Financial Report October – December 2017
A record quarter and year support 2020 targets
(Stockholm, Sweden, January 30, 2018) – For the three-month period ended December 31, 2017, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb), the worldwide leader in automotive safety systems, reported record consolidated sales of $2,729 million. Quarterly organic sales* grew by 1.1%. The operating margin was 0.5% and the adjusted operating margin* was 9.6% (for non-U.S. GAAP measures see enclosed reconciliation tables).
The expectation at the beginning of the quarter was for quarterly organic sales to be “virtually flat” and an adjusted operating margin to be “more than 9%”.
For the first quarter of 2018, the Company expects organic sales growth to be less than 1% and the adjusted operating margin to be around 9%. The consolidated sales growth is expected to be more than 7% in the first quarter 2018. The indication for the full year adjusted operating margin is around 9% and an organic sales growth of more than 7% resulting in a consolidated sales growth of more than 11%. (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 fourth quarter ended a year of records and exciting announcements. We are pleased that the fourth quarter sales and gross profit were the highest we have reported for any quarter. The full year 2017 was also the best year we have reported for sales and gross profit. Building on this solid base, we look forward with great expectations, as order intake in 2017 reached new historic highs for each of our Passive Safety and Electronics segments. This includes new record high order intake for Active Safety and for Restraint Control Systems, while ANBS almost managed to repeat its strong 2016 order intake. Our achievements in 2017, especially our order intake records and gross margin progression reinforce our confidence in the sales and margin targets presented at our Capital Markets Day (CMD) on September 14, 2017.
We continued to broaden our customer and product base in Active Safety in the fourth quarter, including increasing from three to four Vision customers and winning our first LiDAR order. The strong order intake in the fourth quarter supports the sales progression outlined at our CMD, that we expect the sales trend in Electronics to improve in 2019 and beyond. Following two years of record order intake in Electronics, we will step up our R,D&E efforts further in 2018, to support the development of received orders and future product solutions, by increasing R,D&E costs by up to $70 million.
The step-up in growth in Passive Safety was slightly ahead of plan in the fourth quarter, as the increased number of product launches added more than 3pp to organic sales growth* in the segment, partially offset by lower inflator replacement sales and temporary model mix headwinds. In 2018, we expect the contribution from increased product launches to accelerate gradually while the model mix and inflator replacement headwinds subsides after the first quarter leading to our expectation that a more than 2% organic sales growth in the first quarter becomes more than 10% for the full year in Passive Safety.
Building on the board’s decision in December 2017 to move forward with the separation of our business segments, we are working hard to prepare for the separate listing of our Electronics business as a stand-alone company in the third quarter of 2018. We are looking forward to seeing Passive Safety and Electronics releasing their full potential in the years to come.
With quality as our first priority, we continue to execute on our growth and margin opportunities while staying focused on saving more lives and creating value for our stakeholders.”
An earnings conference call will be held at 2:00 p.m. (CET) today, January 30. 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.