Autoliv: Financial Report October - December 2000
* Sales down 2% while organic sales and car production decreased 4%
* Income before taxes $35 million vs. $99 million
* Earnings per share $.20 - in line with expectations
STOCKHOLM, Sweden, Jan. 25 Autoliv Inc.
(SSE: ALIV), the worldwide leader in automotive safety systems, reported
earnings per share of $.20 for the quarter ended December 31, 2000, which is
within the range the Company announced on December 11. Management then
estimated earnings for the quarter to be between $.19 and $.29 per share.
This compares to $.60 for the corresponding period in 1999, which was
Autoliv's best quarter ever.
Global car production was somewhat weaker than expected in December and
Autoliv's sales declined by 2% in the fourth quarter to one billion.
Sales
The Quarter
Consolidated net sales decreased by 2% to $1,003 million from
$1,026 million. Acquisitions added 11% to sales as a result of the
consolidation of Norma and the acquisitions of Izumi, NSK's North American
seat belt operations and OEA. Currency translation effects reduced Autoliv's
reported sales by 9%.
Autoliv's organic sales (i.e. consolidated sales adjusted for currency
effects and acquisitions/divestitures) declined by 4% or at the same rate as
global light vehicle production. Autoliv's sales were also negatively
impacted by an unfavorable country and customer mix. The decline in North
American vehicle production was 7%, while the decline for Autoliv's largest
customers in North America (GM, Chrysler and Ford) was 10%. European car
production decreased by 3%.
Customers' production levels in North America were higher during the
fourth quarter than car sales, particularly for Autoliv's largest customers.
Consequently, customers' vehicle inventories have risen which will negatively
affect Autoliv's sales in the first quarter this year.
Sales of airbag products (incl. steering wheels) decreased due to the fall
in the U.S. car production by 4% to $704 million from $735 million. Currency
effects reduced reported sales by 7%. Acquisitions increased sales by 11%.
Consequently, organic sales declined by 8% as a result of the weak car
production and the negative country and customer mix. The favorable trends
continued for steering wheel and side-impact airbags for head protection.
Sales of seat belt products (incl. seat sub-systems) grew by 3% to
$299 million from $291 million. Currency effects reduced reported sales by
13%, while acquisitions increased sales by 11%. Consequently, organic sales
growth was 5%. The growth was mainly driven by market share gains in the U.S.
and breakthroughs in the U.S. for Autoliv's seat belt pretensioners.
The Full Year
Consolidated sales for the 12-month period January through December rose
by 8% to $4,116 million, while the organic sales growth was 6%. Autoliv's
airbag sales rose by 8% to $2,934 million and seat belt sales by 8% to
$1,182 million, while the organic sales growth was 5% and 9%, respectively.
This compares favorably with the increase in light vehicle production, which
for the same period was less than one percent in both North America and
Europe.
Earnings
The Quarter
Gross profit decreased by $66 million to $156 million and the gross margin
fell from 21.7% to 15.5%. The reduction was primarily due to the fall in U.S.
vehicle production, higher material prices and content, and an unfavorable
sales mix. The acquisitions of OEA and NSK's seat belt operations in North
America have reduced Autoliv's margins, since these companies have lower gross
margins than Autoliv (but also lower overhead costs).
Operating income declined by $57 million to $49 million and the operating
margin fell from 10.4% to 4.9%. The decreases are due to the above-mentioned
$66 million decline in gross profit. This decline was partially offset by the
fact that costs for SG&A and R&D have been reduced as a percentage of sales.
Net financial expenses increased by $6 million to $15 million, mainly as a
result of higher debt incurred for acquisitions, the share repurchase program.
The effective tax rate increased from 39.6% to 43.4% since the
non-deductible goodwill amortization was unchanged while profits have fallen.
Earnings per share amounted to $.20 compared to $.60 during the
corresponding quarter previous year. Of the decline, seven cents are due to
currency exchange effects (including both translation and transaction
effects). Earnings per share increased by one cent as a result of the stock
repurchase program and declined by two cents due to the higher effective tax
rate.
The Full Year
During the 12-month period, gross profit declined by $21 million to
$786 million and gross margin contracted from 21.2% to 19.1% for the reasons
mentioned above. Operating income decreased by $29 million to $340 million
and operating margin from 9.7% to 8.2%, primarily due to the lower gross
margin.
Income before taxes declined by $39 million to $291 million. In addition
to the decline in operating income, the decrease was due to higher interest
expense from higher debt.
Net income decreased by $31 million to $169 million and earnings per share
by 28 cents to $1.67. The stock repurchase program increased the earnings per
share by one cent, while currency exchange effects reduced them by 16 cents
and a higher effective tax rate by two cents.
The effective tax rate was 40.9% during 2000 and 40.6% during 1999.
Cash Flow and Balance Sheet
During the quarter, the operations generated $69 million in cash compared
to $156 million during the same quarter of 1999. Net capital expenditures
amounted to $65 million and $49 million, respectively. The largest capital
expenditures were expansion of the production capacity for inflators and
expansions of the tech centers in France and the U.S. After operating and
investing activities operations generated $13 million in cash compared to
$89 million during the corresponding quarter 1999.
Net debt fell since the third quarter by $4 million to $1,009 million and
the gross interest-bearing debt was reduced by $34 million to $1,091 million.
During the quarter, $14 million was used to buy back stock.
The net debt to capitalization ratio stood unchanged during the quarter at
35%. The equity has been reduced by currency effects and the share buy-back
program.
Employees
The number of employees rose by 500 during the quarter and by 5,400 during
the year to 28,000. Of the annual increase, 3,300 was due to acquisitions,
net of divestitures. The remaining increase, which corresponds to 9% of the
number of employees at the beginning of the year, compares favorably with
Autoliv's unit sales increase.
The number of employees in low labor-cost countries rose from 1,900 to
5,200. Consequently, Autoliv currently has 19% of its employees in these
countries, compared to 8% a year ago.
Significant Events
* Following the record order increase in 1999, Autoliv's order intake
continued during 2000 to grow at a double-digit rate and the Company recorded
a number of break-through orders, such as its first contract for rollover
sensors in North America, the first electronics order from BMW and a major
contract for a new weight sensing system for advanced airbags. This contract
is estimated to be the largest production contract awarded for such a system,
since the new U.S. airbag regulations were adopted in May.
* As of December 31, Autoliv had acquired 4.5 million of its shares
following the authorization in May of the Board of Directors to repurchase up
to 10 million shares. Since the program commenced, $103 million has been used
to buy back shares. The buy-backs have improved earnings per share by one
cent, both in the quarter and for the full year.
* Substantially all of the assets of OEA Aerospace, Inc., have been sold.
The operations (which were part of OEA that Autoliv acquired in May) were not
related to Autoliv's core business. The transaction had no effect on
earnings.
* An agreement has been established with Mando Corporation, a leading
Korean auto parts supplier, to form a joint venture. The new company, Autoliv
Mando Corporation, in which Autoliv will have 65% of the shares, is expected
to reach annual sales, in a few years' time, of approximately $200 million,
almost 5% of Autoliv's current sales. Presently, Korea is supported by export
from Autoliv companies in other countries.
* The Annual General Meeting of Stockholders will be held in Chicago on
April 24, 2001. Holders of record on February 26, 2001 will be entitled to be
present and vote at the Meeting. Notice of the Meeting, the Annual Report and
the Proxy Statement will be mailed to the stockholders at the end of March.
Prospects
Assuming that the January currency exchange rates prevail for the rest of
the year, Autoliv's sales will be negatively impacted by 3% during the year's
first quarter, while the effect for the full year will be up 1%. Acquisitions
are expected to add 7% to sales in the quarter and 2% for the full year. The
supply value of safety systems per vehicle is expected to continue to grow.
In order to cut inventories and adjust to expected lower demand during
2001, the U.S. vehicle manufacturers have announced even steeper production
cuts for the first quarter than published in early December when Autoliv
commented on the year 2001 profit outlook. The plans for GM, Chrysler and
Ford now call for a reduction of more than 20% in the current quarter.
Consequently, Autoliv's earnings for the first quarter 2001 will be lower than
foreseen in December.
Autoliv's management has begun implementing a comprehensive action program
to reduce costs, eliminate unutilized capacity and improve cash flow. The
program includes reduction of headcount by more than 1,000 or approximately
12% in the U.S. and consolidation of manufacturing by closing, phasing-out and
down-sizing of plants in both U.S. and Europe, as well as further transfers of
high-labor content jobs to low cost countries. A quarter of the U.S.
headcount reduction will take place during this quarter and the remaining
reduction will become effective in the following quarters.
Dividend and Report
A dividend of 11 cents per share will be paid on March 1 to Stockholders
of record as of February 1. The ex-date will be January 30.
The next quarterly report for the period January 1 through March 31 will
be published on April 19, 2001.
"
KEY RATIOS
Quarter 12 Months
Oct. - Dec. Jan. - Dec.
2000 1999 2000 1999
Earnings per share 1) $.20 $.60 $1.67 $1.95
Equity per share 19.49 18.86 19.49 18.86
Working capital,
$ in millions 365 202 365 202
Capital employed,
$ in millions 2,919 2,527 2,919 2,527
Net debt, $ in millions 1,009 596 1,009 596
Net debt to equity, % 53 31 53 31
Net debt to
capitalization, % 2) 35 24 35 24
Gross margin, % 3) 15.5 21.7 19.1 21.2
EBITDA-margin, % 4) 11.8 16.6 14.8 16.3
Operating/EBIT margin, % 5) 4.9 10.4 8.2 9.7
Return on equity, % 4.1 12.8 8.7 10.6
Return on capital employed, % 6.9 16.8 12.4 14.6
Average number of shares
in millions 1) 98.0 102.4 100.9 102.4
Number of shares at
period-end in millions 1) 97.8 102.3 97.8 102.3
Number of employees
at period-end 28,000 22,600 28,000 22,600
1) Assuming dilution
2) Net debt in relation to net debt and equity
3) Gross profit relative to sales
4) Income before interest, taxes, depreciation and amortization relative
to sales
5) Operating income relative to sales
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
Quarter 12 Months
Oct. - Dec. Jan. - Dec.
2000 1999 2000 1999
Net sales
- Airbag products $704.0 $735.4 $2,934.3 $2,714.9
- Seat belt products 299.1 290.6 1,181.8 1,097.3
Total net sales 1,003.1 1,026.0 4,116.1 3,812.2
Cost of sales -847.6 -803.8 -3,330.0 -3,005.4
Gross profit 155.5 222.2 786.1 806.8
Selling, general &
administrative expense -46.7 -48.1 -190.0 -176.8
Research & development -45.2 -52.4 -195.7 -197.3
Amortization of intangibles -15.7 -15.4 -66.7 -64.1
Other income, net 1.0 -0.1 5.8 0.0
Operating income 48.9 106.2 339.5 368.6
Equity in earnings
of affiliates 1.3 1.6 4.3 4.6
Interest income 6.3 3.6 13.7 11.3
Interest expense -21.1 -12.9 -66.9 -54.8
Income before taxes 35.4 98.5 290.6 329.7
Income taxes -14.8 -38.4 -117.2 -132.0
Minority interests
in subsidiaries -1.1 1.3 -4.7 2.2
Net income 19.5 61.4 168.7 199.9
Earnings per share $.20 $.60 $1.67 $1.95
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
December 31 September 30 December 31
2000 2000 1999
Assets
Cash & cash equivalents $82.2 $111.5 $119.2
Accounts receivable 835.4 808.8 709.6
Inventories 333.5 321.5 274.0
Other current assets 97.9 139.9 78.7
Total current assets 1,349.0 1,381.7 1,181.5
Property, plant & equipment, net 867.2 900.4 834.6
Intangible assets, net
(mainly goodwill) 1,739.3 1,700.3 1,595.7
Other assets 112.3 84.2 34.7
Total assets $4,067.8 $4,066.6 $3,646.5
Liabilities and
shareholders' equity
Short-term debt $353.8 $279.5 $244.5
Accounts payable 540.3 507.3 453.4
Other current liabilities 361.8 386.2 406.7
Total current liabilities 1,255.9 1,173.0 1,104.6
Long-term debt 737.4 845.0 470.4
Other non-current liabilities 142.4 135.9 131.5
Minority interest in subsidiaries 22.0 17.5 9.0
Shareholders' equity 1,910.1 1,895.2 1,931.0
Total liabilities and
shareholders' equity $4,067.8 $4,066.6 $3,646.5
Working capital, $ in millions 365 377 202
Capital employed, $ in millions 2,919 2,908 2,527
Net debt, $ in millions 1,009 1,013 596
SELECTED CASH-FLOW ITEMS
(Dollars in millions)
Quarter 12 Months
Oct. - Dec. Jan. - Dec.
2000 1999 2000 1999
Net income $19.5 $61.4 $168.7 $199.9
Depreciation
and amortization 69.3 64.0 269.1 253.4
Deferred taxes and other 18.9 10.9 19.7 51.1
Change in
working capital -39.2 19.2 -191.7 -68.3
Net cash provided
by operations 68.5 155.5 265.8 436.1
Capital
expenditures, net -64.6 -49.0 -216.5 -211.7
Acquisitions of
businesses, net 8.9 -17.3 -211.4 -43.7
Net cash after operating
and investing
activities $12.8 $89.2 $-162.1 $180.7
SOURCE Autoliv Inc.
