Plug Power eyes first profit on rising fuel cell orders

Thu Mar 13, 2014 1:05pm EDT

(Reuters) - Plug Power Inc (PLUG.O) said it expected to post its first ever profit in the fourth quarter this year as orders rise for its hydrogen fuel cells, helped by strong demand from customers such as Wal-Mart Stores Inc

(WMT.N).

Plug Power's shares rose as much as 25 percent to $8.48 in morning trading on the Nasdaq, adding to the sky-rocketing 3,722 percent it has gained in the past year.

The company is searching for partners to enter Asia in a similar way to how partnering with Air Liquide (AIRP.PA) helped it enter Europe, CEO Andy Marsh said. The French industrial gas maker also provides Plug Power with hydrogen for its fuel cells.

New York-based Plug Power, which also counts German car makers Daimler (DAIGn.DE) Mercedes and BMW (BMWG.DE) as its customers, recently received an order from another automaker, Marsh said, without naming the company.

Plug Power's fuel cell systems replace lead-acid batteries to power forklifts without burning fuel, which makes them an efficient, quiet and pollution-free alternative to combustion engines.

U.S.-listed fuel cell makers, including Fuel Cell Energy Inc (FCEL.O), have been on a tear in recent months as investors bet on growing demand for the cleaner technology.

The rise in Plug Power's stock has also attracted short-seller Citron Research, who on Tuesday argued that the company "owns no unique technology".

Plug Power currently sources its fuel cell stacks - the core of the technology that converts hydrogen and oxygen into electricity - from Canada's Ballard Power Systems Inc (BLD.TO)

(BLDP.O).

Marsh said Plug Power could add another supplier later this year and start building its own fuel cell stacks with the aim of shipping the in-house built systems next year.

SURGING ORDERS

A wider supplier base, as it ramps production and cuts costs, would also help the company's margins improve "dramatically", CEO Marsh told Reuters last week.

Plug Power said it expected orders to exceed $150 million in 2014, almost four times its total last year.

Orders have already exceeded $60 million so far this year, including the order from Wal-Mart in February, the company said.

But since the gains from these orders would be realized in the second and third quarters, the company forecast a sequential fall in current-quarter revenue.

Plug Power forecast first-quarter revenue of $5-$6 million, lower than the $8 million in the fourth quarter ended December 31. Revenue is expected to be $16-$18 million in the second quarter.

The company's net loss widened to $28.9 million, or 8 cents per share, in the fourth quarter, from $8.5 million, or 25 cents per share, a year earlier. The wider loss was due to a $21 million charge related to stock warrants.

Plug Power's shares were trading up 12 percent at $7.60 afternoon trading. The stock was the most heavily traded on the Nasdaq.

Ballard Power's shares were trading up 9.2 percent at $6.53 in heavy trading on the Toronto Stock Exchange.

(Additional reporting by Sneha Banerjee in Bangalore; Editing by Saumyadeb Chakrabarty and Savio D'Souza)

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