Veoneer cuts sales forecast, remains downbeat on auto industry
STOCKHOLM: Swedish auto technology group Veoneer cut its full-year sales forecast on Wednesday and remained downbeat about global car production, but a smaller-than-expected third-quarter operating loss supported the company’s shares.
A deep slump in auto production has hit Veoneer and the wider automotive industry hard, forcing the company to raise capital earlier this year to shore up its balance sheet.
“The automotive industry faced a volatile and challenging quarter, with light vehicle production being weaker than anticipated in July across most of our major markets,” Veoneer CEO Jan Carlson said in a statement.
“We see this challenging environment in our industry, to continue for some time”.
Veoneer’s stock, which has more than halved in value over the past twelve months, was up 2.3% at 1139 GMT, with investors having factored in the dismal demand backdrop to a large extent and focusing more on the company’s solid cost management.
The firm, which makes radars, vision systems and software for advanced driver assistance systems and autonomous driving, said its quarterly operating loss grew to $122 million from a loss of $58 million a year-earlier, better than the mean forecast for a $133 million loss according to Refinitiv data.
The company said it now expected organic sales to decline by a “low-double-digit” percentage in 2019, versus a previous forecast for a “high-single-digits” drop.
Reflecting the tough conditions, Continental, which partly competes with Veoneer, on Tuesday booked a 2.5 billion euro ($2.8 billion) impairment, saying it did not plan for a material improvement in global car production during the coming five years.
Veoneer said it expected a lower operating loss in the fourth quarter compared with the third quarter and Carlson told Reuters he expected the company to grow again in 2020, despite the risk of delays to some customer launches.
Carlson said Veoneer did not plan to raise more capital in addition to the $627 million it took in earlier this year, but noted “nothing can be guaranteed in a market like this”.