Paul Rodden • Season: 2023 • Episode: 241
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In episode 242, Thyssenkrupp Nucera releases some big numbers on the heels of their IPO. I'll go over the press release and give my thoughts on today's hydrogen podcast.
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Thyssenkrupp Nucera releases some big numbers on the heels of their IPO. I'll go over the press release and give my thoughts on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where's capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden. And welcome to the hydrogen podcast.
In a press release on August 28, Thyssenkrupp Nucera continues strong growth. Thyssenkrupp Nucera remained on growth track in the third quarter of the current fiscal year of 22 - 23. Order intake in the third quarter increased by 13% year on year to 242 million euros prior year period being 215 million euros, mainly due to increasing demand for the latest generation of environmentally friendly chlor-alkali electrolysis solutions from thyssenkrupp nucera. Order intake almost doubled to 214 million euros with the prior year period being 112 million euros in the area of alkaline water electrolysis for industrial scale applications order intake reached 28 million euros. Demand for production capacities remains very high.
This is demonstrated for example, by the conclusion of a contract with h2 Green steel and a further capacity reservation and the high three digit megawatt range for a project in North America. For the first large scale green steel mill in Europe, the electrolysis specialist is supplying one of Europe's largest water electrolysis plants with an installed capacity of more than 700 megawatts. However, the contract with h2 Green steel published in May of 2023 is initially only included in order intake as of the end of June with a low double digit million euro amount and therefore less than 10% of the contractually agreed at total volume. Once further conditions have been met the project's remaining and significantly more significant part is expected to be included in order intake in two phases over the next few quarters. The development of order intake in the corresponding prior year period of 103 million euros was characterized by the major order for the facility in the Port of Rotterdam.
Cumulative order intake in the first nine months of 22 and 23 reporting year reached around 535 million euros. It was there for as expected, below the record level of the comparative period between 21 and 22 of 1.2 billion euros, which is characterized in particular by the world's largest green hydrogen project to date in the gigawatt power range in Saudi Arabia. Sales at Thyssen Krupp Nucera almost doubled in the third quarter to 187 million euros compared with the corresponding prior year period of 99 million euros. sales growth was driven primarily by the execution of major projects such as the gigawatt plant in Saudi Arabia and the plant in the Port of Rotterdam in the Netherlands and alkaline water electrolysis at 110 million euros.
Sales in this area increased 11 fold year on year with the prior year being 10 million euros, and for the first time exceeded the share of sales accounted for by the traditional chlor-alkali business and the chlor-alkali sector sales of 77 million euros were down on prior year period of 89 million with a very strong service business in the first nine months of fiscal 22 - 23. Sales amounted to 493 million exceeding the sales of the corresponding prior year period of 275 million by 79%. While sales in the chlor-alkali segment remained stable at 254 million were the prior year being 250 million. Sales in the alkaline water electrolysis segment increased almost tenfold to 240 million with the prior year being 25 million. So for the first time water electrolysis specialist exceeded the 100 million dollar mark and sales in a single quarter ThyssenKrupp Nucera generated operating earnings or EBIT of 7 million in the third quarter compared with 4 million in the corresponding prior year period. Overall operating earnings in the first nine months also increased by 77% to 20 million up from last year's 11 million.
The most important drivers of the increase in earnings were the significant improvement in sales and the alkaline water electrolysis sector and the improvements in new business in the chlor alkali sector. This was strengthened by the absence of trademark license fees and lower expenses for the spin off of ThyssenKrupp Nucera and preparation for the IPO.
By contrast, the increased earnings contribution from project execution with higher sales was partly offset by structural and development costs for implementing the growth strategy, which also increased as planned and dampened EBIT growth. For example, the company is strengthening its position in the US growth market for green hydrogen by expanding its site. In addition, personnel costs increase with the expansion of the workforce to prepare for and meet the rising demand for Thyssen Krupp Nucera electrolysers. EBIT margin therefore decreased slightly from 4.4% to 3.7% in the third quarter, but remain stable at 4.1 with a prior year period being 4.2% in the first nine months.
Okay, I need to break away from the story for a second to share a quick word from our sponsor. From water electolyzers to flow batteries and fuel cells, Nafion™ Proton Exchange Membranes play a major role in advancing the Hydrogen Economy. Through their high conductivity, superior strength, and chemical durability,Nafion™ membranes provide the performance needed to make green hydrogen safer, more sustainable, and more affordable. Learn how Nafion™ ion exchange materials support the decarbonization of energy across the globe at www.nafion.com.
Now back to the show, and a quote from Dr. Werner Ponikwar, CEO of thyssenkrupp nucera the long term trend toward large volume use of green hydrogen as an energy carrier in energy intensive industries worldwide is intact. We are strategically well positioned for this with our highly efficient water electrolysis technology. And we're working diligently to improve our technology production further and expand our capacities. Our success is reflected in our performance so far this fiscal year. Higher interest income resulted in net financial expense of 12 million euros in the third quarter of 22 - 23, with the prior year being zero and 5 million euros in the first nine months with the prior year period being negative 1 million. The world's leading technology provider in the field of electrolysis achieved earnings after taxes of 6 million euros in the third quarter with the prior year period being 3 million. In the first nine months net income of 18 million exceeded the corresponding figure for the prior year period of 7 million by 154%. And so due to the high paced growth at Thyssen Krupp Nucera, the number of employees increased from 489 to 628. Between September of last year and June of this year, Thyssen Krupp Nucera expects continued strong sales growth in the current fiscal year driven above all by the execution of existing customer orders, expenses for the necessary organizational measures to meet the strong medium and long term growth in demand for water electrolysis plants for producing green hydrogen on an industrial scale are expected to weigh on EBIT margin.
And in a quote from Dr. Arno Pfannschmidt, CFO of thyssenkrupp nucera, thyssenkrupp nucera is well on track, with a pleasingly high cash inflow from the IPO. We are well equipped for the systematic and rapid implementation of the next steps in our growth strategy. Okay, well some very intriguing financial results from Thyssen Krupp Nucera since we last talked about their IPO several weeks ago. And it also appears that the cash raise from that IPO has been put to good use as Thyssen Krupp Nucera continues to pour every bit of free cash available into growth. This is also true for any dividend they might have returned to the stock owners. What these financial results tell me is that this growth strategy is working quite well.
Now, obviously, we're going to see EBIT numbers fluctuate as they expand operations, especially in the US. And the critical question that keeps lingering is will they continue to bring in new large scale projects while meeting the time demands of their current deliverables. I would venture to believe that they can if their investments in Sales and Marketing Land, and if expectations are correct, and this is a $9 billion industry right now, the sales team should have no problem landing high profile projects.
Now that being said, Thyssen Krupp Nucera isn't the only name and electrolyzers and could face some extreme competition from both US companies as well as other operators in Germany. My big question then going forward involves just how aggressive will they be in bringing in new large scale projects. The three high profile projects Thyssen Krupp Nucera landed recently, those being the h2 green steel in Sweden, the gigawatt facility in Saudi Arabia and the large plant in the Port of Rotterdam showcase the size of projects Thyssen Krupp Nucera is able to handle but can they continue lending projects of this scale? And if they do, are they going to be able to scale quickly enough to deliver but really what's the high level view of this press release.
To me, it's the continued increase in EBIT numbers over the last year. And I'm not going to be too worried if they don't hit their financial targets this year as long as they continue to show estimated growth, scale appropriately manage their backlog and work in progress. Thyssen Krupp Nucera will be a large player in the global electrolyzer market. And depending on how well they manage project and internal growth, they could be the sales leader this decade.
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