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Autoliv, Inc. (ALV - Free Report) reported adjusted earnings of $1.75 per share in the second quarter of 2016 that beat the Zacks Consensus Estimate of $1.73. Also, earnings increased 8% from $1.62 per share reported a year ago. Earnings per share, on a reported basis, amounted to $1.68 in second-quarter 2016 compared with $1.55 in second-quarter 2015.
Consolidated revenues improved 12.5% year over year to $2.58 billion, but missed the Zacks Consensus Estimate of $2.64 billion. Excluding negative currency translation effects and the impact of acquisitions, organic sales rose 7.7%, but were lower than the company’s expectation of around 10% growth.
Operating income increased 1.9% to $212.7 million (or 8.2% of sales) from $208.7 million (or 9.1% of sales) in the year-ago quarter. Adjusted operating margin was 8.6% in the reported quarter, higher than the company’s expectation of around 8.5%.
Sales at the Passive Safety segment rose 3.7% year over year to $2 billion in the reported quarter. Excluding negative currency translation effects, organic sales increased 6%. The improvement in organic sales was driven by higher sales in most of the regions, partially offset by poor performance in South America and South Korea. The segment’s operating income improved 5.7% to $206.8 million (10.4% of sales) from $195.7 million (10.2% of sales) in the prior-year quarter.
Sales at the Electronics segment surged 58.5% year over year to $597.8 million. Organic sales were up 19%. The Autoliv-Nissin Brake Systems (ANBS) joint venture positively impacted sales. Operating income from the division advanced 25.2% to $14.9 million (2.5% of sales) from $11.9 million (3.2% of sales) in the prior-year quarter.
Financial Position
Autoliv had cash and cash equivalents of $1.11 billion as of Jun 30, 2016, down from $1.32 billion as of Jun 30, 2015. Total debt fell to $1.55 billion from $1.60 billion as of Jun 30, 2015.
In the first half of 2016, the company’s cash flow from operations increased to $303.1 million from $237.9 million a year ago. Net capital expenditures decreased to $221.1 million from $237.3 million recorded in the year-ago period.
Dividend
On May 10, 2016, Autoliv declared a quarterly dividend of 58 cents per share for the third quarter of 2016. The dividend will be paid on Sep 1, to shareholders on record as of Aug 18, 2016.
Guidance
Autoliv expects organic sales growth of around 6% in third-quarter 2016. Sales will benefit from the recent acquisitions of ANBS and MACOM by 6%. However, currency translation will have a 1% adverse impact on sales. Based on these factors, consolidated sales are expected to grow around 12%. Adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is likely to be 7.5% in third-quarter 2016.
For full-year 2016, the company’s organic sales are expected to increase around 7%. Sales will benefit from the recent acquisitions of ANBS and MACOM by 5%. However, currency translation will have a 1% adverse impact on sales. Based on these factors, consolidated sales are expected to rise 10%, lower than the previous estimate of 11% growth. Adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is likely to be more than 8.5% in 2016. The operating margin expectation includes estimated integration and purchase accounting costs of $20–$30 million for the joint venture with Nissin Kogyo.
Tax rate for full-year 2016 is likely to be around 29%. Operating cash flows are anticipated to be about $0.8 billion, excluding any discrete items, while capital expenditure for supporting the company’s growth plans are projected to be at the higher end of the guidance range of 5–6% of sales.
From 2015 onward, Autoliv has signed various agreements with original equipment manufacturers to supply replacement airbag inflators. The company expects that deliveries will be above 30 million units over the 2015–2018 period.
Zacks Rank
Currently, Autoliv carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Spartan Motors Inc. , The Goodyear Tire & Rubber Company (GT - Free Report) and U.S. Auto Parts Network, Inc. (PRTS - Free Report) , all carrying a Zacks Rank #2 (Buy).
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Autoliv's (ALV) Q2 Earnings Beat Estimates, Improve Y/Y
Autoliv, Inc. (ALV - Free Report) reported adjusted earnings of $1.75 per share in the second quarter of 2016 that beat the Zacks Consensus Estimate of $1.73. Also, earnings increased 8% from $1.62 per share reported a year ago. Earnings per share, on a reported basis, amounted to $1.68 in second-quarter 2016 compared with $1.55 in second-quarter 2015.
Consolidated revenues improved 12.5% year over year to $2.58 billion, but missed the Zacks Consensus Estimate of $2.64 billion. Excluding negative currency translation effects and the impact of acquisitions, organic sales rose 7.7%, but were lower than the company’s expectation of around 10% growth.
Operating income increased 1.9% to $212.7 million (or 8.2% of sales) from $208.7 million (or 9.1% of sales) in the year-ago quarter. Adjusted operating margin was 8.6% in the reported quarter, higher than the company’s expectation of around 8.5%.
AUTOLIV INC Price, Consensus and EPS Surprise
AUTOLIV INC Price, Consensus and EPS Surprise | AUTOLIV INC Quote
Segment Results
Sales at the Passive Safety segment rose 3.7% year over year to $2 billion in the reported quarter. Excluding negative currency translation effects, organic sales increased 6%. The improvement in organic sales was driven by higher sales in most of the regions, partially offset by poor performance in South America and South Korea. The segment’s operating income improved 5.7% to $206.8 million (10.4% of sales) from $195.7 million (10.2% of sales) in the prior-year quarter.
Sales at the Electronics segment surged 58.5% year over year to $597.8 million. Organic sales were up 19%. The Autoliv-Nissin Brake Systems (ANBS) joint venture positively impacted sales. Operating income from the division advanced 25.2% to $14.9 million (2.5% of sales) from $11.9 million (3.2% of sales) in the prior-year quarter.
Financial Position
Autoliv had cash and cash equivalents of $1.11 billion as of Jun 30, 2016, down from $1.32 billion as of Jun 30, 2015. Total debt fell to $1.55 billion from $1.60 billion as of Jun 30, 2015.
In the first half of 2016, the company’s cash flow from operations increased to $303.1 million from $237.9 million a year ago. Net capital expenditures decreased to $221.1 million from $237.3 million recorded in the year-ago period.
Dividend
On May 10, 2016, Autoliv declared a quarterly dividend of 58 cents per share for the third quarter of 2016. The dividend will be paid on Sep 1, to shareholders on record as of Aug 18, 2016.
Guidance
Autoliv expects organic sales growth of around 6% in third-quarter 2016. Sales will benefit from the recent acquisitions of ANBS and MACOM by 6%. However, currency translation will have a 1% adverse impact on sales. Based on these factors, consolidated sales are expected to grow around 12%. Adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is likely to be 7.5% in third-quarter 2016.
For full-year 2016, the company’s organic sales are expected to increase around 7%. Sales will benefit from the recent acquisitions of ANBS and MACOM by 5%. However, currency translation will have a 1% adverse impact on sales. Based on these factors, consolidated sales are expected to rise 10%, lower than the previous estimate of 11% growth. Adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is likely to be more than 8.5% in 2016. The operating margin expectation includes estimated integration and purchase accounting costs of $20–$30 million for the joint venture with Nissin Kogyo.
Tax rate for full-year 2016 is likely to be around 29%. Operating cash flows are anticipated to be about $0.8 billion, excluding any discrete items, while capital expenditure for supporting the company’s growth plans are projected to be at the higher end of the guidance range of 5–6% of sales.
From 2015 onward, Autoliv has signed various agreements with original equipment manufacturers to supply replacement airbag inflators. The company expects that deliveries will be above 30 million units over the 2015–2018 period.
Zacks Rank
Currently, Autoliv carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Spartan Motors Inc. , The Goodyear Tire & Rubber Company (GT - Free Report) and U.S. Auto Parts Network, Inc. (PRTS - Free Report) , all carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>