A123 fails to electrify market with first public results

Lithium ion battery manufacturer A123Systems turned in disappointing results for its first quarter of public reporting, marking up increased losses on only slightly higher revenues compared to the same quarter last year.

Net losses for the third quarter of 2009 stood at $22.8m, up from $19m in 2008, on revenues of $23.6m, up just slightly from $22.9m from the same period last year.

The company blamed the increased losses on higher operational expenses, resulting from investments designed to scale up its capacity. Operating expenses were rose from $19.5m a year ago to $20.9m in the third quarter, including $600,000 of "ramp-up" expenses related to the development of a new manufacturing plant in Michigan.

"Our revenue can be linked to the timing of project starts. The result is that quarterly comparisons, both year on year and sequential, can be skewed," said chief financial officer Michael Rubino, pointing out that its electric grid business was particularly project-based. "As management executives we are more focused on long-term and yearly objectives."

The company, which completed its IPO in late September, is engaged in a major expansion drive having received a $249m grant from the Department of Energy's Electric Drive Vehicle Battery and Component Manufacturing Initiative to build manufacturing facilities in the US, and is already seeking a further $233m in loan funding from the DoE.

"As we look ahead, we're increasing our level of vertical focus to optimise our performance in each of our markets," said CEO David Vieau. To this end, it has created an automotive systems group and recruited new executives in recent months, while also launching a new Cell group to help it to fulfill its consumer product commitments.

A123Systems designs and manufactures lithium ion batteries, and has been in production for four years. Its largest market is transportation, and it is expected top grow rapidly as a result of the flood of electric vehicles that are due to be released in the next couple of years.

However, the deal that the firm signed with Chrysler in April to provide batteries for its Envi electronic vehicle initiative must now be in question, given Chrysler's decision this week to can its electric vehicle programme.