Ballard (NASDAQ:BLDP) (TSX:BLD) is pointing to a “costly and embarrassing” deal with a Chinese partner for its weak financial results in the fourth quarter.
The hydrogen fuel-cell maker reported Thursday (February 26) revenue reached US$15.6 million in Q4, a decline of 10% compared with the same period a year ago.
The Burnaby-based company also posted losses of US$17.5 million.
CEO Randy MacEwen said going forward Ballard would have a China strategy based on “strong, well-capitalized local partners.”
Ballard announced in January it had terminated two contracts with Azure Hydrogen after the Chinese company missed multiple payments.
“This was obviously a costly and embarrassing toast-up for us,” MacEwen said on a conference call with investors.
“However…we terminated the contracts before any intellectual property was transferred or licensed to Azure.”
Ballard planned to bring in a total of US$7.5 million from the Chinese deal, which was related to the assembly of fuel cells for buses and telecom power systems. Instead, it was left with outstanding payments of US$4.5 million, affecting its Q4 performance.
MacEwen also said the fourth quarter was hampered by lower-than-expected sales from its telecom backup power technology, which he described as “an attractive but challenging market.”
The CEO said the telecom side of the business isn’t expected to generate revenue growth at a “dramatic pace” in 2015 but he’s hoping it will pick up by 2016.
MacEwen, who joined the company five months ago, said he was more bullish on Ballard’s near- and long-term outlook than when he began working as CEO.
He said he expects 2015 to perform better than the previous year, highlighting an US$80-million deal with Volkswagen Group. About US$50 million of that deal involves the automaker paying Ballard for intellectual property, while the remaining US$30 million is for an engineering services contract extension.
Earlier this month, the company re-organized under two different platforms — a power products group and a technology solutions group.
MacEwen told investors on Thursday’s conference call this re-organization is aimed at creating more of a customer-centric strategy to accelerate growth.
In addition to the fourth quarter performance, Ballard also reported its annual 2014 financial results Thursday.
Revenue reached US$68.7 in 2014, up 12% compared with 2013. Losses amounted to US$28.2 million for the year, a decline of 41% from a year earlier.
Ballard stocks were trading at US$2.38, down 13.14%, following the release of the financial results.