Autoliv, Inc. ALV reported adjusted earnings of $2.08 per share in the fourth quarter of 2015 that beat the Zacks Consensus Estimate of $1.88. Also, earnings increased 14.9% from $1.81 per share reported a year ago. Earnings per share, on a reported basis, amounted to $2.10 in fourth-quarter 2015 compared with $1.65 in fourth-quarter 2014.
Consolidated revenues improved 7% year over year to $2.52 billion, exceeding the Zacks Consensus Estimate of $2.45 billion. Excluding negative currency translation effects and the positive impact of the MACOM acquisition, organic sales grew 13.4%, surpassing the expectation of 9% growth.
Operating income increased 29.8% to $281.3 million (or 11.2% of sales) from $216.7 million (or 9.2% of sales) in the year-ago quarter.
2015 Performance
Autoliv posted a year-over-year rise of 12.1% in adjusted earnings to $6.65 per share for full-year 2015, beating the Zacks Consensus Estimate of $6.44. Revenues for 2015 dipped 0.8% to roughly $9.17 billion from $9.24 billion in 2014. However, the figure surpassed the Zacks Consensus Estimate of $9.10 billion.
Segment Results
Sales at the Passive Safety segment increased 4.9% year over year to $2.07 billion in the reported quarter. The segment benefitted from better performance in China and North America. Excluding negative currency translation effects, sales rose 12%. The segment’s operating income improved 41.1% to $264.5 million (12.8% of sales) from $187.5 million (9.5% of sales) in the prior-year quarter. Higher margin was driven by better organic sales, positive product mix and favorable raw material prices.
Sales at the Electronics segment rose 16.8% year over year to $463.2 million. Excluding negative currency translation effects, sales were up 18%. Organic sales growth was backed by better sales of active safety products in China and North America. Sales of passive safety electronics improved in China, Rest of Asia and North America. Operating income from the division advanced 32.4% to $32.3 million.
Financial Position
Autoliv had cash and cash equivalents of $1.33 billion as of Dec 31, 2015, down from $1.53 billion as of Dec 31, 2014. Total debt fell to $1.54 billion from $1.60 billion as of Dec 31, 2014.
In 2015, Autoliv’s cash flow from operations increased to $750.5 million from $712.7 million a year ago. Net capital expenditures decreased to $449.6 million from $453.4 million recorded in the year-ago period.
Dividend
On Dec 18, 2015, Autoliv declared a quarterly dividend of 56 cents per share for the first quarter of 2016. The dividend will be paid on Mar 3, to shareholders on record as of Feb 18, 2016.
Guidance
Autoliv expects organic sales growth of more than 10% in first-quarter 2016. However, due to the adverse impact of currency translation and mergers and acquisitions, consolidated sales are expected to grow around 7%. Adjusted operating margin, excluding acquisitions and costs for capacity alignments, antitrust and related matters, is likely to be around 8.5% in first-quarter 2016.
For full-year 2016, the company’s organic sales are expected to increase around 5%. Consolidated sales, which are anticipated to rise by more than 2%, are expected to be adversely affected by the effects of currency translation. Autoliv’s adjusted operating margin is anticipated to improve more than 9%, excluding capacity alignments and antitrust and related matters.
Tax rate is likely to be around 29%. Operating cash flows are anticipated to be about $0.8 billion, excluding antitrust-related matters and any other discrete items, while capital expenses for supporting the company’s growth plans are projected to be at the higher end of the guidance range of 4–5% of sales. Research, Development & Engineering investments are expected to be on the higher end of the 6–6.5% range.
Zacks Rank
Currently, Autoliv carries a Zacks Rank #2 (Buy). Other favorably ranked automobile stocks include General Motors Company GM, Ford Motor Co. F and Lear Corp. LEA, all carrying a Zacks Rank #2.
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