Sales exceed 2024 growth forecast, hydrogen business expands but profitability still far away
Ceres Power (CWR) remains in the business development stage, but management says deals with key industrial partners such as Bosch and Linde (US:LIN) are on track and it expects revenue to double in 2024. The fuel cell and hydrogen electrolyzer company reported revenue of just £22m in 2023, but higher expenses led to a 10% increase in its operating loss to £59.4m. Research and development expenses rose 11% to £54m.
The optimism this year comes on the back of a new deal to sell electrolyser and fuel cell technology to Taiwan’s Delta Electronics (TW:2308), which will bring in sales of around £20 million in 2024. Ceres said this will offset “a short-term delay in fuel cell royalties”. But the transition to profitability is still a long way off. Ceres derives revenue from royalties on equipment designs as well as from equipment sales.
The company said a broader increase in spending on “green steel”, which uses hydrogen produced from renewable energy to fuel electric furnaces, would boost performance in Asia, but it’s a very slow transition given the huge cost of the technology and the need for new renewable energy capacity.The fuel cell business will still account for all but £757,000 of sales in 2023, but the deal with Delta should bring sales in the two divisions to parity this year.
Ceres has time to keep building its assets, thanks to its cash pile. As of December 31, it had almost £140 million in cash, including £90 million in short-term investments. The size of its holdings also helped its balance sheet last year, with finance income of £7.1 million. Investors were buoyed by the Delta acquisition, and the company’s shares rose above 250 pence in January, but they have continued to fall since, with the shares down 61 percent in the past 12 months. Hold on.
Last IC View: Hold, 327p, 29 Sep 2023
CERES POWER (CWR) Order price: 142p Market value: GBP 275m Touch: 141-145p 12 month high: 445p 126p Dividend yield: 0.001% PE ratio: 0.001% Net asset value: 94p Net cash: GBP 47m Year to 30 June Sales (GBP m) Profit before tax (GBP m) Earnings per share (p) Dividends per share (p) 2019 15.3 – 7.40 – 3.4 30% Sales Profit before tax Dividends Year to 31 December (GBP m) Profit (GBP m) Per share (p) Per share (p) 2020 * 31.7 – 17.3 – 9.12 nil 2021 30.8 – 23.4 – 11.5 nil 2022 (Restated)19.8-51.5-24.9nil202322.3-53.6-28.0nil% Change+13—Ex Dividend:- Paid:- *For 18 month filing period.
