UPDATE 2-Slowing car market puts brakes on Veoneer sales growth


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STOCKHOLM (Reuters) – Swedish autoparts maker Veoneer forecast organic sales would not grow this year as it expects a downturn in Chinese and European car production to persist, adding any further deterioration could force it to seek additional funding.

Jan Carlson, CEO of Veoneer, Inc., watches as his company’s stock begins trading on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 2, 2018. REUTERS/Brendan McDermid

Veoneer forecast its 2019 organic sales would be flat to down slightly from last year after reporting a fourth-quarter organic sales decline of 9 percent, worse than the 7.7 percent fall analysts had expected.

“We are seeing a weak first half for (car) production, with the low point there the first quarter,” CEO Jan Carlson told Reuters on Wednesday.

Stockholm-listed shares in the company, which makes high-tech safety equipment such as radars, vision systems and advanced driver assistance systems that will be key components in autonomous cars, were down 3.8 percent to 257 Swedish crowns by 1415 GMT.

The company said it was “actively reviewing” its investment priorities and its product portfolio focus since it expected large-scale production of fully driverless cars to be delayed.

“I think everybody is in agreement that it is pushed out several years from where we thought just 6-8 months ago,” Carlson said, adding that Veoneer would focus on products that capture larger volume sales in the current premium car market.

Several carmakers have cut forecasts as new emissions rules have hit European vehicle sales, and a trade war and slowing economic growth have dented Chinese car sales. In October Veoneer pushed back its 2020 sales and margin targets, partly blaming production delays at customers.

“This is a company profiled as a growth company. What people may be reacting to is that… it will be tough to grow the business this year,” Handelsbanken Capital Markets analyst Hampus Engellau said.

Veoneer had reported record 2018 high order intake as carmakers build newer models with more advanced features such as highway merge and lane change.

It expects the start of order deliveries, new efficiency initiatives and launches and stronger car production in the second half to boost cash flow and cover its funding needs until it reaches positive cash flow.

“However, additional funding may be required if order intake increases beyond our expectations, if the underlying near-term business conditions deteriorate further, or if we make acquisitions,” Carlson said.

Reporting by Esha Vaish and Johannes Hellstrom; Editing by Keith Weir


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