Thyssenkrupp touts hidden hydrogen gem inside conglomerate
A small subsidiary of the ailing German group Thyssenkrupp stands to benefit from a tenfold increase in orders for green hydrogen technology, the company revealed, as it confirmed plans to float the unit which has been estimated to be worth up to €6bn.
Uhde Chlorine Engineers, a joint venture with an Italian family-owned firm in which Thyssenkrupp owns a majority stake, was one of several businesses initially set aside for sale, as the former conglomerate continues to shrink following years of heavy losses.
But a surge 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.
Previously a small niche for the 99-year-old business, which specialised in chlorine gas and caustic soda production, hydrogen electrolysers were only added to the company’s line-up in 2010 and accounted for just €89m of €377m worth of orders in the last financial year.
By the end of 2021, the order backlog for the technology was roughly €900m, Thyssenkrupp said, thanks in part to contracts with Shell and the planned megacity Neom in Saudi Arabia. The group said it was renaming the unit to Nucera.
“Two or three years ago, nobody was investing into green hydrogen — only in renewable energy,” Denis Krude, the unit’s chief executive, told the Financial Times. But renewable energy that is stored in batteries, for example, has “a limited reach,” he said, while hydrogen can be transported.
The recent rush for green hydrogen was driven by “cheaper prices for renewable power, not necessarily in Europe, but in other regions of the world,” he added, while emphasising that a higher price for carbon dioxide emissions, generated by fossil fuel energy, would be necessary to make expensive hydrogen technology viable for widespread use in Nucera’s home market.
Krude told investors on Thursday that Nucera hoped to break even on an earnings before interest and taxes basis in the 2023-24 fiscal year.
After reaching record lows in 2020, following years of rapid decline, Thyssenkrupp’s share price has been rising steadily and is up almost a fifth on the same period last year.
Since selling its prized lifts and escalators business to a private equity consortium for €17bn in 2020, the company has been struggling to find a buyer for its lossmaking steel business, which runs Europe’s largest steel plant in Duisburg, Germany. A proposed deal with British tycoon Sanjeev Gupta fell apart in February last year after he failed to secure financing.
But the unit’s fortunes have been buoyed by an increase in demand for steel amid a decline in cheap Chinese imports, helping it post pre-tax profits of €116m for the last fiscal year after falling to an €820m loss in the previous 12 months.
Activist investor Cevian, which first revealed its investment in Thyssenkrupp in 2013 and pushed for the conglomerate’s break-up, almost halved its holding in November, saying it believed the “turnround [was] bearing fruit”.
The emergence of the hidden value in Nucera’s hydrogen business has raised hopes of similar finds at the Essen-based company.
“Nucera is a really unique asset in our portfolio,” said Volkmar Dinstuhl, who oversaw the lifts sale and is now in charge of selling a slew of smaller Thyssenkrupp businesses.
“But I’m sure if you look into the Thyssenkrupp portfolio business by business, you will find other businesses that are probably undervalued within that group as well.”
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