Beleaguered green hydrogen player Plug Power to slash annual spending — but is it just a drop in the ocean?
US electrolyser and fuel-cell manufacturer Plug Power is to implement a plan to slash its annual expenses by $75m by cutting jobs and optimising its supply chain, the company announced today (Wednesday), in an effort to shore up its shaky finances and slumping share price.
Among the measures put forward by Plug’s executive team include cutting the workforce — without revealing how many jobs would be lost — consolidating its operations, and “optimising its supply chain management”.
The company also plans to curb what it refers to as “discretionary spending”, while also increasing the use of automation and digital technology in its facilities.
The one-off cost of implementing the measures would be around $15m, Plug said.
The $75m would go towards reducing the repeated and ballooning operating losses the company has posted in past years, the most recent being $718m in the first nine months of 2023 — 60% higher over the $446m posted in the same period the previous year.
One reason for this is Plug’s rising operating expenses, which grew 30% to $432m in the first nine months of 2023, up from $332m the previous year.
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However, the $75m cut, even taken without the one-off $15m implementation cost, would not be enough to bring spending back down to 2022 levels.
The news comes just a few weeks after Plug appeared to be on the cusp of securing a $1.6bn loan from the US government to expand its operations by a further six sites, negotiations for which were ongoing at the time.
The embattled company has been struggling to lift its slumping share price after a litany of problems with its hydrogen supply chain in 2023, which resulted in Plug admitting in November that it may not have enough cash to continue operations for a full 12 months.
After crashing to a four-year low in January on the back of the company’s plan to sell up to $1bn in stock, Plug’s share prices have recovered slightly to settle at around $4.24 today, the same level they were at after the company’s difficult Q3 2023 results and around 73% lower than the $15.81 prices Plug’s shares commanded a year ago.
“The implementation of this strategic plan is essential for Plug to sustain its market leadership and continue to provide innovative renewable energy solutions,” said Andy Marsh, CEO of Plug Power. “We are confident that this strategic realignment will strengthen our competitive position and contribute to our long-term success.”
