A small subsidiary of the sick German group Thyssenkrupp will benefit from a tenfold increase in orders for green hydrogen technology, the company revealed, as it has confirmed plans to operate the unit, which is estimated to be worth up to € 6 billion.
Uhde Chlorine Engineers, a joint venture with an Italian family business in which Thyssenkrupp holds a majority stake, was one of several businesses initially set aside for sale, as the former conglomerate continues to shrink subsequent years of heavy losses.
But an increase in demand for green solutions has led to a boom in orders for the company’s water electrolysers, which can produce hydrogen using renewable energy.
Formerly a small niche for the 99-year-old company, which specializes in chlorine gas and caustic soda production, hydrogen electrolysers were only added to the company’s range in 2010 and made only € 89 million of € 377 million in orders in the past financial year. .
By the end of 2021, the order backlog for the technology was around € 900 million, Thyssenkrupp said, thanks in part to contracts with Shell and the planned mega-city of Neom in Saudi Arabia. The group said they were renaming the unit after Nucera.
“Two or three years ago, nobody invested in green hydrogen – only in renewable energy,” Denis Krude, the unit’s chief executive, told the Financial Times. But renewable energy stored in batteries, for example, has “a limited reach,” he said, while hydrogen can be transported.
The recent green hydrogen rush was driven by “cheaper prices for renewable energy, not necessarily in Europe but in other regions of the world,” he added, stressing that a higher price for carbon dioxide emissions, generated by fossil fuel energy, would be needed to make expensive hydrogen technology viable for widespread use in Nucera’s home market.
Krude told investors on Thursday that Nucera hopes to break even on earnings before interest and tax base in the 2023-’24 financial year.
After reaching record lows in 2020, after years of rapid decline, Thyssenkrupp’s share price has risen steadily and is almost a fifth higher than the same period last year.
Since sell its valued elevators and escalator business to a € 17 billion private equity consortium in 2020, the company struggled to find a buyer for its loss-making steel business, which manages Europe’s largest steel plant in Duisburg, Germany. A proposed agreement with British tycoon Sanjeev Gupta collapsed in February last year after failing to secure funding.
But the unit’s fortune was supported by an increase in demand for steel amid a decline in cheap Chinese imports, which helped it generate a pre-tax profit of € 116 million for the last financial year after falling in the previous 12 months to a loss of € 820 million.
Activist investor Cevian, which first announced its investment in Thyssenkrupp in 2013 and called for the conglomerate’s break-up, almost halved its stake in November, saying it believed the “turnaround [was] bear fruit ”.
The rise of hidden value in Nucera’s hydrogen business has given rise to hopes of similar discoveries at the Essen-based company.
“Nucera is a truly unique asset in our portfolio,” says Volkmar Dinstuhl, who oversaw the elevator sale and is now in charge of selling a whole host of smaller Thyssenkrupp businesses.
“But I’m sure if you look at the Thyssenkrupp portfolio business per business, you’ll find other businesses that are probably also undervalued within that group.”
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