Ballard pushes fuel cells for uses other than autos; some investors stuck in past
VANCOUVER, B.C. — While Ballard Power Systems (TSX:BLD) pushes fuel cells for forklifts and backup power, some investors are still stuck on the decision to give up the dream of someday supplying fuel-cell powered automobiles.
With more consumers turning to environmentally friendly vehicles and the restructuring of the automotive industry, a few long-term Ballard shareholders wondered at the company’s annual meeting Tuesday if automobiles powered by fuel cells should still be on the wish list.
Ballard president and chief executive John Sheridan predicted commercial production of automotive fuel cells won’t likely happen until about 2015, at the earliest.
Sheridan said there are “major obstacles” in both the production and cost of getting the technology to market.
“I would love to see the technology … but in terms of the commercial reality, we just don’t see it,” Sheridan said at the meeting.
In an interview afterwards, Sheridan said he isn’t surprised some investors can’t seem to let go of the auto side of the business.
“There is a romanticism about cars, and a lot of people are very concerned about the car world right now and the car sector,” Sheridan said.
In early 2008, Ballard closed a deal to sell its automotive fuel cell development business to Daimler AG and Ford Motor Co. (NYSE:F)
Daimler and Ford manage and fund automotive fuel cell technology development programs through a new private company located at Ballard’s facilities in Burnaby, B.C.
Ballard has kept a 20 per cent stake in the venture, but doesn’t provide any ongoing funding.
“As a public company – a company that has to make a return for shareholders – we made the right decision,” Sheridan said in the interview.
“In terms of the longer-term technology challenge for automotive, I really hope it’s successful, but it is long term.”
He said Ballard could get back into the business when it does become a reality, but not with the same goals as it had in the past.
“Would we switch gears and become a major fuel cell automotive player? No,” he said.
“As a component supplier? Sure, we would take a look at that.”
Sheridan said the business is now focused on materials handling, which includes fuel cell for forklifts in warehouses, as well as backup power.
The company signed a deal in October to supply fuel cells for telecom backup power in India, which it sees as a growing market for the technology. The deal with ACME Group and IdaTech LLC is for 1,000 units in 2009 and 9,000 units in 2010.
Ballard also recently stepped out of the fuel-cell cogeneration business, another hopeful market from its more recent past.
Last month it dissolved a cogeneration joint venture with Ebara Corp. of Japan for producing electricity and hot water in Japanese homes, saying it would take too long to develop the technology.
Ballard said the decision won’t change its guidance, or its projection to sell about 4,000 fuel-cell units in 2009.
Ballard is projecting annual revenues of about $68 million this year, which is at the lower end of its guidance.
The company is also counting on its technology for use in transit buses. It has a deal to supply a handful of fuel-cell powered transit buses to the Vancouver 2010 Olympics.
Vancouver-based Ballard recently reported a first-quarter loss of US$18.6 million, citing weak shipments and falling revenues along with restructuring costs from recent staff cuts.
The company, which reports in U.S. dollars, said the loss amounted to 22 cents per share for the quarter ended March 31.
The most recent results included $1.1 million worth of severance costs when the company laid off 32 employees, or seven per cent of its workforce, earlier this month.
The loss was compared to a profit of $81 million or 87 cents per share for the same period last year, buoyed by a $97-million gain from the sale of its automotive fuel cell development business to Daimler and Ford.
Quarterly revenue fell to $8.1 million during the quarter, down nearly 50 per cent from year-earlier levels of $16 million, as weakness in the auto sector crimped demand for the company’s products.
