Shares in ITM Power nosedived 13.5 per cent on the London Stock Exchange this morning, after the energy storage specialist announced a third profit warning in less than eight months.
The company is forecasting lower revenues and deeper losses than expected, with results for the full year ending April 2023 now expected to be “materially different from the current guidance.”
This comes after the ITM uncovered more delays to deliveries on customer contracts, extra costs and inventory write-downs.
The company has issued three profit warnings since last June, with problems including losses related to delays to its major project at the Leuna chemicals complex in Germany.
The Sheffield-based company produces electrolysers – separating hydrogen from water – which are central to the country’s ambitions to develop green hydrogen for clean energy supply chains.
Downing Street is targeting 10GW of hydrogen generation by the end of the decade as part of its energy security strategy – as the UK looks to ramp up domestic renewable energy to reduce its reliance on overseas suppliers following Russia’s invasion of Ukraine.
In a statement to the stock exchange, ITM attributed its downturn in performance to losses on customer contracts, warranty provisions, and inventory write-downs originating from iterations of product designs during manufacturing.
The company considers these issues to be “surmountable”, and following the appointment of Dennis Schulz as its new chief executive last month, ITM has embarked on a full-scale review of its operations.
It is expected to publish strategic 12-month plan alongside further details on guidance plan will be presented with the interim results announcement – which is scheduled for 31 January.
ITM recognises that “the changes will require focus, time and diligence,” with a more “rigorous approach to capital allocation and cost.”
However, these sentiments do not appear to be convincing investors, with shares now down more than 70 per cent over the past year – including today’s slump.
Its market capitalisation has collapsed to £575m from a peak of £3.5bn in 2021.
Schulz said: “This is the challenge I was expecting when I joined ITM. For the Company to develop from an R&D and prototyping entity, to a mature delivery organisation, we require firmer foundations.
“Our 12-month plan will make ITM a stronger, more focused and highly capable company. The large-scale opportunities in the market are yet to come, and by putting these foundations in place ITM will be ready for the significant market demand ahead of us.”
ITM is listed on the FTSE AIM UK 50 Index, with shares now trading at less than 90p per share.
Nick Walker, investment analyst at Peel Hunt, argued Schulz has his “work cut out,” but that he could be well-suited to the challenges.
He said: “ITM Power has faced manufacturing challenges in the past several months, leading to delays in delivering orders and repeated downgrades to numbers. The new chief executive has his work cut out to right the ship. However, his past experience, notably at Linde Engineering, makes us optimistic that he could be the man for the task at hand. We look forward to his presentation.”