Ceres stock tumbles after Bosch ends partnership

Investing.com -- Shares of Ceres Power Holdings PLC (LON:CWR) plummeted by 37.4% as the market reacted to the news that Bosch (NSE:BOSH), a manufacturing partner and minority shareholder, is exiting the solid oxide fuel cells (SOFC) market.

This departure includes the termination of its partnership with Ceres and the intention to sell its 17% stake in the company.

The announcement came as a significant blow to Ceres, given that Bosch was one of its longstanding manufacturing partners.

While the immediate impact on Ceres's revenue forecasts for fiscal year 2025 appears minimal, the loss of future royalty streams from the partnership is a setback. The company was anticipating royalties from a South Korean manufacturing partner this year, with Bosch expected to follow in the subsequent fiscal year.

Bosch's strategic shift also led to the resignation of Uwe Glock, Bosch's representative Non-executive Director on the Ceres Board, effective immediately. The company is now faced with the challenge of replacing the royalties and finding a buyer for Bosch's shares.

Despite the negative implications of this announcement, there remains uncertainty regarding Ceres's financial outlook.

"Despite upgrading Ceres back to Sector Perform in December, we remained cautious on the name and did highlight risks of delays from partners such as Bosch. While this is a negative announcement for Ceres, there remains downside and upside risk to numbers at this stage. This greatly depends on the number of partners Ceres will announce this year (market expectations currently locked at one new major partner per year out to 2027)," according to an RBC analyst.