VNE - Earnings call transcript Q2 2019

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Second Quarter 2019 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Friday the 26th of July 2019.

like speakers the today, would one over I your of Thomas now, to conference hand to And Jonsson. Please go ahead.

Thomas Jonsson

Thank everybody to call Michaela. And quarter much, earnings presentation. you XXXX our very second welcome

have our Financial and Chief Backman; IR. Here in Mats Stockholm, Chairman, and Carlson; Officer, Jonsson, CEO, Thomas myself, President and our Jan Communications we

adjustment our some and During slides After and provide call, this, are link will on CEO situation, which available through session. our today's about in page already XXXX. business line making particular, some we outlook. in underway, remain efficiency progress will Q&A Then, XXXX will are the through our on comment the a initiatives the results, financial home the corporate we announced Mats website. market earnings we for of the our course, walk at on Veoneer, now our commentary late current you of of programs the on And, Backman

page, the presentation the Q&A and follows. turn this you that we includes of statement, if Safe which an part have So, the integrated is Harbor

will with some intend conclude presentation, and we quarterly the XX-Q at release reconciliations be disclosed in reference figures We the non-U.S. our press The GAAP the will X:XX p.m. that of the During SEC. these filed measures. are call to

limit to two yourself please So, questions each.

With that, I CEO, will to Carlson. over turn it Jan our

Jan Carlson

also to everyone welcome I to like Thomas. would call. you, Thank this

thanking call on page, Company. the entire the of quality improve Turning to by team the dedication performance for will today's out continued and start Veoneer their focus I our

major will vehicle uncertain, year. impact This second light situation we X% environment, be particularly deterioration vehicle Also, not through April expected. continue now see this of lower XXXX. than earlier recovery in and to see the remains mixed the to we production overall our be anticipated in an as X% strong could markets to market we underlying production first light as where Looking in all our half very the

our on adjustment next Looking market initiatives.

We capital Systems in funding raise our the ownership acquire successful U.S. our May $XXX venture, in operations. Brake with saw joint XX% and us of of stake partner venture’s joint are pleased which million resolution or

addition, a we rate see R&D to run results in improvements see gross In already started the of our lower where cost. our engineering have we early

Our anticipated of cash than flow quarter better lower-than-expected expenditure. capital the to we beginning initiatives was working the in capital due and

billion intake developed development Our expected was where the months quarter XX order $X our during average sales. as more than last annual a

decision can the said our business have intake pursuit. we due around before, significantly As of quarter-to-quarter timing vary customer order to

XXXX in planned. continued evolve, to launches our lastly, as And

of vehicle However, instances, than in ramp-up lower. certain the expected and volumes somewhat are underlying is slower volumes the

an to have comparison through page, of now XXXX the Turning Veoneer page. in this we XXXX, all production light approximately our saw what vehicle the in Autoliv. of July fewer spin-off. impact prior just communicated period million Day our vehicles days year, ago. to than business had course were of only that June time XX for This XX XXXX on last of in summarized from major represents we On at vehicles which the the XXXX, at XXXX, is markets, forecast million the both XX latest IHS Overall, reported has in through this and our globally targets fewer time for Analyst the spin-off

much should of for of the into This portfolio. product focus expected. a customers. longer driver originally time. conversations towards that ongoing and vehicles on the and and development quarters, support that based cost ultimately Active addressable core realization more addition, to than money And will In we a see X+ shift and industry come longer with last This be X, level over our more important system, several means Safety Veoneer’s will our period play our take the has industry autonomous level definite the focus market X strength relevant

However, targets. too know the early business it’s our on impact to

page. the Flipping

to continue our customer base. across product Active Safety expanding the in portfolio this progress solid We year make

illustrated to be slide, on will about during of As year. on customer new optimistic across customer the confident business intake of securing our that order we progress product $X.X billion with portfolio customers continue and this and we the our this least across by our areas sales remain pursuit, XXXX. at most have end Based reach activities we expanded target average

program facelifts, page. lower of our slide, see will On slower we cases, support since we which and the vehicle and year. the part sales volume IHS launches production of of light In this new into summarized XXXX organic development as model seen Turning this the have from the some volumes the latter key of vehicle improvement ramp-up and beginning the of XXXX. underlying certain have we development during

radar Our and between technology. assumptions. represent facelifts impact at launches down XX% Combined, rate of of and and ramp the vehicle strong launches lineup take our however depending is of gigahertz BMW XX production by these XX% the to annual temporary on mitigated light business negative mono-vision negative mix XX from sales, to from course the

content $XXX. these average per vehicle The of models roughly is

range the and vehicle. $XXX content between per $XX However, is

turn I to financials. go Mats, over Mats our please will through ahead. now it Backman, to walk CFO, the

Mats Backman

Thank you, Jan.

next the slide. Looking out to

to results light mentioned continues As in and earlier, the near we have term. affect vehicle production adversely operating macro are environment

than second of due expected the net. $XXX consolidated were to lower expected quarter was we better million operating million in $XXX slightly better than Our our RD&E, sales overall and slightly net loss of

sales record Company our mentioned the have growth our several ramp-up continues to in book. tremendous now, we of to As middle be a quarters order of period the and investment for future support

quarter, in is rate close to second increased consequence, $XXX of the have RD&E, investment $XXX a an net, which in million. run annual million our As

quarter sequentially improved growth RD&E cost our year. However, quarter to first this the $XX the second during close to million as compared

anticipated quarter. CapEx expect to lower our full approximately the capacity Active systems expenditures now was addition, we at in year brake relation investment of which mainly in in XX% XXXX than sales. In million the be capital of in and for quarter, the to resulted control Safety increases, beginning $XX the slightly We

slide. into the quarter some now the Looking detail further on for next

year as currency development to $XX and same driven the out North was $XX million million quarter of an Restraint million Brake million, mainly $XX was negative last Active compared Systems Our vehicle while due and organic million. by million, sales certain the Control or XX% America. of was of which decline Safety Control, phase of of decline $XX Systems declined mainly compromised decline sales mainly Restraint models, to $XX the In in $XX of

impact Honda in $XX by control volume driven mono-vision negative was mainly gross million on The by due and China radar the in for certain models main Japan. the lower profit was mix sales negative the product and gradual of systems product Electronics the mix to systems and decrease phase mainly and were currency volumes of The drivers organic decline BMW the of break out While caused the effect $XX segment. decline year-over-year million.

a net additional ramp-up As $XX due mentioned X,XXX last standalone costs operating to engineering during was $XXX versus associated compared earlier, of the hiring year XX company. XXXX listed quarter prior of to increased of million million, $XX RD&E, approximately mainly of the SG&A steep The million due to with the during increase as associates months. the

more on adjustment initiatives of next market in slide. now the Looking to detail our some

of common times, a quarter. with as mentioned I strong The and the the resulted maintained of As with mention very result our XX% their X we a percentage, support also increased ownership of convertible upsizing top-XX $XXX shareholders a that quickly interest we capital proceeds either approximately and of offering. in notes from both senior gross earlier, moved million. raise second or equity oversubscription had the should during our strong who

our Looking now VNBS joint to venture.

During the quarter, joint Kogyo's acquiring dispute. funding venture’s a interest in second resulted we around in U.S. resolution operations. the Veoneer XX% came to Nissin This

million enablers our In repayment had addition, $XX funding plan previously VNBS. to transactions unilaterally provide execute to Brake the for are stability Veoneer for of explore as Systems to for business. options Nissin financial Veoneer Kogyo on important and continue contributed growth Both these to strategic provided debt

outlook next now XXXX on for the Looking for slide.

China, expect customer this a demand current our a leads to Western on lesser and continued soft anticipate This we North level sequential to and operating extent, a during second Europe third us to slightly similar quarter. second sales see the from organic the decline quarter while loss Based in we a the in America. quarter situation deliveries, in in quarter the the as third hold to year, call-offs

As strong as earlier, the improvement our in as we sales be Jan mentioned will organic second not April. expected half

half However half during sales of XXXX. improve from expected second first the to our sequentially are the

rather our digits to in decline As high organic to now as are of single compared mid as full communicated. development, than expected digits this a XXXX the sales year the consequence the single earlier XXXX, for

full-year to XXXX. currency as unchanged the at remain expect X% translation We minus compared approximately to impact

in As we of a to improvement cost RD&E, year. million engineering we in for the cap communicated half of to half ne last a committed first this from quarter, full the $XXX year see second on and expect the sequential remain net,

this Based in we expected at expect is to the due second on in the half from cash exceptionally to working improve year, in approximately sequentially our of our first half to year, first second as of margin this operating performance same the half these the XXXX flow assumptions, the capital quarter. strong while levels remain

turn Jan. back now to will I the call

Jan Carlson

the Thank last page to turn concludes that again, you, today's we for By the call. the turning And Mats. slide. presentation formal

Thank back you. to to Michaela call the turn session. I you Q&A handle the So,

Operator

Thank Thank ladies you, much. so you gentlemen. and

session. Hampus We the will question question-and-answer Handelsbanken. of our begin [Operator go comes Instructions] Engellau now the from line from ahead. first And Please

Hampus Engellau

is two taking that is still business the process qualify car with car to in slightly have regular in on you on much. industries comment have a Thank it we customers. software our on I process OEMs two-year My the to the questions. you than is that getting and Could off or process? how more very faster shorter industry, tech related proceeding? moving i.e., the Starting qualifying question times

is question the business. LiDAR to related Second

you looking about little a LiDAR the are at LiDAR? two vision level offering a LiDAR as customers redundancy talk primary could offering source you Thanks. for to are what in system X as questions. Are or you’re bit my Those also class? If

Jan Carlson

we start customers have they So, going with the time process we how lead on actually and up. qualified if seen software, the

can fact of are attention processes lead qualifying software. to So, of the the between we been and that now. you is functional sales right of why our first most three we have have Other is have more to safety and seen that seen and order flexible historically this many shorter, four And for but programs. that development customers paying the years see more our from time timeframe programs being

Veoneer When all mainly are comes LiDAR, of two-fold. LiDAR to it

Robocap have, We agreement also there and know, Velodyne for have application. business with taken as non-exclusive we you a

that the is technologies applications. We also customers are also also And different now. short-range are pursuing that we working in-house to LiDAR types for ourselves with right of

system. support a as LiDAR having manufacturers car some seeing are We

We LiDAR seeing are the more it's to the confirmatory a source, systems as system replacing but technology applications. not business vision for prime demanding

Operator

from you. question Bjorn ahead. go the Please And comes next the from of Danske Thank Bank. Enarsson line

Bjorn Enarsson

the Safety. in a ramp-up line LVP question we more And for the the Active ramp-up talk bit had on improved activity -- a a please? also Safety little you light on -- brake perhaps have Can should QX bit growing, see more would Active about activities mix U.S. can we orders about some XXXX. activities that brake gross I in in shed ramp-up you I RCS when some on and that little assume and with and margins.

Mats Backman

is in. then, fill can And can start. I maybe This Jan Mats.

to launches comes and brake I right in big that the when will U.S., are take it You related control to the place ramp-up systems. XXXX. mean,

that. You're in correct

think, Looking software before XXXX. it of more the a mono-vision some and we that and through development order We feel see like And to the the suffering lower as pre-XXXX. BMW growth, see will in intake well models, launch-driven we been it’s regular RCS, can related where When similar on we out business Safety I at from is order can Active we for phase terms we radar have in see it’s as like XXXX. report in and start pattern very well. write for coming the we to comes RCS and intake Active of said the in Safety what certain much

Jan Carlson

the margin And and to preparing related gross and can on [Technical decline in Difficulty] launch. of facility here volume our fill you margin buildup But, change see but gross gross the margin mix mix, lower for is of that, increased to you also me and Mats. can the

is the mix having that effect the the on of So, margin. gross

Mats Backman

add to gross things when margins. maybe And comes to two it

on we FX all, some $X impairment profit, of of effect, if have First also the pretty in a but which we smaller negatively affecting margin. also are a affecting we looking on control is is the systems, as gross talked I have brake about also presentation equipment statistically about on you gross million have, that

Operator

the James next go ahead. Picariello comes And from line from the you. Please question Thank KeyBanc. of

James Picariello

lower still Safety just half about Just your in in sales the we be third quarter? Could in you guidance, about improvement next on Can in the and first. seeing half quarter, the sales about the the should sequentially talk core second obviously expecting on over down you're dig second market, -- Active thinking prospectively for year? expectations that what more the are here we in business how X% what

Jan Carlson

in here years is and The that took until we the ramp that in up here coming it’s mentioned decline still the slides, a we're order down production what predominantly been out. but seeing of many now, BMW from we has ramping mono-vision ago

toll some ago. our gigahertz also now. an having XX to a XX That Safety intake is order from the that right and shift Active taking the saw effect on also radars was We years on

We the is E-class the are further right from we develop in the living XXXX. and of back now basis suite suite developing launch and sensor that remember sensor have the to Mercedes with we the for

So, weaker in little And very take XXXX, there now. that vision we effect right on orders. facing of are side before the was, terms

our that takes XXXX. it ramping launches before own year this is now, order, until mono-vision And in time come our portfolio. of the and that and And we So, took algorithm own end in out. product

advanced see an and what on support. you focus customers, We That product on we our favor it's in focus we portfolio well If we that clear I is controllers in and look think driver playing into increased driving. position for our from face ADAS see collaborative see increased radars.

seeing features our the to said, are This of I the There as X giving being helping the X out in are have announcements driving favor us base. car pushing quarter out from of level also customer opportunity and We product it's priority right us that an people with We portfolio, out. pushed numerous level our resources collaborative of on consistently manufacturers program. during is, and support. driver Zenuity Zenuity for the for see

James Picariello

Safety, thinking we return the Got prior here, to to when vehicle gotten backdrop, would if organic your it's thinking light it. guidance more internal Brake production sort you what programs? a difficult light when second backdrop, a across delayed things or bit, that growth, excluding attribute And of exclude That's whether vehicle helpful. about half about production have Restraint your Active Systems, XQ for

Jan Carlson

is can coming the are vehicle is is far There at here light but that such from that impact, least that some we the delays vehicle affecting. majority as there, The production. having and is -- see production it’s bigger nothing so that light

James Picariello

that towards that, Thank Okay. visibility airbag, as just your and would your And ZF’s a on with that for you that that? backlog And didn’t commentary quarter. Because Controls fourth business improvement ECU, the segment you. on be situation based was well? the Restraint to addition what's there expect, in then, given

Jan Carlson

ZF’s airbag on commentary any have ECUs. we the think don't I

order also We win seen for production. take go And now RCS But that where business time on our right continuing. XXX% and car on it's that the on business. intake they several we they orders will rates into are on are that of seeing RCS on-board. is have a before airbag years course continued the side, take But controller lines, we some those strong

So, having light it's the effect. production vehicle the

Operator

Erik a Please from Golrang comes question hold next the And Please second. go you. ahead. Thank from SEB.

Erik Golrang

technologies. you sort autonomous role no And quarter was that that you that’s OEMs had And suppliers, might had in been you? collaboration extent to had. between BMW asked; do of developing yes, I think think as was a thinking one, line. collaboration a orders announcement a few out one there have I number have question. such of Active a it's and the actually at that, of are I big that and what approachable you. it to Daimler the of There But, on of this market just other and was a Thank bad apologies is look shirking I a I course. if the

Jan Carlson

take mean, is main if the se. and We're not collaboration is I main are Daimler. don’t market Daimler, we per between supplier BMW. approachable you that think to I to to the it the the shrinking supplier BMW

as are So, the that also is take already, example, to and discussions architecture an we if BMW we also happen. facts having going and working this of see effect generations the We architecture opportunity and we level, for see on as an that between -- approach the the see common future discussions the to this companies. out the see discussions Daimler those between an you effect under the

positive all, architecture thing effort, will to that possibilities that because in is the harmonize for will this give it all it and believe, for and consolidate product suppliers. a positive development we the economies scale So, industry of be

comes So, it to when this collaboration. that’s opinion, type our of

Operator

you. from Please David the ahead. go of comes Kelley question And Thank next the line from Jefferies.

David Kelley

you either commentary to Could with? Safety the in? be type Roadscape some you would provide that then, regionally what or level color And the customer some what type on of working vehicle -- are of embedded get win, love Active of on

Jan Carlson

is a we're part type our level driving business being the of approaching of part This and collaborative of in X+. a

the we we year. half Roadscape of have first here, As business announced during this added

But, for and customers on are we the that also the approaching. list is on we predominantly vehicle are have three now bid another Roadscape of So, then type customers, we four side. the

the this several So, and years this developed over number a ago. of that have acquired is we we favorable see we -- thing years as since this

David Kelley

how pull we obviously switching in strong I’d And working thoughts improvement should get love deteriorating on environment. think again, macro Thanks. color maybe would great. be Okay, to be volatile, somewhat any underlying capital the appreciated. as the back opportunity just the thinking and follow-up there, capital light the to of of a about year. the your gears, movements seems to Obviously, about levers but half or working macro in

Mats Backman

quarter we Yes. baseline. of the can I use the mean, in the second kind performance as

good had performance a capital quarter. really we working So, in the

$XX contribution, actually will and But, when accounts in So, than more, potential receivables saw the in to in the inventory. lower we activities first -- million it’s on accounts invoicing process for on I where would say, growth, some to because addressing the I mean, to time, been a the already it we extent receivable. development positive released quarter, some with have to this due most more organic see positive related over-dues report. quarter you of and extent and the we Company the the

Looking think, I at operations a inventory. to in done avoiding building inventories, team our great job order

We have that’s to for costs, but we protecting fixed gone under mean, absorption destocking. take And gross meaning we're really through taking, sure, comes when cash flow. if that I are some it hit the you profits, destocking

will that continue. So,

can If terms that bigger it to and moving for a think But, opportunities now, of see as at more. also can we in see even starting you’re I second a mean, point but I are do still I changes, into sure all, have to potential in anticipated, first third I to some had we effect the think we looking them further sustainable the what already that retain to order that. though there we in and need make than quarter improve processes that of quarter, make

Operator

And you. the from next Agnieszka go Thank comes Nordea. ahead. line Please question of the from Vilela

Agnieszka Vilela

XX% of I full for it Did a year guidance year? the guide you Starting for with of have couple that CapEx. the hear sales for full Thank I you. questions. correctly

Jan Carlson

Yes. That's XX% right, to relation that. about in

Agnieszka Vilela

So, in HX? some acceleration now

Jan Carlson

monitoring But, whole up. we the slight is -- Yes, mean, I this something that mean, time. are I are we again,

So, adjust trying LVP, that. we lower in see line with volume, we lower are to if that

your we that see meaning Yes. you're But now right bid we the of in assumption. kind are opportunities. when So, postponing

Agnieszka Vilela

on Perfect. then, order intake. a And question

expect XXXX be intake billion. at still that for You your will least $X.X order

on you the XX And was second two that, intake actually given is number of good which before. a back comparisons you is year. quite than I QX, Number RoboTaxis said However, car for the than as two, really book bit number built don't the is LiDAR the the it for half was a questions is not here, And lower the difficult risk what recurring. given Don’t quite see the cut last on for of for fact have quite months that order so then you that you of some have that order or yourself received in QX, write-down that? in sizable substantially one now a probably you the production that. to it of business it order lower have

Jan Carlson

into the that And back car will the in the come production. book. to down order look year. look and on circumstances we We once do We a year-end the

that So, to we will back after quarter revert this four year.

last intake XXXX. to Quarter heavy -- When four comes you and we year. the also on it that was comparables right four to last that the in year, order very the book order are was quarter very heavy

of So, loaded many it order by this if turned case in it's but out happening the years is year. a becoming for been has also us. too it’s happening, row That intake more has a trend backend that the

that we approaching looking into also and pursuing are customer new customers are are base. our expanding seeing, so that we not We

mentioned pursuits we have best at with here the estimate expand that And year, the essentially the on we areas, have, the all all the that. put. that just to is activities comparables despite slides our looking for and $X.X million we we more overall, had of picture that are the you that we in As also product than

Agnieszka Vilela

flow on full the in just cash question And for Perfect. and that expect, housekeeping level P&L tax both in the one year? can we

Mats Backman

tax quarter, that not items, million. structure tax financial around taxes. the cost, in the $X We're mean, kind Company, of you take the inches the discreet comes if But, when the of -- rate you I guiding what to of it the the given out kind see

then varies from be that items that have on and discrete should zero it of around quarter-to-quarter. top you So, but

Operator

line question the And Please go Levy next Dan Credit from Suisse. you. ahead. comes the of from Thank

Dan Levy

targets missed correct? -- assume on your I if your apologize I under no review. but those, I said revenue were First, in long-term update you’d it, the targets past,

Jan Carlson

any reiterate together ones. capital and yet those that rate don’t not We new we that with communicated and we said targets Correct. communicated have we

Dan Levy

Okay.

So, the at long-term so long-term? will in future, point us some update target, though to on the assume, you look the I

Jan Carlson

will strategic of will of again, we you take and our the down is are and pin numbers supplier to. going broader back view we an targets, will just not Company. yet. and To and for that constant a you number where last a technology all we the have And think side, the course, the we on quarter, the plan we the specific Company we changes. that Well, hard the give have see OEM is very extent, review come to This the that picture I change. and on on to industry in collaborations decided the with side, it’s it making But, pinpoint have

We will some of you point. you Company to at overview course a and strategic give our of come back

Dan Levy

on composition too follow-up. just intake to And some then, you’ve maybe maybe had RD&E the set the a of six rising about levels profitability, of your the past is over had I wanted think the products. And I ask wide because that challenges in order months. you particular, of

that the that programs of beyond taken that won. lack You’ve core is some programs that of gone maybe a have of the strength on of the some were of of maybe scalability sort and maybe there sounds sort like

a on have you been have taken order any you’ve is up pure of profitability, quarter and you down it -- to just it beyond taking even to focus intake focused are So, what be more as more growth. may extent growing and what you than scaling extent or have flattish it -- possible rather that And on be just bit new that may on the order scalability? the year what this

Jan Carlson

But No. you very are right.

X architecture and levels compute development on clearly collaborative here somewhat together align And also more where resources the Zenuity industry matter towards to I Level for with to with companies ourselves towards on working now to X+ we architectures. think, that for very because a on go efficient the doing whole is center that systems instance that the intelligence at weighs over two progress just right the focusing customers now you the being you but We're out the this from scalable to looking We're that. in we're X+, articulated and also time. distributed the do. we Still, we of for good many a orders turn that driving that see some and are on are is seeing and working by of time scalability. that level so thing existing point look being pushed taking this us

this So, next I or over, will develop XX the would say, so. months

Dan Levy

smaller quantify, like within you than more it don't core the I a much there's focused into some radar or focuses, just the sort And if of sort of core putting know way the was on Active whether are programs -- more now, sort to of like just how things you're Safety LiDAR? of rather

Jan Carlson

radars our and that as mentioned of we the addition in additions good ongoing here course the program. the ADAS controllers I the be But in the of Active also the internally the have controllers to LiDAR. Now, a and core very will a us it, is question project hopeful of are very for we ADAS we call would long or the core a have period of the good this. core core, of And will if But addition radar be LiDAR development earlier, of on powerful good that a Safety on time. addition and core you for the short-range

Operator

you. question the line from comes Cross And ahead. the Fox next Steven Thank Research. go Please of from

Steven Fox

Thank you Two me. questions for much. very

could to I could -- when off up is light mix before me you business, it progress my just radar if and comment on seems It seems of how directionally unlikely Thank of at of that. XXXX. how looking flow me a And is become the going help like mix that negative outlook. the would sort highly if term remains sort understand on -- be positive your I vehicle you math make long you expect and to more like breakeven the secondly, on then, wondering light influence? to here, but Just apologize was longer becoming cash to you.

Mats Backman

Can you repeat the first question, again?

Steven Fox

Yes.

burn on fact before take cash become I that curious with down your not directionally make to may going expect you're when rates seems positive. guiding rate, positive, vehicle can I flows specifically progress imagine to was you I look and if thought burn you -- cash it becoming but you it upto that cash cash on at production how if expectations the about that think going back forward. on flows So, XXXX and comment light I

Mats Backman

that about I the have talked thing about we when flow question been the cash here as, giving No, got is as Yes. not to well comes mean, a any And be this enough $XXX I will that's But, we have that targets, breakeven. the if we we capital with that the made the raise the have million. support we it on not. What the that or mean, activities needed current cash have, stated hand we with plans target is to to and we have. kind have growth funds

really, that's on in LVP think, that raise what much So, back I your months. over use assumptions. capital just so last the have to you seen And should two months we you forecast two what then, one that the is very

Steven Fox

mix And the just And on helpful. that's of then negative radar? in terms

Jan Carlson

have the will we that about. been This ramping are is negative major XXXX talking into a been that situation up communicating, when and we continue mixed launches

gradually that XXXX. corrected So, will during be

Operator

from Please comes Markets. question Garrett next ahead. Capital from The of Klumpar the line RBC go

Garrett Klumpar

have guess, juxtaposing kind you competencies? fitting you the resolved is and portfolio, Hey. more now that into your Thanks Spak. taking how of situation Joe It’s kind of on for options, that question. business key see VNBS the for Garrett that and Veoneer’s I do

Jan Carlson

to grow that are a business conducting strategic this we're which business. of for We're review the of divestment look But us into course also opportunities review could options to But for the looking is and include now and this business. also a other for will strategic manage right conducting. business the this we

Garrett Klumpar

the And maybe good volumes kind a we the then, bigger convexity I help not of offer to highlighted update pretty expected? maybe picture, might the But, maybe the that a steep an some of starting targets XXXX you think midterm of and there beyond light And you’re the how year, of volume about declines, I in obviously going decline you’ve steep could your and mitigate over for of obviously, should in about seen think kind give that and to kind change. past declines mean, mean, are how expected of point Veoneer to there.

Jan Carlson

communicated describing we have will and the been do continue so. to Mats in introducing has we we the are Well, presentation initiatives here

-- expenditures will talked as further we also that case would agile -- see CapEx We when would capital example be or look in of that an we on also safe through. LVP here if that and we measures declines

try to the will and of any that all there. look to item decline further through would We situation mitigate every is type if market

Garrett Klumpar

expected more helpful. about But, on I lower mean, prospects, I mean, outgrowth just That’s of the should given that how volumes? kind we think guess, Veoneer’s top line I

Jan Carlson

also And what growth us. organic front as we in indicated we of in we return But the in here to very XXXX. release, main period the is a reason will have in launch-heavy

XXXX. will business, XXXX. throughout We We launches, continue programs system to XXXX throughout of starting the the major measure measure radar time launches have we about talked also and and beginning entire that that brake is have year-end the launches we have vision towards of the launch or

will come the goes programs decline affected of the be across Veoneer of specifically, line. that for add those because on course a -- will of board. So, that But programs event will also top those effect in further LVP

Operator

the next Wolfe Bank. go of [Operator Deutsche question ahead. Thank line you. comes from question The And Emmanuel comes from of Instructions] Galves Dan Please Rosner line the the from Research. from next

Dan Galves

that margin And, to help that about revenue? you on could and meaningful pretty expect terms should QX. pretty also R&D, affected Thanks way dimension versus think incremental be to hoping recoveries you at a any the exit that It or the very like revenue of up looks engineering much, profitability. rate in looks like improvement Is to there get QX significantly extra an Will was quarter good sustainable of I kind of fourth on morning. level of seasonality be is QX. by kind in all? that us

Mats Backman

seasonality sustainable. income. naturally, when to XXX something indicating we we're the from net at that’s we in RD&E, of due quarter improvement. looking been what mean, always that net it we at fourth XXX looking that have as that if point high terms is see have sustainable RD&E the But, to a engineering a comes indicated view, But quarter fourth the you’re I of lower

So, that’s the case with us.

about until When it's the it margin to see incremental difficult through, growth I incremental think, we comes talk Dan. real margin, coming to

coming comes tune much launch to it terms that's in gradually Jan the and as very I growth organic margin. also a the will comes takes order when said, getting when Because, it kind see. organic XXXX, the that incremental to we some So, have see you through it and you to but organic everything growth, growth of a that launch-driven naturally, mean, of And one time when growth earlier. gradually, fine to in launch-driven

Dan Galves

any did then, if willingness that just to weak one. the the of changed, raise, Prior you. Thank see balance part one And you so, source less based Okay. And you to sheet? on customers other relatively meaningfully? on now has capital

Jan Carlson

see And customers see we have discussions or order intake can any from reported. into you go to that didn't business. we No, very supporting hesitation good our the throughout number

to something has that So, do.

Operator

And question you line Thank One from the Please Investments. from so of ahead. go much. the Testa Peter next comes

Peter Testa

you taking question. very Thank Hi. the for much

Just going Daimler, with key BMW, Veoneer. back about Volkswagen, for customers you've the made which evolving the alliance is Ford, to point

and sort existing they spec, at As the scheduling those spec order as can and this some what of sense you I backlog architecture architecture of the touch look have how degree these they questions see the to to and impacting in Veoneer? plans areas, give

Jan Carlson

lines to And architecture sides. both I This it to that deploy have. when is car car the successor they affects. is on don’t they that work to the coming, together different think will lines

any each that see when on effect that know other people of organizations, have two delay to don't car get combine course course, is angle from the of cetera. necessarily lines. on to we you taking an So, efficiency, But et

You Ahead we not same an today. on just That's have the -- coming into effect will coming should it’s the that, and where businesses beyond this think directionally about vehicles in you of this it's effect. XXXX see thereafter. as maybe

Peter Testa

challenges. into the at to manage then, And the content quite where which products sense is if was wondering also depth what the other ramp-ups plan the try OEMs vehicle kind and a content how have go of question of point you point is up, extent you just different And as the are the for just various variant and also to and to as please? this ramping I options, good intersect, the lot discussing are content, standard and things understand cost they a versus those you two

Jan Carlson

and still has are rank your that items one -- rating on a been the will those bigger depending drivers. the driver the see That to also get clear environment in on think their advanced be where requirement much support. historically the star I content and five you of has focus

legislation environment side. voluntarily and we will convinced, in ADAS the and And the the as have know. we initiatives drive similar similar also AEB are You initiatives all actions on drive content the U.S. --

Peter Testa

And so, discussing you any cost variant analysis? there content feel on content for and challenge car, per isn't

Jan Carlson

not so that. think, seen I far, we have

very We focus. big prioritized mobility et immune issues that drive, safety, like industry challenge designing, this, intense been has will is have service, been a that autonomous But a just with be activity. driving is huge be safety the volumes of front the this to be cetera. now a focus, the and historically realistic. guarantee production, has always electrification, case. environmental and not in a something, are part big NCAP standing for will This But To the

that. with convinced are We

Operator

questions [Operator at So, instructions] the no are there moment.

So, please go ahead.

Jan Carlson

would thank in that today Michaela. gotten. look and you, we and I have challenging this forward all Okay. interesting questions you like everyone Thank We the for to call, then participation road here XX, all And October to next tentatively earnings you for Friday, shows for XXXX. third quarter our in quarter conferences call third up. and during coming is planned seeing the And

tentative our is October of plan. XXth So,

we demonstration Gothenburg in Test half to AstaZero September. update the at Track to second and hold that like a intend outside in mention also would I Sweden technology of

all have So, stay many relaxing of advertise you and would you bye and then, can information for summer good now. participate. regarding you And to that. more and to like for hoping you tuned I who Thank all Until holiday. of that you safe

Operator

conference Thank for Thank today. much. you you for does so conclude our That participating.

Speakers, You may stand please disconnect. all by. to continue

Arriver Holdco (VNE) 26 Jul 192019 Q2 Earnings call transcript