Ballard Power Systems Inc. (TSX:BLD) CEO Randy MacEwan says his company still has confidence in the Chinese hydrogen fuel cell market, despite a dispute with a Chinese partner that will cost Ballard $7.5 million in 2014.
Ballard’s stock dropped nearly 9% – from $2.29 to $2.08 per share – when markets opened January 2 on the news that Ballard was cancelling two agreement with Azure International that were previously announced to be worth $17 million.
Under an agreement signed in 2013, Ballard would provide Azure with fuel cell modules and engineering services to Azure as part of a plan to build a new fleet of hydrogen buses in China. In 2013, Ballard said the agreement would be worth $11 million.
In another agreement signed in 2014, Ballard would provide licensing to Azure for its telecom backup power system, an agreement worth $6 million.
Ballard announced January 2 it was cancelling both agreements with Azure, citing breach of contract.
Ballard is writing of the $7.5 million it had expected to receive from Azure in the fourth quarter of 2014 for the bus fuel cells. As a result, Ballard said it will not hit its revenue targets for 2014.
“While we are clearly disappointed with this outcome with Azure and the negative impact on our 2014 financial results, we remain confident in the long-term attractiveness of the Chinese market for our fuel cell solutions,” MacEwan said in a new release.