(Recasts with conference call, figures in U.S. dollars unless noted)
By Allan Dowd
VANCOUVER, British Columbia, July 30 (Reuters) - Fuel cell developer Ballard Power Systems Inc. narrowed its losses in the second quarter, but said on Tuesday there are new delays with one of the first consumer products that will use its alternative energy technology.
Chief Executive Firoz Rasul said Ballard is "disappointed" problems with a component supplier has again forced Coleman Powermate to postpone plans to begin selling fuel-cell powered portable generators, but the company is not revising its revenue guidance for the year.
"They've told us they are looking at alternatives as well as well as helping to work with the supplier who is having difficulty, and have a couple of paths they are pursuing ," Rasul told analysts, declining to elaborate on what component or supplier was having problems.
When Ballard first announced its deal with Coleman, a unit of Sunbeam Corp. , there was hope they could be on the market by late 2001, but the project was snagged by regulatory delays unrelated to the fuel cells themselves.
Rasul told analysts Coleman has said it expects to have a solution to the most recent problem "soon," but added: "We've stopped predicting when 'soon' might be."
Fuel cells are seen as environmentally friendly alternatives to internal combustion engines, used either in generators or automobiles, because they produce power through chemical reactions rather than combustion. With certain fuel types, fuel cells produce power from hydrogen with only heat and water as byproducts.
While Ballard has never cited the Coleman generators has a major income source, they have been viewed as one of the first products using the new technology that will be available to the average consumer as fuel-cell powered cars continue in development.
The Vancouver-based company recorded a second-quarter net loss on Tuesday of $21.5 million, or 20 cents a share, in the period ended June 30, compared with a net loss of $25.7 million, or 28 cents a share, in the same three-month period last year.
Ballard credited the reduced loss largely to cost-cutting and foreign exchange gains spurred by a strengthening of the Canadian dollar during the quarter.
Revenues from products and engineering services increased $12.1 million to $21.5 million, and research and development costs jumped by $7 million to $27.4 million.
Eleven analysts surveyed by Thomson First Call had expected, on average, a loss of 41 cents a share in the quarter. Estimates had ranged from a loss of 30 cents per share to 50 cents per share.
Ballard's shares have been hammered in recent weeks over concerns that its technology will take too long to become commercially viable as it continues to spend money on research and development in an increasingly competitive market.
The company has denied it has any cash-flow problems, and restated its prediction that it will have net losses for the "next several years", but expects cash requirements in 2003 and 2004 will be less than in 2002 after it fully absorbs the costs of recent acquisitions.
Ballard said that without the costs of integrating the XCELLSIS and Ecostar units it acquired last year its loss for the second quarter would have been $15.9 million, 15 cents per share.
The company said it had cash and short-term investment reserves of $334.8 million, enough to fund its operation through 2004 when it has previously said it expects to raise additional capital.
Paul Lancaster, the vice-president for finance, said Ballard was sticking with its previous guidance of cash burn for operations of between $122 million and $144 million for 2002 with revenues of $82 million.
Ballard officials said they were encouraged by announcements by several automakers that they are speeding up efforts to get fuel cell-powered cars on the market.
Ballard's shares, before the results were released, closed down 55 Canadian cents at C$18.60 in Toronto, near the low end of a 52-week trading range of C$16,40 to C$65.95.
On Nasdaq the stock closed down 43 cents at $11.80. The have ranged from $49.89 to $10.31 in the past 52 weeks.
($1=$1.57 Canadian)