Autoliv sales decline as its annual margin outlook narrows
Autoliv’s third-quarter reported sales declined 0.5 per cent and organic sales fell 1.1 per cent. Its sales performance exceeded global vehicle production on the company’s comparison, while raw material and logistics costs pressured profitability. Management narrowed its annual adjusted operating margin outlook to 10.5 per cent, retaining its organic sales and operating cash flow forecasts. Sales in India and to Chinese manufacturers grew.
Economics & Markets··Evening
Quarterly sales and earnings retreat
The automotive safety equipment supplier Autoliv, reported third-quarter revenue of 2.693 billion dollars, down from 2.706 billion dollars. The reported decline was 0.5 per cent. Adjusted earnings per share decreased to 2.19 dollars from 2.32 dollars; the adjusted measure excludes specified items and differs from the reported earnings figure.[1], [2]
Organic sales contracted 1.1 per cent. On Autoliv’s comparison, global light-vehicle production fell 1.9 per cent, so sales performance was 0.8 percentage points better than vehicle output. Regional production mix reduced relative performance by 0.9 percentage points. Operating income declined to 254 million dollars from 267 million dollars; adjusted operating income was 262 million dollars against 271 million dollars.[1]
Asian sales grow while cash generation slows
Sales in India grew by around 30 per cent, while sales to Chinese carmakers expanded by more than 20 per cent. The relative outperformance Autoliv reported reached 11 percentage points in India and 20 percentage points with Chinese manufacturers. Autoliv also identified Japan among the markets with strong sales activity.[1]
Cash generated by operations decreased to 239 million dollars from 258 million dollars, and free cash flow fell to 124 million dollars from 153 million dollars. Autoliv paid dividends totaling 63 million dollars. It also spent 150 million dollars repurchasing 1.23 million shares. The company reported leverage of 1.3 times.[1]
Rising costs narrow the annual margin forecast
Management identified raw materials, logistics, flooding in Thailand and less accurate customer production schedules as cost pressures. The company said efficiency improvements offset most of these headwinds. Reported operating margin was 9.4 per cent and the adjusted margin was 9.7 per cent. Reported earnings per share decreased from 2.28 dollars to 2.13 dollars.[1]
Autoliv narrowed the annual adjusted operating margin forecast to 10.5 per cent from a range of 10.5–11 per cent. Management retained the expectation of unchanged organic sales for the year and operating cash flow of 1.2 billion dollars. These forecasts concern the full year, whereas the sales decline and reduced quarterly cash generation cover the third quarter.[1]
