Veoneer: Financial Report October - December 2019

STOCKHOLM, Feb. 5, 2020 /PRNewswire/ --

Financial Summary - Q4'19           

• Financial results in-line with or better than our expectations           
• Net Sales $456 million           
• Net Sales decline 15%, Organic Sales¹⁾ decline 14%           
• Active Safety Net Sales decline 22%, Organic Sales¹⁾ decline 20%           
• Operating cash flow impacted by ~$(30) million of timing effects

Outlook - FY'20           

• Organic Sales¹⁾ are expected to increase in the mid-single digits, mainly driven by Active Safety and Brake Systems           
• Currency translation impact is expected to be negligible
• Operating loss and cash flow before financing activities¹ are expected to improve from 2019 levels (on a comparable basis)           
• Global LVP is estimated to decline in the low-single digits

Business Highlights           

• Market adjustment initiatives continue to drive underlying cost structure and balance sheet improvements            
• Order book at the end of 2019 remains approximately $19 billion despite ~9% lower LVP assumptions for the period 2020 to 2025            
• Order intake for 2019 of ~$550 million of average annual sales with Active Safety ~70%, this represents ~$2.5 billion of lifetime sales           
• VNBS JV (Asia Operations) divestiture closed on February 3, 2020, net cash proceeds of approximately $170 million           
• Order intake for 2020 is estimated to be approximately $1 billion of average annual sales for our core Electronics segment.

Comments from Jan Carlson, Chairman, President and CEO

Organic sales in the quarter were in-line with our expectations at the beginning of the quarter, despite some weakness in the LVP. Our operating loss was lower than expected at the beginning of the quarter, primarily due to continuing cost control activities across the company, particularly with respect to customer reimbursements and control of our RD&E costs. In general, our market adjustment initiatives are continuing to positively impact our cost structure.

During 2020 we intend to take further actions under our market adjustment initiative program. These actions include: further partnering, further focusing our product portfolio, reviewing certain customer contracts, and a continued focus on other cost improvement initiatives.

We are also continuing to define the scope and priorities of Zenuity, where the Polestar 2 and the Volvo XC 40 Recharge, both launching in the upcoming months, will be the first two vehicles with the full Zenuity software suite for collaborative driving. This is a major milestone and achievement for Zenuity.

2020 is a major customer launch year for Veoneer and we are gearing up for the launch of our fourth-generation vision systems during the first half of the year. The bulk of the launches, and importantly the higher delivery volumes, are concentrated toward the second half of the year which is when we expect Veoneer to return to organic sales growth.

We are basing our 2020 outlook on our core Active Safety and Restraint Control Systems businesses and our VBS US operations Brake Systems business, as we completed the divestiture of the Asian operations of our VNBS joint venture on February 3, 2020 as part of an on-going strategic review of our brake business.

In the early part of January, we participated to the Consumer Electronics Show where we showcased our latest solutions in Collaborative Driving, which further confirmed our decision to focus our sales, operations and development on Active Safety solutions where the driver remains involved. Customer feedback to our approach is very positive and we expect to win significant, profitable orders with our focused, refined Active Safety portfolio throughout 2020.

We are currently monitoring and taking appropriate actions on a daily basis related to the effects from the Corona virus outbreak in China. As always, the health and safety of our employees is our primary focus. To date we are not aware of any cases of the virus with our employees, however it is too early to assess the effects on our China business as this is an on-going situation.

For the next several quarters our focus is on preparing for: successful customer launches in 2020 and heading into 2021, market adjustment initiatives to continue to drive efficiencies and improve cash flow, and continuing to win profitable new business.

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 12:00 CET on Wednesday, February 5, 2020.

An earnings conference call will be held today, Wednesday, February 5, 2020 at 13:00 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 10 of this earnings release for further disclosures. ¹ For all 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 10. See the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking Non-U.S. GAAP financial measures.

Contacts:
Thomas Jönsson - EVP Communications & IR,
+46-8-527-762-27 or thomas.jonsson@veoneer.com and

Ray Pekar - VP Investor Relations,
+1-248-794-4537 or ray.pekar@veoneer.com.

Inquiries - Company Corporate website www.veoneer.com.

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