STOCKHOLM (Reuters) - Auto technology group Veoneer (VNE.N) (VNEsdb.ST) on Friday said it expected to reduce operating losses this year and markedly improve cash flows, despite the coronavirus-induced crisis in the car industry, as cost cuts and efficiency actions started to bite.
The Sweden-based company, which makes radars, vision systems and advanced driver-assistance software, also dropped its forecast for organic sales growth in 2020, but said it still expected to outperform global car production.
“We have a strong cash flow given where we are, and we are seeing good results from our internal actions,” Veoneer CEO Jan Carlson told Reuters.
“Given the terrible situation in the industry and the rest of the world, we think we had a very strong quarter.”
Shares in loss-making Veoneer were up 8.8% at 1224 following the earnings release. Veoneer’s stock is still down 42% this year.
“Shares have been very weak in the last months despite taking action that has and will improve cash flow going forward,” Carnegie said in a research note.
With the global car market already weak for the better part of the past two years, Veoneer has moved to cut costs, with actions further accelerated as the COVID-19 pandemic hit the industry.
Fresh cost measures include staff cuts and furloughs.
On Thursday, the company announced a full exit from its brake control business.
Veoneer, which competes with the likes of Aptiv (APTV.N) and Bosch ROBSCJ.UL, reported a $122 million first-quarter operating loss on a 15% organic sales drop, still improving from the $128 million loss in the same quarter a year earlier.
Reporting by Johannes Hellstrom; Editing by Edmund Blair