Polar Star 3
Credit: North Star
Swedish manufacturer of electric vehicles polar Star On Friday, the company said its third-quarter operating loss narrowed year-over-year as revenue more than doubled and confirmed it still expects to deliver 50,000 vehicles in 2022.
But the company has warned that higher costs and supply chain problems will continue to weigh down its profits through 2023.
Here are the key numbers from Polestar third quarter income statementits first public company since its merger with a specialized acquisition company in June.
- Income: $435.4 million vs. $212.9 million in the third quarter of 2021.
- Operating losses: $196.4 million compared to $292.9 million a year ago.
Despite an operating loss, Polestar was able to report a net income of $299.4 million, or 14 cents per share, thanks to an accounting credit associated with the revaluation of future share payments. (Because Polestar’s share price has fallen since it went public, it will have to pay back less than it previously expected, hence the loan.)
Shares rose more than 16% in early trading on Friday after the report.
“I would like to reiterate: Polestar is a true car company,” CEO Thomas Ingenlath said during an earnings call. “Today we are putting cars on the road and executing our ambitious growth plan.”
Chief Financial Officer Johan Malmqvist said Polestar’s lower operating loss was helped by its cost-cutting efforts, in particular short-term cuts in advertising and marketing spending. On the other hand, headwinds with foreign exchange exacerbated the losses, and they are expected to continue into the next year.
“Because our vehicles are made in China, most of our costs are in the yuan, which has appreciated against European currencies, resulting in a higher selling price,” Malmqvist said during a profit and loss call.
Malmquist said Polestar still expects to deliver 50,000 vehicles in 2022, which will generate about $2.4 billion in revenue for the full year, in line with his previous forecast. 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 on their way to customers, he said.
Polestar ended the third quarter with around $988 million in cash and has since received a $1.6 billion credit line from its two main owners, Volvo Cars and Chinese automaker Geely. This is enough to fund the company until 2023, Malmqvist said.