) reported second quarter 2013 earnings of $1.44 per share,
beating the Zacks Consensus Estimate by 5 cents. Earnings
improved 8.3% from $1.33 per share reported in the second quarter
of 2012 on the back of lower effective tax rate and favorable
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Consolidated revenues rose 5.2% to $2.19 billion, beating the
Zacks Consensus Estimate of $2.17 billion. The year-over-year
improvement in revenues was driven by increasing focus on safety
by leading Chinese car manufacturers.
Revenues from Europe benefited from increase in vehicle
production and higher sales to premium European carmakers. This
was partially offset by a divestiture in 2012 and adverse
currency effects. Excluding divestitures and effects of currency
exchange, organic sales went up 6% as against expectations of a
Operating income grew 1.9% to $194.0 million or 8.8% of sales
from $190.4 million or 9.1% in the year-ago quarter. Excluding
capacity alignment and antitrust investigations costs, operating
margin was 9.1%, which was higher than the company's guidance of
Sales of Airbag products (including steering wheels and passive
safety electronics) increased 3.6% to $1.4 billion. Excluding
negative currency effects, airbag sales improved by more than 4%
due to strong sales in China.
Sales of Seatbelt products improved 3.7% to $693.0 million driven
by favorable currency effects. Organic sales rose 12% primarily
due to strong sales in China.
Sales of Active safety products (automotive radar, night vision
systems and vision camera with driver assist systems) surged
71.4% to $84.5 million. The increase was driven mainly by the new
radar business with
) Mercedes, which is rolling out collision prevention assist
across most of its platforms. The growing radar business for
General Motor Company
) Chevrolet, Cadillac, GMC and Buick brands also boosted sales.
Autoliv had cash and cash equivalents of $1.0 billion as of Jun
30, 2013, up from $917.3 million as of Jun 30, 2012. Total debt
decreased to $624.0 million from $644.2 million as of Jun 30,
In the first half of 2013, the company's cash flow from
operations improved to $332.6 million from $316.6 million a year
ago. Capital expenditures (net) increased to $174.2 million from
$163.6 million in the year-ago period.
Autoliv expects consolidated and organic sales growth of 6% and
projects operating margin to be 8.5% in the third quarter,
excluding capacity alignments and antitrust investigations costs.
For full year 2013, the company anticipates organic sales growth
of 4% and operating margin of around 9%, excluding capacity
alignments and antitrust investigations costs.
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. However, we are concerned
about significant customer concentration risks as the company's
top-five represents about 60% of sales.
Currently, the company retains a Zacks Rank #3 (Hold). In the
), which carries a Zacks Rank # 1 (Strong Buy), is worth a look
at the moment.