Nel ASA: Rheinmetall Talks Are Optional — The Order Book Is Not

Nel ASA's third-quarter 2026 report card reads less like a turnaround and more like a company asking investors to grade two different exams at once. Orders are pouring in. Revenue is falling away. And somewhere between those two lines sits a non-binding letter of intent with Rheinmetall that carries no revenue at all — yet has drawn outsized attention.

That distinction matters more than any single headline number. Booked revenue, firm orders and exploratory cooperation plans each carry a different economic weight, and lumping them together flatters the story.

A 63% Revenue Drop Sets the Baseline

Revenue from customer contracts fell 63% year on year to NOK 112 million, a decline Nel pinned on lower activity in its alkaline business. That figure is the starting point for any recovery thesis, and it is the one line that must move before the narrative can.

The PEM segment cut against the grain. Its revenue climbed 65% to NOK 89 million, while order intake for the division jumped 473%. Real growth, inside a shrinking group — but segment momentum is not group recovery, and the positive trend failed to offset the top-line slide.

Profitability stayed firmly negative. EBITDA came in at minus NOK 93 million, with a net loss of NOK 141 million. Cash at quarter-end stood at NOK 1,078 million, a healthy buffer that does nothing to change the loss on the EBITDA line. Liquidity and operating performance are separate ledgers, and only one of them is improving.

Where the Orders Actually Stand

Group-wide order intake rose 339% to NOK 253 million, and the order backlog reached NOK 1,314 million, up 34%. Those are firm commitments — more concrete than a feasibility study, though still not revenue.

The clearest example arrived roughly a week before the quarterly release: Nel Hydrogen US booked an order from an unnamed US technology customer for multiple containerised PEM electrolysers plus services, worth about USD 12 million, with delivery expected in 2027. That gives the backlog a date on the calendar.

The Rheinmetall arrangement is a different animal entirely. The letter of intent, also announced about a week ago, is expressly non-binding. The two companies will examine a collaboration on modular, decentralised production of synthetic fuels — potential sites, infrastructure, access to renewable power and possible pilot projects. No binding project commitment has been disclosed. Treating it as secured revenue would be a category error.

AlphaValue Trims Its Rating

Analyst sentiment has moved in step with the mixed picture. AlphaValue/Baader Europe cut its rating from "Buy" to "Add" on Friday, according to media reports, and lowered its price target to NOK 2.38 from NOK 3.82.

The downgrade captures the tension neatly: Nel can point to rising orders and one fast-growing division, but it must also answer for a steep revenue decline and a negative operating result.

What the Next Reports Must Prove

The metric to watch is revenue from customer contracts. A renewed climb would signal that the fuller order book is finally converting into deliveries and services. If only the backlog grows, the decisive test stays open — and investors should apply the same filter to every fresh order announcement.

Execution would strengthen the case. Should orders like the US electrolyser deal land on schedule in 2027 and further contracts follow, the foundation for a recovery would firm up. The convincing pattern is repeat delivery paired with fresh demand, not a single celebratory press release.

The bear case starts with the existing earnings pressure. Stronger ordering has not yet translated into a positive result, and even a revenue rebound would not automatically dispel doubts — rising sales alongside persistently weak margins could cap the recovery story. A renewed revenue decline, meanwhile, would show that the better order book is not yet cushioning operating weakness.

For now, the investment decision comes down to weighing an early position against stronger operating confirmation. The order base supplies the arguments. Nel still has to prove the delivery.