STOCKHOLM, Oct. 25, 2019 /PRNewswire/ -- Q3 2019: Business cycle management yielding results
Financial highlights Q3 2019
$2,028mÂ net sales
1.2%Â organic sales growth*
7.6%Â operating margin
9.0% adj. operating margin*
$0.98 EPS - a decline of 27%
$1.30 adj. EPS* - a decline of 4%
Full Year 2019 indications
Around (2)%Â net sales growth
Around 1% organic sales growth
Around 9% adj. operating margin
Key business developments in the third quarter of 2019
- Organic growth outperformed global light vehicle production by 4.6ppÂ mainly due to China and Americas.
- Profitability still impacted by global LVP decline and high raw material costs, although less than previous quarter, partly offset by total workforce decline of 800 vs. a quarter ago, or of 1,600 vs. a year ago.
- Established new customer collaborations;Â a North American road safety center with Great Wall Motor and presented next generation passenger airbag in cooperation with Honda.Â
*For non-U.S. GAAP measures see enclosed reconciliation tables. All figures herein refer to continued operations, excluding former Electronics segment, unless stated otherwise. All change figures in this document compare to the same period of previous year, except when stated otherwise.
(Dollars in millions, except per share data)
Adjusted operating income1)
Adjusted operating margin1)
Earnings per share, diluted2, 3)
Adjusted earnings per share, diluted1, 2, 3)
Operating cash flow4)
Return on capital employed5)
1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 4) For first 9 months 2018 management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 5) Operating income and income from equity method investments, relative to average capital employed.
Comments from Mikael Bratt, President & CEO
We experienced continued challenging market conditions in the quarter. Although the rate of decline in light vehicle production slowed down slightly, uncertainty remains high, market outlook by IHS continues to be revised down and we do not see a turnaround in LVP in the near term.
We continued to outperform light vehicle production, growing organically* about 4.6pp more than LVP in the third quarter, driven mainly by strong development in China and Americas.
Our business cycle management actions are taking effect and the adjusted operating margin* decline year over year was substantially less than in recent quarters, and it improved sequentially. LVP has continued to slide however, and we now assume 6-7% global LVP decline for 2019, which moderates our outlook to around 1% for organic sales growth and to around 9% for adjusted operating margin.
Although I am not pleased with this profit level, we achieved it in the context of LVP expectations declining by 7-8pp in just 9 months. The cost improvement actions which enabled this performance will continue relentlessly.
We reduced our workforce by an additional 800 in the quarter, or by 1,600 compared to a year ago, despite growing our sales organically* by 1.2%. Our program to reduce indirect labor costs by 5% is developing as planned and we expect it to impact our costs meaningfully as of the fourth quarter 2019.
In addition to LVP and raw material headwinds, the strike at General Motors in North America is also affecting our sales.
Being close to our customers supports our short- and long-term business opportunities and this quarter we announced two new customer collaborations - the North American road safety research lab together with Great Wall Motor and the next generation passenger airbag in cooperation with Honda. Our order intake share remained on a good level in the quarter, supporting a prolonged sales growth outperformance.
As always, it is of utmost importance to focus on quality and execution to secure a strong long-term performance for our company.
Conference call and webcast
An earnings conference call will be held at 2:00 p.m. CET today, October 25, 2019. Information regarding how to participate is available on www.autoliv.com. The presentation slides for the conference call will be available on our website shortly after the publication of this financial report.
Inquiries: Investors and Analysts
Vice President Investor Relations
Director Investor Relations
Vice President Communications
This information is information that Autoliv, Inc. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on October 25, 2019.
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