Solid performance and important Italian marine OEM-order signed in the quarter

CEO Richard Berkling comments:

Significant order from Italian shipyard confirms transition to OEM-driven sales

In the third quarter, while market conditions remained soft, we saw a clear improvement with new orders in the marine sector. Thanks to our solid underlying business, we delivered growth of 3% compared to the same quarter 2023. Looking ahead, we anticipate high activity levels in the fourth quarter, driven by significant progress in our two major marine projects in Norway and at the Italian shipyard.

In the quarter, net sales amounted to SEK 72 million, growing 3% compared to the same period last year. Year-to-date growth is at 4% with stable gross margins and improved EBIT. The gross margin was 32.1% in the quarter, improving from last quarter and we continue our work to strengthen the gross margin with a better product mix with higher proportion of application development and services sales as drivers. Comparison year-over-year is affected by a temporary income last year with exceptionally high profitability. 

Operating cash flow in the quarter improved to SEK -7.4 million (-51.9). The cash flow has significant cut-off effects and customer payments from increased OEM-sales will increase our cash position in beginning of fourth quarter.

Revenue from the Italian order in the fourth quarter

It is encouraging to see how investment in hydrogen-electric solutions is growing in the marine industry. We have started production for SEAM and the two ships that will operate on Norway's longest ferry connection. In the fourth quarter, we will start the project for deliveries to the leading Italian marine OEM manufacturer with a total order value of approximately SEK 165 million. This is one of the industry’s largest marine orders to date and a result of a long and very thorough due diligence of our technology and PowerCell as a supplier. Deliveries to customer will take place during 2025, but the order will affect net sales in the fourth quarter of 2024 as project will start now.

Since methanol is available in most of the world’s large harbours, we have added a complement to our product portfolio and gained the Approval in Principle from DNV, Det Norske Veritas, for a new Methanol-to-Power solution. The product is developed together with RIX Industries. By providing this solution, we simplify integration, enhance safety and generate higher value for our customers by minimising time-to-market as well as technical risk and investment.

Concept study for vertical take-off and landing

Parallel to our progress in the marine industry, we continue to gain ground in the aviation industry. In the quarter, we signed an agreement with an Australian aviation company for a concept study for a vertical take-off and landing aircraft, a so-called VTOL aircraft. Fuel cells are very suitable for this segment due to the high energy-to-weight ratio that a hydrogen solution can achieve. With fuel cell technology, a VTOL aircraft can have a good payload, impressive range as well as minimal emissions and low noise. The concept study will result in a hydrogen fuel cell specification that will form the base for several prototypes with long-term commercial plans.

First 300 kW platform tested

We made significant technical progress this quarter by building and testing the first 300 kW product platform. The development work is a part of the Newborn project, part of the EU’s Clean Aviation Joint Undertaking. The EU project focuses on developing an aerospace-certified megawatt-class fuel cell propulsion system, which will be powered by hydrogen. In parallel, we are also part of the EU project H2Marine to ensure that this powerful platform will be ready for industrialisation in other customer segments with high demands on durability. The internal testing confirms a significant improvement in performance as energy density reaches more than 3kW/kg. This translates to improved value in all customer applications from reduced weight, volume and cost. I am very proud of how PowerCell manages to continue to develop its offering while driving growth from our industrialised products with a clear path to break-even.

More drivers accelerating the energy transition

At the end of September, I participated in Climate Week in New York and I can confirm that there is a growing interest in fuel cell technology all over the world. Besides drive for decarbonisation, the energy transition now also benefits from an increased focus on imminent health aspects of hazardous air pollutants related to the combustion engine. According to the research organisation Health Effects Institute, nearly every person on earth breathes unhealthy levels of air pollution every day. We also see a rising demand for electricity as society develops and innovations see the light of day.
 
Consequently, balancing the electricity system becomes increasingly important, the more solar and wind power we utilise. Hydrogen and fuel cells will be part of the expanding energy system. The fact that decarbonisation is not the only driver is what I believe is accelerating the energy transition toward financially viable business models. Our contracts with major OEMs in the marine and aerospace industries help raise attention and increase awareness that fuel cell technology is in a commercial phase.

It is a fantastic development that PowerCell has seen in recent years as we moved from being a research company to now delivering commercial applications. We have prepared ourselves well by increasing competencies and delivery capabilities internally. At the same time, we care about our ability to continue developing our products to grow our market further. I am in daily contact with companies that see fuel cell technology as the solution to reduce their emissions. I am therefore confident in our ability to deliver long-term profitable growth, concludes CEO Richard Berkling.
 
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Next report: Interim report fourth quarter 2024 Thursday 13 February 2025
 
The English version is an in house-translation. In case of any discrepancy, the Swedish text will prevail.