Fuel cell revenues up, but profits still elusive

Total revenues for publicly-traded companies in the global fuel cell sector were up 20% to $266 million in 2005 compared to $221 million the previous year, according to the findings of a PricewaterhouseCoopers (PwC) 2006 fuel cell industry survey released today.

Continuing a trend started in 2003, revenues exceeded spending on research and development (R&D). Net losses in 2005 decreased by 19% to $365 million, and none of the individual companies surveyed reported profits.

The PwC 2006 fuel cell survey report focuses on the 2005 year-over-year financial results of the world's 23 publicly-traded companies whose primary business is in the areas of fuel cell production, system integration, and/or related fueling infrastructure. Four new companies made their debut in the survey in 2005: Acta SpA (Italy); CMR Fuel Cells (UK); PolyFuel (US); and Voller Energy (UK). These four companies were all new listings on the London Stock Exchange Alternative Investment Market (AIM) and are focused in whole or in part on portable fuel cell markets.

"The findings of this latest survey point to a continued evolution of the sector with a lot more activity in the portable fuel cell market," says John Webster, leader of PwC Canada's fuel cell practice and survey co-author. "There is a keen sense of purpose focused directly on products that can be used by consumers at a competitive price and those that will produce returns for investors."

For the first time in the history of the PwC survey, Quantum Fuel Systems (US) was the top revenue earner, with $54.3 million dollars, up 93% from $28 million in 2004. Quantum narrowly overtook former front-runner Ballard Power Systems (Canada), which reported 2005 revenues of $53.7 million, a drop of 33% from $81 million the previous year. The main reasons for the shifts were Quantum's acquisition of Tecstar, and the reduction of automotive products deliveries at Ballard.

"With a focus on near-term revenue opportunities and cost reductions, there has been continued effort by firms in the sector to improve fuel cell technologies," says Alastair Nimmons, a director in PwC's Advisory practice and co-author of the survey report. "We're also seeing more definition around the strategic directions of these fuel cell companies, along with continued consolidation."

In 2005, there were a total of five restructuring and consolidation initiatives and more than 10 collaborative arrangements within the industry between fuel cell companies, customers, suppliers or marketing and distribution companies. Nimmons adds, "These relationships are key to accessing markets, developing technologies and establishing the supply chain in this global industry."

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