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8-K - FORM 8-K - AUTOLIV INC | d862430d8k.htm |
Exhibit 99.1
Financial Report October - December 2014
Strong EPS growth and improved operating margin
(Stockholm, January 29, 2015) For the three-month period ended December 31, 2014, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb) the worldwide leader in automotive safety systems reported consolidated sales of $2,354 million. Quarterly organic sales* (for non-U.S. GAAP measures see enclosed reconciliation table) grew by more than 5%. The adjusted operating margin* was 10.1%.
The expectation at the beginning of the quarter was for organic sales growth of around 2% and an adjusted operating margin of around 9.5%. The higher than expected sales growth came mainly from strong sales in Europe and North America.
For the first quarter of 2015, the Company expects organic sales to increase by around 3%, and an adjusted operating margin of around 8%. The expectation for the full year is for organic sales growth of more than 6%, and an adjusted operating margin of around 9.5%.
Key Figures
(Dollars in millions, except per share data) |
Q4 2014 | Q4 2013 | Change | |||||||||
Net sales |
$ | 2,353.7 | $ | 2,351.9 | 0.1 | % | ||||||
Operating income |
$ | 216.7 | $ | 202.7 | 6.9 | % | ||||||
Operating margin |
9.2 | % | 8.6 | % | 0.6pp | |||||||
Adjusted operating margin1) |
10.1 | % | 10.0 | % | 0.1pp | |||||||
Earnings per share, diluted2) |
$ | 1.65 | $ | 1.04 | 58.7 | % | ||||||
Adjusted earnings per share, diluted 1, 2) |
$ | 1.81 | $ | 1.70 | 6.5 | % | ||||||
Operating cash flow |
$ | 229.3 | $ | 299.2 | (23.4 | )% |
1) Excluding costs for capacity alignment and antitrust matters*. 2) Assuming dilution and net of treasury shares.
Comments from Jan Carlson, Chairman, President & CEO
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We ended 2014 with a quarter in which sales growth as well as operating margin exceeded our expectations. For the full year Autoliv returned a record $811 million to our shareholders through dividends and buy backs. In our active safety business we achieved 45% organic* growth for the year. I am proud of what our 60,000 employees achieved together in 2014.
As of January 1, 2015 we have changed our operating structure and will have two reporting segments Passive Safety and Electronics. By integrating our passive electronics and active safety businesses into a new segment we take the next step in the companys development in the broader area of electronics.
Our long-term target is to reach $2 billion in Electronics sales for 2019, out of which around $1 billion will be active safety sales. The trend in the automotive industry towards automation, and ultimately autonomous driving, is stronger than ever and we strive to create long-term growth and value in this developing field. In support of our strategy we will further increase investments in research and development for electronics and plan to hire up to 300 electronics engineers during the year.
In 2015 we anticipate an expansion in overall operating margin despite record investments in both capital and R&D. This is made possible by our continued market leadership in passive safety. Our full year growth rate for active safety will be affected by the fact that new launches will mainly come in the later part of 2015. Our electronics margin is negatively affected by the stronger dollar.
The unprecedented number of recalls during 2014 shows that our strategy of being the quality leader in all aspects of our business is the right and only choice. Related to the situation with airbag inflators in our industry we now have agreements with several OEMs for new supply capacity and are in discussions for more. We see this as a vote of confidence from our customers for our quality track record and reliable inflator technology.
We enter 2015 with a relentless focus on quality. For the year we see good growth prospects together with continued investments in support of our long-term strategy, as well as improving margins.
An earnings conference call will be held at 2:00 p.m. (CET) today, January 29. To follow the webcast or to obtain the pin code and phone number, please access www.autoliv.com. The conference slides will be available on our web site as soon as possible following the publication of this earnings report. |
Q4 Report 2014 | 4th Quarter |
Outlook
Consolidated Sales
Sales by Product
Change vs. same quarter last year |
Sales (MUSD) | Reported (U.S. GAAP) |
Acquisitions/ Divestitures |
Currency effects1) |
Organic change* |
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Airbags |
$ | 1,506.1 | (0.9 | )% | | (4.7 | )% | 3.8 | % | |||||||||||
Seatbelts |
706.7 | (3.5 | )% | | (5.3 | )% | 1.8 | % | ||||||||||||
Active Safety |
140.9 | 39.9 | % | | (8.8 | )% | 48.7 | % | ||||||||||||
Total |
$ | 2,353.7 | 0.1 | % | | (5.0 | )% | 5.1 | % | |||||||||||
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1) Effects from currency translations.
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Q4 Report 2014 | 4th Quarter |
Sales by Region
Change vs. same quarter last year |
Sales (MUSD) | Reported (U.S. GAAP) |
Acquisitions/ Divestitures |
Currency effects1) |
Organic change* |
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Asia |
$ | 821.8 | (4.9 | )% | | (3.6 | )% | (1.3 | )% | |||||||||||||
Whereof: |
China |
$ | 436.4 | 0.0 | % | | (0.6 | )% | 0.6 | % | ||||||||||||
Japan |
$ | 150.7 | (17.9 | )% | | (12.4 | )% | (5.5 | )% | |||||||||||||
Rest of Asia |
$ | 234.7 | (3.6 | )% | | (1.9 | )% | (1.7 | )% | |||||||||||||
Americas |
$ | 779.1 | 4.6 | % | | (1.9 | )% | 6.5 | % | |||||||||||||
Europe |
$ | 752.8 | 1.3 | % | | (9.9 | )% | 11.2 | % | |||||||||||||
Global |
$ | 2,353.7 | 0.1 | % | | (5.0 | )% | 5.1 | % |
1) Effects from currency translations.
Launches in the 4th Quarter
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Fords new F-Series Inflatable curtains, side airbags and safety electronics. |
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Chevrolets new Colorado Safety electronics and seatbelts with pretensioners. |
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Fords new Mondeo Passenger airbag, inflatable curtains and side airbags. | |||||
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Opels new Corsa Inflatable curtains, side airbags and seatbelts with pretensioners. |
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Hyundais new ix25 Driver airbag, passenger airbag, inflatable curtains, side airbags and safety electronics. |
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Great Walls new Haval H9 Steering wheel with driver airbag, passenger airbag, inflatable curtains, side airbags, safety electronics and seatbelts with pretensioners. | |||||
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Nissans new Murano Passenger airbag, inflatable curtains, side airbags, safety electronics and seatbelts with pretensioners. |
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BMWs new X6 Seatbelts with pretensioners, vision and night vision cameras. |
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Fords new Edge Steering wheel with driver airbag and passenger airbag. |
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Q4 Report 2014 | 4th Quarter |
Earnings
(Dollars in millions, except per share data) |
Q4 2014 | Q4 2013 | Change | |||||||||
Net Sales |
$ | 2,353.7 | $ | 2,351.9 | 0.1 | % | ||||||
Gross profit |
$ | 467.9 | $ | 454.9 | 2.9 | % | ||||||
% of sales |
19.9 | % | 19.3 | % | 0.6pp | |||||||
S,G&A |
$ | (106.8 | ) | $ | (103.2 | ) | 3.5 | % | ||||
% of sales |
(4.5 | )% | (4.4 | )% | (0.1 | )pp | ||||||
R,D&E net |
$ | (122.9 | ) | $ | (109.6 | ) | 12.1 | % | ||||
% of sales |
(5.2 | )% | (4.7 | )% | (0.5 | )pp | ||||||
Operating income |
$ | 216.7 | $ | 202.7 | 6.9 | % | ||||||
% of sales |
9.2 | % | 8.6 | % | 0.6pp | |||||||
Adjusted operating income1) |
$ | 237.2 | $ | 236.3 | 0.4 | % | ||||||
% of sales |
10.1 | % | 10.0 | % | 0.1pp | |||||||
Income before taxes |
$ | 203.3 | $ | 194.6 | 4.5 | % | ||||||
Tax rate |
27.2 | % | 48.3 | % | (21.1 | )pp | ||||||
Net income |
$ | 148.0 | $ | 100.5 | 47.3 | % | ||||||
Net income attributable to controlling interest |
$ | 148.2 | $ | 99.7 | 48.7 | % | ||||||
Earnings per share, diluted2) |
$ | 1.65 | $ | 1.04 | 58.7 | % | ||||||
Adjusted earnings per share, diluted1, 2, 3) |
$ | 1.81 | $ | 1.70 | 6.5 | % |
1) Excluding costs for capacity alignment and antitrust matters*. 2) Assuming dilution and net of treasury shares. 3) Excluding a non-cash, non-recurring valuation allowance for deferred tax assets in 2013*.
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Q4 Report 2014 | 4th Quarter |
Cash flow and Balance Sheet
Light Vehicle Production Development
Change vs. same quarter last year |
China | Japan | RoA | Americas | Europe | Total | ||||||||||||||||||
LVP1) |
6.6 | % | (7.6 | )% | (2.2 | )% | 1.1 | % | (0.1 | )% | 1.3 | % |
1) Source: IHS January 16, 2015.
Headcount
December 31, 2014 | September 30, 2014 | December 31, 2013 | ||||||||||||
Headcount |
60,016 | 59,023 | 56,475 | |||||||||||
Whereof: |
Direct workers in manufacturing |
72 | % | 72 | % | 72 | % | |||||||
Low Cost Countries |
74 | % | 73 | % | 72 | % | ||||||||
Temporary personnel |
15 | % | 16 | % | 17 | % |
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Q4 Report 2014 | Full Year |
Consolidated Sales Full Year 2014
Sales by Product
Year over year change |
Sales (MUSD) | Reported (U.S. GAAP) |
Acquisitions/ Divestitures |
Currency effects1) |
Organic change* |
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Airbags |
$ | 5,951.3 | 4.7 | % | | (1.1 | )% | 5.8 | % | |||||||||||
Seatbelts |
$ | 2,800.1 | 1.0 | % | | (1.3 | )% | 2.3 | % | |||||||||||
Active Safety |
$ | 489.1 | 41.9 | % | | (2.7 | )% | 44.6 | % | |||||||||||
Total |
$ | 9,240.5 | 5.0 | % | | (1.2 | )% | 6.2 | % | |||||||||||
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1) Effects from currency translations.
Sales by Region
Year over year change |
Sales (MUSD) |
Reported (U.S. GAAP) |
Acquisitions/ Divestitures |
Currency effects1) |
Organic change* |
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Asia |
$ | 3,097.9 | 4.2 | % | | (1.4 | )% | 5.6 | % | |||||||||||||
Whereof: |
China |
$ | 1,521.6 | 8.3 | % | | 0.1 | % | 8.2 | % | ||||||||||||
Japan |
$ | 687.7 | (0.1 | )% | | (7.8 | )% | 7.7 | % | |||||||||||||
Rest of Asia |
$ | 888.6 | 0.9 | % | | 1.2 | % | (0.3 | )% | |||||||||||||
Americas |
$ | 3,099.4 | 5.3 | % | | (1.3 | )% | 6.6 | % | |||||||||||||
Europe |
$ | 3,043.2 | 5.5 | % | | (1.0 | )% | 6.5 | % | |||||||||||||
Global |
$ | 9,240.5 | 5.0 | % | | (1.2 | )% | 6.2 | % |
1) Effects from currency translations.
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Q4 Report 2014 | Full Year |
Earnings
(Dollars in millions, except per share data) |
Full year 2014 | Full year 2013 | Change | |||||||||
Net Sales |
$ | 9,240.5 | $ | 8,803.4 | 5.0 | % | ||||||
Gross profit |
$ | 1,803.8 | $ | 1,704.6 | 5.8 | % | ||||||
% of sales |
19.5 | % | 19.4 | % | 0.1pp | |||||||
S,G&A |
$ | (414.9 | ) | $ | (389.9 | ) | 6.4 | % | ||||
% of sales |
(4.5 | )% | (4.4 | )% | (0.1 | )pp | ||||||
R,D&E net |
$ | (535.6 | ) | $ | (489.3 | ) | 9.5 | % | ||||
% of sales |
(5.8 | )% | (5.6 | )% | (0.2 | )pp | ||||||
Operating income |
$ | 722.6 | $ | 761.4 | (5.1 | )% | ||||||
% of sales |
7.8 | % | 8.6 | % | (0.8 | )pp | ||||||
Adjusted operating income1) |
$ | 842.4 | $ | 808.4 | 4.2 | % | ||||||
% of sales |
9.1 | % | 9.2 | % | (0.1 | )pp | ||||||
Income before taxes |
$ | 667.0 | $ | 734.0 | (9.1 | )% | ||||||
Tax rate |
29.7 | % | 33.2 | % | (3.5 | )pp | ||||||
Net income |
$ | 469.0 | $ | 489.9 | (4.3 | )% | ||||||
Net income attributable to controlling interest |
$ | 467.8 | $ | 485.8 | (3.7 | )% | ||||||
Earnings per share, diluted2) |
$ | 5.06 | $ | 5.07 | (0.2 | )% | ||||||
Adjusted earnings per share, diluted1, 2, 3) |
$ | 5.93 | $ | 5.82 | 1.9 | % |
1) Excluding costs for capacity alignment and antitrust matters (including settlements of class actions in the second and third quarter 2014)*. 2) Assuming dilution and net of treasury shares. 3) Excluding a non-cash, non-recurring valuation allowance for deferred tax assets in 2013*.
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Q4 Report 2014 | Full Year |
Cash flow and Balance Sheet
Light Vehicle Production Development
Year over year change |
China | Japan | RoA | Americas | Europe | Total | ||||||||||||||||||
LVP1) |
9.4 | % | 1.8 | % | (2.6 | )% | 0.4 | % | 3.2 | % | 3.3 | % |
1) Source: IHS January 16, 2015.
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Q4 Report 2014 |
Other Significant Items
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Q4 Report 2014 |
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Q4 Report 2014 |
Key Ratios
Quarter October - December | Full year | Full year | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Earnings per share, basic |
$ | 1.65 | $ | 1.05 | $ | 5.08 | $ | 5.09 | ||||||||
Earnings per share, diluted1) |
$ | 1.65 | $ | 1.04 | $ | 5.06 | $ | 5.07 | ||||||||
Total parent shareholders equity per share |
$ | 38.64 | $ | 42.17 | $ | 38.64 | $ | 42.17 | ||||||||
Cash dividend paid per share |
$ | 0.54 | $ | 0.50 | $ | 2.12 | $ | 2.00 | ||||||||
Operating working capital, $ in millions2) |
595 | 543 | 595 | 543 | ||||||||||||
Capital employed, $ in millions3) |
3,504 | 3,489 | 3,504 | 3,489 | ||||||||||||
Net debt (cash), $ in millions2) |
62 | (511 | ) | 62 | (511 | ) | ||||||||||
Net debt to capitalization, %4) |
2 | N/A | 2 | N/A | ||||||||||||
Gross margin, %5) |
19.9 | 19.3 | 19.5 | 19.4 | ||||||||||||
Operating margin, %6) |
9.2 | 8.6 | 7.8 | 8.6 | ||||||||||||
Return on total equity, %7) |
16.6 | 10.0 | 12.3 | 12.5 | ||||||||||||
Return on capital employed, %8) |
24.6 | 23.3 | 20.5 | 22.1 | ||||||||||||
Average no. of shares in millions1) |
89.9 | 95.5 | 92.4 | 95.9 | ||||||||||||
No. of shares at period-end in millions9) |
88.7 | 94.4 | 88.7 | 94.4 | ||||||||||||
No. of employees at period-end10) |
50,770 | 46,852 | 50,770 | 46,852 | ||||||||||||
Headcount at period-end11) |
60,016 | 56,475 | 60,016 | 56,475 | ||||||||||||
Days receivables outstanding12) |
68 | 66 | 71 | 70 | ||||||||||||
Days inventory outstanding13) |
30 | 29 | 32 | 31 |
1) Assuming dilution and net of treasury shares. 2) Non-U.S. GAAP measure; for reconciliation see enclosed tables below. 3) Total equity and net debt. 4) Net debt in relation to capital employed. 5) Gross profit relative to sales. 6) Operating income relative to sales. 7) Net income relative to average total equity. 8) Operating income and income from equity method investments, relative to average capital employed. 9) Excluding dilution and net of treasury shares. 10) Employees with a continuous employment agreement, recalculated to full time equivalent heads. 11) Includes temporary hourly personnel. 12) Outstanding receivables relative to average daily sales. 13) Outstanding inventory relative to average daily sales.
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Q4 Report 2014 |
Consolidated Statements of Net Income
Quarter October - December | Full year | Full year | ||||||||||||||
(Dollars in millions, except per share data) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net sales |
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Airbag products |
$ | 1,506.1 | $ | 1,519.1 | $ | 5,951.3 | $ | 5,686.0 | ||||||||
Seatbelt products |
706.7 | 732.1 | 2,800.1 | 2,772.7 | ||||||||||||
Active safety products |
140.9 | 100.7 | 489.1 | 344.7 | ||||||||||||
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Total net sales |
2,353.7 | 2,351.9 | 9,240.5 | 8,803.4 | ||||||||||||
Cost of sales |
(1,885.8 | ) | (1,897.0 | ) | (7,436.7 | ) | (7,098.8 | ) | ||||||||
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Gross profit |
467.9 | 454.9 | 1,803.8 | 1,704.6 | ||||||||||||
Selling, general & administrative expenses |
(106.8 | ) | (103.2 | ) | (414.9 | ) | (389.9 | ) | ||||||||
Research, development & engineering expenses, net |
(122.9 | ) | (109.6 | ) | (535.6 | ) | (489.3 | ) | ||||||||
Amortization of intangibles |
(3.6 | ) | (5.1 | ) | (16.0 | ) | (20.4 | ) | ||||||||
Other income (expense), net |
(17.9 | ) | (34.3 | ) | (114.7 | ) | (43.6 | ) | ||||||||
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Operating income |
216.7 | 202.7 | 722.6 | 761.4 | ||||||||||||
Income from equity method investments |
1.1 | 1.9 | 6.9 | 7.3 | ||||||||||||
Interest income |
0.7 | 1.4 | 4.8 | 3.9 | ||||||||||||
Interest expense |
(18.2 | ) | (8.6 | ) | (63.4 | ) | (32.9 | ) | ||||||||
Other non-operating items, net |
3.0 | (2.8 | ) | (3.9 | ) | (5.7 | ) | |||||||||
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Income before income taxes |
203.3 | 194.6 | 667.0 | 734.0 | ||||||||||||
Income taxes |
(55.3 | ) | (94.1 | ) | (198.0 | ) | (244.1 | ) | ||||||||
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Net income |
$ | 148.0 | $ | 100.5 | $ | 469.0 | $ | 489.9 | ||||||||
Less; Net income attributable to non-controlling interest |
(0.2 | ) | 0.8 | 1.2 | 4.1 | |||||||||||
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Net income attributable to controlling interest |
$ | 148.2 | $ | 99.7 | $ | 467.8 | $ | 485.8 | ||||||||
Earnings per share1) |
$ | 1.65 | $ | 1.04 | $ | 5.06 | $ | 5.07 |
1) Assuming dilution and net of treasury shares.
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Q4 Report 2014 |
Consolidated Balance Sheets
(Dollars in millions) |
December 31 2014 |
September 30 2014 |
June 30 2014 |
March 31 2014 |
December 31 2013 |
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Assets |
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Cash & cash equivalents |
$ | 1,529.0 | $ | 1,846.7 | $ | 2,060.2 | $ | 1,096.8 | $ | 1,118.3 | ||||||||||
Receivables, net |
1,706.3 | 1,712.7 | 1,843.1 | 1,826.1 | 1,688.0 | |||||||||||||||
Inventories, net |
675.5 | 686.5 | 683.2 | 663.6 | 661.8 | |||||||||||||||
Other current assets |
225.4 | 243.9 | 265.0 | 214.4 | 232.3 | |||||||||||||||
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Total current assets |
4,136.2 | 4,489.8 | 4,851.5 | 3,800.9 | 3,700.4 | |||||||||||||||
Property, plant & equipment, net |
1,390.2 | 1,396.1 | 1,396.1 | 1,354.4 | 1,336.2 | |||||||||||||||
Investments and other non-current assets |
255.3 | 238.9 | 268.9 | 271.2 | 259.0 | |||||||||||||||
Goodwill assets |
1,594.0 | 1,602.6 | 1,612.1 | 1,610.6 | 1,610.1 | |||||||||||||||
Intangible assets, net |
67.2 | 65.4 | 68.9 | 73.2 | 77.3 | |||||||||||||||
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Total assets |
$ | 7,442.9 | $ | 7,792.8 | $ | 8,197.5 | $ | 7,110.3 | $ | 6,983.0 | ||||||||||
Liabilities and equity |
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Short-term debt |
$ | 79.6 | $ | 250.4 | $ | 246.4 | $ | 360.6 | $ | 339.4 | ||||||||||
Accounts payable |
1,091.5 | 1,053.5 | 1,167.7 | 1,166.8 | 1,199.9 | |||||||||||||||
Other current liabilities |
967.5 | 1,021.1 | 1,033.6 | 1,028.3 | 889.2 | |||||||||||||||
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Total current liabilities |
2,138.6 | 2,325.0 | 2,447.7 | 2,555.7 | 2,428,5 | |||||||||||||||
Long-term debt |
1,521.2 | 1,520.5 | 1,528.3 | 277.7 | 279.1 | |||||||||||||||
Pension liability |
232.5 | 148.0 | 153.9 | 151.8 | 147.3 | |||||||||||||||
Other non-current liabilities |
108.5 | 123.6 | 124.2 | 125.2 | 127.7 | |||||||||||||||
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Total non-current liabilities |
1,862.2 | 1,792.1 | 1,806.4 | 554.7 | 554.1 | |||||||||||||||
Total parent shareholders equity |
3,427.1 | 3,660.3 | 3,926.9 | 3,983.5 | 3,981.3 | |||||||||||||||
Non-controlling interest |
15.0 | 15.4 | 16.5 | 16.4 | 19.1 | |||||||||||||||
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Total equity |
3,442.1 | 3,675.7 | 3,943.4 | 3,999.9 | 4,000.4 | |||||||||||||||
Total liabilities and equity |
$ | 7,442.9 | $ | 7,792.8 | $ | 8,197.5 | $ | 7,110.3 | $ | 6,983.0 | ||||||||||
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Q4 Report 2014 |
Consolidated Statements of Cash Flows
Quarter October - December | Full year | Full year | ||||||||||||||
(Dollars in millions) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income |
$ | 148.0 | $ | 100.5 | $ | 469.0 | $ | 489.9 | ||||||||
Depreciation and amortization |
77.4 | 75.4 | 305.4 | 286.0 | ||||||||||||
Other, net |
20.4 | 4.8 | 41.0 | 43.2 | ||||||||||||
Changes in operating assets and liabilities |
(16.5 | ) | 118.5 | (102.7 | ) | 18.8 | ||||||||||
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Net cash provided by operating activities |
229.3 | 299.2 | 712.7 | 837.9 | ||||||||||||
Capital expenditures, net |
(127.9 | ) | (111.9 | ) | (453.4 | ) | (379.3 | ) | ||||||||
Acquisitions of businesses and other, net |
2.1 | 2.9 | 0.4 | 1.9 | ||||||||||||
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Net cash used in investing activities |
(125.8 | ) | (109.0 | ) | (453.0 | ) | (377.4 | ) | ||||||||
Net cash before financing1) |
103.5 | 190.2 | 259.7 | 460.5 | ||||||||||||
Net increase (decrease) in short-term debt |
(165.8 | ) | 125.0 | (252.7 | ) | 272.8 | ||||||||||
Issuance of long-term debt |
10.0 | | 1,263.0 | | ||||||||||||
Repayments and other changes in long-term debt |
(0.1 | ) | (142.3 | ) | (1.2 | ) | (277.3 | ) | ||||||||
Dividends paid |
(48.3 | ) | (47.5 | ) | (194.9 | ) | (191.0 | ) | ||||||||
Shares repurchased |
(186.0 | ) | (147.9 | ) | (616.0 | ) | (147.9 | ) | ||||||||
Common stock options exercised |
9.1 | 11.0 | 32.5 | 27.0 | ||||||||||||
Dividend paid to non-controlling interests |
| (2.9 | ) | (4.9 | ) | (3.3 | ) | |||||||||
Capital contribution from non-controlling interests |
| 0.4 | | 0.4 | ||||||||||||
Other, net |
0.1 | 0.1 | 0.5 | 1.0 | ||||||||||||
Effect of exchange rate changes on cash |
(40.2 | ) | (2.5 | ) | (75.3 | ) | (1.6 | ) | ||||||||
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Increase (decrease) in cash and cash equivalents |
(317.7 | ) | (16.4 | ) | 410.7 | 140.6 | ||||||||||
Cash and cash equivalents at period-start |
1,846.7 | 1,134.7 | 1,118.3 | 977.7 | ||||||||||||
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Cash and cash equivalents at period-end |
$ | 1,529.0 | $ | 1,118.3 | $ | 1,529.0 | $ | 1,118.3 |
1) Non-U.S. GAAP measure comprised of Net cash provided by operating activities and Net cash used in investing activities.
14
Q4 Report 2014 |
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(Dollars in millions)
In this report we sometimes refer to non-U.S. GAAP measures that we and securities analysts use in measuring Autolivs performance. We believe that these measures assist investors and management in analyzing trends in the Companys business for the reasons given below. Investors should not consider these non-U.S. GAAP measures as substitutes, but rather as additions, to financial reporting measures prepared in accordance with U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.
Components in Sales Increase/Decrease
Because the Company generates approximately 75% of sales in currencies other than in the reporting currency (i.e. U.S. dollars) and currency rates have proven to be rather volatile, and due to the fact that the Company has historically made several acquisitions and divestitures, we analyze the Companys sales trends and performance as changes in organic sales growth. This presents the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates. The tables below present changes in organic sales growth as reconciled to the change in the total U.S. GAAP net sales.
Sales by Product
Quarter October - December | Airbag Products | Seatbelt Products | Active Safety | Total | ||||||||||||||||||||||||||||
% | $ | % | $ | % | $ | % | $ | |||||||||||||||||||||||||
Organic change |
3.8 | $ | 57.5 | 1.8 | $ | 13.3 | 48.7 | $ | 49.1 | 5.1 | $ | 119.9 | ||||||||||||||||||||
Currency effects1) |
(4.7 | ) | (70.5 | ) | (5.3 | ) | (38.7 | ) | (8.8 | ) | (8.9 | ) | (5.0 | ) | (118.1 | ) | ||||||||||||||||
Acquisitions/divestitures |
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Reported change |
(0.9 | ) | $ | (13.0 | ) | (3.5 | ) | $ | (25.4 | ) | 39.9 | $ | 40.2 | 0.1 | $ | 1.8 |
1) Effects from currency translations.
Full year 2014 | Airbag Products | Seatbelt Products | Active Safety | Total | ||||||||||||||||||||||||||||
% | $ | % | $ | % | $ | % | $ | |||||||||||||||||||||||||
Organic change |
5.8 | $ | 330.8 | 2.3 | $ | 64.7 | 44.6 | $ | 153.8 | 6.2 | $ | 549.3 | ||||||||||||||||||||
Currency effects1) |
(1.1 | ) | (65.5 | ) | (1.3 | ) | (37.3 | ) | (2.7 | ) | (9.4 | ) | (1.2 | ) | (112.2 | ) | ||||||||||||||||
Acquisitions/divestitures |
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Reported change |
4.7 | $ | 265.3 | 1.0 | $ | 27.4 | 41.9 | $ | 144.4 | 5.0 | $ | 437.1 |
1) Effects from currency translations.
Sales by Region
Quarter October - December | China | Japan | RoA | Americas | Europe | Total | ||||||||||||||||||||||||||||||||||||||||||
% | $ | % | $ | % | $ | % | $ | % | $ | % | $ | |||||||||||||||||||||||||||||||||||||
Organic change |
0.6 | $ | 2.6 | (5.5 | ) | $ | (10.0 | ) | (1.7 | ) | $ | (4.2 | ) | 6.5 | $ | 48.4 | 11.2 | $ | 83.1 | 5.1 | $ | 119.9 | ||||||||||||||||||||||||||
Currency effects1) |
(0.6 | ) | (2.8 | ) | (12.4 | ) | (22.9 | ) | (1.9 | ) | (4.6 | ) | (1.9 | ) | (14.2 | ) | (9.9 | ) | (73.6 | ) | (5.0 | ) | (118.1 | ) | ||||||||||||||||||||||||
Acquisitions/divestitures |
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Reported change |
0.0 | $ | (0.2 | ) | (17.9 | ) | $ | (32.9 | ) | (3.6 | ) | $ | (8.8 | ) | 4.6 | $ | 34.2 | 1.3 | $ | 9.5 | 0.1 | $ | 1.8 |
1) Effects from currency translations.
Full year 2014 | China | Japan | RoA | Americas | Europe | Total | ||||||||||||||||||||||||||||||||||||||||||
% | $ | % | $ | % | $ | % | $ | % | $ | % | $ | |||||||||||||||||||||||||||||||||||||
Organic change |
8.2 | $ | 115.6 | 7.7 | $ | 53.3 | (0.3 | ) | $ | (3.0 | ) | 6.6 | $ | 195.2 | 6.5 | $ | 188.2 | 6.2 | $ | 549.3 | ||||||||||||||||||||||||||||
Currency effects1) |
0.1 | 0.5 | (7.8 | ) | (53.9 | ) | 1.2 | 11.2 | (1.3 | ) | (39.4 | ) | (1.0 | ) | (30.6 | ) | (1.2 | ) | (112.2 | ) | ||||||||||||||||||||||||||||
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Reported change |
8.3 | $ | 116.1 | (0.1 | ) | $ | (0.6 | ) | 0.9 | $ | 8.2 | 5.3 | $ | 155.8 | 5.5 | $ | 157.6 | 5.0 | $ | 437.1 |
1) Effects from currency translations.
15
Q4 Report 2014 |
Operating Working Capital
Due to the need to optimize cash generation to create value for shareholders, management focuses on operationally derived working capital as defined in the table below. The reconciling items used to derive this measure are, by contrast, managed as part of our overall management of cash and debt, but they are not part of the responsibilities of day-to-day operations management.
December 31 | September 30 | June 30 | March 31 | December 31 | ||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | ||||||||||||||||
Total current assets |
$ | 4,136.2 | $ | 4,489.8 | $ | 4,851.5 | $ | 3,800.9 | $ | 3,700.4 | ||||||||||
Total current liabilities |
(2,138.6 | ) | (2,325.0 | ) | (2,447.7 | ) | (2,555.7 | ) | (2,428.5 | ) | ||||||||||
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Working capital |
1,997.6 | 2,164.8 | 2,403.8 | 1,245.2 | 1,271.9 | |||||||||||||||
Cash and cash equivalents |
(1,529.0 | ) | (1,846.7 | ) | (2,060.2 | ) | (1,096.8 | ) | (1,118.3 | ) | ||||||||||
Short-term debt |
79.6 | 250.4 | 246.4 | 360.6 | 339.4 | |||||||||||||||
Derivative asset and liability, current |
(0.8 | ) | (0.9 | ) | 0.1 | (0.4 | ) | 1.1 | ||||||||||||
Dividends payable |
47.9 | 49.3 | 50.1 | 49.0 | 49.1 | |||||||||||||||
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Operating working capital |
$ | 595.3 | $ | 616.9 | $ | 640.2 | $ | 557.6 | $ | 543.2 |
Net Debt (Cash)
As part of efficiently managing the Companys overall cost of funds, we routinely enter into debt-related derivatives (DRD) as part of our debt management. Creditors and credit rating agencies use net debt adjusted for DRD in their analyses of the Companys debt and therefore we provide this non-U.S. GAAP measure. DRD are fair value adjustments to the carrying value of the underlying debt. Also included in the DRD is the unamortized fair value adjustment related to a discontinued fair value hedge which will be amortized over the remaining life of the debt. By adjusting for DRD, the total financial liability of net debt (cash) is disclosed without grossing debt up with currency or interest fair values.
December 31 | September 30 | June 30 | March 31 | December 31 | ||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | ||||||||||||||||
Short-term debt |
$ | 79.6 | $ | 250.4 | $ | 246.4 | $ | 360.6 | $ | 339.4 | ||||||||||
Long-term debt |
1,521.2 | 1,520.5 | 1,528.3 | 277.7 | 279.1 | |||||||||||||||
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Total debt |
1,600.8 | 1,770.9 | 1,774.7 | 638.3 | 618.5 | |||||||||||||||
Cash and cash equivalents |
(1,529.0 | ) | (1,846.7 | ) | (2,060.2 | ) | (1,096.8 | ) | (1,118.3 | ) | ||||||||||
Debt-related derivatives |
(10.0 | ) | (10.6 | ) | (10.5 | ) | (11.7 | ) | (11.5 | ) | ||||||||||
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Net debt (cash) |
$ | 61.8 | $ | (86.4 | ) | $ | (296.0 | ) | $ | (470.2 | ) | $ | (511.3 | ) |
Leverage ratio
The non-U.S. GAAP measure net debt (cash) is also used in the non-U.S. GAAP measure Leverage ratio. Management uses this measure to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. For details on leverage ratio refer to the table below.
December 31 | December 31 | |||||||
2014 | 2013 | |||||||
Net debt (cash)1) |
$ | 61.8 | $ | (511.3 | ) | |||
Pension liabilities |
232.5 | 147.3 | ||||||
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Debt (cash) per the Policy |
$ | 294.3 | $ | (364.0 | ) | |||
Income before income taxes |
$ | 667.0 | $ | 734.0 | ||||
Plus: Interest expense, net2) |
58.6 | 28.9 | ||||||
Depreciation and amortization of intangibles3) |
305.4 | 286.0 | ||||||
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EBITDA per the Policy |
$ | 1,031.0 | $ | 1,048.9 | ||||
Leverage ratio4) |
0.3 | n/a |
1) Net debt (cash) is short- and long-term debt and debt-related derivatives less cash and cash equivalents. 2) Interest expense, net was interest expense including cost for extinguishment of debt, if any, less interest income. 3) Including impairment write-offs, if any. 4) Leverage ratio was not applicable in December 2013 due to net cash position.
16
Q4 Report 2014 |
Items Affecting Comparability
(Dollars in millions, except per share data)
The following items have affected the comparability of reported results from year to year. We believe that, to assist in understanding Autolivs operations, it is useful to consider certain U.S. GAAP measures exclusive of these items. Accordingly, the tables below reconcile from non-U.S. GAAP to the equivalent U.S. GAAP measure.
Quarter October - December 2014 | Quarter October - December 2013 | |||||||||||||||||||||||
Non-U.S. GAAP |
Adjustments1) | Reported U.S. GAAP |
Non-U.S. GAAP |
Adjustments1) | Reported U.S. GAAP |
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Operating income |
$ | 237.2 | $ | (20.5 | ) | $ | 216.7 | $ | 236.3 | $ | (33.6 | ) | $ | 202.7 | ||||||||||
Operating margin, % |
10.1 | (0.9 | ) | 9.2 | 10.0 | (1.4 | ) | 8.6 | ||||||||||||||||
Income before taxes |
$ | 223.8 | $ | (20.5 | ) | $ | 203.3 | $ | 228.2 | $ | (33.6 | ) | $ | 194.6 | ||||||||||
Net income2) |
$ | 162.8 | $ | (14.8 | ) | $ | 148.0 | $ | 163.4 | $ | (62.9 | ) | $ | 100.5 | ||||||||||
Return on capital employed, % |
26.3 | (1.7 | ) | 24.6 | 26.9 | (3.6 | ) | 23.3 | ||||||||||||||||
Return on total equity, % |
17.9 | (1.3 | ) | 16.6 | 16.1 | (6.1 | ) | 10.0 | ||||||||||||||||
Earnings per share, diluted2,3) |
$ | 1.81 | $ | (0.16 | ) | $ | 1.65 | $ | 1.70 | $ | (0.66 | ) | $ | 1.04 |
Full year 2014 | Full year 2013 | |||||||||||||||||||||||
Non-U.S. GAAP |
Adjustments1) | Reported U.S. GAAP |
Non-U.S. GAAP |
Adjustments1) | Reported U.S. GAAP |
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Operating income |
$ | 842.4 | $ | (119.8 | ) | $ | 722.6 | $ | 808.4 | $ | (47.0 | ) | $ | 761.4 | ||||||||||
Operating margin, % |
9.1 | (1.3 | ) | 7.8 | 9.2 | (0.6 | ) | 8.6 | ||||||||||||||||
Income before taxes |
$ | 786.8 | $ | (119.8 | ) | $ | 667.0 | $ | 781.0 | $ | (47.0 | ) | $ | 734.0 | ||||||||||
Net income2) |
$ | 549.1 | $ | (80.1 | ) | $ | 469.0 | $ | 562.0 | $ | (72.1 | ) | $ | 489.9 | ||||||||||
Capital employed2) |
$ | 3,584 | $ | (80 | ) | $ | 3,504 | $ | 3,561 | $ | (72 | ) | $ | 3,489 | ||||||||||
Return on capital employed, % |
23.6 | (3.1 | ) | 20.5 | 23.4 | (1.3 | ) | 22.1 | ||||||||||||||||
Return on total equity, % |
14.2 | (1.9 | ) | 12.3 | 14.3 | (1.8 | ) | 12.5 | ||||||||||||||||
Earnings per share, diluted2,3) |
$ | 5.93 | $ | (0.87 | ) | $ | 5.06 | $ | 5.82 | $ | (0.75 | ) | $ | 5.07 | ||||||||||
Total parent shareholders equity per share2) |
$ | 39.54 | $ | (0.90 | ) | $ | 38.64 | $ | 42.92 | $ | (0.75 | ) | $ | 42.17 |
1) Capacity alignment and antitrust investigations (including settlements of class actions in the second and third quarter 2014). 2) Adjustments for a non-cash, non-recurring valuation allowance for deferred tax assets in both the fourth quarter 2013 and full year 2013 of $39 million on net income and capital employed, and $0.41 on EPS and total parent shareholder equity per share. 3) Assuming dilution and net of treasury shares.
17
Q4 Report 2014 |
Multi-year Summary
(Dollars in millions, except per share data) |
20141) | 20131, 5) | 20121) | 20111) | 20101) | |||||||||||||||
Sales and Income |
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Net sales |
$ | 9,240 | $ | 8,803 | $ | 8,267 | $ | 8,232 | $ | 7,171 | ||||||||||
Operating income |
723 | 761 | 705 | 889 | 869 | |||||||||||||||
Income before income taxes |
667 | 734 | 669 | 828 | 806 | |||||||||||||||
Net income attributable to controlling interest |
468 | 486 | 483 | 623 | 591 | |||||||||||||||
Financial Position |
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Current assets excluding cash |
2,607 | 2,582 | 2,312 | 2,261 | 2,101 | |||||||||||||||
Property, plant and equipment, net |
1,390 | 1,336 | 1,233 | 1,121 | 1,026 | |||||||||||||||
Intangible assets (primarily goodwill) |
1,661 | 1,687 | 1,707 | 1,716 | 1,722 | |||||||||||||||
Non-interest bearing liabilities |
2,400 | 2,364 | 2,162 | 2,102 | 2,001 | |||||||||||||||
Capital employed |
3,504 | 3,489 | 3,415 | 3,257 | 3,066 | |||||||||||||||
Net debt (cash) |
62 | (511 | ) | (361 | ) | (92 | ) | 127 | ||||||||||||
Total equity |
3,442 | 4,000 | 3,776 | 3,349 | 2,939 | |||||||||||||||
Total assets |
7,443 | 6,983 | 6,570 | 6,117 | 5,665 | |||||||||||||||
Long-term debt |
1,521 | 279 | 563 | 364 | 638 | |||||||||||||||
Share data |
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Earnings per share (US$) basic |
5.08 | 5.09 | 5.17 | 6.99 | 6.77 | |||||||||||||||
Earnings per share (US$) assuming dilution |
5.06 | 5.07 | 5.08 | 6.65 | 6.39 | |||||||||||||||
Total parent shareholders equity per share (US$) |
38.64 | 42.17 | 39.36 | 37.33 | 32.89 | |||||||||||||||
Cash dividends paid per share (US$) |
2.12 | 2.00 | 1.89 | 1.73 | 0.65 | |||||||||||||||
Cash dividends declared per share (US$) |
2.14 | 2.02 | 1.94 | 1.78 | 1.05 | |||||||||||||||
Share repurchases |
616 | 148 | | | | |||||||||||||||
Number of shares outstanding (million)2) |
88.7 | 94.4 | 95.5 | 89.3 | 89.0 | |||||||||||||||
Ratios |
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Gross margin (%) |
19.5 | 19.4 | 19.9 | 21.0 | 22.2 | |||||||||||||||
Operating margin (%) |
7.8 | 8.6 | 8.5 | 10.8 | 12.1 | |||||||||||||||
Pretax margin (%) |
7.2 | 8.3 | 8.1 | 10.1 | 11.2 | |||||||||||||||
Return on capital employed (%) |
21 | 22 | 21 | 28 | 28 | |||||||||||||||
Return on total equity (%) |
12 | 13 | 14 | 20 | 22 | |||||||||||||||
Total equity ratio (%) |
46 | 57 | 57 | 55 | 52 | |||||||||||||||
Net debt to capitalization (%) |
2 | N/A | N/A | N/A | 4 | |||||||||||||||
Days receivables outstanding |
71 | 70 | 66 | 67 | 69 | |||||||||||||||
Days inventory outstanding |
32 | 31 | 30 | 32 | 32 | |||||||||||||||
Other data |
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Airbag sales3) |
5,951 | 5,686 | 5,392 | 5,393 | 4,723 | |||||||||||||||
Seatbelt sales4) |
2,800 | 2,773 | 2,657 | 2,679 | 2,363 | |||||||||||||||
Active Safety sales |
489 | 345 | 218 | 160 | 85 | |||||||||||||||
Net cash provided by operating activities |
713 | 838 | 689 | 758 | 924 | |||||||||||||||
Capital expenditures, net |
453 | 379 | 360 | 357 | 224 | |||||||||||||||
Net cash used in investing activities |
(453 | ) | (377 | ) | (358 | ) | (373 | ) | (297 | ) | ||||||||||
Net cash provided by (used in) financing activities |
226 | (318 | ) | (91 | ) | (223 | ) | (529 | ) | |||||||||||
Number of employees, December 31 |
50,800 | 46,900 | 41,700 | 38,500 | 34,600 |
1) Costs in 2014, 2013, 2012, 2011 and 2010 for capacity alignments and antitrust investigations reduced operating income by (millions) $120, $47, $98, $19 and $21 and net income by (millions) $80, $33, $71, $14 and $16. This corresponds to 1.3%, 0.6%, 1.2%, 0.2% and 0.3% on operating margins and 0.9%, 0.4%, 0.9%, 0.2% and 0.2% on net margins. The impact on EPS was $0.87, $0.34, $0.74, $0.15 and $0.17 while return on total equity was reduced by 1.9%, 0.8 %, 1.8%, 0.4% and 0.6% for the same five year period. 2) At year end, net of treasury shares. 3) Includes passive electronics, steering wheels, inflators and initiators. 4) Includes seat components until a June 2012 divestiture. 5) Includes adjustments for a non-cash, non-recurring valuation allowance for deferred tax assets of $39 million on net income and capital employed, and $0.41 on EPS and total parent shareholder equity per share.
18