Nel ASA’s Cost Drive Gains Ground While Orders Stay Stuck in Neutral

Nel ASA's Q1 shows operational progress with a 26% workforce cut and narrower loss, yet a 73% order intake slump to 85M NOK sends stock down 11.88%. Cash cushion of 1.4B NOK provides buffer, but thin backlog challenges growth targets.

Nel ASA’s latest quarter laid bare the central tension haunting the hydrogen sector: operational efficiency is improving, but the demand side remains uncooperative. The Norwegian electrolyser maker trimmed its workforce by 26% from the peak to around 300 employees and narrowed its operating loss by 15 million Norwegian kroner year-on-year, yet the market’s focus fixed on a 73% plunge in order intake to just 85 million kroner. The result was a sharp sell-off that sent the stock down 11.88% on the Oslo exchange on 19 May to 3.01 NOK, while on Tradegate the shares eased 5.15% to €0.28.

Revenue in the first quarter slipped 5% to 148 million kroner, and the adjusted EBITDA remained deep in the red at minus 100 million kroner, albeit an improvement of 15 million kroner from the same period last year. The company’s cash pile of 1.4 billion kroner provides a cushion, but the order backlog of 1.1 billion kroner looks thin against the growth targets set for 2027. Management pointed to geopolitical tensions in the Middle East as a factor delaying project timelines, but that does little to reassure investors looking for visibility.

The performance across Nel’s two main divisions remained uneven. The alkaline electrolysis unit posted a 6% revenue increase and improved its EBITDA by 35 million kroner, while the PEM segment saw revenue fall 14% and recorded an EBITDA loss of 16 million kroner. That split explains why the market is not rewarding the group uniformly for its cost-cutting efforts — the PEM business, in particular, continues to weigh on the overall picture.

Strategically, Nel is betting on pressurised alkaline technology as the main growth driver. The new platform was commercially launched in early May and is designed to target large industrial projects. At the Herøya facility, the company is working towards a production capacity of 500 MW by the end of 2026. To complement this, Nel is developing a next-generation PEM system with a targeted cost reduction of 70%. An EU grant of €11 million, expected in the current quarter, should provide additional support for that programme.

The cost-savings narrative is further underscored by the headcount reduction, which brought staffing down from peak levels by 26%. While this restructuring helps align the cost base with the current project pipeline, it also signals that Nel is preparing for a period of subdued ordering activity. The stock’s year-to-date gain of roughly 43% still reflects the optimism that surrounded the hydrogen theme earlier in 2024, but the recent pullback has shifted attention to the lack of fresh orders.

Chart technicians note that the relative strength index has dropped to 16.2, indicating a deeply oversold condition. That suggests some of the selling pressure may be overdone in the near term. Yet the fundamental question remains: can the new alkaline platform and the expected EU funding translate into a meaningful pickup in orders? For now, Nel’s transformation is financially buffered but growth-dependent — and the next test will be whether delayed projects start flowing back into the order book in the coming months.