Electrolyser maker ITM Power narrowed its losses and quadrupled its revenues in the first half of 2023 in what appears to be the first tentative signs of recovery for the beleaguered UK firm after a rocky 18 months in which the company instigated a radical cost-cutting programme.

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ITM reported revenue of £8.9m ($11.2m) in its interim results for the six months to 31 October 2023, more than four times the £2m it reported in the same period last year, driven primarily by deliveries of its modular electrolyser system the 3MEP Cube, in Germany, together with sales of its 2MW Neptune “plug and play” proton exchange membrane (PEM) electrolysers.

The conclusion of a commercial discussion with one of ITM’s customers in December, in which it was agreed that ITM had fulfilled its commercial obligations, allowed it to report 19% more revenue than earlier guidance had indicated.

Losses were also reduced by over half to £21m. However the company, which is yet to make a profit, is still more loss-making than it was two years ago, when it reported losses of just £12.1m.

Revised losses for the full year are expected at £45m-£50m — an improvement on the £55m in the previous guidance and half those of the previous year but again still higher than the £39m posted two years ago.

Shares rose to over £0.59 on the news, adding over 20% to their value since yesterday, but still far below the 2023 peak of £1.19 they achieved in February.

The results come on the back of a radical strategy overhaul of ITM by the company’s incoming CEO, Dennis Shulz, last year after the company posted its largest loss, which Schulz described as an “unacceptable performance”.

Since then, ITM has slashed its workforce by 30% — more than the 25% it initially promised — to cut costs.

Adopting a “quality over quantity” ethos, it has also reduced the size of its product offering by 75% and offloaded its stake in refuelling business Motive Fuels, as well as “professionalising“ its Sheffield plant, introducing more automation and building out more testing and validation facilities.

The company has also taken steps to extend its global reach, expanding its work on product compliance to include a wider range of countries and making what it describes as an “asset light” entry into the US market (ie, selling products into the US without building a factory).

ITM is now initiating a new 12-month strategic focus, to scale its operations and further automate its production line whilst controlling capital, and to begin widening its product offering again, specifically to introduce a new higher-capacity plug-and-play electrolyser.

“The first half of the financial year already paints the early picture of a new ITM, which starts to be reflected in our improved financial results,” said Schulz. “We have accomplished what we set out to do in the last 12 months. Our plan successfully addressed the most pressing issues to right the ship. It has made ITM a stronger, more focussed, and more capable company.”

But ITM’s share price has nevertheless crashed over the last year, contracting more than 60% since its 2023 peak in February to its lowest point in January 2024 — indicating wider structural issues in the electrolyser business, which is facing a massive oversupply due to a ramp up of Chinese factories and delays to green hydrogen projects.

In fact, yesterday a Norwegian analyst warned that there is “no light at the end of the tunnel” for stricken Norway-based electrolyser maker Nel, which has seen a share price slump of more than 70% over the past year.

Schulz admitted that the operating environment continues to be difficult, but insisted that green hydrogen project development is just around the corner.

“As I reflect on the more near-term market ahead, we will be operating in a complex environment. This ranges from a massive long-term opportunity just waiting to be captured, to dynamically developing markets emerging at different speeds, and short-term macroeconomics currently slowing down market acceleration,” he said. “With the unchanged need to decarbonise, demand is not