Financial Report January - March 1999

Financial Report January - March 1999 Continued Strong Sales Growth (Stockholm, April 22, 1999) -- Consolidated net sales for Autoliv Inc. (NYSE: ALV and SSE: ALIV) grew by 12 percent to $935 million in the three-month period ended March 31, 1999, and earnings per share by 4 percent to $.43 compared to the corresponding quarter 1998. Sales of side airbags have continued to grow fast. Autoliv's margins have been negatively affected mainly by higher depreciation and delays in the cost reduction program due to the fast capacity build-up. The income before taxes improved by 3 percent to $73 million. Sales Consolidated net sales for the first quarter 1999 grew by 12% to $935 million from $838 million during the first quarter 1998. Currency translation effects and acquisitions contributed one percentage point each to the increase, which means that the underlying sales growth was 10%. Since approximately 70% of Autoliv's business is outside the United States, a major portion of sales was favorably affected by the weaker U.S. dollar compared to the first quarter 1998. The production of light vehicles is estimated to have grown by 4% in Europe and by 6% in North America. In Japan, however, the production is estimated to have fallen by 6% from an already low level. The average increase in the Triad thus was 2%. Sales of airbag products (incl. steering wheels) rose by 13% to $659 million from $584 million. Adjusted for currency effects, the underlying sales increase was 12%. The decline in average selling prices has abated slightly, but is still considerable. As a result of higher installation rates, sales of side airbags continued to rise sharply. Sales of side airbags therefore already account for 13% of Autoliv's airbag revenues compared to 9% during the year-ago quarter. Sales of frontal airbags have continued to grow due to higher penetration rates and higher market share. Sales of seat belt products (incl. seat sub-systems) grew by 9% to $276 million from $254 million, while sales excluding currency effects and acquisitions grew by 6%. The increase in seat belt sales is due to higher sales volumes and to new products. Earnings Operating income for the quarter was almost unchanged, $83 million, from the corresponding period 1998, while income before taxes increased by 3% to $73 million as a result of lower interest rates. Net income and earnings per share improved by 4% to $44 million and $.43, respectively. Gross margins fell from 21.8% to 20.4%. Of the decline, approximately one percentage point is due to higher depreciation. This reflects last years' substantial capital expenditures needed to take advantage of the strong order in-take and new business opportunities. Although pricing pressure has moderated slightly, the price decline is still considerable and additional cost reductions introduced by Autoliv have not been sufficient to offset the decline. Margins have also been affected by the fact that side airbags are becoming a mass product also for the low-price end of the vehicle market, especially since the strong demand has made it neccessary to give priority to capacity increases rather than to cost reductions. In addition, start-up costs have been high due to the strategic decision to enter many new markets and establish production in countries such as Brazil, Poland, Canada and steering wheels for the North American market. Operating margin decreased from 9.9% to 8.9% during the first quarter 1999 due to the decline in gross margin. Both selling, general and administrative expenses, and research and development costs have, instead, had a positive effect on margins since these costs shrunk in relation to sales. The effective tax rate was unchanged at 41%. Excluding non-deductible amortization, the tax rate was 36%. Cash Flow and Balance Sheet The cash generated by operations amounted to $97 million compared to $60 million. Capital expenditures amounted to $63 million and $54 million, respectively, while $25 million and $3 million, respectively, were used for acquisition of businesses. The net cash flow after operating and investing activities improved from $6 million to $10 million. The most important acquisitions were the increase of Autoliv's interest in Livbag and the investment in SensoNor. The most important capital expenditure projects were the new plants in Canada, Poland, Brazil and Turkey as well as additional production capacity for side airbags. As a result of the acquisitions, net debt increased from $703 million at the beginning of the quarter to $714 million at the end. During the same period, the net-debt-to-equity ratio increased from 38% to 39%. Equity has been negatively impacted by currency effects. Employees The number of employees increased by 300 during the quarter to 21,000, mainly due to the new production plants. Significant Events ¤Autoliv has exercised its option to increase its holding from 51% to 66% in the inflator company Livbag and has secured the right to make Livbag a wholly- owned company. Livbag is Autoliv's most important supplier in Europe of inflators for airbags. ¤Autoliv has invested NOK 10 million (approx. US $1 million) in 330,000 newly issued shares in SensoNor, a supplier of airbag sensors. The investment will support development of new crash sensor technologies. ¤Construction of a completely new plant has begun in Turkey. The new facility will both replace the old plant and provide additional manufacturing capacity for recently secured new orders from such customers as Ford and Renault. ¤Lars Westerberg assumed the position of President and Chief Executive Officer of Autoliv Inc. as of February 1 and was elected to the Company's board on February 10. Dividend A dividend of 11 cents per share will be paid on June 3 to Autoliv stockholders of record as of May 6, 1999. Ex-date on the stock exchanges will be May 4. Report This report has not been examined by the Company's auditors. The next quarterly report for the period April 1 through June 30 will be published on July 22, 1999. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/22/19990423BIT00120/bit0001.doc The Full Report http://www.bit.se/bitonline/1999/04/22/19990423BIT00120/bit0002.pdf The Full Report