challenging market fundamentals and client financing issues, adding to the company’s uncertainties.
Market Uncertainty
The market currently favors small and medium-sized projects, with large-scale projects facing regulatory and financial uncertainties. This shift in demand presents both challenges and opportunities for Nel.
Forward-Looking Guidance
Looking ahead, Nel reported revenues of NOK 155 million and an EBITDA of minus NOK 115 million for the first quarter of fiscal year 2025. Despite a 69% revenue decline compared to the previous year, the company saw a 64% increase in PEM revenues. With an order intake of NOK 311 million and a backlog of NOK 1.46 billion, Nel’s market outlook is supported by its collaboration with Samsung E&A and record high PEM order intake.
In summary, Nel ASA’s earnings call reflected a mixed sentiment, balancing significant challenges with strategic opportunities. While the company faces hurdles in the alkaline segment and project uncertainties, its strong cash reserves and focus on next-generation technologies provide a positive outlook. Strategic partnerships and record high PEM order intake underscore Nel’s potential for future growth.