Takeaway from safety equipment specialist supplier Autoliv‘s second quarter of 2019: “Navigating through challenging conditions”.
The company booked US$2,155m of consolidated sales, up 1.5% year on year, a 7.9% operating margin, 8.5% adjusted operating margin and EPS down 43% to $1.25 or off 38% to an adjusted $1.38.
Full year 2019 “indications” were 1% to 3% organic sales growth, minus 1% to 1% consolidated sales growth and 9% to 9.5% adjusted operating margin.
Autoliv said its growth outperformed global light vehicle production by 9.1% due mainly to good business in the Americas and China though profit was limited by a severe global light passenger vehicle sales decline and high raw material costs.
Hence its workforce fell by 1,208 people in the quarter, mainly direct labour. The supplier also began to reduce indirect headcount by about 5%, adding, ominously: “Additional restructuring measures are being evaluated.”
Mikael Bratt, president & CEO, said in the results statement: “We experienced another challenging quarter dominated by severe weakness in global light vehicle markets and high raw material costs with reduced profitability as a consequence.
“The uncertainty remains high in a falling market and we currently do not see any signs of a turnaround in light vehicle demand. Therefore we now indicate a lower full year 2019 sales and profitability.”
“Launch related costs [are] continuing to decline versus the first quarter.
“I am generally pleased with how we managed the sharp decline in global light vehicle by the cost reduction actions we implemented and are planning. Furthermore, I see both room and need for additional improvements in certain areas.
“Our sales continued to develop significantly better than LVP, with organic growth outperforming LVP in all regions except Japan, where we expect outperformance to begin later in the year.
“Order intake continued on a good level, securing a strong order book and a prolonged outperformance versus LVP.
“In addition to our near term focused cost reduction actions, we have accelerated our efforts on building the foundation for improving the entire value chain. This includes increased flexible automation, digitalisation and R,D&E efficiency.”