Financial Summary – Q3’21
- Active Safety drives organic sales growth, despite 20% YoY decline in light vehicle production (LVP)
- Net Sales $391 million, Net sales increase 5%, Organic Sales1 increase 3% YoY
- Active Safety Net Sales increase 27%, Organic Sales increase 24% YoY
- Operating cash flow $(120) million
- Cash balance $420 million
- Veoneer is currently focusing on providing information relating to the on-going acquisition process and is no longer providing a forward looking outlook and will not be holding an earnings call.
- Entered into a definitive merger agreement under which SSW and Qualcomm will acquire Veoneer, terminated merger agreement with Magna International Inc.
- Organic Sales growth outperformed the global LVP by ~23pp during Q3’21
- Semiconductor supply chain shortages continue to create industry production, delivery and cost challenges
- Temporary inventory buildup negatively impacted cash flow, expect the effect to reverse in fourth quarter
- ADAS and AD software unit Arriver performed first public demonstration running on the Snapdragon Ride platform, at IAA, Munich with positive feedback and reviews
- Veoneer announced as key active safety contributor to Mercedes S-Class with 4th generation Vision and Perception software enabling Level 3 self-driving
- Order intake over the Last Twelve Months (LTM) was more than $500 million of average annual sales at the end of Q3’21
Comments from Jan Carlson, Chairman, President and CEO
Veoneer showed strong operational performance during the third quarter. Despite a sequential drop in the light vehicle production of 12%, our net sales were essentially flat, sequentially. Through our market adjustment initiatives, we also managed to improve our gross profit and reduce our operating loss sequentially and year-over-year. I would like to direct my sincere thanks to the entire Veoneer team who continues to execute in these difficult market conditions and rapidly changing and uncertain environment.
The global underlying demand for all of our products remains very strong, but as is true for many industries and companies today, semiconductor shortages and supply chain constraints continue to hamper our growth. We are managing this situation daily, and are doing our utmost to support our customers through this difficult situation.
The gradual weakening of the LVP during the quarter was especially challenging where we saw a temporary buildup of inventory which is reflected in our working capital and cash flow. We have taken initiatives to rectify the situation and I view this as another sign of our discipline and executional strength as the full year 2021 LVP expectation eroded from a 14% growth in the beginning of the year, to virtually flat growth from the depressed COVID-19 pandemic levels in 2020.
We continue to see strong momentum for our technologies and products. During the quarter the high-volume Subaru Forrester was launched with our stereo vision camera. We also launched our 9th customer for Monovision, we announced that we are delivering key technologies for Mercedes S-Class upgrade to level 3 capabilities, and we had the first public demonstration of the Arriver-Snapdragon Ride solution to great feedback at the IAA Show in Munich.
Following the end of the quarter, we announced that we signed a merger agreement with SSW and Qualcomm for the acquisition of Veoneer by SSW and subsequent transfer of Arriver to Qualcomm. The Board of Directors determined that the $37 per share, all cash transaction offered by SSW and Qualcomm was superior to the previous transaction agreement with Magna International. The proposed transaction with SSW and subsequent SSW-Qualcomm transaction are pending and subject to various conditions and we will provide updates as appropriate.
Our focus continues to be on the day-to-day execution, delivering to our customers, overcoming shortages and logistics issues, and continuing to develop our products and technologies. I am most grateful to our people who are showing great determination and resilience through this period of internal and external change.
1For all Non-U.S. GAAP financial measures, see the reconciliation tables in this earnings release, including the Non-U.S. GAAP Financial Measures section for further discussion of the forward-looking Non-U.S. GAAP financial measures on page 11.