Sweden's Veoneer order intake stays strong, shares jump

STOCKHOLM (Reuters) - Swedish electronic car products maker Veoneer VNE.N, spun off by Autoliv ALIVsdb.STALV.N this month, said on Friday order intake was unexpectedly strong over the generally slow summer months and indicated that it may raise a 2022 sales target.

Its indication of strong future demand eclipsed weaker than expected quarterly sales growth and operating profit numbers, pushing up its Stockholm-listed stock VNEsdb.ST up 5 percent to 433 Swedish crowns by 1240 GMT.

Veoneer is trying to convince investors that it can secure a larger share of the electronics market for self-driving cars and active safety products such as radars, vision systems and autonomous driving software.

Investor focus has been on order intake and new customer wins and less on costs and expenses, which the group has already flagged will be higher due to R&D and investment.

In its first results as a standalone entity, Veoneer said that strong order momentum noted over the first quarter had continued. Even in the period since its investor day on May 31, it had won 15 new orders, it added.

Chief Executive Jan Carlson said it was seeing a trend of “increasing customer activity” across its geographies and products, and take-up rates were potentially higher for its product category active safety.

The company may have to look at revising a sales target of $4 billion (3.05 billion pounds) for 2022 if the current strong momentum continues, he told Reuters on Friday.

Higher costs caused the operating loss to widen to $48 million from $12 million in the April-June quarter, exceeding the $31.6 million loss expected by analysts polled by Reuters.

Organic sales also shrank 4.5 percent from a year ago, more than the 2.8 percent drop expected, but it maintained its guidance for a 3 percent drop in organic sales in 2018.

The impact is from Veoneer phasing out certain contracts for two units and as growth from current order intake will only come through from late 2019 as the industry has long lag times.

Engineering groups and their automotive customers also face a threat from a trade war between the U.S. and its trade partners that has led to tariffs on supply chain products and higher raw material costs.

But Veoneer, which imports some electronic control units from Canada, expects the direct impact from trade tariffs to be negligible as it looks now, Carlson said.

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