Nel ponders splitting into two, posts reduced annual loss

Norwegian hydrogen solutions provider Nel ASA (OSE:NEL) has decided to look into the possibility of splitting into two companies to pursue a separate listing for its Fueling division, it announced on Wednesday, while also reporting a significant reduction in its annual net loss.

Nel said in a statement that it wants to create two independent pure-play companies aiming to become “market leaders” in their respective fields – electrolysers production and hydrogen fuelling.

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"We have seen limited synergies between the Fueling and Electrolyser divisions and believe each business will be better positioned to become market leaders in their respective fields by operating independently,” commented CEO Hakon Volldal.

The current plan is to spin off the Fueling division as a dividend-in-kind to all existing Nel ASA shareholders. Then, the company intends to apply for listing of the shares in the separate fuelling business on an OSE-regulated market later this year.

Nel has committed to making sure that the independent fuelling company will have a sufficient liquidity runway at the time of listing. It stressed though that a final decision for the spin-off has not yet been made.

Meanwhile, the company posted a net loss of NOK 855 million (USD 80.7m/EUR 74.6m) for 2023, compared to a loss of NOK 1.17 billion in the prior year.

“Nel generated close to NOK 1.8 billion in revenues in 2023, up almost 80% from 2022. Moreover, EBITDA improved by more than NOK 300 million year-on-year, and the net loss was significantly reduced. Although I am pleased with this development, the real significance of the 2023 financial figures is that Nel’s business model scales well. We know that if we can continue to grow revenues, we will be able to deliver positive earnings,” Volldal stated.

In the fourth quarter of 2023 alone, Nel managed to halve its EBITDA loss from October-December 2022 thanks to its rising revenues, and consequently booked a net loss of just NOK 94 million compared to NOK 731 million a year back. It should be noted, though, that the Q4 2022 result was affected by a net unrealised fair value adjustment of NOK 108 million and impairments in Fueling of NOK 327 million.

The following table gives more information about the company’s financial performance.

At the end of the fourth quarter, Nel’s order backlog was down 6% year-on-year to about NOK 2.46 billion, some 85% of which is related to electrolysers. The decline is attributed to low electrolyser order intake in the fourth quarter and the cancellation of a 40-MW contract. The company pointed out that the substantial variability in its order intake between quarters is normal because electrolyser projects are becoming larger in size.

(NOK 1.0 = USD 0.944/EUR 0.873)