Autoliv Inc. Continued Strong Sales Growth
23 April 1999
Autoliv Inc. Continued Strong Sales Growth
STOCKHOLM, Sweden, April 22 -- Consolidated net sales for
Autoliv Inc. grew by 12 percent to $935 million in the
three-month period ended March 31, 1999, and earnings per share by 4 percent
to $.43 compared to the corresponding quarter 1998. Sales of side airbags
have continued to grow fast. Autoliv's margins have been negatively affected
mainly by higher depreciation and delays in the cost reduction program due to
the fast capacity build-up.
The income before taxes improved by 3 percent to $73 million.
Sales
Consolidated net sales for the first quarter 1999 grew by 12% to
$935 million from $838 million during the first quarter 1998. Currency
translation effects and acquisitions contributed one percentage point each to
the increase, which means that the underlying sales growth was 10%. Since
approximately 70% of Autoliv's business is outside the United States, a major
portion of sales was favorably affected by the weaker U.S. dollar compared to
the first quarter 1998.
The production of light vehicles is estimated to have grown by 4% in
Europe and by 6% in North America. In Japan, however, the production is
estimated to have fallen by 6% from an already low level. The average
increase in the Triad thus was 2%.
Sales of airbag products (incl. steering wheels) rose by 13% to
$659 million from $584 million. Adjusted for currency effects, the underlying
sales increase was 12%. The decline in average selling prices has abated
slightly, but is still considerable. As a result of higher installation
rates, sales of side airbags continued to rise sharply. Sales of side airbags
therefore already account for 13% of Autoliv's airbag revenues compared to 9%
during the year-ago quarter. Sales of frontal airbags have continued to grow
due to higher penetration rates and higher market share.
Sales of seat belt products (incl. seat sub-systems) grew by 9% to
$276 million from $254 million, while sales excluding currency effects and
acquisitions grew by 6%. The increase in seat belt sales is due to higher
sales volumes and to new products.
Earnings
Operating income for the quarter was almost unchanged, $83 million, from
the corresponding period 1998, while income before taxes increased by 3% to
$73 million as a result of lower interest rates. Net income and earnings per
share improved by 4% to $44 million and $.43, respectively.
Gross margins fell from 21.8% to 20.4%. Of the decline, approximately one
percentage point is due to higher depreciation. This reflects last year's
substantial capital expenditures needed to take advantage of the strong order
in-take and new business opportunities. Although pricing pressure has
moderated slightly, the price decline is still considerable and additional
cost reductions introduced by Autoliv have not been sufficient to offset the
decline. Margins have also been affected by the fact that side airbags are
becoming a mass product also for the low-price end of the vehicle market,
especially since the strong demand has made it necessary to give priority to
capacity increases rather than to cost reductions. In addition, start-up
costs have been high due to the strategic decision to enter many new markets
and establish production in countries such as Brazil, Poland, Canada and
steering wheels for the North American market.
Operating margin decreased from 9.9% to 8.9% during the first quarter 1999
due to the decline in gross margin. Both selling, general and administrative
expenses, and research and development costs have, instead, had a positive
effect on margins since these costs shrunk in relation to sales.
The effective tax rate was unchanged at 41%. Excluding non-deductible
amortization, the tax rate was 36%.
Cash Flow and Balance Sheet
The cash generated by operations amounted to $97 million compared to
$60 million. Capital expenditures amounted to $63 million and $54 million,
respectively, while $25 million and $3 million, respectively, were used for
acquisition of businesses. The net cash flow after operating and investing
activities improved from $6 million to $10 million. The most important
acquisitions were the increase of Autoliv's interest in Livbag and the
investment in SensoNor. The most important capital expenditure projects were
the new plants in Canada, Poland, Brazil and Turkey as well as additional
production capacity for side airbags.
As a result of the acquisitions, net debt increased from $703 million at
the beginning of the quarter to $714 million at the end. During the same
period, the net-debt-to-equity ratio increased from 38% to 39%. Equity has
been negatively impacted by currency effects.
Employees
The number of employees increased by 300 during the quarter to 21,000,
mainly due to the new production plants.
Significant Events
-- Autoliv has exercised its option to increase its holding from 51% to
66% in the inflator company Livbag and has secured the right to make
Livbag a wholly-owned company. Livbag is Autoliv's most important
supplier in Europe of inflators for airbags.
-- Autoliv has invested NOK 10 million (approx. US $1 million) in
330,000 newly issued shares in SensoNor, a supplier of airbag sensors.
The investment will support development of new crash sensor
technologies.
-- Construction of a completely new plant has begun in Turkey. The new
facility will both replace the old plant and provide additional
manufacturing capacity for recently secured new orders from such
customers as Ford and Renault.
-- Lars Westerberg assumed the position of President and Chief Executive
Officer of Autoliv Inc. as of February 1 and was elected to the
Company's board on February 10.
Dividend
A dividend of 11 cents per share will be paid on June 3 to Autoliv
stockholders of record as of May 6, 1999. Ex-date on the stock exchanges will
be May 4.
Report
This report has not been examined by the Company's auditors. The next
quarterly report for the period April 1 through June 30 will be published on
July 22, 1999.
KEY RATIOS (UNAUDITED)
Three-Months Jan. - Mar. Last 12 Full
months Year
1999 1998 April 98 1998
- Mar 99
Earnings per share $0.43 $0.41 $1.86 $1.84
Equity per share 18.01 16.86 18.01 18.04
Net debt, $ in millions 714 656 714 703
Net debt to equity, % 39 38 39 38
Gross margin, %, (1) 20.4 21.8 21.1 21.4
EBITDA-margin %, (2) 16.0 16.4 16.6 16.7
Operating margin, %, (3) 8.9 9.9 9.9 10.2
Return on equity, % 10 10 11 11
Return on
capital employed, % 13 14 14 14
Return on total capital, % 10 10 10 10
Number of employees
at period-end 21,000 18,500 21,000 20,700
Number of shares
outstanding,
(in millions) 102.3 102.2 102.3 102.3
(1) Gross profit relative to sales
(2) Income before interest, taxes, depreciations and amortizations
relative to sales
(3) Operating income relative to sales
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter Jan. - Mar. Last 12 Full
months Year
1999 1998 Apr 98 1998
- Mar 99
Net sales
- Airbag products $659.2 $583.6 $2,492.3 $2,416.4
- Seat belt products 276.2 254.3 1,093.9 1,072.0
Total net sales 935.4 837.9 3,586.2 3,488.7
Cost of sales -744.2 -655.1 -2,830.3 -2,741.2
Gross profit 191.2 182.8 755.9 747.5
Selling, general &
admin. expense -42.9 -39.4 -162.0 -158.5
Research & development -48.9 -46.1 -179.0 -176.2
Amortization of
intangibles -16.3 -15.2 -62.6 -61.5
Other income, net 0.3 0.7 2.4 2.8
Operating income 83.4 82.8 354.7 354.1
Equity in earnings
of affiliates 1.2 1.8 5.8 6.4
Interest income 2.7 1.6 9.1 8.0
Interest expense -14.4 -15.5 -54.9 -56.0
Income before taxes 72.9 70.7 314.7 312.5
Income taxes -29.4 -28.3 -125.0 -123.9
Minority interests
in subsidiaries 0.6 -0.0 0.3 -0.3
Net income 44.1 42.4 190.0 188.3
Earnings per share 0.43 0.41 1.86 1.84
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions)
Mar. 31 Dec. 31
1999 1998
Assets
Cash & cash equivalents $89.4 $118.5
Accounts receivable 704.3 664.2
Inventories 245.1 264.9
Other current assets 94.3 84.1
Total current assets 1,133.1 1,131.8
Property, plant &
equipment, net 846.5 868.6
Intangible assets,
net (mainly goodwill) 1,650.2 (1) 1,649.1
Other assets 18.6 18.5
Total assets $3,648.4 $3,668.1
Liabilities and
shareholders' equity
Short-term debt $206.4 $192.6
Accounts payable 439.6 457.1
Other current liabilities 441.8 413.0
Total current liabilities 1,087.8 1,062.7
Long-term debt 596.8 628.6
Other non-current
liabilities 103.9 116.3
Minority interest in
subsidiaries 17.1 14.6
Shareholders' equity 1,842.8 1,846.0
Total liabilities
and shareholders' equity $3,648.4 $3,668.1
(1) Whereof goodwill $1,304 million, and acquired patent and
patent-supported technology $239million from the merger
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Three Months Jan.- Mar. Full Year
1999 1998 1998
Net income $44.1 $ 42.4 $188.3
Depreciation and amortization 66.7 54.3 228.0
Deferred taxes and other 5.7 -2.6 41.6
Change in working capital -19.1 -39.4 143.6
Net cash provided by
operating activities 97.4 59.9 314.3
Capital expenditures -62.5 -53.7 -279.2
Acquisitions of businesses, net -24.8 -3.3 -29.5
Net cash after operating
and investing activities $10.1 $2.9 $5.6
For more information, please contact Mats Odman, Manager of Investor
Relations of Autoliv Inc., +46-8-587-20-600
Autoliv Inc.
Website: http://www.autoliv.com
E-mail: info@autoliv.com
Tel: +46-8-587-20-600
Fax: +46-8-24-44-79 / 24-44-93