Thyssenkrupp’s hydrogen subsidiary Nucera recorded a 77% decline in green hydrogen segment orders during the fourth quarter of fiscal 2024/25, with new business contracting to €3 million compared to prior-year levels. The company reported that additional orders in this division will not significantly impact revenue until subsequent years, while the traditional chlor-alkali business demonstrated relative resilience with only a 6% quarterly decline and €107 million in new orders.
The order collapse extends deterioration visible throughout the fiscal year ended September 2025, with total order backlog falling from €1.1 billion to €606 million. This 45% backlog reduction reflects both project execution drawing down existing commitments and insufficient new order intake to maintain pipeline levels. The green hydrogen division, representing Nucera’s growth strategy premised on energy transition demand, faces particular stress as projected electrolyser market expansion fails to materialize at anticipated rates.
Segment Performance Divergence and Business Model Implications
The stark performance gap between green hydrogen and chlor-alkali segments reveals market readiness disparities for emerging versus established technologies. Chlor-alkali electrolysis, producing chlorine and caustic soda for chemical industry applications, operates within mature markets with established demand patterns and proven economics. This business generated €107 million in quarterly orders despite a modest decline, demonstrating a stable industrial customer base and predictable procurement cycles.
Green hydrogen electrolysis targeting energy sector applications faces fundamentally different market dynamics. Projects remain largely policy-driven rather than economically self-sustaining, creating dependency on government subsidies, carbon pricing mechanisms, and regulatory mandates that exhibit greater volatility than industrial chemical demand. The 77% quarterly order decline suggests that anticipated policy support has not translated to firm equipment commitments at scale projected by electrolyser manufacturers, including Nucera.
Chairman Werner Ponikwar’s strategy to offset sales declines through cost reductions and optimized project mix acknowledges that volume growth assumptions underlying Nucera’s hydrogen business case require revision. Cost reduction efforts typically encompass workforce adjustments, facility rationalization, and supply chain renegotiation, though these measures address symptoms rather than underlying demand weakness. Project mix optimization likely prioritizes higher-margin opportunities over market share maximization, accepting lower volumes in pursuit of profitability.
Order Backlog Trajectory and Revenue Visibility
The fiscal 2024/25 order backlog compression from €1.1 billion to €606 million, subsequently declining to €348 million, eliminates revenue visibility that equipment manufacturers require for capacity planning and workforce management. Nucera’s forecast range of €350 million to €900 million for fiscal 2025/26 order backlog reflects extraordinary uncertainty, with the €550 million spread representing more than 150% of the low-end estimate. This guidance range indicates management cannot confidently predict whether market conditions stabilize, deteriorate further, or recover.
The attribution of backlog growth expectations to large new construction projects in both segments, plus chlor-alkali services, suggests Nucera anticipates individual major project awards that could substantially alter the order trajectory. This project-dependent outlook creates binary outcomes where securing or losing single large contracts produces outsized impacts on financial performance. Equipment manufacturers prefer diversified order streams, reducing concentration risk, but early-stage markets like green hydrogen lack sufficient project volume to provide such diversification.
The chlor-alkali services business’s contribution to backlog projections reflects recurring revenue from maintenance, spare parts, and technical support on the installed equipment base. Services typically generate higher margins than equipment sales while providing revenue stability independent of new project cycles. Nucera’s emphasis on services aligns with industrial equipment manufacturer strategies to develop annuity revenue streams, offsetting capital equipment cyclicality.
Operating Performance and Profitability Challenges
Nucera’s fiscal 2025/26 EBIT guidance of zero to negative €30 million, compared to prior-year positive €2 million, indicates the business will likely operate at breakeven or loss in the coming year. This profitability deterioration results from revenue declining faster than fixed cost reductions, creating negative operating leverage. Equipment manufacturers carry substantial engineering, manufacturing overhead, and administrative expenses that cannot adjust rapidly to volume changes.
The guidance implies Nucera expects revenue insufficient to cover its cost base even after implementing reduction measures. This scenario forces management decisions about how aggressively to cut costs, risking organizational capability degradation, versus maintaining capacity for potential market recovery. Excessive cost reduction can create a competitive disadvantage if demand recovers faster than anticipated, while inadequate cuts extend loss periods, threatening financial viability.
The contrast between Nucera’s deteriorating hydrogen business and Quest One’s similar challenges documented in Hamburg demonstrates sector-wide demand shortfalls rather than company-specific execution issues. Multiple electrolyser manufacturers reporting order weakness, project cancellations, and financial stress indicate systemic market conditions where green hydrogen economics remain uncompetitive with incumbent technologies absent substantial policy support.
Market Structure and Competitive Dynamics
Nucera competes in electrolyser markets dominated by Chinese manufacturers, accounting for nearly 60% of global manufacturing capacity. This competitive positioning creates price pressure from lower-cost Asian suppliers while European and American markets implement domestic content requirements, attempting to protect local manufacturers. Whether Nucera can compete on cost with Chinese producers or must rely on geographic preferences and quality differentiation affects its addressable market and pricing power.
The company’s dual-segment structure with an established chlor-alkali business alongside emerging hydrogen operations provides a financial buffer that pure-play hydrogen companies lack. This diversification enables Nucera to sustain hydrogen losses using profits from traditional business, though prolonged hydrogen underperformance eventually constrains this cross-subsidy as investors question capital allocation to unprofitable segments.
Thyssenkrupp’s ownership provides parent company resources but also creates strategic questions about continued hydrogen investment, given deteriorating returns. Conglomerates periodically divest underperforming divisions that distract management and consume capital without adequate returns. Whether Thyssenkrupp maintains commitment to Nucera’s hydrogen strategy or explores strategic alternatives, including divestiture, depends on both near-term performance and conviction about long-term market development.
Policy Dependency and Market Development Timeline
Green hydrogen demand remains predominantly policy-driven, with economic viability dependent on carbon prices, renewable electricity costs, and subsidies bridging the competitiveness gap with grey hydrogen from natural gas. European hydrogen strategies and the U.S. Inflation Reduction Act incentives created expectations for substantial electrolyser demand that have not materialized at projected rates, as evidenced by Nucera’s order decline and broader industry project cancellations.
The temporal mismatch between policy announcements generating manufacturer capacity investments and actual project commitments creates industry oversupply relative to near-term demand. Electrolyser manufacturers expanded production capacity, anticipating growth that remains years away, if it occurs at all. This overbuilding relative to demand creates price competition, margin pressure, and potential industry consolidation through bankruptcies and acquisitions.
Germany’s weakening hydrogen ambitions, documented earlier this year, illustrate policy risk affecting equipment manufacturers. Government commitments to hydrogen are necessary for climate targets coexist with budget constraints limiting subsidy availability, creating a gap between stated intentions and funded projects. Nucera’s order collapse partly reflects this policy-reality divergence, where announced hydrogen strategies fail to translate into equipment purchases.
Customer Segment Analysis and Project Economics
Industrial customers evaluating green hydrogen adoption face economics heavily dependent on electricity costs, utilization rates, and end-use applications. Chemical, steel, and refining sectors represent the highest-value hydrogen applications with potential to pay premiums for decarbonized supply, yet even these segments require substantial cost reductions before large-scale conversion from grey hydrogen. The €3 million quarterly order intake suggests that few customers find current green hydrogen economics compelling, regardless of sustainability objectives.
Energy sector applications, including seasonal storage and power generation, face even less favorable economics given competition from batteries for short-duration storage and natural gas for dispatchable generation. The use cases generating most policy attention often prove least economically viable, as discussed in academic critiques of hydrogen for heating and passenger vehicles, where direct electrification offers superior efficiency.
Nucera’s reported expectation that additional hydrogen orders will not significantly impact revenue until subsequent years acknowledges that even when projects advance, long development timelines separate initial commitments from equipment delivery and revenue recognition. This lag creates cash flow challenges for manufacturers that must maintain operations during extended periods between order and payment.
The company’s situation exemplifies broader challenges facing energy transition equipment manufacturers, where anticipated demand growth based on decarbonization requirements encounters economic barriers preventing rapid technology adoption. Whether Nucera can maintain viability through the demand trough until green hydrogen economics improve, or whether the business faces fundamental restructuring or exit, will test management capability and parent company support as market conditions remain difficult through at least fiscal 2025/26 based on current guidance.
