POWERCELL SWEDEN AB Interim report third quarter 2023
Yet another quarter with the strongest gross margin in the industry
July - September 2023 | January - September 2023 |
- Net sales SEK 69.9m (55.6), growth of 26% compared to same quarter previous year
- Gross profit increased 82% to SEK 36.1m (19.8) and gross margin of 51.6% (35.5)*
- Operating income SEK -6.5m(-24.5)
- Income after tax SEK -6.6m(-19.9)
- Operating cash flow SEK -51.9m(-11.0)
- Earnings per share (basic & diluted) SEK -0.22(-0.37)
- Net sales SEK 182.8m (142.9), growth of 28% compared to same period previous year
- Gross profit increased 39% to SEK 77.0m (55.2) and gross margin of 42.1% (38.6)*
- Operating income SEK -64.4m(-77.7)
- Income after tax SEK -53.0m(-61.7)
- Operating cash flow SEK -47.0m(-82.8)
- Earnings per share (basic & diluted) SEK -1.19(-1.15)
Significant events during the third quarter
- PowerCell applies for listing on Nasdaq Stockholm.
- Follow-uporder from H2FLY for hydrogen-electric powered aircraft.
Significant events after the end of the reporting period
- No significant events after the end of the period.
Key performance indicators
SEK million, unless other stated | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | 2022 | ||||
2023 | 2022 | 2023 | 2022 | ||||||
Net sales | 69.9 | 55.6 | 182.8 | 142.9 | 244.7 | ||||
Gross profit | 36.1 | 19.8 | 77.0 | 55.2 | 113.0 | ||||
Gross margin*, % | 51.6 | 35.5 | 42.1 | 38.6 | 46.2 | ||||
Operating income | -6.5 | -24.5 | -64.4 | -77.7 | -75.0 | ||||
Net income | -6.6 | -19.9 | -53.0 | -61.7 | -58.2 | ||||
Earnings per share (basic and diluted), SEK | -0.22 | -0.37 | -1.19 | -1.15 | -1.09 | ||||
Shareholder equity ratio, % | 60.8 | 69.8 | 60.8 | 69.8 | 70.2 | ||||
Operating cash flow | -51.9 | -11.0 | -47.0 | -82.8 | -120.5 | ||||
*As from 1 January 2023, PowerCell presents certain indirect costs related to the production as Costs of goods and services sold. Previously, these costs were presented as Selling and administrative expenses. The change impacts the gross margin negatively with 2.0 percentage points for third quarter and 4.5 percentage points in the period January - September 2023. The operating income is not affected. The change is made prospectively as from 1 January 2023 which means that the comparative periods has not been adjusted. Please refer to page 16, note 2 "Accounting policy" for further details.
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Interim report third quarter 2023
The CEO's comments
Improved operating income and ramping up for serial deliveries
In the third quarter, we achieved organic growth of 26 percent and operating income amounted to SEK -6.5m,(-24.5). Even though this is a loss, the operating leverage gives a strong year- over-year improvement. With our proven industrial offer for hydrogen electric solutions, we grow at a higher pace than the underlying market development. The preparations for serial deliveries are running according to plan and with Bosch as our contract manufacturer we have an asset-light business with operational leverage. PowerCell is well positioned to accelerate growth in the market for sustainable, zero emission solutions.
In the quarter, growth twelve-month rolling was 42 percent and net sales amounted to SEK 69.9 million. The revenue increase is driven by a growing number of OEM customers who want to use our hydrogen electric solutions in commercial applications with significant volumes. We have a leading position in the aviation and marine segments, and it is encouraging to see how interest in hydrogen electric solutions continues to spread to more industries. In the quarter, revenue was positively impacted by increased royalty fees from Bosch which is reflecting their growing hydrogen electric business in the automotive segment.
Gross margin in the quarter increased 16.1 percentage points to 51.6 percent. However, the gross margin was temporarily positively impacted in the quarter by an income with exceptional high profitability. We are in a new phase with market driven growth from commercial applications and have left early-stage tech exploration. Stronger OEM demand with deployment into commercial applications puts different demands on the product offering from PowerCell which also provides long-term volume commitment and an interesting after-market business. Following the direction set out in the Q1 report 2021, we have focused on improving our product offering, industrialization and productivity to make sure that when the market starts to grow, we scale up operations that is lean and sustainable. Our growth will contribute to our future profitability will contribute to our future profitability, while we continue to invest in the next generation of technology
First deliveries of fuel cell stacks from Bosch Partnering with Bosch, a world leading supplier in industrialization and industrial technology, for the manufacturing of our fuel cell stack S3 gives us important operational advantages. In the quarter, we received the first deliveries from Bosch's European unit, and we expect to take advantage of their global volume production capabilities in due course. With this collaboration, we can focus on the assembly and delivery of fuel cell systems, which is expected to have a positive impact on our working capital and reduce the need of investments in
CAPEX.
Strong development in aviation segment
Among our business successes in the quarter, I would
like to highlight the follow-up order from German H2FLY for deliveries of full fuel cell systems to aircraft. We signed the first order with H2FLY in June 2022 and the new contract is yet another confirmation of our strong position in the fast growing transition to emission-free, sustainable aviation. Another key event in the quarter is the progress we make together with ZeroAvia in creating emission-free, commercial aircraft. A year ago, we signed the world's first ever contract covering serial delivery of hydrogen fuel cell stacks to the aviation industry with ZeroAvia. On 19th of July 2023, ZeroAvia announced the successful completion of the first phase of certification flight testing of the ZA600 system. Beside passing significant flight test milestones, ZeroAvia has secured pre-orders for nearly 2,000 engines from several of the major global aviation OEM´s and is on track for commercial operations in 2025. I am proud to report that we have in total 18 different customer application projects in the highly demanding Aviation segment.
Application to be listed on Nasdaq main market We have proven that our offering Industrialized Innovation is a winning concept, and we have a clear strategy to continue our growth journey. One step in this journey is the application to be listed on Nasdaq Stockholm, which is a natural step as we as a company and the hydrogen electric industry as a whole mature and large-volumecommercial applications become a reality. To better capture future opportunities, we have strengthened the Management Team. I'm happy to welcome Alison Arnold as Chief Marketing Officer and Victor Åkerlund as Chief Analytics and Sustainability Officer to PowerCell. At PowerCell, our driving force is the desire to create a more sustainable, emission-free
world. PowerCell has an important offering that supports the transition to an emission-free society and we are well positioned to take advantage of the growing interest for our environmentally friendly solutions.
Richard Berkling
CEO
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+51.6%
Gross margin July - September 2023
Interim report third quarter 2023
Financial performance July to September
Net sales
Sales in the quarter increased 26% to SEK 69.9m (55.6) compared to the same period last year where the Aviation segment showed strongest growth. Aviation is together with the Marine segment, PowerCell´s largest customer segments. Sales of products increased with about 84%, making product sales the major part of the product mix in the quarter. Royalty fees of SEK 12.0m (1.5) from Robert Bosch GmbH are reported as net sales in the quarter, a substantial increase from last year.
Gross profit and operating income/loss
Gross profit amounted to SEK 36.1m (19.8) with a gross margin of 51.6% (35.5).
During 2023, PowerCell has changed the presentation of certain indirect material and labor costs, such as warehouse personnel, transportation and warranty costs, etc. For the third quarter, the change means that SEK 1.4m was reported as Cost of goods sold instead of in Selling and administrative costs. This affects the gross margin with about 2.0 percentage points and a comparable gross margin versus last year would be 53.6% (35.5). Further reading on page 16, note 2 "Accounting policies".
Operating expenses increased 27% to SEK 54.9m (43.3). Other operating costs amounted to SEK -4.8m(-8.7) and relates fully to operating exchange losses. Other operating income amounts to SEK 17.0m (7.8) and includes operating exchange gains SEK 7.4m (7.0) and R&D grants SEK 9.6m (0.8). Majority of R&D grants in quarter comes from EU and relates to projects within aviation and the heavy-duty truck industry. Costs related to the EU granted projects are to be found in OPEX as R&D costs. In addition to EU granted projects and development expenditures that are capitalized, Powercell has R&D activities and expenditures focusing on future technical solutions.
Operating income amounted to SEK -6.5m(-24.5).
With the strong market interest in the company's products and several new customer agreements, PowerCell has entered into a new phase of product development. In the quarter, SEK 4.1 was capitalized as development expenditures related to the development of the new PS200 system.
Net income and financial items
Net financial items amounted to SEK -0.1m (4.6) and mainly related to revaluation effects in bank accounts denominated in foreign currency, primarily EUR. Net income in the third quarter was SEK -6.6m(-19.9).
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Interim report third quarter 2023
Cash flow
Operating cash flow was SEK -51.9m(-11.0) and total cash flow was
SEK -59.7m(-22.2), impacted negatively by changes in working capital, but is caused by activities in growing net sales.
Cash flow from investing activities is effected from PowerCell entering into a new phase of product development. In the quarter, SEK 4.1m is therefore capitalized as intangible assets.
Financial position
PowerCell's financial position and liquidity are satisfactory. Cash and cash equivalents amounted to SEK 134.5m on 30 September 2023.
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Interim report third quarter 2023
Financial performance January to September
Net sales
Sales year to date increased by 28% to SEK 182.8m (142.9) compared to the same period last year. Most customer segments showed strong growth with the majority of the sales generated by the Aviation and Marine segments. The business mix continued to improve with more commercial customers as well as products and services with a higher value add. Royalty fees of SEK 15.6m (4.4) from Robert Bosch GmbH are reported as net sales in the period.
Gross profit and operating income/loss
Gross profit increased by 39% to SEK 77.0m (55.2), with a gross margin of 42.1% (38.6). The gross margin was positively impacted by the change in product mix with increased royalty fees from Robert Bosch GmbH and increasing engineering service sales.
In 2023, PowerCell have changed the presentation of certain indirect material and labor costs, such as warehouse personnel, transportation and warranty costs, etc. For the first nine months, the change means SEK 8.3m in Costs of goods sold instead of in Selling and administrative costs. This affects the gross margin with about 4.5 percentage points and a comparable gross margin versus last year would be 46.6% (38.6).
Operating expenses amounted to SEK 156.3m (134.2), which reflects a planned scale up to prepare the organization for continued growth. The increase is less than the increase in net sales, giving an operating leverage. Other operating costs amounted to -16.0m(-14.6) and relates fully to operating exchange losses.
Other operating income amounts to SEK 30.9m (15.9) and includes operating exchange gains SEK 11.7m (12.0) and R&D grants SEK 18.9m (3.5). Majority of R&D grants in 2023 come from EU and relates to projects within aviation and heavy-duty truck industry. Costs related to the EU granted projects are to be found in OPEX as R&D costs. In addition to EU granted projects and development expenditures that are capitalized, Powercell has R&D activities and expenditures focusing on future technical solutions.
With the strong market interest of the company's products and several new customer agreements entered, PowerCell has entered into a new phase of product development. In the second and third quarter, SEK 9.7m was capitalized as development expenditures related to the development of the new PS200 system.
The operating income in the nine-month period was SEK -64.4m(-77.7).
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Interim report third quarter 2023
Net income and financial items
Net financial items amounted to SEK 11.4m (15.9) and mainly related to revaluation effects in bank accounts denominated in foreign currency, primarily EUR. Net income in the nine-month period was SEK -53.0m(-61.7).
Cash flow
Operating cash flow was SEK -47.0m(-82.8) and total cash flow was SEK -71.3m(-110.1), impacted by the operational result, decrease in working capital, with increases in inventory and positive effect from liabilities.
Cash flow from investing activities is effected from PowerCell entering into a new phase of product development. In the second and third quarter, SEK 9.7m is therefore capitalized and viewed as an intangible asset.
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Interim report third quarter 2023
Other information
Employees
On 30 September 2023, the Group had 151 (105) employees measured as full-time equivalents, FTE.
The share
The share is listed on Nasdaq First North Growth Market under the ticker PCELL. On 30 September 2023 the total number of outstanding shares were 52,142,434. PowerCell holds no treasury shares.
Ten largest owners per 30 September 2023
Votes and | ||
Name | Number of shares | capital |
Robert Bosch | 5,848,531 | 11.22% |
BlackRock | 2,744,213 | 5.26% |
Avanza Pension | 1,547,562 | 2.97% |
green benefit AG | 976,977 | 1.87% |
Legal & General | 853,264 | 1.64% |
Swedbank Robur Funds | 392,160 | 0.75% |
KPL Kapitalförvaltning AS | 355,899 | 0.68% |
CPR Asset Management | 340,051 | 0.65% |
Invesco | 328,516 | 0.63% |
VanEck | 291,484 | 0.56% |
Total 10 largest owners | 13,678,657 | 26.23% |
Other | 38,463,777 | 73.77% |
Total | 52,142,434 | 100.00% |
Source: Modular Finance AB. Compiled and processed data from various sources, including Euroclear, Morningstar and the Swedish Financial Supervisory Authority (Finansinspektionen).
Risks and uncertainties
Through its operations PowerCell is exposed to risks and uncertainties. For extensive information of the most significant operational and financial risks, please see pages 52-53 and pages 62-64 in the Annual Report for 2022. The conflict in Ukraine has created great uncertainty about the development of the world economy. PowerCell has a very limited business and exposure to Russia and Ukraine and is not directly affected of the conflict. However, the indirect consequences can be extensive and lead to disruptions in the supply chain and increased costs. PowerCell follows the continued development of the conflict carefully. The current macro environment, with high inflation and increasing interest rates impacts PowerCell, both through suppliers and customers. PowerCell can mitigate through pricing and productivity measures.
Parent company
The main part of the Group´s activity is carried out in the parent company PowerCell Sweden AB. Out of 151 employees, 147 are employed by the parent company. The parent company's revenue amounted to SEK 69.9m (55.6) in the third quarter. Operating profit/loss for the quarter amounted to SEK -10.1m(-24.0)
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Interim report third quarter 2023
Assurance of the Board of Directors
The Board of Directors and the CEO warrant that this interim report for Powercell Sweden AB (publ), 556759- 8353 provides a true and fair picture of the parent company's and the Group's operations, financial position and results, and describes the significant risks and uncertainties of the parent company and the companies included in the Group.
Gothenburg, 19 October 2023 | ||
Magnus Jonsson | Nicolas Boutin | Helen Fasth Gillstedt |
Chairman | Director | Director |
Riku-Pekka Hägg | Karin Ryttberg-Wallgren | Uwe Hillmann |
Director | Director | Director |
Annette Malm Justad | Richard Berkling |
Director | CEO |
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Interim report third quarter 2023
Auditor´s report
Powercell Sweden AB (publ), 556759-8353
Introduction
We have reviewed the condensed interim financial information (interim report) of PowerCell Sweden AB as of 30 September 2023 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Gothenburg, 19 October 2023 Öhrlings PricewaterhouseCoopers AB
Fredrik Göransson
Authorized Public Accountant
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Interim report third quarter 2023
Condensed income statement - Group
SEK thousand | Note | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | 2022 | ||||
2023 | 2022 | 2023 | 2022 | |||||||
Net sales | 3 | 69,881 | 55,622 | 182,770 | 142,911 | 244,691 | ||||
Costs of goods and services sold | -33,797 | -35,850 | -105,777 | -87,724 | -131,668 | |||||
Gross profit | 36,084 | 19,772 | 76,993 | 55,187 | 113,023 | |||||
Selling and administrative costs | 4 | -27,511 | -22,343 | -80,854 | -69,658 | -98,559 | ||||
Research and development costs | -27,401 | -21,040 | -75,435 | -64,554 | -92,329 | |||||
Other operating income | 6 | 17,041 | 7,763 | 30,885 | 15,936 | 21,807 | ||||
Other operating costs | 7 | -4,751 | -8,695 | -16,035 | -14,642 | -18,961 | ||||
Operating income | -6,538 | -24,543 | -64,446 | -77,731 | -75,019 | |||||
Net financial items | -121 | 4,629 | 11,444 | 15,937 | 16,801 | |||||
Profit (loss) after financial items | -6,659 | -19,914 | -53,002 | -61,794 | -58,218 | |||||
Income tax | 13 | 14 | 28 | 52 | 45 | |||||
Profit (loss) for the period | -6,646 | -19,900 | -52,974 | -61,742 | -58,173 | |||||
Other comprehensive income: | ||||||||||
Items that may be reclassified to profit or loss | ||||||||||
Exchange differences from foreign operations | 2 | -41 | 81 | -42 | 37 | |||||
Other comprehensive income for the period | 2 | -41 | 81 | -42 | 37 | |||||
Total comprehensive income for the period | -6,644 | -19,941 | -52,893 | -61,784 | -58,136 | |||||
Profit (loss) for the period and total comprehensive income are, in their entirety, attributable to shareholders of the Parent Company.
Earnings per share, calculated on profit (loss) for the year attributable to Parent Company shareholders of ordinary shares: | ||||||||||
SEK | Note | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | 2022 | ||||
2023 | 2022 | 2023 | 2022 | |||||||
Earnings per share, basic | 5 | -0.22 | -0.37 | -1.19 | -1.15 | -1.09 | ||||
Earnings per share, diluted | 5 | -0.22 | -0.37 | -1.19 | -1.15 | -1.09 | ||||
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Powercell Sweden AB published this content on 19 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 October 2023 06:08:10 UTC.
