Autoliv 3rd Quarter Financial Report: Autoliv's Profit up 14%
21 October 1999
Autoliv 3rd Quarter Financial Report: Autoliv's Profit up 14%; Sales up 9%
STOCKHOLM, Sweden, Oct. 21 -- Autoliv Inc.
-- the worldwide leader in automotive safety systems - today
reported a 14% increase in its net income to $43 million, corresponding to
$.42 per share, for the three-month period ended September 30, 1999, compared
to $38 million and $.37, respectively, for the corresponding quarter 1998.
Income before taxes improved by 12% to $72 million.
The improvement was driven by continued strong sales performance and
improved gross margins. Sales rose by 9% (including a 3% negative currency
effect) to $874 million and gross margins improved from 20.3% to 21.1%.
Sales
Consolidated net sales for the third quarter 1999 rose by 9% to $874
million from $804 million during the corresponding period 1998, mainly as a
result of new airbag business in Japan, continued strong demand for side
airbags and the anti-whiplash system Autoliv introduced last year. Sales
adjusted for currency translation effects grew by 12%. Since approximately 60%
of Autoliv's business is in Europe, the weakening of the Euro had a negative
impact of 3%. The effect of acquisitions was insignificant.
During the quarter, the production of light vehicles is estimated to have
grown by 2% in Europe and by 12% in North America. In Japan, however, the
production is estimated to have fallen by 4%. The average increase in the
Triad was 4%.
Sales of airbag products (incl. steering wheels) rose by 12% to $622
million from $554 million during the third quarter 1998. The underlying sales
adjusted for currency effects increased by 15%, which means that Autoliv
continues to increase its market share. Sales were particularly strong in
Japan, Germany, Spain and the U.S. Sales of side airbags grew by 37% and sales
of steering wheels doubled.
Sales of seat belts (incl. seat sub-systems) stood almost unchanged at
$252 million. Excluding currency effects and acquisitions sales increased by
4%. The increase was driven by higher sales of seat sub-systems as a result of
the new anti-whiplash system introduced last year and by market share gains
for seat belts in the U.S.
For the nine-month period January through September consolidated sales
increased by 11% to $2,786 million, while sales adjusted for currency effects
rose by 12%. Consolidated sales of airbags grew by 14% to $1,980 million and
of seat belt sales by 3% to $807 million, while currency-adjusted sales grew
by 15% and 4%, respectively.
Earnings
The Company's action program improved the gross margin from 20.3% during
the third quarter last year to 21.1%. Operating margin, however, was almost
unchanged (9.3% versus 9.2%) mainly due to higher R&D expenditure and higher
SG&A expense. The R&D expenditure has been affected by the strong order intake
and the SG&A expenses by acquisitions and new market investments.
Gross profit improved by 13% to $184 million and operating income by 9% to
$81 million. Income before taxes increased by 12% to $72 million, while net
income and earnings per share improved by 14% to $43 million and $.42,
respectively.
The effective tax rate was 41% compared to 42% during the corresponding
quarter 1998. Excluding non-deductible amortization, the tax rate was 36%.
For the nine-month period ended September 30 1999, net income improved by
6% to $139 million. Earnings per share increased from $1.28 to $1.35.
Cash Flow and Balance Sheet
Cash generated by operations improved from $24 million during the third
quarter 1998 to $76 million during the same quarter 1999, mainly as a result
of less need for additional working capital. Cash flow after investing
activities improved by $102 million from a deficit of $55 million to a surplus
of $47 million, partly due to lower capital expenditures. These expenditures
decreased by 52% or by $39 million to $37 million.
Net debt has been reduced to $683 million from $703 million at the
beginning of the year. During the same period net debt to equity has declined
to 36% from 38%.
Employees
The number of employees increased by 400 during the quarter and by 1,400
during the year to 22 100, mainly due to the new production plants, higher
production volumes and transfer of jobs to low labor-cost countries.
Significant Events
The order intake has continued to be strong, but it will also result in
continued higher R&D expenditures.
In October, Autoliv acquired 49.5% of the shares in the Estonian company
Norma AS, the dominant seat belt supplier to the Russian vehicle industry.
The agreement also gives Autoliv the right to acquire another 1.5% of the
Norma shares. The transaction improves Autoliv's possibilities to sell new
safety technologies in Eastern Europe and provides yet another possibility to
move production to low labor-cost countries.
The world's first anti-whiplash system specially developed for rear-seat
occupants was launched by Autoliv in September. This Self-Inflating Head
Restraint (SIHR) follows upon the introduction last year of Autoliv's anti-
whiplash system (AWS) for front-seat occupants.
Autoliv is in the process of consolidating all the automotive safety
companies in Malaysia into one company, Autoliv HT (Malaysia), in which
Autoliv will hold a 49% interest. The new company will have 250 employees and
annual sales of approximately $25 million. The change is subject to approval
by the Malaysian authorities.
Autoliv has made its 49%-owned joint venture in Indonesia a wholly-owned
subsidiary.
Dividend
A dividend of 11 cents per share will be paid on December 2 to Autoliv
stockholders of record as of November 4. Ex-date will be November 2.
Report
This report, which has been issued by the Company's President, has not
been examined by the Company's auditors. The next quarterly report for the
period October 1 through December 31 will be published on January 27, 2000.
KEY RATIOS (UNAUDITED)
Quarter Nine Months Twelve Months
Jul.-Sept. Jan.-Sept. Oct. 98- Full Year
1999 1998 1999 1998 Sept. 99 1998
Earnings per share $.42 $.37 $1.35 $1.28 $1.92 $1.84
Equity per share 18.70 17.70 18.70 17.70 18.23 18.04
Net debt, $ in
millions 683 717 683 717 703 703
Net debt to equity, % 36 40 36 40 38 38
Gross margin, % (a) 21.1 20.3 21.0 21.4 21.1 21.4
EBITDA-margin %, (b) 15.9 16.4 16.2 14.3 16.4 16.7
Operating margin, % (c) 9.3 9.2 9.4 9.9 9.8 10.2
Return on equity, % 9 9 10 10 10 11
Return on capital
employed, % 14 14 13 14 14 14
Return on total capital, % 9 9 10 10 10 10
Number of employees at
period-end 22 100 19 500 22 100 19 500 22 100 20 700
Number of shares
outstanding,
(in millions) 102.3 102.2 102.3 102.2 102.3 102.3
(a) Gross profit relative to sales
(b) Income before interest, taxes, depreciation and amortization
relative to sales
(c) Operating income relative to sales
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in millions, except per share data)
Quarter Nine Months Twelve Months
July-Sept. Jan.-Sept. Oct. 98- Full Year
1999 1998 1999 1998 Sept. 99 1998
Net sales
- Airbag products $622.3 $553.9 $1 979.5 $1 737.4 $2 658.8 $2 416.7
- Seat belt
products 251.5 250.5 806.7 782.8 1 095.9 1 072.0
Total net sales 873.8 804.4 2 786.2 2 520.2 3 754.7 3 488.7
Cost of sales -689.6 -641.5 -2 201.6 -1 981.5 -2 961.3 -2 741.2
Gross profit 184.2 162.9 584.6 538.7 793.4 747.5
Selling, general & administrative
expense -41.0 -36.1 -128.7 -114.6 -172.6 -158.5
Research &
development -45.7 -40.2 -144.9 -131.8 -189.3 -176.2
Amortization of
intangibles -16.3 -15.2 -48.7 -45.7 -64.5 -61.5
Other income, net -0.3 2.7 0.1 3.5 -0.6 2.8
Operating income 80.9 74.1 262.4 250.1 366.4 354.1
Equity in earnings of
affiliates 2.2 0.9 3.0 5.1 4.3 6.4
Interest income 2.6 1.7 7.7 6.4 9.3 8.0
Interest expense -13.9 -12.7 -41.9 -42.6 -55.3 -56.0
Income before taxes 71.8 64.0 231.2 219.0 324.7 312.5
Income taxes -28.6 -26.2 -93.6 -88.0 -129.5 -123.9
Minority interests in
subsidiaries 0.9 -0.1 0.8 -0.3
Net income 43.2 37.8 138.5 130.9 196.0 188.3
Earnings per share $0.42 $0.37 $1.35 $1.28 $1.92 $1.84
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(Dollars in millions)
Sept. 30 Dec. 31 Sept. 30
1999 1998 1998
Assets
Cash & cash equivalents $119.9 $118.5 $139.4
Accounts receivable 717.9 664.2 668.3
Inventories 271.0 264.9 247.8
Other current assets 83.0 84.2 77.8
Total current assets 1 191.8 1 131.8 1 133.3
Property, plant & equipment, net 859.7 868.6 831.5
Intangible assets, net
(mainly goodwill) 1 617.6 1 649.1 1 648.1
Other assets 14.9 18.6 22.2
Total assets $3 684.0 $3 668.1 3 635.1
Liabilities and shareholders' equity
Short-term debt $265.9 $192.6 184.6
Accounts payable 426.3 457.1 390.6
Other current liabilities 415.1 413.0 480.9
Total current liabilities 1 107.3 1 062.7 1 056.1
Long-term debt 537.1 628.6 671.5
Other non-current liabilities 124.5 116.2 84.9
Minority interest in subsidiaries 2.6 14.6 13.6
Shareholders' equity 1 912.5 1 846.0 1 809.0
Total liabilities and shareholders'
equity $3 684.0 $3 668.1 $3 635.1
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Quarter Nine Months Twelve Months
July-Sept Jan.-Sept. Oct.98- Full Year
1999 1998 1999 1998 Sept.99 1998
Net income $43.2 $37.8 $138.5 $130.9 $196.0 $188.3
Depreciation and
amortization 58.4 57.6 189.4 167.6 249.0 228.0
Deferred taxes and
other 21.7 -1.1 40.2 -1.9 83.7 41.6
Change in working
capital -47.4 -70.2 -87.5 -116.1 -115.0 -143.6
Net cash provided
by operations 75.9 24.1 280.6 180.5 414.5 314.3
Capital
expenditures -36.7 -76.1 -162.7 -197.5 -244.4 -279.2
Acquisitions of
businesses 7.7 -2.6 -26.4 -12.8 -43.1 -29.5
Net cash after operating
and investing
activities $46.9 $-54.6 $91.5 $-29.8 $127.0 $5.6
Contact: Mats Odman of Autoliv, +46(8)58-72-06-23, or +46(8)58-72-06-00
fax +46(8)24-44-79, or 46(8)24-44-93, or mats.odman@autoliv.com,
or info@autoliv.com.
Barry Murphy, Autoliv North America, (248)475-0409;
fax (248)475-9831 or barry_murphy@autolivasp.com