Nel ASA Cuts Costs and Headcount, but Production Capacity Suffers — Orders Hold the Key

Nel ASA's share price rallies over 50% YTD after workforce cuts, but a 73% plunge in order intake and shrinking backlog reveal underlying challenges.

The Oslo-listed hydrogen specialist has engineered a dramatic turnaround in its share price, but the numbers behind the rally tell a more complicated story. Nel ASA's stock closed Thursday at 0.29 euros in Frankfurt, having surged 42.57% over the past month and 50.23% year-to-date. At the Norwegian home exchange, the shares topped the OBX benchmark, while in German trading they now sit at 0.30 euros — a daily gain of about 4% and a year-to-date advance of 56%. Yet the 52-week high remains a stretch, and market enthusiasm masks a brutal contraction in the order book.

The rally's trigger was a radical restructuring. Management slashed the workforce to roughly 300 employees — a 26% reduction from the peak headcount and 19% below the year-ago quarter. Payroll costs have dropped by one-fifth as a result. The cuts bought precious time, but they also came with a warning: manufacturing and project execution capacity has been trimmed, meaning Nel cannot scale up as quickly if demand suddenly rebounds.

Two platforms, two timelines

Nel's technology roadmap runs on parallel tracks. The pressurised alkaline platform entered commercial sales in early May, designed to simplify industrial hydrogen production at scale. That is the immediate growth driver, with the Herøya facility targeting an annual capacity of up to 1 gigawatt, eventually rising to 4 gigawatts. Meanwhile, the PEM (Proton Exchange Membrane) division is still in development. The company plans to build a prototype stack in 2026 and aims to cut stack-level costs by roughly 70%. Widespread industrialisation, however, remains several years off. For now, containerised PEM deliveries — suited for projects between 2.5 and 50 megawatts with lead times under 12 months — are meant to revive that business in the next twelve months.

Orders tell a harsh truth

The gap between technology promise and commercial traction is stark. First-quarter revenue from customer contracts slipped 5% to 148 million Norwegian kroner, while the operating loss stood at 100 million kroner. More concerning: order intake collapsed 73% to 85 million kroner, and the order backlog shrank 24% to 1.113 billion kroner. A bright spot came in April — a follow-up order for containerised PEM systems worth $7 million, and a separate second-quarter order of about 70 million kroner. But these remain far from the scale needed to reach profitability.

Cash reserves of 1.443 billion kroner and an order backlog of 1.113 billion kroner provide a comfortable cushion. An EU grant of 11 million euros, expected in the second quarter of 2026, will directly fund the alkaline platform's industrialisation. Behind that lies a broader award of up to 135 million euros from the EU Innovation Fund, covering as much as 60% of eligible costs. The European backing improves financing visibility but does not itself generate revenue.

Geopolitical headwinds and a nervous tape

Geopolitical tensions in the Middle East are adding uncertainty to project timelines and material costs. Some regional initiatives have been delayed, though Nel has so far not flagged sustained inflation. On the technical side, the stock remains jittery: the relative strength index sits at 27.9, and annualised 30-day volatility runs at 93.54%. Expectations and order entry are still out of sync.

A reference project in South Korea — the first off-grid green hydrogen facility of its kind, a 10-megawatt installation that started up in late March — lends credibility. But the market's focus now shifts to the first half of 2026. Nel reports its half-year results on July 15. Between now and then, new orders for electrolysers will determine whether the cost-cutting story can evolve into a growth story. Without large-scale contracts for the alkaline platform, the technology roadmap risks remaining bigger than the commercial progress.