Actionable news
0
All posts from Actionable news
Actionable news in ALV: AUTOLIV Inc,

Autoliv: Financial Report July - September 2015

The following excerpt is from the company's SEC filing.

Strong growth in Europe and Active Safety

(Stockholm, October 23, 2015) For the three-month period ended September 30, 2015, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb) the worldwide leader in automotive safety systems reported consolidated sales of $2,185 million. Quarterly organic sales* grew by 8.4%. The adjusted operating margin* was 9.4% (for non-U.S. GAAP measures see enclosed reconciliation tables).

The expectation at the beginning of the quarter was for organic sales growth of more than 7% and an adjusted operating margin of around 9%.

For the fourth quarter of 2015, t he Company expects organic sales to increase by around 9% and an adjusted operating margin of around 10.5%. The expectation for the full year is for organic sales growth of around 7% and an adjusted operating margin of around 9.5%.

Key Figures

(Dollars in millions, except per share data)

Q3 2015

Q3 2014

Change

Net sales

2,184.5

2,208.0

Operating income

Operating margin

Adjusted operating margin

Earnings per share, diluted

Adjusted earnings per share, diluted

Operating cash flow

1) Excluding costs for capacity alignment and antitrust related matters.

2) Assuming dilution and net of treasury shares.

Comments from Jan Carlson, Chairman, President & CEO

During the third quarter, we delivered more than 8% organic sales growth, including 36% growth in our important active safety business. The adjusted operating margin improved year-over-year to 9.4%. In addition adjusted earnings per share grew by 22%. I am pleased with Autolivs overall performance in the quarter.

Our strong growth outperformed the light vehicle production in all regions. We saw double digit growth in Europe, Japan and the Rest of Asia, which combined account for around half of Autolivs total sales. In Europe, active safety and sales of passive safety products to volume manufacturers, were the strongest growth drivers.

In China, we performed better than the light vehicle production. However, given the current uncertainty, we continue to implement short term measures, including adjusting manufacturing capacity to mitigate the margin effect from fluctuating volumes. At the same time we continue to prepare for a more normalized growth situation by strengthening our engineering capabilities.

During the quarter we executed toward our mission of being the leading safety supplier for the future car. We closed the previously announced acquisition of MACOMs automotive business and launched the important Electronic Horizon product at the ITS show in France. We signed an agreement (subject to closing) with the intent to form a joint venture in the area of brake control systems with Nissin-Kogyo. We also became a participant in the Drive Me program, a cooperation between several parties including Volvo Car Corporation, academic institutions and authorities where we will collaborate on the road to self-driving vehicles.

At our Capital Markets Day in early October, we set the course towards the end of the decade by setting our financial targets for growth, margins and earnings per share. At the event we also demonstrated our industry leading active safety portfolio which will play a vital role in delivering Real Life Safety in the years to come.

An earnings conference call will be held at 2:00 p.m. (CET) today, October 23. To follow the webcast or to obtain the pin code and phone number, please access www.autoliv.com. The conference slides will be available on our web site as soon as possible following the publication of this earnings report.

Q3 Report 2015

Outlook

Mainly based on our customer call-offs we expect organic sales for the fourth quarter of 2015 to grow by around 9% compared to the same quarter of 2014. Currency translations are expected to have a negative effect of more than 6%, resulting in a consolidated sales growth of more than 3%. The adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is expected to be around 10.5%.

The expectation for the full year 2015 is for an organic sales growth of around 7%. Consolidated sales are expected to decline by around 2% as negative effects from currency translations are expected to be around 9%. The expectation for the full year adjusted operating margin is around 9.5%, excluding costs for capacity alignments and antitrust related matters.

Autoliv has agreements with several OEMs for supply of replacement airbag inflators for delivery. Based on customer agreements and our own expectations we

estimate delivery volumes of up to 20 million units mainly in 2015 and 2016. It remains too early in this evolving situation to be able to estimate final volumes.

Our capacity alignment program continues and the Company continues to expect the costs for the program to be more than $90 million for the full year 2015.

The projected tax rate, excluding any discrete items, for the full year 2015 is now expected to be around 32% and is subject to change due to any other discrete or nonrecurring events that may occur.

We still expect operational cash flow for the full year to remain strong and to be around $0.8 billion excluding antitrust related matters and any other discrete items. Capital expenditures in support of our growth strategy are expected to be 5-6% of sales for the full year, which is an increase from the normal level of 4-5% of sales mainly due to the replacement inflator business.

Consolidated Sales

Consolidated sales declined by around 1% to $2,185 million compared to $2,208 million in the same quarter 2014. Excluding negative currency translation effects of $220 million, and positive M&A effects from our recent

acquisition of the MACOM business of more than $10 million, the organic sales growth* was 8.4%, compared to the organic sales growth of around 7% expected at the beginning of the quarter.

Sales by Product

Change vs. same quarter last year

Sales (MUSD)

Reported

(U.S. GAAP)

Acquisitions/

Divestitures

Organic

change*

Airbags

1,204.2

Seatbelts

Passive Safety Electronics

1) Effects from currency translations.

2) Including Corporate and other sales.

The organic sales growth* of

airbag products

(including steering wheels) was driven by increased replacement inflator sales in North America and Japan, driver airbags and steering wheels in Europe as well as inflatable curtains in several regions including North America and new business in China.

The organic sales growth* in

seatbelt products

was a result of sales growth in Europe and Rest of Asia, partly offset by lower sales in China. The trend of higher sales for more advanced and higher value-added seatbelt systems continued globally.

Organic sales* for

passive safety electronics products

(mainly airbag control modules and remote sensing units) grew strongly in China and South Korea.

The strong organic sales growth* for

active safety products

(automotive radars, night vision systems and cameras with driver assist systems) was driven by radar and vision systems. Radar related products particularly contributed, primarily as a result of Mercedes increased demand for driving assistance products. Sales of vision systems to BMW also contributed.

Sales by Region

Whereof:

Americas

Global

The organic sales growth* of more than 8% in the quarter was mainly a result of strong growth in Europe and North America, particularly to non-US OEMs. The inflator replacement program also contributed. The growth was slightly offset by an organic sales* decline in China.

Autolivs sales in

in the quarter were $713 million.

Sales from Autolivs companies in

decreased organically* by more than 3% in the quarter. This was a result of a 6% light vehicle production (LVP) decline (according to IHS), unfavorable vehicle mix and model transitions with global OEMs. This was partly mitigated by sales growth with Chinese OEMs.

Organic sales* from Autolivs companies in

increased by more than 15% in the quarter. The sales increase was mainly driven by inflator replacement sales but also impacted by strong growth with models from Mazda and Lexus, which was offset by sales decreases for models from Mitsubishi.

Organic sales* from Autolivs companies in the

Rest of Asia (RoA)

grew by more than 12% in the quarter. This was driven by sales increases in South Korea, particularly for models from Hyundai and Kia. The strong sales growth in India was primarily driven by high safety content in well performing models from Hyundai. In Thailand, models from Mitsubishi and Isuzu contributed to the growth.

For Autolivs companies in the

, the sales development was mixed for the quarter. In North America, strong organic sales growth* of almost 10% was mainly driven by models from Mercedes, Ford, Nissan and Hyundai/Kia. Sales of replacement inflators also contributed to the growth. Sales in South America (Brazil) declined due to a 21% drop in LVP mainly affecting Autoliv through lower sales of models from GM and VW.

The strong organic sales growth* of 11% in the quarter from Autolivs companies in

was driven by sales increases for a number of OEMs, particularly models from VW, Ford, Hyundai/Kia and Fiat-Chrysler.

Launches in the 3

Quarter

Audis new A4

Inflatable curtains, side airbags, active seatbelts with pretensioners, cable cutters.

KIAs new Sportage

Driver airbag, passenger airbag, side airbag, inflatable curtains, seatbelts with pretensioners, safety electronics.

Hondas new Civic

Driver airbag with steering wheel, passenger airbag, inflatable curtains, side airbags, radar system.

BMWs new 7-series

Driver airbag with steering wheel, passenger airbag, seatbelts with pretensioners, Night vision system, cable cutters.

Fords new Everest

Passenger airbag, inflatable curtains, side airbags, knee airbag, safety electronics.

Chevrolets new Volt

Safety electronics and radar system.

Minis new Clubman

Driver airbag with steering wheel, side airbag, inflatable curtains, knee airbag, seatbelts with pretensioners, mono vision system.

Teslas new Model X

Side airbags, inflatable curtains and cable cutters.

BMWs new X1

Side airbag, inflatable curtains, knee airbag, seatbelts with pretensioners, mono vision system.

Net Sales

Gross profit

(101.3

(101.0

R,D&E net

(130.4

(135.7

Adjusted operating income

Income before taxes

Tax rate

Net income

Net income attributable to controlling interest

The gross profit for the third quarter 2015 was $14 million higher than the same quarter in 2014. The gross margin improved 0.8pp to 20.1%, from 19.3% in the same quarter of 2014, mainly as a result of the higher organic sales, favorable currency effects, positive product mix and raw material savings. These positive effects were partly offset by costs related to the investments for capacity and growth.

Selling, General and Administrative (S,G&A) expenses were unchanged at $101 million.

Research, Development & Engineering (R,D&E) expenses, net decrease by $5 million compared to the same quarter of the previous year. At comparable currency rates the increase in R,D&E, net was more than $6 million.

Operating income decreased $17 million to $158 million, or 7.2% of sales. Costs of $42 million related to capacity alignments reduced the operating margin by 1.9pp in the third quarter, compared to 0.5pp in the same quarter of 2014. Adjusted operating margin, excluding costs for capacity alignment and antitrust related matters, was 9.4% of sales for the third quarter 2015 compared to 8.5% of sales for the same period in 2014. The increase was primarily driven by the organic sales growth, positive product mix, raw material savings and favorable currency effects.

Income before taxes decreased by $5 million. Income attributable to controlling interest was $99 million, a decrease of $8 million from the third quarter of 2014.

The effective tax rate in the third quarter of 2015 was 34.7% compared to 31.9% in the same quarter of 2014. Discrete tax items, net had a favorable impact of 0.4pp compared to the same quarter 2014 when discrete tax items, net decreased the tax rate by 0.2pp. The tax rate in 2015 has been negatively impacted by an unfavorable mix of earnings and tax rates in various jurisdictions compared to 2014.

Earnings per share (EPS) was $1.12 compared to $1.16 for the same period one year ago. The EPS was positively affected by 22 cents from higher operating income and 4 cents by lower number of shares outstanding. These positive effects were more than offset by 32 cents from higher costs for capacity alignments. The adjusted EPS assuming dilution was $1.53 compared to $1.25 for the same period one year ago.

The weighted average number of shares outstanding assuming dilution was 88.3 million compared to 91.9 million in the third quarter of 2014 mainly due to our share repurchase program.

Cash Flow and Balance Sheet

Cash flow from operations amounted to $191 million compared to $212 million in the same quarter of 2014. The decrease was primarily related to timing effects.

Cash flow before financing* was negative $34 million compared to positive $94 million during the same quarter of 2014. The difference of $128 million comes mainly from M&A activities in the quarter, specifically the execution of a license agreement with Volvo Car Corporation and the completion of our acquisition of MACOMs automotive business. Capital expenditures, net, of $96 million were $16 million more than depreciation and amortization expense during the quarter and $22 million less than capital expenditures during the third quarter of 2014.

During the quarter, operating working capital* as a percentage of sales was 6.9%, down from 7.1% on June 30, 2015. The Company targets that working capital in relation to the last 12-month sales should not exceed...


More