Financial Report October - December 1999

Financial Report October - December 1999 * Quarterly sales exceeded one billion for the first time * Income before taxes $ 99 million, up 5% reported and 11% underlying * Earnings per share $.60, up 6% reported and 12% underlying (Stockholm, Sweden, Jan. 27, 2000) -- The worldwide leader in automotive safety systems, Autoliv Inc. (NYSE: ALV and SSE: ALIV), today reported record sales and earnings for both the last quarter 1999 and the full year. For the quarter, consolidated net sales rose to $1.0 billion, or by 6% and earnings per share to $.60, or by 7%. Underlying sales and earnings improved by 12% and 15%, respectively, adjusted for currency effects. For the full year, sales grew by 9% to $3.8 billion and earnings per share by 6% to $1.95. This means that Autoliv has continued to grow substantially faster than the world market, sustaining profitability despite pricing pressure. Income before taxes improved by 5% to $99 million in the quarter and by 6% to $330 million in the year. Sales Fourth Quarter For the three-month period ended December 31, 1999, consolidated net sales grew by 6% to $1,026 million from $969 million during the corresponding 1998 period, while sales adjusted for currency translation effects grew by 12%. Since approximately 60% of Autoliv's business is in Europe, the weakening of the Euro had a negative impact of 6%. The effect of acquisitions/divestitures was insignificant. The production of light vehicles is estimated to have grown by 1% in Europe and by 2% in North America. In Japan, however, the production is estimated to have declined by 1%. The average increase in the Triad was less than 1%. Sales of airbag products (incl. steering wheels) rose by 8% to $735 million from $679 million during the fourth quarter 1998. The underlying sales adjusted for currency effects and acquisitions increased by 13%. Unit sales of side airbags rose by almost 50% and of frontal airbags by 14%. Sales of seat belts (incl. seat sub-systems) were almost unchanged at $291 million, while sales excluding currency effects and divestitures increased by 10%. Full Year For the 12-month period January through December, consolidated net sales rose by 9% to $3,812 million. This compares favorably with the growth of the world market which is estimated to have been less than 4%. Adjusted for currency effects, Autoliv's sales increased by 12%. Sales were mainly driven by the record number of program launches in 1998, market share gains and a favorable customer mix. Airbag sales rose by 12% to $2,715 million and by 14% adjusted for currency effects, while seat belt sales increased by 2% and 6%, respectively, to $1,097 million. Earnings Fourth Quarter For the fourth quarter, gross profit improved by 6% to $222 million and gross margin to 21.7% from 21.5% during the year-ago period. This was the best gross margin recorded in six quarters, which reflects the ongoing moderation in pricing pressure and Autoliv's aggressive cost-saving program. Operating income rose by 2% to $106 million, and operating margin amounted to 10.4% compared to 10.7% for the fourth quarter 1998. The margin was affected by increased R&D expenditures due to the strong order intake during the year. The financial net expense was reduced as a result of improved cash generation. Net income rose by 7% to $61 million. The effective tax rate was 39.6% compared to 38.9%. The fourth quarter 1999 was thus better than the fourth quarter 1998, which had been the best quarter historically. Excluding the translation effects of currency rates, gross profit improved by 11%, operating income by 6% and net income by 15%. Full Year For the full year, gross profit improved by 8% to $807 million, operating income by 4% to $369 million and net income by 6% to $200 million. Gross margin was 21.2% compared to 21.4%. Operating margin was 9.7% compared to 10.2%. The margin was negatively affected by higher R&D expenditures. The effective tax rate was almost unchanged at 40.6% compared to 40.5% for the year-ago period. Return on equity stood unchanged at 10.6%, while return on capital employed improved from 14.2% in 1998 to 14.6%. Cash Flow and Balance Sheet Cash generated by operations improved by $22 million to $156 million during the fourth quarter 1999, partly as a result of less need for additional working capital. Cash flow after investing activities improved by $54 million from $35 million to $89 million, mainly due to a reduction in Capital expenditures, net. Capital expenditures, gross amounted to $74 million and net to $49 million. Cash generated by operations during the year improved by $122 million to $436 million or to $4.26 per share. Capital expenditures, net amounted to $212 million and were $42 million less than depreciation and amortization. Net debt decreased by $107 million from the beginning of the year to $596 million at year-end, despite acquisitions totaling $44 million. Net debt to equity improved from 38% at the beginning of the year to 31% at the end. Employees The number of employees increased by 500 during the quarter and by 1,900 during the year to 22,600, mainly due to new production plants, higher production volumes and transfer of jobs to low labor-cost countries. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/01/27/20000127BIT00890/bit0001.doc The full report http://www.bit.se/bitonline/2000/01/27/20000127BIT00890/bit0002.pdf The full report