Ivory Coast Delays and US Tariffs Pose Risks Despite Fluence’s Growth

Strong Revenue Growth Anchored by Ivory Coast Project

Fluence Corporation Limited (ASX, FLC) has delivered an impressive 72.9% increase in revenue to $52.4 million for the year-to-date third quarter of 2025, primarily driven by the Ivory Coast Addendum project. This milestone underscores the company’s successful execution of its strategy to expand its high-margin Smart Product Solutions and recurring revenue streams across its diversified business units.

The Ivory Coast Addendum alone contributed an additional $18.5 million in revenue compared to the prior year, marking a pivotal factor in Fluence’s growth trajectory. While the gross margin dipped by 3 percentage points to 28.8%, this was largely attributed to the lower margins associated with the Ivory Coast project, offset by margin improvements in other segments such as Municipal Water and Wastewater (MWW), Industrial Wastewater & Biogas (IWB), and Southeast Asia & China.

EBITDA and Operational Efficiency Gains

EBITDA for the quarter and year-to-date stood at $1.2 million, reflecting an increase of $2.6 million and $6.2 million respectively over the previous year. This improvement was supported not only by revenue growth but also by disciplined cost management, including a $0.8 million reduction in selling, general and administrative expenses and research and development costs. All business units except Industrial Water & Reuse (IWR) reported EBITDA growth, highlighting the broad-based operational progress.

Cash flow remains healthy with $14.1 million in cash and $4.1 million in security deposits as of September 30, 2025. Despite an expected negative operating cash flow in Q4 due to timing of milestone payments and vendor settlements related to the Ivory Coast Addendum, the company forecasts positive operating cash flow for the full fiscal year.

Backlog and New Orders Signal Strong Pipeline

Fluence’s backlog stood at $75.7 million at the end of Q3, with more than $50 million expected to be recognised in fiscal 2026 and beyond. New orders for the quarter reached $17.2 million, a 9.6% increase over the same period last year, while year-to-date new orders totalled $39.7 million. Notably, the company anticipates Q4 2025 to be the strongest quarter for new orders, driven by growth in North America, Southeast Asia, and China markets.

Recent contract wins include significant projects such as the $12 million Nirobox ultra-pure water treatment plant for the Qurayyah Power Plant in Saudi Arabia and multiple wastewater treatment plants across Argentina, Italy, and the United States, reinforcing Fluence’s global footprint and diversified revenue streams.

Navigating External Challenges and Strategic Outlook

Fluence continues to monitor the evolving US tariff environment, which introduced higher import tariffs earlier in 2025. Management has implemented alternative manufacturing strategies to mitigate potential margin impacts, particularly for the MWW North America segment, and expects only minor effects on overall performance. The company remains cautious but optimistic about managing these external risks.

Looking ahead, Fluence maintains its full-year 2025 guidance of $80-95 million in revenue and $3-5 million in EBITDA, though it expects to finish closer to the lower end of this range. The Ivory Coast Addendum project remains on budget and largely on schedule, with commissioning nearing completion and milestone payments progressing as planned. The company is actively pursuing a long-term operations and maintenance contract for the Ivory Coast plant, which could provide a steady recurring revenue stream once finalized.