Green Hydrogen Systems undergoes major restructure to cut costs by 50%

Danish electrolyser manufacturer Green Hydrogen Systems (GHS) is implementing cost-cutting and restructuring measures in response to slow market adoption of hydrogen and delays in commercialising its X-Series electrolyser.

The company plans to discontinue sales of its A-Series alkaline electrolyser to focus exclusively on the 6MW X-Series system. GHS will continue to manufacture and deliver A-Series orders until its backlog is completed in 2025. The firm has said it will service the A-Series units for the duration of their lifetime.

However, to improve the commercial offering of the X-Series, it intends to reduce costs by 40-50% by 2026 as it hopes to break even earlier than original projections.

Having planned to start delivering the new system by the end of 2024, GHS said it had faced slower-than-anticipated development and commercialisation. H2 View has reached out to GHS for more details.

GHS told H2 View that it had experienced “teething problems” with the A-Series systems, which it has “dealt with and captured valuable learnings from.”

“We have invested heavily and prioritised spending extra time on testing and validation of our X-Series before releasing it for commercial sales – which we did three weeks ago,” a company spokesperson added.

Furthermore, the company will undertake a major restructure of its operations, with around 100 job cuts expected, in a bid to reduce its cost base by “at least” 40-50%.

The restructuring will incur one-off implementation costs of DKK 100-150m ($14.7-22m), spread across 2024 and early 2025, the company said.

As a result of these initiatives, GHS has lowered its 2024 revenue guidance from DKK 125-165m ($18.4-24.2m) to DKK 105-145m ($15.4-21.3m). While the company has maintained its EBITDA forecast of DKK -260 to -220m (-$38.2 to -$32.3m), the restructuring expenses have pushed the overall EBITDA projection down to DKK -400 to -300m (-$58.7 to -$44.1m) for 2024.

GHS also revealed that these financial strains could lead to a breach of its loan agreements unless waived by lenders. Without additional funding, the company expects its capital reserves to be exhausted by the first half of 2025.

To address cash flow challenges and fund the restructuring, GHS plans to raise up to DKK 300m by the end of this year, with a similar or larger capital increase by mid-2025.

“With the restructuring initiatives expected to be implemented by the end of Q1 2025 and the Company anticipating the first X-Series orders in the coming months, the Board of Directors expects that an additional capital increase of similar or increased size will necessary and will have to be completed by the summer of 2025,” a company statement said.

“We must take into account that the market is not moving as fast as anticipated,” said GHS CEO, Peter Friis. “This has resulted in a challenge, and as a result, we need to adjust and implement substantial changes across our business to ensure our competitiveness and a strong foundation for the long-term future.”

Thomas Broe-Andersen, Chairman of the Board of Directors at GHS, added, “To support Green Hydrogen Systems strategic focus, we will adapt the business to its needs and the current market conditions to ensure the future value for the hydrogen market and the investors going forward.”