Autoliv Inc. is a worldwide leader in automotive safety a pioneer in both seatbelts and airbags and a technology leader with the widest product offering for automotive safety. All the leading automobile manufacturers in the world are our customers. Autoliv Inc. has a market cap of $1.97 billion; its shares were traded at around $23.52 with a P/E ratio of 8 and P/S ratio of 0.3. Autoliv Inc. had an annual average earning growth of 6.8% over the past 10 years.
Highlight of Business Operations:In North America, which accounts for almost one quarter of consolidated revenues, LVP dropped by 51%. Production cuts for passenger cars were as severe as for light trucks. Ford cut their production by 49%, Chrysler by 55% and GM by 59%. Asian and European vehicle manufacturers combined reduced their production in the region by 45%.
Sales of airbag products (including steering wheels and electronics) decreased by slightly more than 49% to $587 million. Excluding negative currency effects of 8% and a small effect from a newly acquired radar business (see Significant Events), organic sales declined by close to 42% compared to the 45% decline in LVP in the Triad, i.e. the dominant markets for airbags. Autolivs performance was due to new business with Ford, Volkswagen, and Toyota (see Sales by Region below).
Sales from Autolivs European companies declined by 52% to $499 million. Excluding negative currency effects of 15% and a positive effect from the acquired radar business of less than 1%, organic sales declined by 37% compared to the 41% decline in European light vehicle production. Autolivs better performance than the market was due to new business for Opels Insignia, and Volkswagens Scirocco and Passat CC. It was also due to Fiats 500 and Grande Punto; and Volkswagens new Golf which benefited from the current strong trend towards smaller cars.
Sales from Autolivs North American companies dropped by 49% to $204 million. Excluding negative currency effect of 5% from a weaker Mexican peso and a small effect from the acquired radar business, organic sales declined by 44% compared to the 51% drop in North American light vehicle production. Autolivs better performance than the market was primarily due to new business for Fords new F-series; Chryslers Dodge Ram and Toyotas Rav4.
Sales from Autolivs companies in Japan declined by 57% to $85 million. Excluding favorable currency effects of 13%, organic sales declined by 70%. This was primarily due to the 48% decrease in Japanese LVP. Autolivs sales were also affected by the fact that production declined the most for premium cars, SUVs and other vehicles with high safety content for export to North America and Western Europe. This was evidenced by the fact that organic sales of curtain airbags declined by 71% despite new curtain business for Hondas Odyssey, Mitsubishis Montero Sport and Toyotas Alphard.
Operating income declined by $216 million to a loss of $89 million and operating margin to (9.6%) from 7.0% in 2008. Operating loss and margins were affected by lower gross profit as well as by severance and restructuring costs that were $15 million higher than in the same quarter 2008. Selling, general and administrative expense declined by 30%, of which 20% or $21 million was due to cost savings and 10% to currency effects. Research, development and engineering expense, net declined by 33%, of which 9% was due to currency effects and 24% or $27 million was due to higher engineering income and the Companys cost savings actions. Including production overhead, overhead costs were $140 million or 28% lower than in the same quarter 2008.
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