The global leader of automotive safety systems,
) announced the construction of a new airbag manufacturing plant
in Chonburi, located 70 km east of Bangkok. The company took this
initiative to meet the increased production of vehicles and
rising demand for airbag fitments in Asia.
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Autoliv will be investing around $3 million for the plant, which
will be located adjacent to existing airbag facility of the
company in Thailand. The plant covers 4,800 square meters of area
and is expected to start functioning from Sep 2013.
For full year 2013, Autoliv anticipates organic sales growth in
the range of 2% to 4%. It expects that airbag module volume will
be 1.5 million units in 2013. The company also anticipates that
airbag volume will improve to 3.5 units by 2015. Autoliv also
believes that airbag fitment rates will benefit from the
implementation of New Car Assessment Program for Southeast Asian
Countries (ASEAN NCAP) program.
Autoliv has a stable market share in both airbag modules and seat
belts in North America, Europe and Asia. The company has
continuously expanded in low-cost countries, including Romania
and China, in order to meet local demand and to consolidate
manufacturing from high-cost countries.
Autoliv posted a 20.6% increase in earnings per share to $1.29 in
the first quarter of 2013 from $1.07 year ago, beating the Zacks
Consensus Estimate by a couple of cents. Earnings benefited from
lower capacity alignments and antitrust investigations costs,
partly offset by lower underlying operating profit. Consolidated
revenues slid 2.0% to $2.1 billion due to negative currency
effects and a small divestiture.
However, we are concerned about the company's increased raw
material costs. Further, the company faces significant customer
concentration risks as its top-5 represent about 60% of sales.
Currently, Autoliv retains a Zacks Rank #3 on its stock, which
translates to a Hold rating. Other stocks that are performing
well in the industry include
Tower International, Inc.
STRATTEC Security Corp.
). They carry a Zacks Rank #1 (Strong Buy).