Autoliv has predicted a fall in its fourth quarter and full year sales as production cuts continue to bite the North American and western European automotive markets.

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In releasing its third quarter results, Autoliv said that the latest forecasts from JD Power and CSM indicate a decline of 7% in global light vehicle production for the fourth quarter. This includes production cuts in North America and western Europe, where Autoliv derives 70% of revenues, of 19% and 13%, respectively.


Moreover, it went on to warn: “However, all these forecasts could have already become outdated given the current financial turmoil. Currency exchange rates have also become more volatile lately.


“Based on these uncertain assumptions, the indication for the fourth quarter is an organic sales decline in the order of 12% which is better than the forecast average change in vehicle production in North America and western Europe,” the company said.


Acquisitions and currency effects are expected to have a favourable impact on consolidated sales of close to 1% each, based on current exchange rates.

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For the full year, Autoliv said the assumptions imply that organic sales would decline by 6% while consolidated sales would increase by only 2% compared to previous guidance of an organic sales decline of 1% and a consolidated sales increase of 8%.


As a consequence, the previous guidance of an operating margin in the range of 7.0% to 7.5% for the full year has also been revised.


“The current uncertain assumptions indicate an operating margin before severance and restructuring costs of around 6.5% for the full year and of approximately 5% for the fourth quarter. Consequently, Autoliv expects to be able to continue to offset a significant portion of the negative effects caused by the latest round of production cuts by customers thanks to the Company’s action program and other internal measures,” a statement said.


In its third quarter, Autoliv reported a fall in consolidated sales of 1% to US$1,545m, whilst organic sales  decreased by 7%. The company blamed “significant cuts in North American and West European vehicle production” for the falls.


Operating income for the quarter was $58m, operating margin 3.8%, income before taxes $47m, net income $31m and earnings per share $0.44.


On a comparable basis, excluding severance and restructuring cost in both years, operating income amounted to $91m compared to $117m in the same quarter 2007; operating margin amounted to 5.9% compared to 7.5%; net income to $55m compared to $68m and earnings per share to $0.76 compared to $0.87.

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