Q1 2024: Notable Improvements in Gross Margin and Cash Flow Despite Modest Sales Growth
January – March 2024
- Net sales SEK 52.1m (50.5), growth of 3%
- Gross profit increased 28% to SEK 24.6m (19.1) and the gross margin improved to 47.2% (37.9)
- Operating income SEK -29.3m (-26.2)
- Income after tax SEK -25.1m (-24.2)
- Operating cash flow SEK 38.7m (11.6)
- Earnings per share (basic & diluted) SEK -0.66 (-0.45)
CEO Richard Berkling comments:
Strong cash flow and growing interest for commercial projects
The hydrogen-electric market is developing well and the interest for our emission-free fuel cell systems is increasing. As we gain more OEM customers and integrated installations of our industrialised fuel cell systems, deliveries increase more slowly in the transition phase from the previous project-driven market. In the quarter, we have focused on ramping up for coming serial deliveries and report a net sales increase of 3 percent. At the same time, we report a high gross margin in the first quarter of 47.2 percent (37.9) and high operating cash flow of SEK 38.7 million (11.6). With our leading position in significant market segments, efficient organisational structure and innovative capacity, we can continue growing in the attractive hydrogen market.
The hydrogen-electric market is driven by the megatrends of electrification and the transition to emission-free energy. We are in many discussions with customers about commercial applications, as well as in industries where hydrogen-electric solutions have not previously been discussed. In the aviation and marine industries, hydrogen-electric solutions are well-established and PowerCell has established itself as a leader in those sectors.
We have recently made commercial progress with for example ColGar Energy which has approved our product design. ColGar Energy will use our VS5 fuel cell system to generate auxiliary power for a ‘Meals on Wheels’ van fleet in Wales and we have received the first serial order worth about SEK 35 million. This deal is a significant step since it means that we are entering a new commercial segment with our emission-free solutions, which opens up new opportunities.
Unique flexible container solution
A few weeks ago, we announced a strategic partnership with Hitachi Energy, a global technology leader in sustainable energy. Together we have developed HyFlex™, which is a flexible container solution that can be used in a wide range of applications for emission-free power production, independent of the grid. During a demonstration at the Port of Gothenburg, HyFlex™ provided power to an electric excavator from Volvo Construction Equipment. Linde Gas, the world’s largest industrial gas company, provided green hydrogen for the production. This shows the power of collaboration in the hydrogen-electric industry and with HyFlex™ diesel-driven generators can be replaced in many applications, such as construction sites, maritime and port electrification.
Established leader in aviation and marine
We are proud to have been selected to be part of the EU’s H2Marine project in February this year. Through, for example, our contract with Norwegian SEAM and deliveries to Norwegian ferries, we have shown that we are a key player in enabling fuel cell technology to the marine industry. As part of this EU project, we can further improve our existing fuel cell platform for the marine segment.
Our strong position in the aviation industry was confirmed already a year ago when we were selected to be part of the EU Clean Aviation Joint Undertaking to develop environmentally sustainable aviation. As part of the project, a new 300 kW product platform will be developed. Today, PowerCell has over 20 customer projects in various phases within the aviation segment, which proves that we are the leader in this technically very demanding industry.
Focus on profitable growth
Even though we have a very strong interest in our products and the world urgently needs emission-free energy solutions, our industry is also affected by macroeconomic uncertainty. We note that it may take longer for our customers to come to a decision. Therefore, we focus on what we can control and work for continued effective ramp-up of volumes and good cash flows. By investing in innovation, we continuously strengthen our competitiveness. PowerCell also has an advantage by being efficiently structured and able to reach breakeven at lower volumes than others in our industry. In summary, we have a unique, strong position in a very attractive market and we are determined to continue our growth journey.
Link to report: https://powercellgroup.com/investor/reports-presentations/
Webcasted presentation
PowerCell’s first quarter 2024 will be published on Thursday 25 April at 07:30 am CEST. An online presentation will take place the same day at 08:30 am CEST. The presentation can be listened to online or by calling in. The presentation will be followed by a question-and-answer session. The presentation is held in English.
If you wish to participate online, please use the link https://ir.financialhearings.com/powercell-q1-report-2024. You can ask questions in writing at the online presentation.
If you wish to participate in the telephone conference, you can register using the link https://conference.financialhearings.com/teleconference/?id=5005470. Following registration, you will receive telephone numbers and a conference ID to log in to the conference. You can ask questions verbally at the telephone conference.
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