Nel ASA's 1.3 Billion NOK Order Backlog Masks a Looming Asset Writedown

Nel's stock rises despite a 31% revenue drop in 2025 and a potential multi-million writedown on idled assets. Analysts cut targets amid cash burn concerns.

Investors in Norwegian hydrogen specialist Nel ASA are navigating a stark contradiction. While the company’s shares gained over six percent to €0.22 in recent trading, buoyed by a weekly advance of nearly twelve percent, management is quietly assessing a potential multi-million writedown on idled production assets. This juxtaposition of market optimism and underlying financial risk sets the stage for a critical first-quarter report due on April 22.

The core issue remains a persistent gap between orders and revenue. Nel’s order backlog has swelled to over 1.3 billion NOK, with the PEM division alone reporting a fourth-quarter 2025 order intake of 686 million NOK—a staggering 364 percent surge. Yet, in that same final quarter of 2025, revenue from customer contracts collapsed by 20 percent to 330 million NOK. For the full year 2025, revenue shrank by 31 percent to 963 million NOK. Management attributes this disconnect to irregular delivery schedules for large-scale projects, an explanation that has failed to convince skeptical analysts.

This revenue shortfall is compounded by a costly technological pivot. The company is shifting from its legacy atmospheric electrolyzer production lines to a new generation of modular, containerized systems designed for outdoor installation and lower construction costs. Two major production lines at the Herøya plant now stand idle as a result. The board is currently re-evaluating their book value, raising the specter of another significant asset impairment. This would further pressure a balance sheet already burdened by an 799 million NOK writedown on property, plant, equipment, and intangible assets recorded last year.

Analyst sentiment reflects these deep-seated concerns. Both Berenberg and Citigroup recently lowered their price targets, to 2.30 NOK and 2.40 NOK respectively, while maintaining neutral ratings. The average price target sits at just 2.09 NOK. The banks point to a consistent cash burn, risks of future equity dilution, and a hydrogen sector grappling with overcapacity and delayed investment decisions. Trading at €0.20 in Frankfurt, the stock remains nearly 18 percent below its July 2025 52-week high, with an RSI of 34.8 indicating an oversold condition that has yet to spark a sustained recovery.

Nel’s future hinges on its Next Generation Pressurized Alkaline technology, in development since 2018. The company has completed full-scale testing at Herøya and targets a commercial launch in the first half of 2026, with volume deliveries starting in 2027. The European Union is supporting this industrialisation push with up to 135 million euros from its Innovation Fund, covering a large portion—up to 60 percent—of the relevant investment and operational costs. The first gigawatt of production capacity is estimated to cost around 300 million NOK before subsidies.

A liquidity buffer of approximately 1.6 billion NOK provides the funding runway to bridge this final investment phase. The imminent quarterly report must now deliver two crucial data points: the precise scale of the potential asset writedown in Herøya and a clear breakdown of how the recent order boom will translate into tangible cash flow. If the report fails to show a convincing convergence of orders and revenue, investor attention will swiftly turn to the next test: the half-year figures due on July 15.