The hydrogen company Nel ASA has recently disclosed its financial results for the fourth quarter of 2024, presenting both improvements and persistent challenges. The Norwegian firm reported earnings per share (EPS) of -0.04 Norwegian kroner (NOK), which fared slightly Better than analysts' expectations of -0.047 NOK. This marks an improvement compared to -0.06 NOK reported during the same period last year.
For the fourth quarter, Nel’s EBITDA improved to -36 million NOK from -78 million NOK seen during Q4 2023. Notably, the company’s Alkaline division contributed positively with 19 million NOK, albeit its PEM division reported -22 million NOK, showing improvement from the previous year’s -39 million NOK.
Despite the upward trend in EBITDA, the quarterly revenue of approximately 450.5 million NOK fell short of analysts' predictions which averaged around 468.6 million NOK. The company revised its previous year's revenue down to 437.2 million NOK from 500.7 million NOK.
Operating cash flow reflected concerns as Nel ASA’s cash reserves decreased significantly to 1.88 billion NOK from 3.36 billion NOK year-over-year. Changes are underway following the spinoff of its former fueling segment, Cavendish Hydrogen, aimed at adjusting operational capacities and investments to respond to the soft market demand.
Though facing these losses, CEO Håkon Volldal expressed optimism about Nel's future prospects. “I am pleased to see our business results for 2024 showing continued positive development. Since 2022, we have nearly doubled our revenues, reduced EBITDA losses by 60%, and significantly lowered our cash burn,” he stated.
Looking to the future, Nel ASA plans to reduce investments by 50% going forward, without compromising its strategic projects. With expectations of increased order intake compared to 2023 and 2024, Volldal remains confident, “I am convinced Nel will end up among the winning electrolyzer OEMs due to our proven platforms and new generation technologies.”
Despite these optimistic forecasts, analysts remain cautious. The current market conditions, influenced by geopolitical tensions and fluctuated stock prices, present significant risks for investors. Nel's stock recently rose by 8.71% following the release of its figures but remains vulnerable due to broader economic factors. The stock had previously decreased by 2.63%, closing at 2.22 NOK.
The total order intake for Q4 2024 amounted to 148 million NOK, up by 13% relative to the same quarter last year. Nevertheless, the order backlog has decreased to 1.61 billion NOK, down 23% from the previous year. Such mixed signals pose challenges for investors as they ponder the sustainability of the company's recovery.
Overall, the results reflect the inherent volatility of the hydrogen sector. While there are indications of operational improvements and positive growth trajectories, significant hurdles lie on the horizon as companies like Nel ASA grapple with customer demand and market conditions. Analysts continue to keep their distance from the stock, with no current buy recommendations issued.
Nel’s story is one of cautious optimism—showing improvements yet beset by challenges. The coming months will determine the company's ability to convert hope and plans for growth and stability amid the uncertainties surrounding the hydrogen market.