Financial Report July - September 2016
Close to 13% consolidated sales growth, exceeding margin guidance
(Stockholm, October 27, 2016) – – – For the three-month period ended September 30, 2016, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb) – the worldwide leader in automotive safety systems – reported consolidated sales of $2,461 million. Quarterly organic sales* grew by 6.1%. The operating margin was 7.8% and the adjusted operating margin* was 8.1% (for non-U.S. GAAP measures see enclosed reconciliation tables).
The expectation at the beginning of the quarter was for organic sales growth of “around 6%” and an adjusted operating margin of “around 7.5%”.
For the fourth quarter of 2016, the Company expects organic sales to be flat compared to the fourth quarter of 2015. The fourth quarter of 2016 includes approximately 3 less working days compared to 2015, decreasing the year-over-year organic growth by around 5pp and on an equivalent basis the organic growth expectation is around 5%. The adjusted operating margin is expected to be more than 9%. The expectation for the full year is for organic sales growth of around 7% and an adjusted operating margin of more than 8.5%. (See the “Outlook” section on the next page for further discussion of organic sales and adjusted operating margin, which are forward-looking non-U.S. GAAP measures).
For Key Figures summary table, please refer to attached file below.
Comments from Jan Carlson, Chairman, President & CEO
“The third quarter developed slightly better than our expectations. Growth was in line with our guidance and operating margin was higher than expected. I am particularly pleased with the strong growth in Europe and China.
Regionally, the light vehicle production growth in China was stronger than expected. Future growth depends to some extent on the continuation of government incentives currently in place, but we believe in the long term growth prospects in China. In the U.S. market the monthly vehicle sales figures continue to indicate a slowdown in the market, while Europe continues to see high vehicle production levels. Autoliv currently has a healthy product mix in Europe and we outperformed the European vehicle production growth in the quarter by double digit levels.
In active safety we are now starting to see the lower growth rates that we have indicated for some time. This is due to the ramp down of GPS modules and our internally developed brake control products. After the launch of our new active safety products in the beginning of 2016, we have won significant new business. However some of that business has a later expected start of production and additionally some of the business opportunities have not materialized as previously anticipated. We therefore expect to reach our end of decade sales target in Active Safety about one year later than earlier communicated.
We continue to have a positive situation in our passive safety business. The historically high order intake continued and we are gaining future market share beyond our previous expectations. We are pleased that we were able to achieve double digit operating margin in passive safety while deploying additional engineering and other resources to meet this wave of growth that we expect to come from 2018 and onwards.
The combined effect of the developments in active and passive safety is further increasing our confidence that we are on the right path to surpass our $12 billion corporate sales target for the end of the decade. This will allow us to grow our sustainable market share and further strengthen our technology and market leadership. We also continue to monitor the overall macro- and industry situation and we are ready to take necessary actions while focusing on executing on our growth strategy with a relentless focus on quality.”
An earnings conference call will be held at 2:00 p.m. (CET) today, October 27. To follow the webcast or to obtain the pin code and phone number, please access www.autoliv.com. The conference slides will be available on our web site as soon as possible following the publication of this earnings report.