Nel ASA's Split Screen: PEM Orders Explode While the Income Statement Shrinks

Nel ASA's Q2 order intake jumps 224% to NOK 230M, but revenue falls 12%, shares slide, and JPMorgan cuts target to NOK 1.80 amid sector headwinds.

The hydrogen sector's favorite paradox is playing out in real time at Oslo-based Nel ASA. The electrolyser specialist just posted its most dramatic order intake in years — a 224% year-on-year surge — yet the shares keep sliding, JPMorgan has slashed its price target, and the company's own revenue line is heading in the opposite direction.

Trading at €0.1950 in Frankfurt on Thursday, the stock was down 1.42% on the day and 6.25% over the past month. The picture is similar on the Norwegian exchange, where the equity sits roughly 47% below its 52-week high of NOK 0.3655, set on 25 May. The relative strength index of 38.9 points to persistent weakness rather than a capitulation-style oversold bounce.

The Order Book Tells One Story

The headline number from the second-quarter report, published on 15 July, is hard to argue with. Order intake reached NOK 230 million, up from NOK 71 million in the same period last year — a 224% jump that was almost entirely driven by PEM electrolyser bookings, which accounted for 96% of the increase. The order backlog swelled to NOK 1,213 million by quarter-end, a 9% improvement on the preceding three months.

That momentum, however, has not translated into the income statement. Revenue from customer contracts fell to NOK 153 million in Q2, a 12% decline from the NOK 174 million booked a year earlier. Total revenue, including other income, came to NOK 182 million. The EBITDA figure landed at minus NOK 155 million, a shortfall that includes a one-off charge of NOK 70 million tied to the settlement of a long-running legal dispute with Iwatani Corporation of America, which Nel resolved in early June.

The Balance Sheet Tells Another

The cash position adds a layer of urgency. Nel held NOK 1,328 million in liquid reserves at the end of June, down from NOK 1,928 million twelve months prior. That roughly NOK 600 million drawdown over the year reflects sustained operating losses and the cost of putting the Iwatani matter to bed — though the remaining liquidity still provides room to manoeuvre.

JPMorgan's response to the quarterly figures came on Wednesday, when the bank trimmed its price target from NOK 2.90 to NOK 1.80 while keeping a "Neutral" rating. The revision was framed around both the earnings release and broader industry headwinds. Automated valuation services have meanwhile nudged their recommendation from "Sell" to "Hold," though that upgrade rests primarily on short-term price stabilisation rather than a fundamental reassessment.

Sector Headwinds and a Leadership Gap

The macro picture is not cooperating. Reports that oil majors such as BP have shelved or cancelled several large-scale hydrogen projects — redirecting focus to their core operations — could dampen near-term demand for gigawatt-scale electrolyser technology of the kind Nel supplies. The industry is also awaiting the EU-led Clean Hydrogen Partnership's decision on the "HORIZON-JU-CLEANH2-2026" funding programme, with results expected in early August. Nel and its partners are among the 170 applicants seeking support for green hydrogen production and storage initiatives, and a favourable outcome could provide a fresh catalyst for the order pipeline.

Adding to the uncertainty is the vacancy at the top. CEO Håkon Volldal announced his resignation in June and is serving out a six-month notice period while the board searches for a successor. Samsung E&A remains the largest institutional shareholder after free float, holding a 9.09% stake equivalent to 167,155,785 shares.

What Comes Next

Nel is also betting on cost leadership to regain its footing. The next-generation alkaline electrolyser system unveiled in May targets system costs below USD 1,450 per kilowatt for a 25-megawatt installation — a figure that, if achieved, would meaningfully improve the technology's competitive position.

The immediate calendar offers two checkpoints: the EU funding announcement due in early August, and the third-quarter interim report slated for 21 October. Whether the PEM order surge can be converted into sustainable revenue growth — and whether that is enough to win back investor confidence — will hinge on both.