Lower operating loss, confirms forecasts

Polestar 3

Courtesy of Polestar

Swedish electric vehicle manufacturer The North Star said Friday its third-quarter operating loss was down from a year ago as revenue more than doubled, and it confirmed it still plans to deliver 50,000 vehicles in 2022.

But the company has warned that rising costs and supply chain issues will continue to squeeze its margins through 2023.

Here are the key numbers from Polestar’s third quarter earnings report, its first as a public company after it merged with a special purpose acquisition company in June.

  • Revenue: $435.4 million, compared to $212.9 million in the third quarter of 2021
  • Operating loss : $196.4 million, down from $292.9 million a year ago

Despite the operating loss, Polestar was able to post a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payments. (Because Polestar’s stock price has fallen since its IPO, it will have to shell out less than expected, hence the credit.)

Shares rose sharply after the report and ended Friday’s session up more than 20%.

“I would like to reiterate: Polestar is a real automotive company,” CEO Thomas Ingenlath said on the earnings call. “We’re putting cars on the road today and delivering on our ambitious growth plan.”

Chief Financial Officer Johan Malmqvist said Polestar’s lower operating loss was helped by its efforts to cut costs, particularly short-term reductions in advertising and marketing spending. On the other hand, currency headwinds exacerbated the loss, and these are expected to continue into next year.

“As our cars are produced in China, the majority of our costs are in renminbi, which has strengthened against European currencies, resulting in a higher cost of sale,” Malmqvist said on the earnings call.

Malmqvist said Polestar still expects to deliver 50,000 vehicles in 2022, generating about $2.4 billion in full-year revenue, both in line with its earlier guidance. Those numbers imply deliveries of about 19,600 vehicles in the fourth quarter, generating about $924 million in revenue — and those vehicles are already built and in transit to customers, he said.

Polestar ended the third quarter with about $988 million in cash and has since secured a $1.6 billion line of credit from its two main owners, Volvo Cars and Chinese automaker Geely. That’s enough to fund the company through 2023, Malmqvist said.

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