By Geoffrey Smith
Investing.com -- Shares in ITM Power (LON:ITM) plunged over 20% to their lowest in more than two years after the U.K.-based maker of hydrogen fuel cells abandoned a key expansion project, forecast another year of hefty losses and announced its long-serving chief executive, Graham Cooley will step down.
Cooley, who has headed the company for 13 years, will stay on until a successor is found and will then revert to a more strategic role reporting to the chairman and new CEO, ITM said.
The company said it's decided not to go ahead with a second factory in the U.K, which would have brought it closer to its target of having 5 gigawatts of annual production capacity, "given the current business climate and cost escalation."
"Our ambitions remain as strong as ever, but we need to be nimble and flexible, and we want to ensure investment decisions are correct and right for the business and considered fully before capital is committed," the company said.
Instead, ITM will more than double the size of its current facilities at Bessemer Park in Sheffield to 1.5 GW, a move it said was "a better use of capital with commensurately improved near-medium term cash flows." It said the expansion may take up to two years but could be accelerated to within eight months.
Cash flow is expected to remain deeply negative over the coming year, however, with an estimated 30-40 million pounds on capital expenditures along with an underlying loss of up to 50 million pounds before interest, taxes, depreciation and amortization. ITM expects its total cash burn will be over 110 million pounds this year, roughly equivalent to one-third of the cash on its balance sheet after last year's capital raise.
The company lost just under 47 million pounds before taxes in the last financial year, having failed to book revenue from a big order from Linde's (NYSE:LIN) hydrogen project at Leuna in Germany. That will now be recognized in the current financial year.
Analysts at Citigroup said that, after adjusting for the delayed recognition of revenue, the company's sales guidance for the current year - at between 23 and 28 million pounds - was around 18% below expectations. They also expressed concern at the announcement of Cooley's move without having a replacement already lined up.