Nel ASA: Cash Burn Is the Real Test as Orders Pile Up and Revenue Falls Away

Nel ASA enters the final stretch of 2026 with two stories running in parallel — and they point in opposite directions. The Norwegian hydrogen specialist closed the third quarter with NOK 1,078 million in liquid funds, a cushion that buys time. Against that sits a net loss of NOK 141 million and revenue from customer contracts of NOK 112 million, down 63% year on year. Finansavisen notes the top line was the weakest for any quarter in more than six years.

The gap between the balance sheet and the income statement is where the investment case now lives. Cash on hand says nothing about whether the underlying business has found a sustainable earnings base; a loss-only reading ignores the liquidity buffer entirely. Both have to be held in view at once.

Orders surge, but the timing of delivery matters

Order intake told a very different story from revenue. Nel booked NOK 253 million in new orders during the quarter, an increase of roughly 339% to 340% on the prior-year period, while the order backlog stood at NOK 1,314 million at the end of September — up 34% year on year. The inflow came predominantly from the PEM business.

Those figures describe a different stage of the commercial cycle than revenue does, which is why the two numbers are not a contradiction. What they do not settle is when the work gets delivered and what margin it carries.

Two contracts give the backlog concrete shape. Collins Aerospace ordered Navy stacks worth USD 20 million. After the quarter closed, an unnamed global US-based technology group placed an order for MC500 products and related services valued at about USD 12 million, booked through subsidiary Nel Hydrogen US, with delivery expected in 2027. That date is as much a part of the story as the order size.

Rheinmetall: a signed intent, not a purchase order

A separate announcement carried a different weight. Nel and Rheinmetall have signed a non-binding declaration of intent to examine decentralised plants for producing renewable synthetic fuels. Nel would contribute its electrolyser technology; Rheinmetall would bring its Giga-PtX concept and integration know-how. Feasibility, sites and possible pilot projects are all still to be assessed, with an initial focus on Norway and on applications for defence and critical infrastructure.

No confirmed plant order has emerged from the arrangement. For investors, the distinction is straightforward: binding orders support the business outlook, while cooperation agreements open doors without guaranteeing anyone walks through them.

The cash flow line is the one to watch

Operating cash outflow reached NOK 200 million in the quarter, against an EBITDA of minus NOK 93 million. That makes the operating cash flow the single most important metric in the next set of reports. A slower burn would give Nel room to work through the new orders and push technical improvements forward. A persistently heavy outflow would sharpen the financing question even as the order book grows — though no reliable date for a possible capital need can be inferred from a single quarter.

Finansavisen reports that SB1 Markets cut its price target to NOK 0.30, with the analyst seeing no profitability in sight and expecting a further capital raise in 2028. That is a forecast, not an announced financing measure, and the difference matters: a sceptical rating is not the same thing as a confirmed call on the market.

Alkaline weakness offsets PEM growth

The divergence between the two segments is stark. Alkaline revenue collapsed by 91% year on year, while PEM revenue climbed 65%. Even a growing PEM franchise may not be enough, at least initially, to offset the weakness elsewhere — the strongest counterargument to the recovery thesis.

Risk also sits inside the backlog itself. Both HYDS sites are considered exposed, and one delivery may not happen before 2027. A large order book is therefore no automatic shield against further weak quarters; slipping delivery dates would delay the expected relief in cash burn, a particular problem if operating losses persist. Strong order momentum and financing risk can coexist perfectly well.

What would count as real progress

The next technical checkpoint comes with large-scale testing of new PEM stacks, expected in 2027. Development targets include a 70% cost reduction and a 10% efficiency gain — goals, not results. If the engineering delivers, it could lay the groundwork for an economic improvement; until then, development potential and demonstrated financial impact remain separate things.

As long as the liquidity reserve provides room to manoeuvre and new orders convert into cash-generating business, an operating recovery stays a plausible scenario. Should deliveries slip while cash burn stays high, the question of additional capital gains weight. The decisive development, then, would not be another order but a visible easing of operating cash flow — with the large-scale stack tests providing the technical checkpoint further out.