Autoliv (ALIV) Q4 2009 earnings summary

Executive summary

• FY09 net sales fell 21% to $5.121B and organic sales declined 18%, amid a 13% drop in global light vehicle production; net income attributable to controlling interests remained positive at $10M.

• Recovery strengthened through the year: Q4 sales rose 40% YoY and operating margin reached 6.6%, despite a 4.2pp restructuring-charge impact.

• FY09 operating cash flow was $493M; free cash flow after capital expenditures was $363M, the third-highest level historically.

Financial highlights

• FY09 net sales $5.121B, down 21%; gross profit $848M, down 25%; operating income $69M, down 78% YoY.

• Net income attributable to controlling interests was $10M vs. $165M in FY08; diluted EPS was $0.12 vs. $2.28.

• Gross margin was 16.6% vs. 17.4% in FY08; it recovered from 8.7% in Q1 to 20.4% in Q4.

• Operating costs included $133M of severance and restructuring charges, reducing operating margin by 2.6pp and diluted EPS by $1.14.

• Operating cash flow was $493M; net capital expenditures were $130M, and gross capital expenditures were $140M.

Outlook and guidance

• FY10 organic sales growth expected at 10–15% vs. forecast global LVP growth of 11%; acquisitions and currency were each expected to add ~3%, supporting consolidated growth guidance of 15–20%.

• FY10 operating margin expected within the long-term 8–9% target range; Q1 margin guidance was ~8.5%.

• FY10 capital expenditures projected at $200–250M, or ~4% of sales; effective tax rate expected slightly below 30%.

• Guidance excluded the agreed Delphi passive-safety asset acquisition in Asia; completion was expected before April 2010 and was projected to add $250M in annual sales.