Autoliv Announces Financial Report April-June 1998
23 July 1998
Autoliv Announces Financial Report April-June 1998
STOCKHOLM, Sweden, July 23 -- Autoliv Inc.
, a worldwide leader in automotive safety, reported a
3 percent increase in sales to $878 million for the three-month period ended
June 30, 1998, and a 4 percent improvement in earnings per share to $.50,
despite lower vehicle production, continued severe pricing pressure on airbags
and the strike at General Motors.
The combination of a strong sales performance for Autoliv's latest product
innovations, management's action program and the merger between Autoliv AB and
Morton ASP are therefore starting to generate results.
Sales posted consolidated net sales for the second quarter 1998 rose by 3%
to $878 million from $850 million for the corresponding quarter 1997. The
underlying sales increase (i.e. excluding currency effects and acquisitions)
was also 3%. The strike at General Motors is estimated to have negatively
affected Autoliv's sales growth by about one percentage point.
The production of light vehicles is estimated to have grown by 3% in
Europe, while that production in North America and Japan is estimated to have
fallen by 6% and 17% respectively. The average decline in the triad therefore
exceeded 5%.
Autoliv's sales of airbag products (incl. steering wheels) amounted to
$600 million. Both posted sales and sales adjusted for currency effects and
corporate acquisitions declined by 1%. The pricing pressure has continued to
be severe, especially in the U.S. Unit sales have, however, continued to grow
sharply, particularly for passenger and side-impact airbags. The number of
customers for Autoliv's side-impact protection systems have increased to
21 vehicle manufacturers and the number of programs to more than 70 car
models.
Posted sales of seat belt products (incl. seat sub-systems) grew by 15% to
$278 million, while sales excluding currency effects and acquisitions grew by
14%. The significant increase is mainly due to new products. The latest
pretensioner generation introduced last year has, for instance, made it
possible not only to increase sales of this innovative feature but also to win
sales for complete belt systems where the new pretensioner is an integrated
part of the retractor.
Net sales for the six-month period rose by 2% to $1,716 million over the
corresponding period 1997. Adjusted for currency effects and corporate
acquisitions, sales grew by 3%. Posted sales for airbags declined by 2% and
underlying sales by 1%. Posted sales for seat belt grew by 12% while the
growth excluding currency effects and acquisitions was 14%.
Earnings
The Company's net income increased by 4% to $51 million as a result of
higher sales and a better gross margin. This margin improved from 21.7% to
22.0% thanks to corporate acquisitions, higher vertical integration, reduced
material costs and productivity improvements. Selling, general and
administrative expense has also been kept unchanged. The R&D expense has,
however, increased by 19% to take advantage of Autoliv's many business
opportunities, not least in new areas such as pre- and post-crash systems.
The increase is also the effect of the consolidation of new companies. The
operating margin was, however, maintained at about 10.6%.
For the six-month period ended June 30 net income and earnings per share
declined by 10% to $93 million and $.91, respectively, due to the decline in
the first quarter.
The effective tax rate was 40%, both for the quarter and the six-month
period, compared to 41% for the corresponding quarter and six-month period
1997. Excluding non-deductible amortization, the tax rate was 36%.
Cash Flow and Balance Sheet
Cash generated by operations during the quarter amounted to $97 million,
after an increase in working capital of $7 million to $52 million. Of the
cash, $68 million was used for capital expenditures and $7 million for
acquisitions of businesses, compared to $48 million and $4 million,
respectively, during the second quarter 1997. Major capital expenditures were
used for increased capacity in initiators, inflators and airbag cushions, and
for the construction of a plant in Brazil and a steering wheel plant in North
America.
Net debt decreased by $3 million to $653 million during the quarter and
increased during the six-month period by $7 million. At the end of the
quarter, net debt to total equity stood at 37% compared to 38% at the
beginning of the year.
Employees
The number of employees increased by almost 700 during the quarter to
19,200. Almost the entire increase is estimated to have come from continued
vertical integration and acquisitions.
Significant Events
-- Autoliv has developed a new kind of airbag -- the Inflatable Carpet
(InCa) -- for prevention of injuries to car occupant's feet, ankles and
lower legs, one of the most common injuries in frontal crashes to
occupants who already are protected by seat belts and airbags.
-- Autoliv's sales of steering wheels are expected to double in the next
couple of years. Autoliv Steering Wheels has therefore been formed to
coordinate this expansion. Mr. Paul Charlety has been appointed
President of the new division.
-- Commercial shipments of the Inflatable Curtain have begun. The
interest in this new protection system for the head in side-impact
collisions is significant. The growth rate in units is expected to be
faster for this product than any other new Autoliv product ever
introduced.
-- Commercial shipments have also begun of the AWS (AntiWhiplash Seat),
Autoliv's efficient protection against neck injuries in rear-end
collisions.
-- Local production of airbags has started in Australia. Previously these
items were exported from the U.S.
-- Mr. Hans Biorck will join the company on September 1 to later assume
the position of Chief Financial Officer and Vice President Finance when
Mr. Wilhelm Kull, Autoliv's present CFO and VP Finance, retires next
year.
Dividend
A dividend of 11 cents per share will be paid on September 3 to Autoliv
stockholders of record as of August 6, 1998. Ex-date on the stock exchanges
will be August 4.
Report
This report has not been examined by the Company's auditors. The next
quarterly report will be published on October 22.
KEY RATIOS (UNAUDITED)
Quarter Six Month Twelve
Apr.-June Jan.-June Months
1998 1997(A) 1998 1997(A) 1997(B)
Earnings per share
(basic and diluted) $0.50 $0.47 $0.91 $1.01 $1.81
Equity per share 17.25 16.29 16.67
Net debt, $ in millions 653 625 646
Net debt to equity, % 37 38 38
Gross margin, % 22.0 21.7 21.9 22.6 22.1
Operating margin, % 10.6 10.7 10.3 11.6 10.9
Return on equity, %* 11 13 11
Return on capital employed, %* 15 17 15
Return on total capital, %* 10 13 11
Number of employees at period-end 19,200 16,300 17,800
Number of shares, diluted (in millions) 102.2 102.2 102.2
(*) On a comparable basis
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter Six Months Twelve
Apr.-June Jan.-June Months
1998 1997(A) 1998 1997(B) 1997(B)
Net sales
- Airbag products $599.9 $607.1 $1,183.5 $1,208.4 $2,316.4
- Seat belt products 278.0 242.4 532.3 475.3 940.4
Total net sales 877.9 849.5 1,715.8 1,683.7 3,256.8
Cost of sales -684.9 -665.2 -1,340.0 -1,303.8 -2,537.0
Gross profit 193.3 184.3 375.8 379.9 719.8
Selling, general &
administrative
expense -39.1 -39.3(C) -78.6 -75.9(C) -154.7(C)
Research &
development -45.5 -38.9(C) -91.7 -79.2(C) -152.7(C)
Amortization of
intangibles -15.3 -14.2 -30.4 -29.5 -59.6
Other income, net 0.1 -0.9 0.9 -0.5 3.2
Operating income 93.2 91.0 176.0 194.8 356.0
Equity in earnings
of affiliates 2.4 2.2 4.2 4.9 10.3
Interest income 3.1 2.6 4.7 3.9 7.1
Interest expense -14.4 -12.7 -29.9 -26.6 -55.9
Income before taxes 84.3 83.1 155.0 177.0 317.5
Income taxes -33.5 -34.0 -61.7 -72.6 -129.4
Minority interests
in subsidiaries -0.2 -0.6 -0.2 -0.9 -3.2
Net income before
one-time items 50.6 48.5 93.1 103.5 184.9
Earnings per share 0.50 0.47 0.91 1.01 1.81
Write-off of
acquired R&D -- -732.3(D) -- -732.3(D) -732.3(D)
Reported net income $50.6 $-683.8 $93.1 $-628.8 $-547.4
(A) Whereof April is reported as pro forma.
(B) Whereof January-April is reported as pro forma.
(C) Pro forma numbers reclassified.
(D) In the audited financial statements for Autoliv, Inc., (Autoliv AB and
subsidiaries for period on and prior to April 30, 1997 and Autoliv
Inc. for May 1 to December 31, 1997) is the Write-off of acquired R&D
shown as operating expense and a loss per share of $6.70 is reported.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions)
June 30 Dec. 31
1998 1997
Assets
Cash & cash equivalents $239.7 $152.0
Accounts receivable 631.9 569.2
Inventories 229.7 197.8
Other current assets 63.8 55.2
Total current assets 1,165.1 974.2
Property, plant & equipment, net 776.8 727.2
Intangible assets, net (mainly goodwill) 1,662.5 1,694.5
Other assets 27.4 34.6
Total assets $3,631.8 $3,430.5
Liabilities and shareholders' equity
Short-term debt $225.1 $186.2
Accounts payable 421.1 385.3
Other current liabilities 452.1 428.0
Total current liabilities 1,098.3 999.5
Long-term debt 667.9 611.8
Other non-current liabilities 90.5 100.8
Minority interest in subsidiaries 12.1 14.4
Shareholders' equity 1,763.0 1,704.0
Total liabilities and
shareholders' equity $3,631.8 $3,430.5
(A) Whereof goodwill $1,322 million, and acquired patent and patent-
supported technology $249 million from the merger
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Quarter Six Months Twelve
Apr.-June Jan.-June Months
1998 1997(A) 1998 1997(B) 1997(B)
Net income $50.7 $-683.8 $93.1 $-628.8 $-547.4
Write-off of acquired R&D -- 732.3 -- 732.3 732.3
Depreciation and amortization 55.7 52.0 110.0 110.5 207.7
Deferred taxes and other -3.4 -0.8 -0.8 -3.5 -7.7
Change in working capital -6.5 12.7 -45.9 10.3 55.6
Net cash provided by
operating activities 96.5 112.4 156.4 220.8 440.5
Capital expenditures -67.7 -48.4 -121.4 -103.4 -215.8
Acquisition of businesses -6.9 -3.9 -10.2 -3.9 -44.7
Net cash after operating &
investing activities $21.9 $60.2 $24.8 $113.5 $180.0
(A) Whereof April is reported as pro forma
(B) Whereof January-April is reported as pro forma