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Autoliv (ALV) to Gain from Innovative Products, JVs
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On Jun 30, 2016, we issued an updated research report on Autoliv, Inc. (ALV - Free Report) . The company is poised to gain from innovative product launches, acquisitions and new joint ventures (JVs). However, stiff competition in passive safety products and customer concentration pose concerns.
Autoliv reported adjusted earnings of $1.66 per share in the first quarter of 2016 that beat the Zacks Consensus Estimate of $1.50. Also, earnings increased 16.9% from $1.42 per share reported a year ago. Consolidated revenues improved 11.8% year over year to $2.43 billion, exceeding the Zacks Consensus Estimate of $2.35 billion.
Autoliv expands its business through acquisitions and JVs. In Apr 2016, the company announced the completion of the JV with Nissin Kogyo that was named Autoliv-Nissin Brake Systems (ANBS). Under the JV, Autoliv combined its brake control business with Nissin Kogyo's automotive braking business. ANBS merges Nissin Kogyo's expertise and technology in brake control and actuation systems with Autoliv’s huge global customer base. The JV is expected to improve Autoliv’s position as a leading system supplier for autonomous vehicles. ANBS is part of Autoliv's Electronics business segment. With a 51% share in the JV, Autoliv has management control.
Also, the company regularly launches innovative products to boost sales. Further, it has received many awards for the same. In Mar 2016, Autoliv was awarded as the 2015 Supplier of the Year by General Motors Company (GM - Free Report) .
However, adjusted operating margin, excluding costs for capacity alignments and antitrust-related matters, is likely to be around 8.5% in second-quarter 2016, lower than 9.5% recorded in the second quarter of 2015. For 2016, Autoliv’s adjusted operating margin is expected to be over 9%, excluding capacity alignments and antitrust-related matters. This guidance is lower than adjusted operating margin of 9.7% recorded in 2015.
Additionally, in Jun 2016, Autoliv announced that it will incur a cost of around $10−$40 million, net of expected insurance recoveries, for cooperating with Toyota Motor Corporation (TM - Free Report) in the recall of 1.43 million cars worldwide. Toyota announced the recall to fix defective airbags that had been produced by Autoliv.
We note that Autoliv is under pressure due to stiff competition in passive safety products and customer concentration. General Motors and Ford Motor Co. (F - Free Report) , which are its biggest customers, each accounted for 12% of its total sales in 2015. The top 5 customers represent about 52% while the top 10 represent 83% of Autoliv’s sales. Thus, the loss of any key customer could considerably affect the company’s earnings.
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Autoliv (ALV) to Gain from Innovative Products, JVs
On Jun 30, 2016, we issued an updated research report on Autoliv, Inc. (ALV - Free Report) . The company is poised to gain from innovative product launches, acquisitions and new joint ventures (JVs). However, stiff competition in passive safety products and customer concentration pose concerns.
Autoliv reported adjusted earnings of $1.66 per share in the first quarter of 2016 that beat the Zacks Consensus Estimate of $1.50. Also, earnings increased 16.9% from $1.42 per share reported a year ago. Consolidated revenues improved 11.8% year over year to $2.43 billion, exceeding the Zacks Consensus Estimate of $2.35 billion.
Autoliv expands its business through acquisitions and JVs. In Apr 2016, the company announced the completion of the JV with Nissin Kogyo that was named Autoliv-Nissin Brake Systems (ANBS). Under the JV, Autoliv combined its brake control business with Nissin Kogyo's automotive braking business. ANBS merges Nissin Kogyo's expertise and technology in brake control and actuation systems with Autoliv’s huge global customer base. The JV is expected to improve Autoliv’s position as a leading system supplier for autonomous vehicles. ANBS is part of Autoliv's Electronics business segment. With a 51% share in the JV, Autoliv has management control.
Also, the company regularly launches innovative products to boost sales. Further, it has received many awards for the same. In Mar 2016, Autoliv was awarded as the 2015 Supplier of the Year by General Motors Company (GM - Free Report) .
However, adjusted operating margin, excluding costs for capacity alignments and antitrust-related matters, is likely to be around 8.5% in second-quarter 2016, lower than 9.5% recorded in the second quarter of 2015. For 2016, Autoliv’s adjusted operating margin is expected to be over 9%, excluding capacity alignments and antitrust-related matters. This guidance is lower than adjusted operating margin of 9.7% recorded in 2015.
Additionally, in Jun 2016, Autoliv announced that it will incur a cost of around $10−$40 million, net of expected insurance recoveries, for cooperating with Toyota Motor Corporation (TM - Free Report) in the recall of 1.43 million cars worldwide. Toyota announced the recall to fix defective airbags that had been produced by Autoliv.
We note that Autoliv is under pressure due to stiff competition in passive safety products and customer concentration. General Motors and Ford Motor Co. (F - Free Report) , which are its biggest customers, each accounted for 12% of its total sales in 2015. The top 5 customers represent about 52% while the top 10 represent 83% of Autoliv’s sales. Thus, the loss of any key customer could considerably affect the company’s earnings.
Autoliv currently carries a Zacks Rank #3 (Hold).
AUTOLIV INC Price and Consensus
AUTOLIV INC Price and Consensus | AUTOLIV INC Quote
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