TRW
Automotive Holdings Corp.
(
TRW
) revealed an increase in profit to $238 million or $1.84 per share
in the fourth quarter of 2011 from $225 million or $1.72 per share
in the same quarter of the prior year (all excluding special
items). The profit exceeded the Zacks Consensus Estimate by 29
cents per share.
Sales in the quarter escalated 7% to $4.0 billion, driven by
higher vehicle production volumes, mainly in North America, and
increasing demand for TRW's active and passive safety products
compared to the prior-year
quarter.
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
quarter.
Annual Results
For full year 2011, TRW depicted a profit of $971 million or
$7.42 per share compared with $844 million or $6.57 per share in
2010 (all excluding special items). Sales went up 13% to $16.24
billion driven by higher level of global vehicle production
volumes, strong demand for TRW's innovative technologies and the
positive impact of currency movements between the two
periods.
Excluding special items, operating income increased slightly to
$1.28 billion in 2011 from $1.21 billion in the prior year. The
improvement in profit was driven primarily by the positive impact
of the higher level of sales between the two periods, partially
offset by inflationary pressures, including higher raw material
prices and planned increases in costs to support future growth.
Adjusted EBITDA was flat at $1.73 billion compared with $1.67
billion in the prior year.
Financial Details
TRW had cash and cash equivalents of $1.24 billion as of
December 31, 2011, up from $1.08 billion in the corresponding
period a year ago. Total debt amounted to $1.53 billion as of
December 31, 2011, down from $1.85 billion as of December 31, 2010.
Consequently, the debt to capitalization ratio declined to 34% as
of December 31, 2011 from 47% as of December 31, 2010.
For full year 2011, net cash flow provided by operating
activities totaled $1.12 billion, compared with $1.05 billion in
the prior year. Capital expenditures were $571 million versus $294
million in 2010. Consequently, free cash flow decreased to $549
million from $758 million in 2010.
Outlook
TRW anticipates sales in the range of $16.0 billion to $16.4
billion for full year 2012, including $4.1 billion for the first
quarter of the year. The expectations were 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
in 2012.
Our Take
TRW Automotive is a leading manufacturer of advanced technology
products and services for the automotive markets. Despite the
impressive results and promising outlook, we are concerned about
high customer concentration and rising raw material prices. As a
result, the company retains a Zacks #3 Rank on its stock, which
translates to a "Hold" rating for the short term (1 to 3
months).
TRW's competitor,
Autoliv Inc.
(
ALV
) saw an 11% fall in profits to $158.5 million or $1.70 per share
in the fourth quarter of 2011 from $177.5 million or $1.89 per
share in the same quarter of 2010. The decline in profits was
mainly attributable to increase in raw material costs and higher
research, development & engineering expenses. However, the
profit was higher than the Zacks Consensus Estimate of $1.67 per
share.
AUTOLIV INC (
ALV
): Free Stock Analysis Report
TRW AUTOMTV HLD (
TRW
): Free Stock Analysis Report
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