SWEDEN: Autoliv cites active safety among reasons for impressive third quarter results
Autoliv is highlighting growth in its steering wheel and active safety business among the reasons for its highest third quarter sales ever, with Europe showing encouraging signs of 'stabilisation.'
The supplier posted consolidated sales of US$2.12bn, with cash flow from operations at US$206m, again, the highest ever, while operating income was US$182m, including US$3m related to antitrust investigations and capacity alignments.
Net income was US$125m and Autoliv is estimating 2013 full-year organic sales to grow by more than 5%, compared to previous indications of around 4%.
"Our steering wheel business - we have grown volumes in the third quarter [of] 30%," an Autoliv spokesman told just-auto from Sweden. "That puts some strain on our manufacturing so it comes currently at a lower margin.
"Active safety is becoming increasingly important all the time - it is the future growth area and current [growth] area of the automotive safety industry.
"In 2012, it was 3% of our total revenue, but from a strategic standpoint the fact we are there and [have] got the right relationships with the OEMs, it is very important."
Autoliv says its active safety business has grown nearly 70% in consecutive quarters, a situation it says it is a "little bit surprised by," but is nonetheless predicting its systems and products could save up to 150,000 lives per year in the future.
Europe is seeing a gradual emergence from economic gloom and Autoliv says it is continuing its "transition" phase on the Continent where it is increasing manufacturing capability footprint from west to east.
"As we do that and we get increasing volumes at the same time, that could put further pressure on that programme, because we have to handle both transitions at the same time," said the Autoliv spokesman.
"While it is a long-term positive, it could put a short-term strain on our capabilities. We would prefer to call it [Europe], stabilisation.
"Registration numbers and light vehicle production numbers, they have come up a little bit. Stabilisation is the word we use. We don't see the fundamentals there for a quick uptick."
The component producer added it expected its strong growth to continue into the fourth quarter, driven largely by China and active safety, but also by model launches and production ramp-ups in Europe, Japan and Brazil.
In the press release issued at 12:00 CET on October 24, 2013, titled “Strong Sales Growth Continues Led by China and Active Safety”, the “Comments from Jan Carlson, President and CEO” and “Outlook” sections contained misstated language regarding the growth outlook. The correct press release follows, in full. The misstated and corrected statements are identified and described on a page at the end of this release.
Strong Sales Growth Continues Led by China and Active Safety
(Stockholm, October 24, 2013) – – – For the three month period ended September 30, 2013, Autoliv Inc. (NYSE: ALV and SSE: ALIV.Sdb) – the world leader in automotive safety – reported consolidated sales of $2,119 million, the highest third quarter sales in Autoliv's history. The operating margin was 8.8% excluding costs related to antitrust investigations and capacity alignments (non-U.S. GAAP measure, see enclosed reconciliation table). Organic sales* growth of close to 9% exceeded the Company's expectation by almost 3 percentage points (pp).
Cash flow from operations was $206 million, highest for a third quarter ever, and operating income was $182 million, including $3 million in costs related to antitrust investigations and capacity alignments. Income before taxes was $177 million and net income was $125 million. Earnings Per Share (EPS) increased by 5% to $1.29, assuming dilution.
For the fourth quarter, Autoliv's strong organic sales growth is expected to continue by more than 9%. The operating margin is expected to be around 9% excluding costs related to antitrust investigations and capacity alignments. We expect 2013 full year organic sales to grow by more than 5%, as compared to the previous indication for growth at around 4%. The operating margin indication remains unchanged at around 9% excluding costs related to antitrust investigations and capacity alignments, mainly due to adverse currency effects and operational inefficiencies.
Comments from Jan Carlson, President and CEO
“We had a solid quarter, delivering strong growth and better than expected margins. Even though we have challenges I am very pleased with the Company's overall excellent performance. As in the previous quarter, China and Active Safety products contributed significantly to our strong growth, while operational issues and currencies negatively affected our margins.
We recently held an opening ceremony for our new propellant plant in China, the Company's biggest investment to date, which will start production in the beginning of 2014. This is another important step in our investment strategy, a strategy which will support our strong growth and build long term competitive advantage as we continue to build the most geographically dispersed global footprint in our industry.
Looking forward, we expect strong growth to continue into the fourth quarter, again driven largely by China and Active Safety, but also by important model launches and production ramp-ups in Europe, Japan and Brazil. In addition to our strong growth in Active Safety we target to achieve our long term company margin range of 8% to 9% for this business in the next two to three years. Based on strong order intake over the last few years we further believe we are gaining market share in certain product areas.
In parallel with these positive developments we are challenged to continue the transition of our European footprint at the highest possible pace. An increasing part of our growth is also coming from Europe where we have a currently unfavorable situation and from Brazil where we have supply chain challenges. These challenges in combination with our investments in Active Safety will continue to put pressure on our margins leading into 2014.
Our current growth shows that we have the right strategy and as we execute towards our strategic targets as outlined at our capital market day and complete our current company transformation, we will build an even stronger Autoliv. In the future we envision that our products and systems will save 150,000 lives every year.”
An earnings conference call will be held at 2:30 p.m. (CET) today, October 24. To follow the webcast, or obtain the pin code and phone number, please access www.autoliv.com. The conference call slides will be available on our web site as soon as possible following the publication of this earnings report.
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Original source: http://www.autoliv.com/NewsRoom/Pages/PressReleases.aspx?releaseid=821571