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Veoneer Inc VNE

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Morningstar’s Analysis

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Veoneer Q1 Revenue Growth Above Market Despite Headwinds, Maintains 2021 Guidance; $24 FVE Unchanged

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

Narrow-moat Veoneer, supplier of advanced driver-assist systems, reported first-quarter losses per share of $0.93, missing the FactSet sell-side consensus of an $0.81 loss per share by $0.12, which we suspect was attributable to negative currency effects, unfavorable geographic mix, higher supply chain cost from the chip shortage, and the cost of incorporating Veoneer’s portion of the former Zenuity joint venture with Volvo. Even so, losses per share improved by $1.16 versus the $2.09 loss per share a year ago. Consolidated revenue of $419 million was mostly in line with the $418 million FactSet consensus but represented a 16% year-over-year increase. Excluding the negative currency translation, organic revenue increased 17%, which outperformed the market by 4 percentage points as measured by global light vehicle production, despite the unfavorable geographic mix where China and rest of world production was higher than management expected while Europe, North America, and Japan production was lower. Veoneer has greater exposure to Europe, North America, and Japan. The 3-star-rated shares of Veoneer currently trade roughly in line with our $24 per-share fair value estimate.

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Company Profile

Business Description

Veoneer designs, develops, and makes safety electronics for the global automotive industry. Passive safety products include sensors, electronic control units, and software used to prepare seat belt pretensioners, and to deploy airbags in a collision. Active safety products include sensors, electronic control units, and software that enable advanced driver assistance systems, or ADAS, highly automated driving, or HAD, and autonomous driving, or AD. Roughly one-third of revenue comes from each of Europe, the Americas, and Asia. Daimler, Hyundai/Kia, Ford, Honda, and General Motors are the company’s five largest customers, accounting for 61% of 2020 revenue.

Klarabergsviadukten 70, Box 13089, Section C6
Stockholm, SE-103 02
T +46 852776200
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 7,543

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