Ballard Power Systems (BLDP.TO)(BLDP) has announced a plan to cut jobs and shuffle its executive ranks in a bid to shrink expenses by up to 30 per cent next year. The Vancouver-based hydrogen fuel cell maker says the moves are needed amid slower-than-expected adoption of the zero-emission technology.
In a news release on Thursday, Ballard warned it will book an unspecified restructuring charge in its next quarter. The company did not detail how many jobs would be impacted. Last month, Ballard cut its capital spending plans, while warning sales will be lumpy for the foreseeable future as customers delayed orders.
Ballard builds hydrogen fuel cells for buses, commercial trucks, trains, marine vessels, and stationary power applications. Customers and partners include Canadian Pacific Kansas City (CP.TO) rail, Ford’s (F) heavy truck division, Winnipeg-based bus maker NFI Group (NFI.TO), as well as German auto parts manufacturer MAHLE, Linamar (LNR.TO), and Siemens AG.
Toronto-listed shares climbed as much as five per cent in early trading on Friday. The stock had fallen over 57 per cent over the last 12 months as Ballard executives repeated warnings about the “slowing effects” of inflation, and policy uncertainty in the United States, where the company is focusing much of its growth ambitions.
“In the context of a challenging macroeconomic and geopolitical outlook and amid protracted policy uncertainty, we see a multi-year push-out of the availability of low-cost, low carbon hydrogen and hydrogen refuelling infrastructure,” chief executive officer Randy MacEwen stated in a news release.
“As this delay represents a significant headwind to our corporate growth plan, we are implementing a cost restructuring to moderate our investment intensity and pacing to better align with delayed market adoption.”
Under the changes announced on Thursday, Ballard says it will replace its current chief financial officer and chief operating officer with company insiders. Ballard says the departing executives will support their successors in the transition.
MacEwen expects the moves will yield annualized total operating expense savings in excess of 30 per cent, “with a substantial part of the annualized savings being realized in 2025.”
Meanwhile, Ballard says it continues to evaluate plans to build a new fuel cell gigafactory in Texas, having secured US$94 million in incentives from the U.S. government. MacEwen says the company is looking at financing options to extend its funding timeline and delay cash outlays.
At the same time, Ballard is conducting a strategic review of its plans in China, citing continued challenges in that market, and an underperforming joint venture with Weichai Power.
“Notwithstanding the slowing timeline for market adoption, we remain confident in the long-term value proposition of hydrogen fuel cells,” MacEwen stated in the news release. “While the speed of travel has changed, we have unwavering conviction on the direction of travel.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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