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Autoliv Earnings Beat in Q4 and FY13

Zacks Equity Research

Autoliv Inc. (ALV) reported fourth-quarter 2013 adjusted earnings of $1.70 per share, beating the Zacks Consensus Estimate of $1.49. Earnings improved 7.6% from $1.58 per share reported in the fourth quarter of 2012.

Including a non-cash, non-recurring valuation allowance for deferred tax assets in the fourth quarter of 2013, earnings per share amounted to $1.04, down 28.3% from $1.45 in the year-ago quarter.

Consolidated revenues rose 14.6% year over year to a record high of $2.35 billion, beating the Zacks Consensus Estimate of $2.24 billion. The improvement was driven by higher-than-expected vehicle production in all regions, particularly in China.

Operating income surged 16.3% to $202.7 million or 8.6% of sales from $174.3 million or 8.5% of sales in the year-ago quarter. Excluding capacity alignment and antitrust investigations costs, operating margin was 10%, which was higher than the company’s guidance of 9%.

2013 Results

Autoliv reported earnings of $5.82 per share in 2013, in line with 2012. Earnings per share surpassed the Zacks Consensus Estimate of $5.64.

Consolidated revenues increased to a record high of $8.8 billion from $8.27 billion in 2012, exceeding the Zacks Consensus Estimate of $8.69 billion.

Segment Results

Sales of Airbag products (including steering wheels and passive safety electronics) rose 14.2% year over year to $1.52 billion due to high sales growth of side airbags, knee airbags, electronics and steering wheels. Excluding negative currency effects, Airbag sales improved by 14.7%.

Sales of Seatbelt products improved 11.3% to $732.1 million driven by favorable currency effects and higher sales in China and Europe. Organic sales rose 10.9% over the prior-year quarter.

Sales of Active safety products (automotive radar, night vision systems and vision camera with driver assist systems) surged 56.7% to $100.7 million year over year. Excluding positive currency effects, organic sales improved 55.6%. The increase was driven mainly by the demand for the radar by Daimler AG (DDAIF) for its Mercedes cars and night vision products by both Daimler and BMW.

Financial Position

Autoliv had cash and cash equivalents of $1.12 billion as of Dec 31, 2013, up from $977.7 million as of Dec 31, 2012. Long-term debt decreased to $618.5 million from $632.7 million as of Dec 31, 2012.

In 2013, Autoliv’s cash flow from operations improved to $837.9 million from $688.5 million a year ago. Net capital expenditures increased to $379.3 million from $360.4 million in the year-ago period.

Share Buyback

Autoliv reactivated its share buyback program during the quarter and spent $148 million to repurchase 1.636 million shares at an average price of $90.30. On Jan 30, 2014, the board of directors approved an increase of 10 million shares in the buyback authorization, taking the total outstanding authorization to 11.6 million shares.

Dividend Update

Autoliv increased its quarterly dividend for the first quarter of 2014 to 52 cents per share from the previous payout of 50 cents. The increased dividend will be paid on Mar 6, 2014 to shareholders of record as of Feb 20, 2014.


Autoliv expects organic sales growth of about 7% and projects operating margin to be 8% in the first quarter of 2014, excluding capacity alignments and antitrust-investigation costs.

For full-year 2014, the company anticipates organic sales growth of 5%. Autoliv also announced an operating margin guidance of around 9%, excluding capacity alignments and antitrust investigation charges.

Expenses related to the ongoing capacity alignment program are expected to be in the range of $20–$40 million in 2014, while tax rate should be around 28%. Operating cash flows are expected to be more than $700 million and capital expenses are projected to vary between 4.5%–5% of sales.

Currently, Autoliv holds a Zacks Rank #4 (Sell). Gentex Corp. (GNTX) and STRATTEC Security Corporation (STRT), both carrying a Zacks Rank #1 (Strong Buy), are performing well in the industry.

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