Financial Report April - June 2020
Financial Summary - Q2'20
- Underlying financial results better than expected, due to our Market Adjustment Initiatives (MAI)
- Net Sales of $184 million declined 62% including an Organic Sales1) decline of 53%
- Active Safety Net Sales of $79 million declined 57% including an Organic Sales decline of 56%
- Operating Cash flow of $(107) million
Outlook - FY'20 Indication
- Organic sales are expected to outperform the global LVP due to new program launches
- Currency translation impact is expected to be (1)%
- RD&E, net is expected to improve by more than $100 million from 2019, on a comparable basis
- Operating loss is expected to improve from 2019 levels (on a comparable basis), and Cash flow before financing activities1) is expected to be approximately $(200) million for H2'20
- MAI program contributed to our improved operating loss and cash flow performance, particularly in engineering reimbursements, and the recovery from Nissin Kogyo, thereby mitigating the negative effects of COVID-19 for the quarter
- Cash flow before financing activities tracking in-line with our expectations for FY'20
- Order intake year to date is more than $300 million and more than $600 million during the LTM
- Veoneer and Volvo Cars finalized the split of the Zenuity software JV
- UN Regulation establishes strict requirements for Automated Lane Keeping Systems (ALKS) for passenger cars starting in 2021
- Continue to make progress towards the closing of the VBS-US operations divestiture
Comments from Jan Carlson, Chairman, President and CEO
The second quarter was very unusual. The light vehicle production declined by around 45%, the worst decline in recorded history. The many complexities in terms of regional differences, global supply chains, short delivery notices and several other factors, made it a very difficult environment for running effective and efficient operations. The health of our employees remained a continued focus, not least because of the additional challenges of safely ramping up our operations, as the COVID -19 pandemic is first and foremost a health crisis. Despite the extreme conditions in the quarter, our market adjustment initiatives are having the desired effects and we are currently on track to reach our efficiency targets for 2020. In the first and second quarter we have been particularly successful in customer negotiations which were reflected in our results in the second quarter. We are also continuing to deliver on-going improvements in RD&E and other cost efficiencies according to plan.
During the quarter we continued the introduction of the next generation of our Active Safety portfolio. Our fourth-generation vision system is now launched and the indications are that this system is performing very well, further strengthening our position as a leading challenger in the vision market. There have now also been a total of eleven launches of our next generation 77GHz radar product, including two recent launches of forward looking radar, a very important development as we see this generation of our radar product as highly competitive in the market for years to come.
The trend, focus and commercial opportunity for the next decade is in collaborative driving and active safety. The finalization of the split of Zenuity and the integration of more than 200 talented software engineers into our systems and software team fits right into that opportunity. These additions are focused on driving policy, which complements the team mainly focused on perception software and system design. Having this combined capability fully in-house further enhances our ability to develop full systems as well as individual products for all different types of OEMs and segments of the light vehicle market. We are also encouraged by the initial positive reviews of the Polestar 2. Most of the Active Safety system on the Polestar 2, including the entire system ADAS software stack, is delivered by Veoneer, a good reference for the next steps for our systems and software business. Further launches are being rolled out in the second half of 2020 and beyond.
I am very proud of the way the entire Veoneer team has performed under these circumstances, staying focused on execution, launching new technologies and customer programs, while continuing to make progress in the Market Adjustment Initiatives (MAI) program first announced over a year ago. This was all done while simultaneously handling the health situation and the changes that come from transitioning our way of working to a mainly virtual and digital environment. I would like to extend my warm thanks to the entire Veoneer team.
An earnings conference call will be held today, Friday, July 24, 2020 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 11 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 11. See the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking Non-U.S. GAAP financial measures.
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 Friday, July 24, 2020.
Thomas Jönsson - EVP Communications & IR, +46 8 527 762 27 or firstname.lastname@example.org
Ray Pekar - VP Investor Relations, +1 248 794 4537 or email@example.com. Inquiries - Company Corporate website www.veoneer.com.