Green Hydrogen Systems A/S Implements Cost-Saving Measures
Green Hydrogen Systems A/S is taking decisive steps to restructure and enhance its financial stability.
As the green energy transition accelerates globally, green hydrogen remains a critical technology. However, the adoption of hydrogen technologies and associated production projects has been slower than expected. This lag has impacted the pace of commercializing Green Hydrogen Systems' X-Series electrolyser product, delaying order placements and spotlighting the need for cost competitiveness right from the onset of commercialization.
In response to these challenges, the company has unveiled a comprehensive cost-out and restructuring initiative designed to streamline operations while reducing expenses significantly.
Key Components of the Cost-Out and Restructuring Initiative
The restructuring program consists of several pivotal aspects:
Reducing Production Costs for the X-Series
First, the company is focusing on lowering production costs for the X-Series electrolyser by an impressive 40-50%. Positive developmental progress has shown strong performance during testing, with ongoing international bidding activities. The proposed improvements will be implemented by 2026, potentially allowing for earlier profitability milestones that were previously unattainable.
Operational Restructuring
Moreover, Green Hydrogen Systems is undertaking a significant operational restructuring aimed at cutting its current staffing costs. The dialogue with employee representatives regarding the reduction in workforce has begun, impacting around 100 salaried positions. This strategic move aims to ensure profitability can be achieved even with lower order volumes moving forward.
Financial Implications and Capital Base Strengthening
While implementing these initiatives, the company is anticipating one-off costs between DKK 100-150 million in 2024 and early 2025. Consequently, this may lead to the breach of covenants with current lenders. The company has highlighted that without additional funding, existing capital reserves could be fully depleted in the first half of 2025.
To address this potential shortfall, the Board of Directors is pursuing a capital increase of up to DKK 300 million before the end of 2024. This move is crucial to supporting the costs associated with the restructuring plan.
Future Outlook and Shareholder Engagement
With the restructuring projected for completion in the first quarter of 2025 and expected orders for the X-Series on the horizon, the Board anticipates a need for additional capital increases. Successful implementation of the restructuring and new sales from the X-Series could lead the company towards profitability and independence by 2026.
The Board is actively communicating with major shareholders and lenders to explore solutions for immediate funding requirements. “Green Hydrogen Systems possesses remarkable capabilities and significant global potential,” said Thomas Broe-Andersen, Chairman of the Board. “Adjusting our operations is critical for ensuring our future value and meeting market demands.”
Revised Financial Guidance for 2024
In reflection of current challenges, Green Hydrogen Systems is lowering its revenue guidance for 2024 to between DKK 105 and 145 million, previously set between DKK 125 and 165 million. The adjustments stem from a lack of commercial traction and the risks posed by the restructuring initiatives.
The EBITDA guidance for 2024 remains at DKK -260 to -220 million, excluding restructuring costs. However, including these costs, the expected EBITDA could range from DKK -400 to -300 million based on the timing and total incurred expenses. The company’s anticipated CAPEX is also revised to DKK 130-160 million due to the restructuring plan.
Future mid-and long-term targets are paused, with updates expected during the announcement of the 2024 Annual Report in early 2025.
For any inquiries, please reach out to:
Lene Rode, Head of Communications & External Relations
+45 4085 2619
lro@greenhydrogen.dk
Frequently Asked Questions
What measures is Green Hydrogen Systems taking to reduce costs?
The company is implementing a cost-out program targeting a 40-50% reduction in production costs for its X-Series electrolyser and is restructuring its operations, impacting around 100 employees.
What is the reason for the adjusted revenue guidance for 2024?
The guidance was adjusted due to slower commercial traction than expected and risks of order cancellations linked to the restructuring program.
How much capital does Green Hydrogen Systems aim to raise?
The company plans to raise up to DKK 300 million to stabilize its capital base and support upcoming restructuring costs.
When does the company expect to achieve profitability?
With successful implementation of its restructuring initiative and increasing sales of the X-Series, Green Hydrogen Systems aims for profitability by the end of 2026.
Who can I contact for more information?
For inquiries, Lene Rode, Head of Communications & External Relations is available at +45 4085 2619 or by email at lro@greenhydrogen.dk.
