Hydrogen darling ITM Power to cut over 100 jobs as it grapples with heavy losses
Hydrogen specialist ITM Power will cut more than 100 jobs in a bid to shore up costs, after admitting its financial performance was “unacceptable.”
In its half-year results, published today, ITM Power conceded that it had underestimated the challenge of transitioning from a research and development company to a volume manufacturer.
“As a consequence, we set unrealistic targets for project completion,” the London-listed company said.
New chief executive Dennis Schulz has announced that “every aspect of the business” needs to be scrutinised for “cost saving potential”, and warned that “difficult decisions” will be necessary.
This includes reducing its headcount by a quarter, with a calculated 30 per cent saving on personnel cost – equating to around £9m per year.
Alongside job cuts, it is considering the offload of Motive Fuels, a joint venture with commodity trading house Vitol, which aimed to create a hydrogen refuelling business across the UK.
ITM Power revealed revenues are no longer expected to grow at all in the final six months of its financial year. It is now expecting an adjusted EBITDA loss in the range of £85-£95m.
Net cash is expected to slide from £317m to £245-270m.
Hydrogen start-up faces scale-up challenges
ITM Power is based in Sheffield and produces electrolysers, which separate the zero-carbon fuel from water.
The start-up is backed by industrial gas group Linde and Italian gas infrastructure group Snam, and has been highly-touted as a promising green energy player.
However, it has been facing difficulties in scaling up its electrolyser technology and has suffered pre-tax losses of £57m in the six months to October.
This is more than trebled the losses record in the previous six month period of trading.
The company has faced delays to its signature Leuna project in Germany and has issued three profit warnings in the past eight months alone.
The company’s travails follow the recent demise of Britishvolt, which has fallen into administration after being highly touted across the industry.
This raises questions over the UK’s ability to utilise scientific research to scale up competitive clean energy manufacturers.
The government is targeting 10GW of hydrogen generation by the end of the decade as part of its energy security strategy, with green hydrogen seen as particularly valuable for decarbonisation and heavy transport.
Shares in ITM Power bounced back 13 per cent of the FTSE AIM UK 50 Index following the latest update, with investors seemingly reassured by its aggressive policy changes under its new chief executive.
However, its share price is still barely a quarter of its level last March, reflecting the challenge ahead in regaining market confidence.