STOCKHOLM -- Sweden's Veoneer said on Monday it would seek up to $500 million in new capital to help the maker of electronic car products cope with a downturn in the vehicle market, delays in introducing self-driving technology and costs associated with new product development.
Veoneer has suffered as automakers have extended their timeline for the mass adoption of self-driving vehicles and robotaxis due to regulatory and technological challenges and due to a slide in conventional car sales needed to fund development.
Shares in the company, which makes radar, visions systems, advanced driver assistance software and autonomous drive software, had fallen 17 percent to 211.50 Swedish crowns ($22.26) by 10:49 CET.
Veoneer's fund raising would dilute holdings of existing shareholders by up to 18 percent, based on its U.S.-listed market capitalization of $2.34 billion at Friday's close.
Analysts had expected Veoneer to seek more cash after the money-losing firm pushed back 2020 sales and margin targets in October, partly blaming production delays at automakers.
Veoneer was reviewing its targets, CEO Jan Carlson said after the company said it needed fresh capital to meet r&d costs and deliver against a big order book.
"We have a strong base for the future, with possibly one of the largest order books in the industry," Carlson told Reuters. "But we are a small company when it comes to sales, and therefore very sensitive to a declining car production."
Veoneer said the decline in car production in the first quarter had been worse than expected, meaning it now saw 2019 organic sales declining compared with 2018, versus previous guidance of flat to slightly lower like-for-like sales.
The company, which reported a quarterly operating loss of $128 million, said its order book at the beginning of 2019 was more than $19 billion, compared with about $16 billion a year earlier.
Analysts said the only positive in the results was a growth in order intake of about $1.2 billion on average over the last 12 months, in line with the intake reported for 2018, due to continued demand for safety-related car products.
"But costs are pulling away here as they keep on building a very large order book," Handelsbanken analyst Hampus Engellau said.
The company, whose shares have lost 41 percent of their value since it was spun off by Autoliv last year, said in February it expected order deliveries, an efficiency drive and stronger car output in the second half to cover funding needs.
Alliance Bernstein analyst Max Warburton said Monday in a note to investors that Veoneer's independent future looks questionable and gave the company's stock an underperform rating.
Investor enthusiasm for auto stocks has been tempered in the past year due to concerns about trade tensions, ongoing emission headaches and slowing demand in China and Europe, delaying several initial public offerings in the sector.
The company said it was conducting a review and seeking new efficiency measures at Zenuity, its autonomous software partnership with Volvo. But it said it did not expect benefits from the initiatives to kick in before the second half.
