Energy storage company Hydrogenics Corporation has reported a double-digit drop in revenue in its 2016 full-year financials but has underlined that it still sees significant growth potential for the year ahead.

Despite ending the year with lower revenue than in 2015, the Candian outfit’s CEO Daryl Wilson insists that Hydrogenics is going into 2017 with increased optimism about the year’s order flow and its strongest backlog ever.

In the company’s fiscal full-year report, revenue dropped by 19% from $35.9m the prior year to $29m. The company said that the year-over-year decrease was reflective of market dynamics, marking a decline in electrolyser sales for energy storage and industrial applications and significant projects in 2015 that were not repeated in 2016.

Gross margin increased to 20.7% in 2016 from 16.6% in 2015, reflecting the fact that several first-of-their-kind projects with lower margin profiles negatively impacted results in 2015. Fiscal 2016 was also positively affected by increased revenue within the Chinese mobility market, partially offset by lower adsorption of indirect fixed overhead costs and changes in product mix.

Due to a decrease in net research and development (R&D) expenditures, Hydrogenics also marginally reduced its cash operating costs from $14.1m in 2015 to $13.9m in 2016.

Major sale

Fourth quarter revenue saw an increase sequentially over the third quarter, reflecting the first of the company’s pre-commercial fuel cell shipments to Alstom Transport to be used in first-of-a-kind zero-emission fuel cell-powered commuter trains. A major sale of fuel cell power modules to China also contributed to improved Q4 results.

Hydrogenics Corporation chosen for $4m fuel cell deal in China

As a result, gross profit in the quarter stood at $2m compared to $1.7m the prior year due to product mix with a large lower-margin project.

However, company revenue in this quarter saw a decrease of 23% year-over-year, totalling $8.7m. The company attributes this to the lower revenue in its OnSite Generation business due to delivery timings.

Looking ahead, Wilson identified several key regions about which to remain optimistic. He said, “We anticipate an increase in revenue this year reflecting deliveries out of backlog along with new orders signed and delivered in 2017. Going forward, we see strong interest in our products across China and are upbeat that growth trends here will positively impact Hydrogenics as well as the entire fuel cell industry.”

“Hydrogenics is also expected to benefit from the trend towards increased energy storage and H2 fuelling station applications as well as higher demand for electrolysers for industrial, fuelling and energy storage applications across key markets such as Europe and Russia.”

Hydrogenics, headquartered in Ontario, Canada, provides hydrogen generation, energy storage and hydrogen power modules to enable the acceleration of a global power shift.