Fitch Ratings has upgraded the issuer default ratings for TRW
and its main subsidiary
) from "BB+" to "BBB-" based on the rebound of the company from the
global economic recession in 2009.
BBB is the lowest investment-grade rating, reflecting the
company's sound credit scenario and low default risk. However, BB
ratings are speculative, carrying a risk of default.
Fitch also appreciated TRW's cash flow and balance sheet
positions. The agency believes that the company will continue to be
financially stable despite a slowdown in production level.
In the fourth quarter of 2011, the company topped the Zacks
Consensus Estimate by a significant margin of 29 cents per share.
It revealed an increase in profit to $238 million or $1.84 per
share in the quarter from $225 million or $1.72 per share in the
same quarter of the prior year (all excluding special items).
The company's sales in the quarter escalated 7% to $4.0 billion,
driven by higher vehicle production volumes, mainly in North
America, and increasing demand for its active and passive safety
products compared to the prior-year
However, excluding special items, operating income in the
quarter dipped marginally to $307 million from $310 million in the
prior-year period. The decline in profit was attributable to a
negative impact from higher raw material prices, higher legal fees
and planned increases in costs to support future growth, partially
offset by increased profit from the higher level of sales between
the two quarters.
Earnings before interest, taxes, depreciation and amortization
before special items (adjusted EBITDA) declined slightly to $413
million in the quarter compared with $426 million in the prior-year
TRW anticipates sales in the range of $16.0 billion−$16.4
billion for full year 2012, including $4.1 billion for the first
quarter of the year. The expectations are based on the assumptions
for industry production volumes of 13.9 million units in North
America and 18.4 million units in Europe. The company continues to
expect China and the rest of world regions to be the growth drivers
TRW, headquartered in Michigan, is a leading manufacturer of
advanced technology products and services for the automotive
markets. The company's operations include design, manufacture and
sale of active and passive safety related products. It is among the
world's 10 largest suppliers of automotive systems, modules and
components to global automotive manufacturers. Its main competitors
The company's continued focus on innovative technologies is
capable of generating top- and bottom-line growth. In addition, we
believe its strong exposure to the international markets,
especially emerging markets, will fuel earnings growth.
However, we are concerned about weaknesses in the European
markets - where the company generates more than half of revenues,
high customer concentration and a challenging pricing environment.
As a result, it retains a Zacks #3 Rank on its stock, which
translates to a "Hold" rating for the short term (1 to 3
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