The company has said that it has become clear that the outcome of the financial year ending April 30 (2023) will see lower revenue and higher earnings before interest, taxes, depreciation, and amortisation (EBITDA).
ITM said the main factors that are set to cause the financial situation relate to losses on customer contracts, legacy commitments for earlier production generations causing on-site support costs, warranty provisions, and inventory write downs “originating from iterations of product designs during manufacturing.”
Despite the bleak outlook, the company has said the issues are “surmountable” but will require focus, time and diligence.
The Sheffield-based firm has said, “Projects that are nearing contract closing are impacted as costs were underestimated when prices were originally negotiated and committed to.”
Coming as its third warning in three months, ITM said in a trading update in October (2022) it was facing production issues of its 2MW MEP 2.0 stack, leading to “limited deliveries”, offering limited field data to assess the level of warranty provisions.
ITM plans to announce further details and guidance and a strategic 12-month priorities plan with interim results on January 31, 2023, anticipated to cover:
Concentrating on its portfolio on a core product suite.
Plans for future testing capabilities and automation.
Rigorous approach to capital allocation costs.
The warning comes little over a month after Dennis Schulz took over as CEO of ITM after Dr. Graham Cooley announced he would be stepping aside from the role to assume a senior strategic role within the company.
Read more: ITM Power names Dennis Schulz as CEO
“This is a challenge I was expecting when I joined ITM,” said Schulz. “For the Company to develop from an R&D and prototyping entity, to a mature delivery organisation, we require firmer foundations.”
The CEO continued, “Our 12-month plan will make ITM a stronger, more focused and highly 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.”
Since issuing today’s warning, ITM’s shares have fallen as much as 14%, coming down more than 70% over the past the year.
The story of ITM Power
© ITM Power
When it comes to electrolysers, there’s one company which is never far from the headlines: ITM Power. Thanks to its focus on three broad markets areas – mobility, Power-to-X and industry, the British manufacturer of polymer electrolyte membrane electrolysers has grown considerably in recent years and moved into the world’s largest electrolyser manufacturing facility in Sheffield, UK in January 2021.
Through standardisation, modularisation and the employment of world class practices, ITM Power has the manufacturing capacity to produce 1GW of electrolysis a year. The company says the Gigafactory provides a blueprint which can be easily replicated when there are large order volumes. And ITM Power confirmed to H2 View there are already fully funded plans in the pipeline to build a second gigawatt-scale facility which would be even bigger than the current one.
“We have already raised sufficient funds to build a second factory – it’s critical to our continued success that we are able to fulfil our order book as the market continues to grow at a very rapid rate,” Dr. Rachel Smith, Executive Director of ITM Power, told H2 View.
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