Polestar publishes Q2 2024 results: 82% growth in global deliveries

Polestar, reports its preliminary unaudited financial and operational results for the second quarter ended June 30, 2024.

Deliveries were 13,150 cars, an 82% increase compared to the first quarter, taking global deliveries for the first six months of the year to 20,371, with strong momentum especially in the USA, Sweden, Norway and Germany. At the same time, active management actions improved inventory turnover and reduced the number of cars in stock by approximately 30% when compared to Q4 2023. Cash and cash equivalents were USD 669 million as of June 30, 2024.

 Recent developments:

• Appointed Michael Lohscheller as Polestar CEO, effective October 1, 2024. Michael previously served as CEO of Opel, VinFast and Nikola and brings a wealth of expertise in the automotive industry, particularly in navigating competitive markets and scaling businesses.
• Appointed Philipp Römers as Head of Design and Michael Manske as Head of Global Communications & PR. Phillip joins from AUDI AG where he was Head of Exterior Design, and Michael from Volkswagen Group where he held a variety of roles.
• Commenced Polestar 4 SUV coupé deliveries in Europe. Initial vehicles delivered to customers in Germany, Norway, Sweden, Netherlands, Denmark and Belgium.
• Started production of luxury SUV, Polestar 3 in South Carolina, USA. The first South Carolina-produced cars are being handed over to customers in the next few weeks.
• Secured up to USD 300 million in external funding, in the form of a one-year revolving term loan facility and intended to be used for general corporate purposes.
• Filed 2023 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission, and as a result, regained reporting compliance under Nasdaq Listing Rule 5250(c)(1).

Outlook

As previously reported, sales momentum seen in the second quarter had a positive impact on inventory levels and cash flow. Polestar remains confident of a stronger second half of the year, particularly in the fourth quarter as sales of the two premium SUVs build.

Conference call and upcoming events

Polestar management will hold a live audio webcast today 29 August 2024 at 08:00 US Eastern time (14:00 Central European Summer Time). The live audio webcast will be available at https://https://investors.polestar.com/events/event-details/q224-results-webcast.

Following the completion of the call, a replay will be available at https://investors.polestar.com

Key financial highlights

The below table summarises key preliminary unaudited financial results for the six months ended June 30, 2024.
(in millions of U.S. dollars) (unaudited)

• Revenue decreased by USD 319.6 million or 26%, mainly due to lower global vehicle sales and higher discounts in a competitive market.
• Gross result decreased by USD 50.7 million to a gross loss of USD 29.1 million with lower vehicle sales and higher discounts. Cost of sales was also impacted as IP related to the Polestar 2 previously depreciated into research and development expense is now capitalized into inventory and released into cost of sales upon inventory sale.
• Selling, general and administrative expense decreased by USD 36.8 million, or 8%, with management actions offsetting costs for promotional activities related to commercial campaigns and events for Polestar 3 and Polestar 4 global launches.
• Research and development expense decreased by USD 59.7 million or 72% to USD 23.3 million mainly driven by increased capitalization for future car models and Polestar 2 IP amortization now being capitalized in inventory.
• Other operating income decreased by USD 14.5 million or 38% .
• Operating loss decreased by USD 31.2 million or 6%, with lower revenue offset by cost management actions.

Key financial highlights

The below table summarises key preliminary unaudited financial results for the three months ended June 30, 2024.
(in millions of U.S. dollars) (unaudited)

• Revenue decreased by USD 118.4 million or 17% due to lower global volumes and higher discounts.
• Gross result decreased by USD 5.1 million, with an impact of lower global volumes and higher discounts partially offset by positive impact of impairment release and some normalisation of revenue recognition on sales of cars to China JV.
• Selling, general and administrative expenses were down USD 33.1 million or 13% with cost management actions.
• Research and development decreased by USD 35.7 million or 76% mainly due to higher capitalization of internal development program expenditures and Polestar 2 IP amortization now being capitalized in inventory.
• Other operating income decreased by USD 32.4 million, primarily due to foreign exchange effects.
• Operating loss decreased by USD 31.3 million or 12%.

Cash flow highlights

The below table summarises preliminary cash flow for the six months ended June 30, 2024.
(in millions of U.S. dollars) (unaudited)

• Operating cash outflow of USD 166.1 million, less than the operating loss, as improved working capital mainly due to inventory management actions primarily seen in the second quarter.

• Investing cash outflow of USD 354.3 million, predominantly driven by intellectual property investments related to the Polestar 3, Polestar 4 and Polestar 5 as well as USD 34.3 million capital injection into China JV.

• Financing cash inflow of USD 440.8 million, with proceeds from USD 950 million club loan facility, partially offset by principal repayments on borrowings and trade financing facilities.

Preliminary key operational highlights

The below table summarises key preliminary operational results as of and for the six months ended June 30, 2024:

1. Represents the sum of total volume of vehicles delivered for (a) external sales of new vehicles without repurchase obligations, (b) external sales of vehicles with repurchase obligations, and (c) internal use vehicles for demonstration and commercial purposes or to be used by Polestar employees (vehicles are owned by Polestar and included in inventory). A vehicle is deemed delivered and included in the volume figure for each category once invoiced and registered to the external or internal counterparty, irrespective of revenue recognition. Revenue is recognized in scenarios (a) and (b) in accordance with IFRS 15, Revenue from Contracts with Customers, and IFRS 16, Leases, respectively. Revenue is not recognized in scenario (c).
2. Represents the markets in which Polestar operates.
3. Represents Polestar Spaces, Polestar Destinations, and Polestar Test Drive Centers.
4. Represents Volvo Cars service centers to provide access to customer service points worldwide in support of Polestar’s international expansion.

• Global volumes decreased 7,497 to 20,371 cars, with the decline predominantly driven by the absence of Hertz sales. Sales mix improved towards Retail sales versus fleet sales, and Polestar 2 MY23 was sold out.
• Polestar now has 189 locations and 1,163 service points across its markets, up 39 and 34, respectively, when compared to the three months ended June 30, 2024.

SOURCE: Polestar