Autoliv Inc. (ALV) reported third-quarter 2013 earnings of $1.29 per share, lagging the Zacks Consensus Estimate of $1.33. Earnings improved 5% from $1.23 per share reported in the third quarter of 2012 on the back of lower effective tax rate and interest expense.
Consolidated revenues rose 9% year over year to $2.12 billion, beating the Zacks Consensus Estimate of $2.07 billion. The improvement was driven by higher organic sales in all regions, particularly Europe, along with favorable vehicle mix in China. Revenues from Europe benefited from higher sales to premium European carmakers and favorable currency effects.
Operating income declined 2.7% to $182 million or 8.6% of sales from $187 million or 9.6% in the year-ago quarter. Excluding capacity alignment and antitrust investigations costs of $3 million, operating margin was 8.8%, which was higher than the company’s guidance of 8.5%.
Segment Results
Sales of Airbag products (including steering wheels and passive safety electronics) rose more than 7% year over year to $1.36 billion. Excluding negative currency effects, Airbag sales improved by 8% aided by strong sales in Asia.
Sales of Seatbelt products improved 6% to $659 million driven by favorable currency effects. Organic sales rose 5% over the prior-year quarter primarily due to well-performing platforms and higher production in China and Europe.
Sales of Active safety products (automotive radar, night vision systems and vision camera with driver assist systems) surged 69% to $96 million year over year. Excluding positive currency effects, organic sales improved 67%. The increase was driven mainly by the demand for the collision prevention assist by Daimler AG (DDAIF) for its Mercedes cars and the commencement of the manufacture of the new Mercedes S-class. The growing production of General Motor Company’s (GM) brands also boosted sales.
Financial Position
Autoliv had cash and cash equivalents of $1.13 billion as of Sep 30, 2013, up from $908.2 million as of Sep 30, 2012. Long-term debt decreased to $423.5 million from $497.4 million as of Sep 30, 2012.
In the third quarter of 2013, Autoliv’s cash flow from operations improved to $206 million from $131 million a year ago. Capital expenditures (net) decreased to $93 million from $98 million in the year-ago period.
Guidance
Autoliv expects consolidated and organic sales growth of over 9% and projects operating margin to be 9% in the fourth quarter, excluding capacity alignments and antitrust investigations costs.
For full-year 2013, the company anticipates organic sales growth of 5%, up from the previous guidance of 4%. Autoliv affirmed the operating margin guidance of around 9%, excluding capacity alignments and antitrust investigations costs.
Currently, Autoliv retains a Zacks Rank #2 (Buy). Gentex Corp. (GNTX), which carries a Zacks Rank #1 (Strong Buy), is performing well in the industry.
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