Financial Report October – December 2018
Continued momentum in order intake and growth
(Stockholm, Sweden, January 29, 2019) – For the three-month period ended December 31, 2018, sales for Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb), the worldwide leader in automotive safety systems, grew by 1.6% to $2,193 million. Sales grew organically* by 4.2%, driven by 19% organic sales growth in Americas. Operating margin declined to 1.0%, primarily due to an accrual for the remaining portion of the EC antitrust investigation. The adjusted* operating margin was 10.9%. (For non-U.S. GAAP measures see enclosed reconciliation tables.)
For the full year 2019, the indication is for organic sales to increase by around 5% and the adjusted operating margin to be around 10.5%. (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).
The results herein present the performance of Autoliv giving effect to the spin-off of Veoneer, Inc. (“Veoneer”), Autoliv’s former Electronics segment, on June 29, 2018. Historical financial results of Veoneer are reflected as Discontinued Operations, with the exception of cash flows, which are presented on a consolidated basis of both Continuing and Discontinued Operations and net income attributable to a controlling interest (Consolidated Autoliv). The restated historical financial information reflecting the spin-off is unaudited.
|(Dollars in millions, except per share data)||Q4 2018||Q4 2017||Change|
|Net sales Continuing Operations||$2,192.8||$2,158.7||1.6%|
|Operating income Continuing Operations||$21.0||$250.3||(91.6)%|
|Operating margin Continuing Operations||1.0%||11.6%||(10.6)pp|
|Adjusted operating margin Continuing Operations1)||10.9%||11.8%||(0.9)pp|
|Earnings per share Continuing Operations, diluted2, 3)||$(1.06)||$2.26||(146.9)%|
|Adjusted earnings per share Continuing Operations, diluted1, 2, 3)||$1.42||$2.29||(38.0)%|
|Operating cash flow on a consolidated basis||$289.4||$389.4||(25.7)%|
|1) Excluding costs for capacity alignments, antitrust related matters and separation of our business segments. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from the EPS calculation.|
Comments from Mikael Bratt, President & CEO
"I am pleased with our sales growth, order intake and cash flow in the quarter and full year, especially considering that the automotive environment turned increasingly challenging towards the end of the year. We grew organically* by more than 4% in the fourth quarter, despite a fall in light vehicle production of more than 5%, according to IHS. Our outperformance was mainly due to the high number of product launches in North America and China. We outgrew light vehicle production organically by almost 20% in North America and by 11% in China. For full year 2018, we grew organically by close to 5% while light vehicle production declined by about 1%. The launches remain on schedule, with good delivery precision albeit still with elevated launch related costs.
Our order intake continued on a high level, supporting our growth opportunities also beyond 2020. We estimate that Autoliv was able to book around 50% of the available order value in 2018, making 2018 the fourth consecutive year of booking around or more than 50% of available order value.
Although light vehicle production in the fourth quarter was significantly below earlier expectations, we met our indication of 10.5% adjusted operating margin for the full year 2018, in part due to the high degree of flexibility in our Chinese operations. Operating cash flow was strong in the quarter, bringing it to more than $0.8 billion for full year 2018 for Continuing Operations.
Our sales and earnings capacity is further supported by the continued high order intake in 2018, and our targets of reaching more than $10 billion in sales and around 13% in adjusted operating margin remain. However, due to the slowdown in global light vehicle sales and production, and increased raw material pricing, we no longer expect to reach these targets in 2020. Based on continued execution of our strong order book and assuming LVP returns to its trend growth of around 2% in 2020, we expect an improvement in 2020 towards our sales and adjusted operating margin targets.
Our focus in 2019 is directed on improving launch effectiveness and productivity, monitoring and managing light vehicle production volatility while, as always, having quality as our first priority.”
An earnings conference call will be held at 2:00 p.m. (CET) today, January 29. 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.
Inquiries: Investors and Analysts
Vice President Investor Relations
Tel +46 (0)8 58 72 06 71
Director Investor Relations
Tel +46 (0)8 58 72 06 14
Vice President Communications
Tel +46 (0)8 58 72 06 50
This information is information that Autoliv, Inc. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on January 29, 2019.