Autoliv Announces Record Sales and Earnings for Fourth Quarter
28 January 1999
Autoliv Announces Record Sales and Earnings for Fourth Quarter; Financial Report October - December
STOCKHOLM, Sweden, Jan. 28 -- Autoliv Inc.
, a worldwide leader in automotive safety, reported record
sales and earnings for the quarter ended December 31, 1998. Sales rose by 13%
to $969 million from the corresponding three-month period 1997 and earnings
per share by 24% to $.56. Income before taxes improved by 18% to $94 million.
Sales for the full year 1998 increased by 7% to $3.5 billion and earnings
per share by 2% to $1.84. Both the improvements for the three-month and the
twelve-month periods are primarily due to strong demand for Autoliv's latest
innovations, such as side airbags and seat belt pretensioners.
Sales
Posted consolidated net sales for the fourth quarter 1998 increased by 13%
to $969 million over the corresponding quarter 1997. Currency translation
effects contributed 2 percentage points to the increase and corporate
acquisitions (net of divestitures) 1 percentage point.
The production of light vehicles in Europe and North America is estimated
to have grown by 3% and 2%, respectively, while the production in Japan is
estimated to have declined by 1%. The average weighted production increase
was 2% compared to the corresponding quarter 1997.
Posted sales of airbag products (incl. steering wheels) rose during the
quarter by 15% to $679 million, while sales excluding currency effects and
acquisitions grew by 11%. Sales of side-impact airbags have continued to grow
even faster than expected. Pricing pressure has abated somewhat but is still
severe.
Posted sales of seat belt products (incl. seat sub-systems) grew by 9% to
$289 million, while sales excluding currency effects, acquisitions and
divestitures grew by 8%. The increase is mainly due to continued strong
demand for pretensioners, load limiters and other new seat belt features
developed by Autoliv.
Posted consolidated sales for the full year 1998 rose by 7% to
$3,489 million from previous year. Excluding currency translation effects and
acquisitions, sales grew by about 6%. Posted sales of airbags increased by 4%
and underlying sales by 3%. Both posted and underlying sales of seat belts
increased by 14%. Unit sales of side airbags increased from 3 million units
previous year to 8 million and unit sales of load limiters from 3 million to
9 million. The unit sales increase for seat belt pretensioners was 25% to
23 million.
Earnings
Despite strong pricing pressure, gross margin was almost unchanged at
21.5% compared to 21.6% during the corresponding quarter 1997. However, due
to the strong sales performance, operating margin improved from 10.6% to
10.7%, although R&D expenses rose faster than revenues or by 19%. Net income
rose by 24% to $57 million or to $.56 per share.
For the full year 1998, net income improved by 2% to $188 million or to
$1.84 per share. Income before taxes amounted to $313 million compared to
$318 million during previous year. Gross margin declined from 22.1% to 21.4%
and operating margin from 10.9% to 10.2% due to the pricing pressure. The
1998 numbers have been effected by a weak first quarter and higher R&D
expenditures for the year as a means of taking advantage of Autoliv's many
business opportunities, not least in new areas such as pre- and post-crash
systems. R&D expenses rose by 15% from 4.7% to 5.0% of sales (excluding R&D
assignments paid by customers).
Tax rates remained unchanged at approximately 39% for the quarter and
declined from 42% to 41% for the full year. Excluding non-deductible
amortization, the tax rates were 36% for 1998 and 37% for 1997.
Cash Flow and Balance Sheet
Cash provided by operations amounted to $314 million during the year, with
$134 million thereof generated during the fourth quarter. To meet rapidly
growing production volumes and strong order intake, capital expenditures
increased by 29% to $279 million for the year and by 17% to $82 million for
the quarter. Acquisitions of businesses amounted (net of cash acquired) to
$30 million for the year and $17 million for the quarter.
Cash flow after operating and investing activities was $6 million during
the year and $35 million during the quarter compared to $180 million and
$47 million, respectively, in 1997.
Net debt declined by $14 million during the quarter, despite increased
acquisitions and capital expenditures. Due to these investments and the need
for more working capital, net debt increased, however, for the full year from
$646 million to $703 million. Net debt to equity was 38%, both at the
beginning of the year and at year-end.
Employees
The number of employees increased by 2,900 during 1998 and by 1,200 during
the quarter to 20,700 at year-end. Of the in-crease over 50% is estimated to
come from continued vertical integration, acquisitions and transfer to low-
labor cost countries.
Significant Events
-- Autoliv-Nichiyo Co. Ltd, where Autoliv will have a 60% interest, has
been formed with the Japanese chemical group NOF. The company will
manufacture airbag inflators, based on Autoliv's technology, at a plant
currently under construction in Japan.
-- Autoliv has made Sagem-Autoliv a wholly-owned subsidiary by acquiring
the other partner's 50% interest. At the beginning of 1998, Autoliv acquired
Nokia's interest in another joint venture for electronics.
-- Construction of a plant for one-piece-woven airbag cushions has begun
at Tilbury, Canada, close to Autoliv's facilities in Detroit.
-- Lars Westerberg has been appointed President and Chief Executive
Officer after Gunnar Bark who will remain Chairman of the Board. Mr.
Westerberg will assume his position in February.
Dividend
A dividend of 11 cents per share will be paid on March 4 to Autoliv
stockholders of record as of February 4, 1999. Exdate on the stock exchanges
will be February 2.
Reports
This report has not been examined by the Company's auditors. The next
report will be published on April 22, 1999. The annual report will be
distributed with the proxy statement towards the end of March. The Annual
Stockholders' Meeting will be held on May 6 in Stockholm, Sweden
KEY RATIOS (UNAUDITED)
Quarter Oct. - Dec. Twelve Month Jan. - Dec.
1998 1997 1998 1997(a)
Earnings per
share
(fully diluted) $0.56 $0.45 $1.84 $1.81
Equity per share 18.04 16.67
Net debt, $
in millions 703 646
Net debt to equity, % 38 38
Gross margin, 21.5 21.6 21.4 22.1
Operating margin, % 10.7 10.6 10.2 10.9
Return on equity, % 11 11
Return on
capital employed, % 14 15
Return on
total capital, % 10 11
Number of employees
at period-end 20,700 17,800
Number of shares,
fully diluted
(in millions)* 102.3 102.2 102.3 102.2
*At end of period
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter Oct. -Dec. Twelve Month Jan. - Dec.
1998 1997 1998 1997(a)
Net sales
- Airbag products $679.3 $591.9 $2,416.7 $2,316.4
- Seat belt
products 289.2 264.4 1,072.0 940.4
Total net sales 968.5 856.3 3,488.7 3,256.8
Cost of sales -759.7 -671.7 -2,741.2 -2,537.0
Gross profit 208.8 184.6 747.5 719.8
Selling, general &
administrative
expense -43.9 -41.6 -158.5 154.7(b)
Research &
development -44.4 -37.3 -176.2 -152.7(b)
Amortization of
intangibles -15.8 -16.2 -61.5 -59.6
Other income, net -0.7 1.3 2.8 3.2
Operating income 104.0 90.8 354.1 356.0
Equity in earnings
of affiliates 1.3 2.8 6.4 10.3
Interest income 1.6 1.9 8.0 7.1
Interest expense -13.4 -16.5 -56.0 -55.9
Income before taxes 93.5 79.0 312.5 317.5
Income taxes -35.9 -30.1 -123.9 -129.4
Minority interests
in subsidiaries -0.1 -2.4 -0.3 -3.2
Net income before
one-time items 57.5 46.5 188.3 184.9
Earnings per share 0.56 0.45 1.84 1.81
Write-off of
acquired R&D -- -- -- -732.3(c)
Reported net
income $57.5 $46.5 $188.3 -$547.4
(a) Whereof January - April is reported as pro forma.
(b) Pro forma numbers reclassified.
(c) 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, 1977) 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)
Dec. 31 Dec. 31
1998 1997
Assets
Cash & cash equivalents $118.5 $152.0
Accounts receivable 664.2 569.2
Inventories 264.9 197.8
Other current assets 84.2 55.2
Total current assets 1,131.8 974.2
Property, plant & equipment, net 868.6 727.2
Intangible assets, net (mainly goodwill) 1,649.1(d) 1,694.5
Other assets 18.6 34.6
Total assets $3,668.1 $3,430.5
Liabilities and shareholders' equity
Short-term debt $192.6 $186.2
Accounts payable 457.1 385.3
Other current liabilities 413.0 428.0
Total current liabilities 1,062.7 999.5
Long-term debt 628.6 611.8
Other non-current liabilities 116.2 100.8
Minority interest in subsidiaries 14.6 14.4
Shareholders' equity 1 846.0 1,704.0
Total liabilities and
shareholders' equity $3 668.1 $3 430.5
(d) Whereof goodwill $1,304 million, and acquired patent and
patent-supported technology $239 million from the merger.
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Quarter Twelve Months
Oct. - Dec. Jan. - Dec.
1998 1997 1998 1997
(e)
Net income $57.5 $46.5 $188.3 -$547.4
Write-off of
acquired R&D -- -- -- 732.3
Depreciation and
amortization 60.4 53.0 228.0 207.7
Deferred taxes
and other 43.5 3.0 41.6 -7.7
Change in
working capital -27.6 54.8 -143.6 55.6
Net cash provided by 133.8 157.3 314.3 440.5
operating activities
Capital expenditures -81.7 -69.7 -279.2 -215.8
Acquisitions of
businesses -16.7 -40.8 -29.5 -44.7
Net cash after operating
and investing
activities $35.4 $46.8 $5.6 $180.0
(e) Whereof January - April is reported as pro forma.