Ballard Power doesn't need automotive business to be profitable, CEO says

Ballard Power Systems Inc. (TSX: BLD.TO) expects to reach profitability in the medium term before commercialization of fuel cells for cars, CEO John Sheridan said at the company's annual meeting Wednesday.

"Our business strategy is to drive to profitability in these non-automotive nearer term markets, we see automotive then providing a very significant benefit on top of that," Sheridan said after the meeting.

However Sheridan was careful not to put a precise date on when the company would be making money.

"We're not going to repeat the mistakes of the past and give a specific time, at least not now," he said.

"We need to make more progress in terms of predictability of revenue and the solidity of our market position, but we do see it over medium term."

In 2002, the company boldly set a target of reaching profitability by 2007.

When former CEO Dennis Campbell took over in 2003, he was heralded as the man who would lead Ballard to "mass commercialization."

However Campbell ended up leading a restructuring of the company that has seen its workforce cut from 1,400 to fewer than 1,000, the sale of its German subsidiary, Ballard Power Systems AG, and a sharp drop in the stock price.

During the annual meeting Sheridan faced several questions from shareholders about the company's stock which have traded steadily lower in recent weeks.

Ballard shares closed down six cents at $5.14 on the Toronto Stock Exchange on Wednesday, a new 52-week low for the company and well off its highs of more than $200 the stock reached in 2000.

"The best thing we can possibly do to grow shareholder value is to execute strongly on the business plan. We think it is realistic, we think we have the right elements in place, we think we can deliver it successfully," Sheridan said.

"If we do, we think that will grow shareholder value."

Since Sheridan took over in the top job in 2006, Ballard has focused on growing its non-automotive business including forklifts, back-up power and residential cogeneration.

Last month, the company scaled back its sales outlook for two major customers, but held to its full-year revenue expectations as it reported its first-quarter financial results.

The fuel-cell maker, which reports in U.S. dollars, said it lost US$14.3 million or 12 cents per share on revenue of $13.6 million for the period ended March 31.

That compared with a year-earlier loss of $17.2 million or 13 cents per share on revenue of $9.4 million.

Overall, revenue for the year is expected to be between $55 million and $65 million.

Last week, Ballard signed a two-year agreement to supply Plug Power Inc.

The deal follows Plug Power's announcement that it has acquired General Hydrogen Corp., one of Ballard's customers. Another Ballard customer, Cellex Power Products, Inc., was also acquired by Plug Power earlier this year.

Under this new agreement, Ballard will supply Plug Power with fuel cell stacks for all of Plug Power's commercial sales in the materials handling market through April 2009.