Ceres Power Shares Drop as H1 Revenue Declines 26%

Ceres Power Holdings (LON: CWR) shares fell over 9% on Friday after the company released its interim results for the six months ended June 30, 2025, revealing a company in transition amid evolving market demands.

The clean energy technology developer reported a solid balance sheet, but also a revenue dip, reflecting a strategic pivot from research and development to commercialization.

The company's cash and short-term investments position remains strong at £104.1 million, a slight increase from £102.5 million in December 2024. This was supported by a positive cash inflow of £1.6 million during the period, a significant improvement compared to the £13.9 million outflow in the first half of 2024.

Revenue decreased by 26% to £21.1 million, down from £28.5 million in the prior year, attributed to the one-off licence revenue from the Delta agreement in 2024. Gross profit followed suit, decreasing 27% to £16.6 million, reflecting the revenue decline. However, the gross margin remained robust at 79%, slightly lower than the 80% reported in H1 2024.

Operating costs, excluding exceptional items, saw a 6% reduction to £35.6 million, a result of the cost base rationalization initiated in 2024 and ongoing financial discipline.

The adjusted EBITDA loss widened to £11.3 million, compared to £9.0 million in the first half of 2024. These figures highlight the cost of transitioning to a commercially-led organization.

Doosan's commencement of mass production using Ceres’ SOFC technology marks a pivotal moment. This includes applications for AI-driven data centers, energy grid stabilization, power systems for buildings, and auxiliary power for marine applications.

Royalty revenue streams for Ceres are contingent on Doosan's initial commercial sales. Shell's megawatt-scale electrolyser is now operational at its Bangalore Technology Centre, demonstrating an efficiency of 37kWh/kg of hydrogen. Delta's investment of approximately £170 million in assets for large-scale manufacturing of hydrogen energy solutions further validates Ceres’ technology.

Ceres is undergoing a business transformation program to align with its shift from R&D to a commercially-focused entity. This strategic move aims to capitalize on emerging market opportunities, particularly the surging demand for power in AI data centers and broader electrification initiatives.

The Board anticipates full-year revenue for 2025 to be around £32 million. A new manufacturing license agreement is under negotiation, but its completion and revenue recognition timing remain uncertain. Successful closure of this deal could boost revenue beyond the current guidance.

Phil Caldwell, Chief Executive Officer of Ceres, said: “We are seeing an unprecedented change in the market with an acute need for power to service the demand of AI-data centres and increased electrification of society, which represents a major market opportunity for the business.”

AskTraders Takeaway: The transition from R&D to commercialization is a complex process, and the near-term financial impact is evident in the revenue decline and increased EBITDA loss. However, the strong balance sheet, coupled with key partnerships and the start of mass production by Doosan, provides a foundation for future growth.