Autoliv, Inc. ALV recently canceled its quarterly dividend scheduled for Jun 4 and suspended future dividends until further notice. It also withdrew the 2020 guidance to preserve cash as vehicle sales drop on the coronavirus outbreak. The company also drew the remaining $600 million from its revolving credit facility of $1 billion. Notably, it had already drawn down $500 million on Mar 19.
The company’s current cash balance is $1.4 billion, which would be used to deal with the downturn caused by shutdowns in production due to the pandemic-led crisis.
Further, the company’s executive officers and non-employee board members have agreed to minimize their pay to combat the crisis. While the executive officers have reduced their base salaries by 20% for second-quarter 2020, the non-employee board members have decreased their annual base retainer by 20% for the same period.
Moreover, the company has temporarily suspended production at almost all of its plants in Europe, the Americas, India, Malaysia and the Philippines to contain the spread of the virus, with most closures currently planned at between two weeks and one month.
Compared to the prior-year period, operations in China have slowly recovered to around 90%. The recovery in production has been in line with the recovery in customer demand since mid-February. In South Korea, Indonesia and Japan, majority of the company’s plants are currently operating relatively close to the planned output.
Autoliv currently carries a Zacks Rank #5 (Strong Sell).
The rapidly-spreading coronavirus pandemic has become a concern for other global auto biggies as well including Tesla TSLA, Honda Motor HMC, Toyota Motor TM, Volkswagen AG, Goodyear Tire, Nissan, Harley-Davidson and Hyundai Motor. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis.The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
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