STOCKHOLM (Reuters) - Swedish auto technology group Veoneer (VNE.N) (VNEsdb.ST) said on Friday it expected operating losses to decrease in the second half this year on cost savings, even as it cut its 2019 guidance for sales due to weakening global car production.
Veoneer’s results come as a string of carmakers and suppliers, including Veoneer rival Continental (CONG.DE), have warned of weak car markets globally, and Veoneer’s stock has been heavily battered over the past year.
Veoneer’s Swedish-listed stock surged almost 10% following the earnings release with the results outlook providing relief, according to analysts. But it is still down nearly 60% over the past 12 months.
The company, which has also seen high research, development and engineering costs weigh on earnings, said it now expected organic sales in 2019 to drop by “high single digits” compared with a previous forecast for a “mid single digit” decline. Organic sales strip out currency swings, acquisitions and disposals.
Veoneer said it still expected an improvement in results during the second half of the year at it ramps up cost savings, particularly by curbing spending in its research and development (R&D) business and engaging in partnerships to restrict investment costs.
It did not give a figure on total cost savings.
Hampus Engellau, an analyst at Handelsbanken said the cut in the organic sales growth forecast had been broadly expected, and that the big surprise was in their second half outlook for earnings and cash-flow.
“Many had worried that the accelerating cuts in global light vehicle production would force them to push the date for results and cash-flow improvements further into the future,” he said.
Veoneer, which makes radars, vision systems, advanced driver assistance software and autonomous drive software, said quarterly results had been slightly better than its expectations.
The company, which was spun-off from airbag maker Autoliv (ALIVsdb.ST) (ALV.N) last summer, said its quarterly operating loss rose to $137 million (£110.14 million) from 48 million a year-earlier. That was in line with the mean analysts’ forecast according to data from Refinitiv.
Reporting by Johannes Hellstrom, Editing by Helena Soderpalm and Emelia Sithole-Matarise