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Autoliv Announces Joint Venture with Volvo Cars

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Nov. 20 2020, Updated 1:04 p.m. ET

Price movement

Autoliv (ALV) has a market cap of $9.4 billion. It rose by 0.92% to close at $106.74 per share on September 6, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.17%, 1.1%, and -13.1%, respectively, on the same day. ALV is trading 0.45% above its 20-day moving average, 0.05% below its 50-day moving average, and 5.9% below its 200-day moving average.

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Related ETF and peers

The iShares Dow Jones US ETF (IYY) invests 0.05% of its holdings in Autoliv. The ETF tracks a broad, cap-weighted index of US companies covering 95% of the US market. The YTD price movement of IYY was 8.4% on September 6. The market caps of Autoliv’s competitors are as follows:

  • Delphi Automotive (DLPH) — $19.3 billion
  • Magna International (MGA) — $15.7 billion
  • Gentex (GNTX) — $5.0 billion

Latest news on Autoliv

In a press release on September 6, 2016, Autoliv reported that it “and Volvo Cars, the global premium car maker, have signed a letter of intent to form a new jointly-owned company to develop next generation autonomous driving software.”

It added that “the planned new company will have its headquarters in Gothenburg, Sweden, and an initial workforce taken from both companies of around 200, increasing to over 600 in the medium term. The company is expected to start operations in early 2017.”

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Performance of Autoliv in 2Q16

For 2Q16, Autoliv reported net sales of $2.6 billion, a rise of 13% over the $2.3 billion reported in 2Q15. Sales of airbag products, seatbelt products, passive safety electronic products, and active safety products rose by 4.0%, 2.7%, 13.6%, and 40.7%, respectively, between 2Q15 and 2Q16. The company reported brake control system sales of $133.4 million in 2Q16. The company’s cost of sales as a percentage of net sales and operating income rose by 3.2% and 1.9%, respectively, between 2Q15 and 2Q16.

Net income and EPS

Autoliv’s net income and EPS (earnings per share) rose to $148.4 million and $1.68, respectively, in 2Q16, compared with $136.7 million and $1.55, respectively, in 2Q15. It reported adjusted EPS of $1.75 in 2Q16, a rise of 8.0% over 2Q15.

The company’s cash and cash equivalents fell by 16.5% and its inventories rose by 5.5% between 4Q15 and 2Q16. Its current ratio and long-term debt-to-equity ratio fell to 1.7x and 0.46x, respectively, in 2Q16, compared with 1.8x and 0.53x, respectively, in 4Q15.

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Quarterly dividend

Autoliv has declared a quarterly dividend of $0.58 per share on its common stock. The dividend will be paid on December 1, 2016, to shareholders of record at the close of business on November 16, 2016.

Projection

The company has made the following projections for fiscal 2016:

  • organic sales growth of ~6%
  • sales growth from merger and acquisition activities (ANBS and MACOM) of ~6%
  • adjusted operating margin of 7.5%, which excludes costs for capacity alignments and antitrust-related matters

The company has made the following projections for fiscal 3Q16:

  • organic sales growth of ~7%
  • sales growth from merger and acquisition activities (ANBS and MACOM) of ~5%
  • adjusted operating margin of more than 8.5%, which excludes costs for capacity alignments and antitrust-related matters and includes integration and purchase accounting related costs for the joint venture with Nissin Kogyo (ANBS) of $20 million–$30 million
  • tax rate of ~29%, which excludes any discrete items
  • operational cash flow of ~0.8 billion

In the next part of this series, we’ll discuss Harman International Industries (HAR).

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