Autoliv Financial Report January - March 2000:
19 April 2000
Autoliv Financial Report January - March 2000:
Sales up 16% to $1.1 billion
Earnings per share up 25% to $.54
Acquisition of NSK's seat belt operations concluded
STOCKHOLM, Sweden, April 19 Autoliv Inc.
(NYSE: ALV; SSE: ALIV), the worldwide leader in automotive safety systems,
reported record sales and the best first quarter earnings ever for the
three-month period ended March 31, 2000.
Consolidated net sales rose by 16% to $1.1 billion, operating income by
25% to $104 million and earnings per share by 25% to $.54 compared to the
corresponding quarter 1999. Sales and earnings were mainly driven by
increased penetration of safety products, market share gains and higher global
light vehicle production.
Income before taxes improved by 31% to $95 million.
Sales
Consolidated net sales grew by 16% to $1,084 million from $935 million.
Autoliv's sales (and global light vehicle production) have been favorably
impacted by approximately 5% more working days than during the same period in
l999 (which will be reversed during the second and fourth quarters).
Acquisitions increased sales by 4%, while currency translation effects reduced
sales by 6%.
Adjusted for currency effects and acquisitions/divestitures, sales rose by
18%. This compares favorably with global light vehicles production which is
estimated to have risen by less than 4%. The fact that Autoliv's revenues
increased faster than vehicle production is a reflection of the strong
worldwide demand for safer cars, as well as of Autoliv's market share gains
within the automotive safety industry.
Autoliv's sales grew particularly fast in the U.S. (led by a 50% increase
in seat belt sales), in Sweden (led by strong demand for the Inflatable
Curtain and anti-whiplash systems) and in Spain and Australia (due to higher
car production and export sales).
Sales of airbag products (incl. steering wheels) rose by 18% to
$779 million from $659 million. The decline in average selling prices has
abated considerably from prior years. Currency effects reduced sales by 5%.
The acquisition of Izumi increased sales by 4%. Consequently, the underlying
increase was 19%. Sales growth was partly driven by a three-fold increase in
steering wheel sales to $68 million. More than a third of this increase was
attributable to the Izumi acquisition.
Sales of seat belt products (incl. seat sub-systems) grew by 10% to
$305 million from $276 million. Currency effects reduced sales by 8%, while
changes in the corporate structure -- i.e. mainly the consolidation of Norma
AS -- increased seat belt sales by 2%. Consequently, underlying sales rose by
16%. This organic growth is mainly due to market share gains in the U.S.,
introductions of Autoliv's anti-whiplash system in more car models and higher
light vehicle production.
Earnings
Gross profit rose by 19% to $228 million from $191 million, improving
gross margin to 21.0% from 20.4%. The margin improvement reflects -- besides
higher sales -- the on-going moderation in pricing pressure as well as the
effects of Autoliv's cost saving actions, such as transferring more than
1,000 jobs to low labor-cost countries during the last 12-month period and the
introduction of more cost-efficient inflators.
Operating income increased by 25% to $104 million from $83 million and
operating margin improved to 9.6% from 8.9%, despite a 20% increase in R&D
expenses following the strong order intake during the last few quarters. The
margin improvement was due to the above-mentioned action program, the price
pressure moderation and higher sales.
Net financial expenses declined by $2.0 million to $9.7 million as a
result of approximately $100 million lower average net debt. Income before
taxes rose by 31% to $95 million from $73 million mainly as an effect of
higher sales and operating margin. The effective tax rate stood unchanged at
41%. Excluding non-deductible goodwill amortization, the tax rate was 37%.
Net income improved by 25% to $55 million from $44 million or to 54 cents
per share from 43 cents.
Cash Flow and Balance Sheet
The operations generated $70 million in cash compared to $97 million
during the same quarter 1999. Capital expenditures amounted to $48 million
and $63 million, respectively, and acquisitions to $5 million and $25 million.
The net cash flow after operating and investing activities improved by
$7 million to $17 million. Liquid funds declined by $17 million to
$102 million. The most important acquisition was Izumi and the largest
capital expenditures were capacity expansions for the Inflatable Curtain.
As a result of the acquisitions and more working capital, net debt
increased by $23 million during the quarter to $619 million and the
interest-bearing debt by $6 million to $721 million. The net-debt-to-equity
ratio stood almost unchanged at 32%. Equity has been negatively impacted by
currency effects.
Employees
The number of employees increased by 2,000 during the quarter to 24,600.
Excluding acquisitions the increase was 200.
Significant Events
As of January 1, Japan's second largest steering wheel business was
acquired from Izumi and the option to increase Autoliv's interest in Norma to
51% was exercised. Izumi makes Autoliv the only company with steering wheel
plants in North America, South America, Europe and Japan. Norma gives Autoliv
a unique market position in Eastern Europe and yet another alternative to move
production to low labor-cost countries.
Autoliv has agreed to acquire NSK's seat belt operations in several steps.
As of April 1, the US operations with annual sales of approximately
$70 million were acquired together with a 40% interest in NSK's Asian seat
belt operations. Autoliv has an option to acquire the remaining 60% in
two steps on April 1, 2002 and 2003. This business has sales of almost
$250 million. The acquisition makes Autoliv the global leader in seat belts.
Autoliv has commenced a tender offer worth $206 million for the shares in
OEA, Autoliv's main external supplier of initiators for airbag inflators.
During 1999, OEA had sales of $250 million. The offer has cleared the
anti-trust approval in the US, one of the conditions for the offer. The Board
of OEA recommends the transaction. The planned integration of OEA is expected
to have a positive effect on earnings already after one year.
Prospects
If the current exchange rate between the US dollar and the Euro would
prevail for the rest of the year, Autoliv's sales and earnings will be
negatively affected by approximately 5% compared to the corresponding 9-month
period 1999. DRI expects light vehicle production in North America and Europe
to remain unchanged compared to the period April-December 1999. The supply
value of safety products is expected to continue to grow faster than the
global vehicle production. The three acquisitions already concluded are
expected to add approximately 5% during the remainder of the year to Autoliv's
organic sales growth. The effect of the planned acquisition of OEA would be
additional.
Dividend
A dividend of 11 cents per share will be paid on June 5 to stockholders of
record as of May 8, 2000. Ex-date will be May 4.
Report
The next quarterly report for the period April 1 through June 30 will be
published on July 20, 2000.
KEY RATIOS
Quarter Latest
Jan.-Mar. 12 months Full Year
2000 1999 2000/1999 1999
Earnings per share
(ass. dilution) $.54 $.43 $2.06 $1.95
Equity per share 19.16 18.01 19.16 18.86
Net debt, $ in
millions 619 714 619 596
Net debt to equity, % 32 39 32 31
Working capital, $ in
millions 272 162 272 202
Capital employed, $ in
millions 2 581 2 557 2 581 2 527
Gross margin, % a) 21.0 20.4 21.3 21.2
EBITDA-margin %, b) 15.7 16.0 16.2 16.3
Operating/EBIT margin, % c) 9.6 8.9 9.8 9.7
Return on equity, % 11.4 9.6 11.1 10.6
Return on capital
employed, % 15.4 14.1 15.3 14.6
Average no. of shares
assuming dilution
(in mill.) 102.4 102.3 102.4 102.4
Number of shares at period-
end assuming dilution 102.3 102.3 102.3 102.3
Number of employees at
period-end 24 600 21 000 24 600 22 600
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
(Dollars in millions, except per share data)
Quarter Latest
Jan.-Mar. 12 months Full Year
2000 1999 2000/1999 1999
Net sales
- Airbag products $778.7 $659.2 $2 834.4 $2 714.9
- Seat belt products 305.3 276.2 1 126.4 1 097.3
Total net sales 1 084.0 935.4 3 960.8 3 812.2
Cost of sales -855.9 -744.2 -3 117.1 -3 005.4
Gross profit 228.1 191.2 843.7 806.8
Selling, general &
administrative expense -49.2 -42.9 -183.1 -176.8
Research & development -58.9 -48.9 -207.3 -197.3
Amortization of intangibles -15.9 -16.3 -63.7 -64.1
Other income, net 0.2 0.3 -0.1 0.0
Operating income 104.3 83.4 389.5 368.6
Equity in earnings of
affiliates 0.7 1.2 4.1 4.6
Interest income 2.8 2.7 11.4 11.3
Interest expense -12.5 -14.4 -52.9 -54.8
Income before taxes 95.3 72.9 352.1 329.7
Income taxes -38.8 -29.4 -141.4 -132.0
Minority interests in
subsidiaries -1.3 0.6 0.3 2.2
Net income 55.2 44.1 211.0 199.9
Earnings per share $.54 $.43 $2.06 $1.95
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
March 31 December 31
2000 1999
Assets
Cash & cash equivalents $101.9 $119.2
Accounts receivable 839.8 709.6
Inventories 272.5 274.0
Other current assets 92.2 78.7
Total current assets 1 306.4 1 181.5
Property, plant & equipment, net 839.0 834.6
Intangible assets, net
(mainly goodwill) 1 584.3 1 595.7
Other assets 40.0 34.7
Total assets $3 769.7 $3 646.5
Liabilities and shareholders' equity
Short-term debt $297.1 $244.5
Accounts payable 509.3 453.4
Other current liabilities 423.6 406.7
Total current liabilities 1 230.0 1 104.6
Long-term debt 423.7 470.4
Other non-current liabilities 134.1 131.5
Minority interest in subsidiaries 19.8 9.0
Shareholders' equity 1 962.1 1 931.0
Total liabilities and shareholders'
equity $3 769.7 $3 646.5
SELECTED CASH-FLOW ITEMS
(Dollars in millions)
Quarter Latest
Jan.-Mar. 12 months Full Year
2000 1999 2000/1999 1999
Net income $55.2 $44.1 $211.0 $199.9
Depreciation and
amortization 65.6 66.7 252.3 253.4
Deferred taxes and other -1.9 5.7 43.5 51.1
Change in working capital -48.7 -19.1 -97.9 -68.3
Net cash provided
by operations 70.2 97.4 408.9 436.1
Capital expenditures, net -48.3 -62.5 -197.5 -211.7
Acquisitions of businesses -4.6 -24.8 -23.5 -43.7
Net cash after operating
and investing activities $17.3 $10.1 $187.9 $180.7