Autoliv spinoff Veoneer delays sales, margin goals as auto gloom spreads

October 25, 2018 20:40 CET

STOCKHOLM — Swedish supplier Veoneer pushed back its sales and margin targets on Thursday, blaming production delays at customers struggling with tougher regulations and faltering demand.

Several automakers have cut financial guidance as new emissions rules have delayed vehicle sales in Europe and economic growth in China, the world’s biggest auto market, has slowed to its weakest quarterly pace since 2009.

These have included Daimler and Hyundai, which together accounted for 29 percent of Veoneer’s total sales in 2017, making them its second and third largest customers respectively.

The industry gloom has hit other suppliers too.

Veoneer, which focuses on high-tech safety gear aimed at self-driving cars, said it now expected to achieve an operating margin of 0-5 percent one to two years later than its original target of 2020, adding it would also have to spend more than expected on r&d.

The company also said it was unlikely to reach its $3 billion sales target for 2020. CEO Jan Carlson told analysts it would be “fair to guess” the target would be achieved sometime during 2021.

“In the short-term, we see some delays in the start of production and slower ramp-ups of certain customer models along with some slight delays in expected business,” Carlson said in a statement.

Veoneer said interest and orders for its radar products, vision systems and advanced driver assistance software had been rising, evidenced by a new contract to supply robotaxis from a undisclosed major global manufacturer.

Generally it takes as long as three years to book revenues against orders, but the company said this was being further delayed due to slow ramp-ups in car production.

Handelsbanken analyst Hampus Engellau said Veoneer was also likely facing some pain as customers such as Daimler, Geely and BMW were not able to export as much from the United States to China due to new tariffs.

In 2017, Daimler accounted for 17 percent of Veoneer’s sales, according to the Swedish firm’s IPO prospectus. It did not give figures for Geely and BMW.

Veoneer previously said the phase-out of some contracts would result in a 3 percent fall in underlying sales this year.

It downgraded that forecast on Thursday to a 5 percent fall, blaming a near-term slowdown in light vehicle production.

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