Autoliv has reported first quarter operating down 29% at USD173m as it said a labour conflict in Mexico caused temporary costs of over USD20m – although the issue is now 'resolved and production returning to normal levels'.
The company reported first quarter total of USD2,174m consolidated sales, 3% down on last year but with 1.8% organic sales growth and an 8.0% operating margin.
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For the year it says it expects around 5% organic sales growth (3% total growth) and a 10.5% operating margin as initial launch cost pressures subside.
Mikael Bratt, President & CEO of Autolive said: "Our people did well managing the largest quarterly light vehicle market decline in a decade, and consequently the quarter developed in line with our expectations, excluding the effects of the labour conflict in Mexico.
"Despite the unforeseen labour conflict related costs and weak LVP trend, we are able to reiterate our full year profitability indication as we aim to meet these challenges with cost reductions, including a hiring freeze and other measures.
"Our sales strongly outpaced light vehicle production thanks to our performance in Americas and China. The sharp decline in LVP was more than offset by continued growth from new launches and we were able to grow sales organically by almost 2%. However, profitability was negatively affected by the mix impact of LVP driven sales decline for established business and sales growth coming from new launches, as profitability on new launches is initially lower until production is fully ramped up to the designed line capacity.
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By GlobalData"We saw a clear improvement in launch related costs compared to the fourth quarter of 2018, although we still expect it will take a few more quarters to be back at a normal launch cost level.
"Our order intake share remained at a good level although OEM order activity was relatively modest in the quarter.
"I am pleased that the labour conflict in Mexico is closed, with only limited production back-log effects remaining, although we are of course never satisfied when disturbances brings negative impacts on us and our customers.
"With the EC antitrust decision behind us, we continue to focus on launch effectiveness, productivity and managing light vehicle production volatility, while, as always, having quality as our first priority."
