Shares of ITM Power, the Sheffield-based green hydrogen and energy storage firm, rose about 13% after it published results for the six months to October 31, 2022, and a strategic update.
The company said the strategic update includes a “rigorous approach to capital allocation and cost management, including a headcount reduction equating to a 30% (£9m) annualised saving on personnel cost, professionalising engineering and manufacturing, and increasing control over spend.”
ITM Power announced an anticipated 25% headcount reduction in full-time equivalents (FTEs) — about 100 staff.
Shares of ITM Power are down more than 60% for the past 2 months.
The company reported first-half revenue of £2.million (H122: £4.2m) and an adjusted EBITDA loss £54.1 million (H122: £12.9m). Net cash at the end of the first half was £317.7m (H122: £164.2m).
ITM Power said the the strategic update also includes concentrating its portfolio on a core product suite “with robust product validation, and preparing for manufacturing at scale.”
The firm reported an agreement with Vitol to review strategic options for their joint venture Motive Fuels Ltd. Options to be considered by shareholders range from the sale of the business to discontinuing activities, and are subject to appropriate consultation. This is intended to save ITM Power £28 million to be rerouted to its core business,
ITM Power chair Roger Bone said: “We raised capital to pursue an expansion strategy and in doing so underestimated the competencies and capabilities required to scale up and to transition from an R&D company to a volume manufacturer.
“As a consequence, we set unrealistic targets for project completion. This has produced an unacceptable financial performance.
“We have acted swiftly by appointing Dennis (Schulz) as our new CEO. During his 2 months at ITM, Dennis has developed a 12-month plan which lays out the underlying challenges of the business as well as the solutions which we will put into place.
“I have no doubt that the immediate actions being taken will provide strong foundations for the future which will enable ITM to move into its next phase of development and to play a leading role in the journey to net zero.”
In its financial guidance for FY23, ITM Power said full-year revenue is now expected to be £2 million with further revenue deferred into the next financial year.
The firm said adjusted EBITDA loss is expected to be in the range of £85 million to £95 million and net cash at year-end expected to be in the range of £245 million to £270 million.
ITM Power CEO Dennis Schulz said: “We need to transform ITM from an R&D culture company to a professional and credible delivery organisation ready for volume manufacturing – sustainably growing into a profitable business.
“Most issues today arise from immature engineering processes, which materialise during manufacturing and lead to project delays and cost overruns. As one key priority, we will change the way we engineer our products and control design changes.
“The market for green hydrogen is real, driven by climate change, and decarbonisation imperatives. Increasing carbon taxation in combination with green funding programmes make previously unattractive business cases viable.
“Recent energy independence considerations are further fuelling demand growth. However, peak electricity prices and inflation have temporarily slowed down customer investment decisions. This gives ITM time to have the breathing space required to focus on getting the fundamentals of the business in order, while delivering on our contractual customer commitments.
“Our detailed 12-month plan will make ITM a stronger, more focused and more capable company. The large-scale opportunities in the market are yet to come, and by putting these foundations in place ITM will be ready for the significant market demand ahead of us.”