Veoneer: Financial Report January - March 2019
STOCKHOLM,April 29,2019 --Financial Summary - Q1'19
Consolidated Net Sales $494 million
Net Sales growth (17)%,Organic Sales1 growth (12)%
Active Safety Net Sales growth (10)%,Organic Sales1 growth (3)%
2019 Outlook
Light vehicle production decline low to mid single digits versus 2018
Organic Sales1 decline in the mid single digits versus 2018
Currency translation impact on sales unchanged at ~(2)% versus 2018
Operating loss,cash flow weaker in H1'19,expected improvement in H2'19
Business Highlights
Veoneer Order Book at the beginning of 2019 was more than $19 billion as compared to approximately $16 billion one year earlier
Q1'19 Order Intake remains strong,LTM approximately $1.2 billion average annual sales with Active Safety at similar levels to 2018
Market adjustment initiatives are expected to deliver margin and cash flow improvements during the H2'19 and into 2020
The Company is considering alternatives for a capital markets raise of up to $500 million
Comments from Jan Carlson,Chairman,President and CEO
The future of transportation belongs to Collaborative Driving. We believe that in the not too distant future,the vast majority of all cars sold will be equipped with advanced driving assistance technology. We also believe that Veoneer,with our cutting-edge offering in a broad range of Active Safety products,will be one of the leaders in this emerging industry. However,the speed of this transition is proving more difficult to predict than earlier anticipated. We have to adjust our speed to changing road conditions.
At present,we see changes in the market. The first quarter was weaker than expected. Light vehicle production during the first quarter deteriorated beyond market expectations. In addition,Veoneer sales declined more than the light vehicle production primarily driven by our high-level content on premium car models in current deliveries. This vehicle segment saw a sharper production decline than the general market.
We currently see these trends continuing through 2019,primarily due to weak markets in China and Europe. We still expect the second half,mainly the fourth quarter,to be stronger than the first half of 2019. We now anticipate our organic sales will decline for the full year 2019 as compared to 2018. We experienced continued increasing RD&E costs during the quarter. This w as mainly driven by the complexity of certain projects,change requests from our customers and high level of new hires.
At the same time,our order intake continues to be strong. Our strategically important Active Safety business specifically show ed progress. While launch schedules into 2020 are mainly on track,we see some potential customer launch delays and lower production volumes than previously expected.
Developing cutting-edge technology for the next generation of automotive mobility requires resources,particularly in a situation when the order intake continues to be strong. In consideration of this and the changed market conditions,the company has decided to seek additional funding to help secure the continued development of our product portfolio.
Moving forward,we will continue our focus on growth and take firm internal actions to adjust to the market changes by:
increasing our efforts on the initiatives around investment priorities,as announced in the fourth quarter 2018 earnings report,
improving balance sheet and cash-flow efficiency,including restrictions on capital expenditures and focus on operating working capital,
undertaking several gross margin improvement initiatives,
maintaining RD&E costs relatively flat at a maximum of $600 million for the full year 2019,
enhancing efficiency and focus on winning orders within the product portfolio,
reviewing our brake control business,a process that is well under way,and
reviewing the focus of Zenuity,as the market opportunities move to Collaborative Driving and self-driving is pushed out in time.
Our belief is firm: The future belongs to Collaborative Driving. By Creating Trust in Mobility we believe we are well on our way to realizing the vision. Veoneer is built on close to 70 years of developing safety systems within Autoliv,a pioneer in automotive safety. A vital part of our heritage is our ability to patiently build profitable business models based on innovation.
As described above,we see deteriorating business conditions in the near term,including lower than expected light vehicle production. We also do not expect to see the effects of our efficiency and prioritization initiatives until the latter part of the year and into 2020. This situation,along with our capital needs for RD&E due to continued strong order intake,execution of current customer projects and the continued development of our product portfolio,has led the Company to consider alternatives for approaching the capital markets for a capital raise of up to $500 million.
We are fully committed to address the short-term challenges head on. We have a strong and dedicated management team,cutting edge technology,a talented work force,and a competitive product portfolio with an order book of more than $19 billion points toward a strengthened future market position. These building blocks will help establish Veoneer among the top companies in the development of Active Safety and Collaborative Driving.
Contacts:
Thomas Jonsson - EVP Communications & IR
+46-8-527-762-27
thomas.jonsson@veoneer.comand
Ray Pekar - VP Investor Relations,+1-248-794-4537
ray.pekar@veoneer.com.
Inquiries - Company Corporate website www.veoneer.com.
This report is information that Veoneer,Inc. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication,through the agency of the EVP Communications and IR set out above,at 08:30 CET on Monday,2019.
An earnings conference call will be held today,2019 at 14:00 CET. To follow the webcast or to obtain the phone number/pin code,please see www.veoneer.com. The slide deck will be available on our website prior to the earnings conference call. See also the Non-U.S. GAAP Financial Measures section on page 8 of this earnings release for further disclosures.
1For these non-U.S. GAAP financial measures,see the reconciliation tables in this earnings release,including the Non-U.S. GAAP Financial Measures section on page 8. See the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking organic sales non-U.S. GAAP financial measure.
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