German electrolyser manufacturer Thyssenkrupp Nucera has seen a small lift to its shares as it announced that it had seen the highest quarterly sales in the company’s short history in the past quarter.

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Total sales grew by around 35% to €208.3m ($224.4m), of which its alkaline electrolysers contributed €120.6m — a 73% growth for the segment year-on-year, as the electrolyser manufacturer started to deliver on massive orders it had previously booked, particularly in Saudi Arabia.

Thyssenkrupp Nucera has already handed over the first eight modules for the 2.2GW Neom green hydrogen and ammonia complex to Air Products for shipment, which CEO Werner Ponikwar pointed out in an earnings call meant the risk of transporting these to the site was borne by the customer once the electrolysers were loaded onto ships in Vietnam. (Vietnamese industrial engineering company Lilama has a contract to manufacture 110 electrolyser modules for Thyssenkrupp Nucera.)

“I am pleased to inform you that deliveries are continuing despite the severe tensions in the Red Sea,” he added, referring to the risk of attacks on commercial shipping by the Houthi militant group in Yemen.

The first 20MW electrolyser for Saudi Arabia’s Hydrogen and Innovation Development Centre (HIDC), developed by the Neom Green Hydrogen Company (NGHC), has already been delivered, with operations expected to start within the next month.

Meanwhile, Thyssenkrupp Nucera also started to convert a reservation from Sweden’s H2 Green Steel for 700MW of electrolysers into firm orders, with €100m recognised in Q1 and another 60% of the contract volume due to be recorded in results over the coming months.

The electrolyser maker is also in the process of finishing the fabrication of modules for Shell’s 200MW Holland Hydrogen 1 project in the Netherlands, for which six of ten have already been completed.

However, Thyssenkrupp Nucera also admitted that while fabrication of electrolysers for Unigel’s 60MW project in Brazil had been completed, these were still awaiting delivery — in contrast to an announcement in 2022 prior to its spin-out from Thyssenkrupp, which suggested these were in the process of being installed.

Despite these strong sales figures, the electrolyser manufacturer has seen its earnings before taxes and interest (Ebit) fall from €11m for Q1 2023 to minus €0.9m in the past quarter.

Thyssenkrupp Nucera explains this decrease is mainly due to “the planned increase in structural and development costs for the implementation of the growth strategy in [alkaline electrolysers]” — ie, building out manufacturing capacity. However, the company also admits that its alkaline electrolysers have much lower gross margins compared to its chlor-alkali electrolysers.

“We expect ramp-up costs to accelerate in the upcoming quarters, which will temporarily impact profitability in this financial year,” said chief financial officer Arno Pfannschmidt on an earnings call.

This means that Thyssenkrupp Nucera forecasts in its guidance that, while alkaline electrolyser sales will reach €600-700m for its full financial year, it will see negative Ebit in the “in the mid-double-digit million euro range”, compared to its €24m EBIT in the previous year.

However, the company still has €761.4m in net financial assets on its books. “We will not need any additional capital for our current growth plans in the coming years,” Pfannschmidt added.

Ponikwar highlighted that Thyssenkrupp Nucera is actively pursuing contracts for 35 projects, with a combined capacity of 11GW worth €9bn, many of which are expected to sign their final contracts in 2025.

“Those 11GW will not all end up in our books unfortunately,” he admitted, but added that the company expects to “win a fair share of these projects”.

The company’s pipeline is dominated by projects in Europe (36%) and North America (33%), likely due to the direct subsidies available in these regions.

“Europe is still to be seen as one of the largest markets for green hydrogen going forward,” Ponikwar said, noting that while the region “might not be able to fully self-sustain when it comes to producing and consuming green hydrogen”, it could still produce cheap H2 from wind in the north and solar in the south that could compete with shipments of ammonia such as from the Middle East cracked back to hydrogen.

He also clarified that while the draft guidance for the clean hydrogen production tax credit in the US is likely to increase the levelised cost of hydrogen, among customers and prospective clients, “the general sentiment is... green hydrogen will become a very attractive and competitive alternative to other energy carriers” due to the subsidy.

Thyssenkrupp Nucera had its initial public offering in July last year, splitting away from German steelmaker Thyssenkrupp, which continues to hold more than 50% of its shares. Italian multinational De Nora also owns 25.85% of Thyssenkrupp Nucera shares, while Energy Solutions Company — a subsidiary of the Saudi sovereign wealth vehicle PIF — holds another 6%, with the remaining shares on free float.