Financial Report April - June 2021: Veoneer

STOCKHOLM, July 23, 2021 /PRNewswire/ -- Financial Summary - Q2'21

• Sequential improvement in operating loss and cash flow despite lower than expected LVP and continued supply chain challenges
• Net Sales $398 million, Net sales increase 116%, Organic Sales1 108%
• Active Safety Net Sales increase 149%, Organic Sales increase 140%
• Operating cash flow $(69) million.
• Cash balance $556 million

Outlook - FY'21

• Organic Sales1 growth YoY is expected to exceed 25%
• Active Safety Organic Sales1 growth YoY is expected to be in the range of 40-45%
• Currency translation impact is expected to be ~4%
• Operating loss is expected to improve in 2021 from 2020, Cash balance is expected to exceed $400 million at 2021 year-end
• Order intake in 2021 is expected to increase from 2020

Business Highlights

• Enters into a definitive merger agreement under which Magna International Inc. will acquire Veoneer
• Organic Sales growth outperformed the global LVP by ~58pp for Q2'21, expect out-performance of mid-teens for full year 2021
• Semiconductor supply shortages continue to create industry delivery and cost challenges
• Significant regional mix improvement in LVP in Q2 from Q1, mainly in North America, Europe and Japan
• Veoneer's ADAS and AD software unit Arriver performed first in vehicle demonstrations to customers with positive feedback
• Agreement Baraja to industrialize their LiDAR technology for the next wave of L2+ toL4 autonomous vehicle applications.
• China Active Safety momentum continues with new contract awards and launches during the quarter
• Order intake over the Last Twelve Months (LTM) was more than $530 million of average annual sales at the end of Q2'21

Comments from Jan Carlson, Chairman, President and CEO

On July 22 Veoneer entered into a definitive merger agreement under which Magna will acquire the Company. We believe this is a compelling transaction for our shareholders and all of our stakeholders. It will deliver significant and immediate value to Veoneer stockholders and reflects an attractive premium to our trading price and provides new opportunities for our employees to join one of the most capable suppliers in the mobility space. The plan is to finalize the agreement in the coming months and we will provide timely updates as the process progresses.

For the quarter, I was pleased with Veoneer's performance during a challenging period. Despite the uncertainty created by supply disruptions, the COVID-19 pandemic and sequentially lower light vehicle production leading to lower sales, Veoneer improved its gross profit and operating loss as well as its cash flow. These improvements were achieved through the progress of our on-going market adjustment initiatives, and we expect continuous progress throughout 2021 as sales increases and the results of the efficiency programs are expected to  keep our costs at near planned levels. 

Planned launches are on track, although the positive volume effects are somewhat held back by the short-term fluctuations in OEM demand. During the quarter we had five key launches, four out of which were Active Safety launches that will start to contribute to our expected strong organic sales growth in the quarters and years to come. The launch of the Geely EMA was especially significant for Veoneer as we are a full system and integration supplier to the vehicle. This is a flagship program for our Company, highlighting the strength of our vision, radar, ECU and software capabilities. It further highlights the current momentum we have in China where among other customer wins we signed yet another new customer for our vision technology.

Our order intake developed better in the quarter than what we expected,  due in part to new opportunities that we were able to capture and partly orders expected in the third quarter materializing already in the second quarter. We won orders across most products areas, highlighting the strength of our current product portfolio. With this positive development we are well on track to reach higher order levels in 2021 as compared to 2020.

The first Arriver perception and drive policy software running on the Qualcomm Snapdragon Ride platform has now been demonstrated in-vehicle to potential customers with encouraging initial feedback, a true milestone. During the quarter the Volvo XC40 Recharge, which runs the current generation of Arriver software, was picked as "Top Safety Pick+" by the Insurance Institute for Highway Safety in the United States, another proof point that we are on track to create a leading global challenger for Active Safety systems and software. 

These developments are the result of the strong execution of the entire Veoneer team and I would like to take this opportunity to thank all of Veoneer's associates for their focus and persistence in these volatile times.

An earnings conference call will be held today, Friday, July 23, 2021 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. 1For all Non-U.S. GAAP financial measures, see the reconciliation tables in this earnings release, including the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking Non-U.S. GAAP financial measures on page 11.

Contacts:
Thomas Jönsson - EVP Communications & IR, +46 8 527 762 27 or thomas.jonsson@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 06:00 CET on Friday, July 23, 2021.

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