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Leclanché will reach profitability, investment bank agrees, but not until 2019

Leclanché batteries at a project on the Portugese island, Graciosa. Image: Leclanché.

A City of London investment bank has said it agrees that Swiss energy storage maker and integrator Leclanché will reach profitability, but expects it to take a year longer than the company itself has predicted.

The battery and system manufacturer and integrator is emerging from a period of “underperformance” that lasted a few years, analysts from Cantor Fitzgerald Europe said, but based partly on a touted 450MWh pipeline and excitement over the e-mobility sector, is on course to turn it around.

Leclanché had called an improved 2016 performance, when it finished up with EBITDA losses of CHF27.5 million (US$28.7 million) as marking the first steps towards breaking even. When announcing those results this April, CFO Hubert Angleys had said that EBITDA breakeven would come when the company exceeded 100MWh of revenues, expected to come in 2018.

However, Cantor Fitzgerald pointed out that due to the need to find funding during the first half of this year, Leclanché’s sales in that period are likely to be lower than forecast - meaning that for the 2017 financial year (FY2017), the investment bank considers the company will make around CHF29.6 million, rather than a previously predicted CHF71.4 million. The following financial year’s prediction is similarly downgraded from an expected CHF98.1 million to CHF64.7 million.

Cantor Fitzgerald’s analysts therefore pushed back the expected date when Leclanché would break even again to 2019. It expects the company to recover somewhat this year with 22MWh of systems currently under construction and a further 30MWh under construction or ready to deliver. Having made early sales in the electric bus industry, Leclanché is bullish on the promise of transport applications, with CEO Anil Srivastava having blogged for this site recently on the promise of the European market for electric buses. Cantor Fitzgerald said that if Leclanché could deliver, it is standing to sell more than 150MWh into the sector annually, worth some US$45 million.

The investors also said that if 95MWh each year of sales are achieved in stationary energy storage while managing the 150MWh of transport system sales, the company could make CHF181.4 million annual revenue in FY2019, up from a forecast based on current circumstances of CHF123.4 million, reaching EBITDA of CHF27.5 million.

After an eventful year which included a now-resolved “technical insolvency blip”, Leclanché is now targeting an IPO for North America as well as targeting a software and energy management company for acquisition. Cantor Fitzgerald considered however that the most vital aspect of Leclanché’s near-term plans would be a CHF30 million fund raise the company is preparing for October. Success of this fund raising would be crucial to the Swiss company’s chances of hitting those 95MWh stationary energy storage / 150MWh annual targets from the year after next. 

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