During the third quarter of 2022, Cell Impact achieved a revenue level of SEK 14.7 million (27.5), which is SEK –46 million lower than the corresponding quarter last year. Sales during the quarter primarily comprised of flow plates, while tooling and development projects account ed for a minor share of sales. Sales of flow plates during the quarter were lower than planned but significantly higher than in the corresponding quarter in 2021. Sales during the third quarter were negatively impacted by set-up and wait times in production related to two existing but updated products, as well as the introduction of a new product, which has taken longer than expected. Toward the end of the quarter, production had reached a higher level of activity, but although this demand and volume remains, it will take one or more quarters before we catch up. Overall, the company’s assessment is that full-year sales will be somewhat lower than the sales target set for 2022. As previously communicated, the company will focus in the short term on growth ahead of profitability and cash flow, which also means that the year’s target for operational cash flow will not be achieved.
During the preceding quarter, Cell Impact Forming™ equipment was installed and approved at Plug’s Giga Factory and Innovation Center in Rochester, New York, which represents key validation of our forming technology. During this quarter, Cell Impact will deliver a forming line to Japan. In cooperation with F.C.C., a leading global supplier of automotive components, we will be able to demonstrate how forming technology produces flow plates to existing and potential customers. In addition to forming technology, Cell Impact develops production concepts and technology that will be among the most competitive in our industry. The fact that a demonstration line has been delivered to Japan again highlights Cell Impact Forming as an effective and scalable technology. These deliveries indicate a beginning of Cell Impact’s contribution to the upscaling of the hydrogen society and to the green transition. The aim is that, in future, we will see a large number of forming lines installed in Karlskoga and throughout the world to enable Cell Impact’s manufacture of flow plates.
Phase ll, the productivity-enhancement program that I have mentioned in an earlier CEO’s message, has the aim of increasing production in Karlskoga by proprietary development and procurement new, smart process technologies. The Russian war in Ukraine is resulting in shortages of some components, such as electric wiring, which is extending lead times from European equipment suppliers and, in turn, delaying the build-up of Phase II by a few quarters. To our satisfaction, we signed an agreement during the quarter for the purchase of equipment that forms the basis of a Phase ll production process that meets the stricter demands for quality and cost-effectiveness. The first significant part of the establishment of the new production process is scheduled for the beginning of 2024. This is important in relation to our future profitability because an improved earnings performance is based on Phase II type of production equipment that will contribute to more rational production and a healthy gross margin.
After a few years’ absence, Cell Impact participated as an exhibitor at the most recent fuel cell exhibition in Stuttgart. The response was highly positive and resulted in several inquiries. The feedback from visitors to the stand was that Cell Impact is one of few companies that has genuinely focused on monitoring developments in the hydrogen industry and that can already now offer production of flow plates on a large scale – with an exciting plan for upscaling.
We live in a volatile world with shortages of goods, long lead times and a number of risks that can create disruptions. During the quarter, supply chains were stable for our current production, although much work is required to ensure acceptable lead times for input goods and equipment that correspond with Cell Impact’s future plans.
In recent months, several European governments have announced national initiatives aimed at companies in the hydrogen sector. These initiatives are being made on the basis of industrial policy, climate benefits and a desire to reduce dependence on, for example, Russian gas. Many countries are investing in hydrogen because it adds a completely new industry with very substantial employment potential and green growth. In France, the hydrogen strategy was announced by the prime minister and in the UK, the government has appointed a hydrogen champion who will work to promote the realization of the government’s hydrogen ambitions. There are similar approaches being adopted in several countries, both in the EU and beyond. Sweden has Hybrit, which is delivering on climate goals using hydrogen, but much more could be done to support Swedish industry in the development of a new industrial sector. Nevertheless, Cell Impact is an international company and well-positioned with its offering – in Sweden and globally.
Pär Teike, CEO
Karlskoga in October