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Autoliv's (ALV) Q2 Earnings Beat Estimates, Rise Y/Y - Analyst Blog

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Autoliv, Inc.ALV reported adjusted earnings of $1.62 per share in the second quarter of 2015, which surpassed the Zacks Consensus Estimate of $1.54. Earnings increased 11.7% from $1.45 per share reported a year ago. Meanwhile, earnings per share on a reported basis amounted to $1.55 in the second quarter of 2015 compared with 89 cents in the same quarter of 2014.

Autoliv Inc. - Earnings Surprise | FindTheBest

Consolidated revenues declined 3.8% year over year to $2.29 billion, marginally surpassing the Zacks Consensus Estimate of $2.28 billion. The beat was backed by the company's strong organic sales growth. The company benefited from better performance by its units in Europe and North America. Excluding negative currency translation effects, organic sales grew nearly 6.1% surpassing the expectation of 6% growth.

Operating income rose a strong 49.7% to $208.7 million (or 9.1% of sales) from $139.4 million (or 5.8% of sales) in the year-ago quarter.

Segment Results

Sales at the Passive Safety segment decreased 4.4% year over year to $1.93 billion. Excluding negative currency translation effect, sales increased 5.7%. All regions except China recorded growth in the quarter. The segment's operating margin jumped 77.5% to $195.7 million driven by higher organic sales, positive product mix, favorable raw material prices as well as lower costs for antitrust-related matters.

Sales at the Electronics segment decreased 0.9% year over year to $377.1 billion. Excluding negative currency translation effect, sales increased 8.3%. The organic sales growth in electronics came on the back of better performance by the active safety division in Europe and North America, mainly by premium brands. Meanwhile, sales of passive safety electronics was almost flat as the increase in sales of Hyundai/Kia in South Korea was neutralized by a decrease in Japan. The operating margin at the division fell 34.3% to $11.9 million owing to higher research, development & engineering costs and negative currency transaction.

Financial Position

Autoliv had cash and cash equivalents of $1.32 billion as of Jun 30, 2015, down from $2.1 billion as of Jun 30, 2014. Total debt fell to $1.6 billion from $1.8 billion as of Jun 30, 2014.

In first-half 2015, Autoliv's cash flow from operations decreased to $237.9 million from $271 million a year ago. Net capital expenditures increased to $237.3 million from $207.4 million recorded in the year-ago period.

Dividend

On May 5, 2015, Autoliv declared a quarterly dividend of 56 cents per share in the second quarter of 2015. The dividend will be paid on Sep 3, 2015 to shareholders on record as of Aug 20, 2015.

Guidance

Autoliv expects organic sales growth of about 7% in third-quarter 2015. However, due to the adverse impact of currency translation, consolidated sales will decline by less than 2%. Adjusted operating margin, excluding acquisitions and costs for capacity alignments, antitrust and related matters, is likely to be around 9% in third-quarter 2015.

For full-year 2015, the company's organic sales growth guidance is pegged at over 6%. Consolidated sales are expected to decline by 2% owing to the adverse effects of currency translation. Autoliv also projects adjusted operating margin of around 9.5%, excluding capacity alignments and antitrust and related matters.

Expenses related to the ongoing capacity alignment program are expected to be over $90 million in 2015 due to increased activities compared to the previous estimate. Tax rate is likely to be around 31%. Operating cash flows are anticipated to be about $0.8 billion, excluding antitrust-related matters and any other discrete items, while capital expenses for supporting the company's growth plans are projected at around 5-6% of sales.

Stocks to Consider

Currently, Autoliv carries a Zacks Rank #4 (Sell). Better-ranked automobile stocks include Gentherm Incorporated THRM , Valeo SA VLEEY and Lear Corp. LEA . While Gentherm sports a Zacks Rank #1 (Strong Buy), Valeo and Lear carry a Zacks Rank #2 (Buy).

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AUTOLIV INC (ALV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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