Thyssenkrupp: Hydrogen kit maker steals a march on challengers

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Being an incumbent in a newly enticing industry is not an entirely comfortable experience. After decades in a sleepy backwater, one is suddenly surrounded by fast-paced startups ready to snatch their turf. How big a ditch does a long-standing record really provide?

That’s the question investors will be asking about Thyssenkrupp’s Nucera, which is reportedly preparing for a long-delayed initial public offering. The company, a joint venture with the Italian company De Nora, produces electrolysers, essential for the production of green hydrogen for the energy transition.

Green hydrogen could account for more than 10% of the world’s energy needs in a net-zero scenario. This will require many electrolysers – around 5500 GW by 2050, according to consultancy McKinsey.

Nucera has an early lead. Consider its market position. It has 1 GW of production capacity. The global is about 8 GW. Yes, the competitors have multiplied. Fellow German industrial conglomerate Siemens has its own electrolysis unit. Manufacturers listed include ITM of UK and NE of Norway. There are also over a hundred startups.

But industrializing the production of electrolysers is not easy, as ITM’s operational problems demonstrate. Its market value has shrunk by 90% in just over three years. Meanwhile, Nucera could build the two biggest hydrogen projects out there, Neom in Saudi Arabia and an Air Products plant in Texas.

Nucera deserves a valuation at the top end of its peer group, which today trades between 2 and 5 times its 2025 sales. At 4 times, Nucera’s €600m to €700m sales forecasts alone reach around 2.6 billion euros. Addressing the legacy business main line of €300 million for a total of just under €3 billion. That’s only about half of the original touted rating for the group. But Thyssenkrupp’s two-thirds share would still be worth nearly half of its market capitalization.

The bigger question isn’t about the group’s competitive position, but about the speed of the rise of hydrogen itself. Profits won’t flow quickly. If so, it will be important to have an established industrial backer.