February 18, 2009 / 6:19 PM / in 9 years

Ballard CEO says company could turn profit soon

(In U.S. dollars unless noted)

OTTAWA, Feb 18 (Reuters) - Ballard Power Systems BLD.TO (BLDP.O) is within striking distance of profitability, thanks to rising sales, widening profit margins and lower costs, the fuel cell developer’s chief executive said on Wednesday.

“We think profitability in the near term is very realistic,” Ballard CEO John Sheridan said at an investor conference in Vancouver. “We see that coming through continued progress in the short term.”

Ballard has forecast a 15 percent to 30 percent increase in 2009 revenue, to between $68 million and $78 million, as product shipments more than double from 2008 to 4,000 units.

It expects gross margin between 25 percent and 35 percent, partly reflecting product cost reductions, Sheridan said.

The company also forecast in late January a cash burn reduction of between $17 million and $27 million.

Revenue could get a big boost from a deal to supply back-up power systems for wireless base stations in India, which Sheridan said could swell from an initial contract worth $25 million to $75 million.

“India’s a bit of a sweet spot as we see it for fuel cells in terms of backup power, supplemental power,” he said at the CIBC conference monitored by webcast. “Huge economic growth, even in this global recession, growth likely in the 5-6-7% range ... and still almost explosive levels of growth in wireless telecoms.”

Ballard is acutely undervalued and has a strong opportunity to build shareholder value, Sheridan said.

Market weakness that drove shares lower was exacerbated by a major index fund liquidating about 5 million Ballard shares at year-end as it rebalanced its portfolio, the CEO said. Ballard stock fell about 50 percent in two days.

Ballard shares dipped 2 Canadian cents to C$1.37 on the Toronto Stock Exchange and added 4 cents to $1.10 on Nasdaq on Wednesday. The stock has lost about 70 percent of its value in the last six months. ($1=$1.26 Canadian) (Reporting by Susan Taylor; Editing by Frank McGurty)

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