For the full year 2018, Autoliv’ sales grew organically* by 4.8% compared to full year 2017, almost 6pp more than LVP growth according to IHS. The largest contributors to the organic growth were North America, China and India, partly offset by Europe and South Korea.
The organic sales increase* from Autoliv’s companies in China of 4.9% was driven by both domestic and global OEMs. Sales growth to domestic OEMs was mainly with Geely, including Lynk & Co, and Great Wall while growth with the global OEMs was mainly with VW, Honda and Nissan.
Organic sales growth* of 3.6% from Autoliv’s companies in Japan was mainly derived from sales to Subaru and Mitsubishi as well as inflator replacement sales.
Organic sales growth* from Autoliv’s companies in the Rest of Asia of 5.6% was driven by strong sales
development in India, which grew organically by 26%, mainly from sales to Suzuki, Honda, Tata and Hyundai/Kia. Sales in South Korea decreased, driven mainly by lower sales to Hyundai/Kia.
The organic growth* from Autoliv’s companies in Americas was 13.3%. North America grew organically by 13.1% mainly due to new model launches with FCA, Honda, Nissan, Tesla and VW, partly offset by lower sales to Daimler, GM and Ford. Overall growth was driven by all main product groups. Sales in South America grew organically by 18.2%, mainly due to increased sales to FCA and VW.
The 2.8% organic sales decline* from Autoliv’s companies in Europe was mainly driven by Renault, FCA, BMW, JLR, PSA and Ford, partly offset by strong performance with premium brands such as Daimler and Volvo.
The gross profit for the full year 2018 increased by $32 million, compared to the prior year, as a result of higher sales partly offset by a lower gross margin. The gross margin decreased by 0.9pp compared to full year 2017, mainly due to adverse impact from launch related costs, raw material costs and currency changes which more than offset the operating leverage on the increased sales.
Selling, General and Administrative (S,G&A) expenses decreased by $16 million or 0.5pp of sales driven by transition service agreement income, lower bonus accruals and lower legal costs. Research, Development & Engineering (R,D&E) expenses, net as percent of sales was 4.8% compared to 4.6% in the same period the prior year mainly as a result of the significant increase in product launches during the first half of 2018 and continued strong order intake.
The change in Other income (expense), net, compared to full year 2017 was primarily due to increased costs for antitrust related matters. During the fourth quarter 2018, the Company accrued $210 million in connection with the remaining portion of the European Commission’s investigation of anti-competitive behavior among suppliers of occupant safety systems in the European Union that was initiated in 2011.
Operating income decreased by $174 million to $686 million. The reported operating margin was 7.9% of sales, compared to 10.6% of sales in the prior year. The decrease of 2.7pp of sales was mainly due to higher costs for antitrust related matters compared to the same period 2017, reported as Other income (expense), net, lower gross margin and higher R,D&E, net costs.
The adjusted operating margin*, excluding costs for capacity alignments, antitrust related matters and the separation of our business segments, was 10.5% of sales compared to 11.1% of sales for the full year 2017. The decrease was mainly due to the lower gross margin and higher R,D&E, net costs.
Income before taxes decreased by $180 million compared to full year 2017 due to the increase in costs for antitrust related matters. Income attributable to controlling interest from Continuing Operations decreased by $210 million compared to the same period in 2017, due to the lower income before taxes and due to the increase in the effective tax rate to 38.4% from 25.8% in the prior year. Discrete tax items, net and the impact of the antitrust accrual in 2018 had an unfavorable impact of 9.3pp. The tax rate excluding discrete items and the impact of the antitrust accrual in 2018 was 29.1%. In 2017, the net impact of discrete tax items caused a 1.0pp increase to the effective tax rate. In 2017, tax rate excluding discrete items was 24.8%.
Cash flow items prior to the third quarter 2018 are presented on a consolidated basis, which includes both Continuing and Discontinued Operations.
Cash flow from operations amounted to $591 million compared to $936 million for full year 2017. The decrease was primarily related to costs for separation of our business segments and the increase in operating assets and liabilities due to increased sales.
Cash flow before financing* was negative $37 million, compared to $239 million for full year 2017, mainly due to the lower operating cash flow. Capital expenditures, net, of $555 million were $158 million more than depreciation and amortization expense for full year 2018 and $15 million less than capital expenditures, net, for full year 2017. Of the total $555 million in capital expenditures, net, in 2018, $486 million was related to Continuing Operations. Of the total $570 million in capital
expenditures, net, in 2017, $465 million was related to Continuing Operations.
The Company’s net debt position* increased by $1,250 million to $1,619 million compared to December 31, 2017, while gross interest-bearing debt increased by $899 million to $2,230 million compared to December 31, 2017, both of them driven by the capitalization of Veoneer prior to the spin-off.
For full year 2018, total equity decreased by $2,273 million to $1,897 million, mainly due to $2,123 million related to the spin-off, $217 million in dividends and $150 million from currency translation effects. The decrease was partly offset by $184 million from net income. Total parent shareholders’ equity was $1,884 million corresponding to $21.63 per share.
Dividends
On November 8, 2018, the Company declared a quarterly dividend to shareholders of 62 cents per share for the first quarter 2019, with the following payment schedule:
Ex-date (common stock) | February 21, 2019 |
Ex-date (SDRs) | February 21, 2019 |
Record Date | February 22, 2019 |
Payment Date | March 7, 2019 |
Next Report
Autoliv intends to publish the quarterly earnings report for the first quarter of 2019 on Friday, April 26, 2019.
Inquiries: Investors and Analysts
Anders Trapp
Vice President Investor Relations
Tel +46 (0)8 58 72 06 71
Henrik Kaar
Director Investor Relations
Tel +46 (0)8 58 72 06 14
Inquiries: Media
Stina Thorman
Vice President Communications
Tel +46 (0)8 58 72 06 50
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 January 29, 2019.
Footnotes
*Non-U.S. GAAP measure, see enclosed reconciliation tables.
Definitions and SEC Filings
Please refer to www.autoliv.com or to our Annual Report for definitions of terms used in this report. Autoliv’s annual report to stockholders, annual report on Form 10‑K, quarterly reports on Form 10‑Q, proxy statements, management certifications, press releases, current reports on Form 8-K and other documents filed with the SEC can be obtained free of charge from Autoliv at the Company’s address. These documents are also available at the SEC’s website www.sec.gov and at Autoliv’s corporate website www.autoliv.com. The restated historical financial statements reflecting the spin-off of Veoneer are unaudited, but have been derived from our historical audited annual reports.
“Safe Harbor Statement”
This report contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc. or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “estimates”, “expects”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “may”, “likely”, “might”, “would”, “should”, “could”, or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words. Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation, changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier, changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment, restructuring and cost reduction initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer
bankruptcies, consolidations, or restructuring; divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; (including the resolution of the Toyota recall); higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q and any amendments thereto. For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.
13
Q4 Report – 2018
Key Ratios
| Fourth Quarter | Full Year | Full year |
| 2018 | 2017 | 2018 | 2017 |
Earnings per share Continuing Operations, basic1) | $(1.07) | $2.26 | $4.32 | $6.70 |
Earnings per share Continuing Operations, diluted1, 2) | $(1.06) | $2.26 | $4.31 | $6.68 |
Total parent shareholders’ equity per share | $21.63 | $46.38 | $21.63 | $46.38 |
Cash dividend paid per share | $0.62 | $0.60 | $2.46 | $2.38 |
Operating working capital, $ in millions3) | 478 | 581 | 478 | 581 |
Capital employed, $ in millions4) | 3,516 | 4,538 | 3,516 | 4,538 |
Net debt, $ in millions3) | 1,619 | 368 | 1,619 | 368 |
Net debt to capitalization, %5) | 46 | 8 | 46 | 8 |
Gross margin, %6) | 19.4 | 20.4 | 19.7 | 20.6 |
Operating margin, %7) | 1.0 | 11.6 | 7.9 | 10.6 |
Return on total equity, %8) | (18.8) | n/a | 13.0 | n/a |
Return on capital employed, %9) | 2.4 | n/a | 16.8 | n/a |
Average no. of shares in millions2) | 87.4 | 87.2 | 87.3 | 87.7 |
No. of shares at period-end in millions10) | 87.1 | 87.0 | 87.1 | 87.0 |
No. of employees at period-end11) | 57,729 | 56,674 | 57,729 | 56,674 |
Headcount at period-end12) | 66,764 | 64,550 | 66,764 | 64,550 |
Days receivables outstanding13) | 70 | 72 | 71 | 76 |
Days inventory outstanding14) | 35 | 33 | 35 | 35 |
| | | | | |
1) Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from the EPS calculation. 2) Assuming dilution and net of treasury shares. 3) Non-U.S. GAAP measure; for reconciliation see enclosed tables below. 4) Total equity and net debt. 5) Net debt in relation to capital employed. 6) Gross profit relative to sales. 7) Operating income relative to sales. 8) Income from Continuing Operations relative to average total equity. 9) Operating income and income from Continuing Operations equity method investments, relative to average capital employed. 10) Excluding dilution and net of treasury shares. 11) Employees with continuous employment status, recalculated to full time equivalent heads. 12) Includes temporary hourly personnel. 13) Outstanding receivables relative to average daily sales. 14) Outstanding inventory relative to average daily sales. |
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14
Q4 Report – 2018
Consolidated Statements of Net Income and Loss
(Dollars in millions, except per share data) | | | | | | | | |
| | Fourth Quarter | | Full Year | | Full Year |
(Unaudited) | | 2018 | | 2017 | | 2018 | | 2017 |
| | | | | | | | |
Airbag and Other products1) | | $1,463.7 | | $1,395.6 | | $5,698.6 | | $5,343.2 |
Seatbelt products1) | | 729.1 | | 763.1 | | 2,979.6 | | 2,793.6 |
Total net sales | | $2,192.8 | | $2,158.7 | | $8,678.2 | | $8,136.8 |
| | | | | | | | |
Cost of sales | | (1,767.6) | | (1,717.9) | | (6,966.9) | | (6,457.1) |
Gross profit | | $425.2 | | $440.8 | | $1,711.3 | | $1,679.7 |
| | | | | | | | |
Selling, general & administrative expenses | | (99.4) | | (109.6) | | (390.3) | | (406.6) |
Research, development & engineering expenses, net | | (84.7) | | (75.6) | | (412.6) | | (370.6) |
Amortization of intangibles | | (2.8) | | (2.9) | | (11.3) | | (11.2) |
Other income (expense), net | | (217.3) | | (2.4) | | (211.1) | | (31.7) |
Operating income | | $21.0 | | $250.3 | | $686.0 | | $859.6 |
| | | | | | | | |
Income from equity method investments | | 0.8 | | 0.5 | | 3.6 | | 1.7 |
Interest income | | 2.8 | | 1.8 | | 6.9 | | 7.4 |
Interest expense | | (19.9) | | (14.5) | | (66.1) | | (61.1) |
Other non-operating items, net | | (2.6) | | 2.7 | | (18.0) | | (15.2) |
Income from Continuing Operations before income taxes | | $2.1 | | $240.8 | | $612.4 | | $792.4 |
| | | | | | | | |
Income taxes | | (94.9) | | (43.4) | | (234.9) | | (204.4) |
Income (loss) from Continuing Operations | | ($92.8) | | $197.4 | | $377.5 | | $588.0 |
| | | | | | | | |
Income (loss) from Discontinued Operations, net of income taxes | | 2.0 | | (253.0) | | (193.8) | | (285.0) |
Net income (loss) | | ($90.8) | | ($55.6) | | $183.7 | | $303.0 |
| | | | | | | | |
Less; Net income from Continuing Operations attributable to non-controlling interest | | 0.2 | | 0.7 | | 1.6 | | 2.0 |
Less; Net loss from Discontinued Operations attributable to non-controlling interest | | – | | (118.9) | | (8.3) | | (126.1) |
Net income (loss) attributable to controlling interest | | ($91.0) | | $62.6 | | $190.4 | | $427.1 |
| | | | | | | | |
Amounts attributable to controlling interest: | | | | | | | | |
Net Income (loss) from Continuing Operations | | ($93.0) | | $196.7 | | $375.9 | | $586.0 |
Net Income (loss) from Discontinued Operations, net of income taxes | | 2.0 | | (134.1) | | (185.5) | | (158.9) |
Net income (loss) attributable to controlling interest | | ($91.0) | | $62.6 | | $190.4 | | $427.1 |
| | | | | | | | |
Earnings (loss) per share Continuing Operations2, 3) | | ($1.06) | | $2.26 | | $4.31 | | $6.68 |
Earnings (loss) per share Discontinued Operations2, 3) | | $0.02 | | ($1.54) | | ($2.13) | | ($1.81) |
Earnings (loss) per share2, 3) | | ($1.04) | | $0.72 | | $2.18 | | $4.87 |
1) Including Corporate and other sales. 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 EPS calculation.
15
Q4 Report – 2018
Consolidated Balance Sheets
| | December 31 | | September 30 | | June 30 | | March 31 | | December 31 |
(Dollars in millions, unaudited) | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 |
Assets | | | | | | | | | | |
Cash & cash equivalents | | $615.8 | | $533.7 | | $507.5 | | $793.9 | | $959.5 |
Receivables, net | | 1,667.1 | | 1,784.5 | | 1,902.0 | | 1,895.1 | | 1,696.7 |
Inventories, net | | 757.9 | | 758.7 | | 709.7 | | 704.3 | | 704.3 |
Other current assets | | 244.6 | | 271.2 | | 254.6 | | 238.6 | | 197.0 |
Current assets, discontinued operations | | – | | – | | – | | 710.0 | | 647.2 |
Total current assets | | $3,285.4 | | $3,348.1 | | $3,373.8 | | $4,341.9 | | $4,204.7 |
| | | | | | | | | | |
Property, plant & equipment, net | | 1,690.1 | | 1,654.8 | | 1,633.4 | | 1,676.4 | | 1,608.9 |
Investments and other non-current assets | | 323.5 | | 331.3 | | 352.4 | | 352.0 | | 341.0 |
Goodwill assets | | 1,389.9 | | 1,391.0 | | 1,391.9 | | 1,400.0 | | 1,397.0 |
Intangible assets, net | | 32.7 | | 35.3 | | 38.3 | | 40.7 | | 42.6 |
Non-current assets, discontinued operations | | – | | – | | – | | 1,067.1 | | 955.7 |
Total assets | | $6,721.6 | | $6,760.5 | | $6,789.8 | | $8,878.1 | | $8,549.9 |
| | | | | | | | | | |
Liabilities and equity | | | | | | | | | | |
Short-term debt | | $620.7 | | $573.0 | | $605.6 | | $60.2 | | $19.7 |
Accounts payable | | 1,029.0 | | 992.4 | | 1,036.9 | | 970.6 | | 957.3 |
Other current liabilities | | 1,215.8 | | 1,118.4 | | 1,110.8 | | 1,152.2 | | 1,109.4 |
Current liabilities, discontinued operations | | – | | – | | – | | 626.5 | | 568.2 |
Total current liabilities | | $2,865.5 | | $2,683.8 | | $2,753.3 | | $2,809.5 | | $2,654.6 |
| | | | | | | | | | |
Long-term debt | | 1,609.0 | | 1,677.5 | | 1,678.0 | | 1,310.2 | | 1,310.7 |
Pension liability | | 198.2 | | 204.3 | | 203.8 | | 211.5 | | 206.8 |
Other non-current liabilities | | 152.1 | | 141.5 | | 147.1 | | 149.7 | | 144.3 |
Non-current liabilities, discontinued operations | | – | | – | | – | | 55.2 | | 64.1 |
Total non-current liabilities | | $1,959.3 | | $2,023.3 | | $2,028.9 | | $1,726.6 | | $1,725.9 |
| | | | | | | | | | |
Total parent shareholders’ equity | | 1,883.7 | | 2,040.4 | | 1,994.5 | | 4,206.2 | | 4,035.1 |
Non-controlling interest | | 13.1 | | 13.0 | | 13.1 | | 135.8 | | 134.3 |
Total equity | | $1,896.8 | | $2,053.4 | | $2,007.6 | | $4,342.0 | | $4,169.4 |
| | | | | | | | | | |
Total liabilities and equity | | $6,721.6 | | $6,760.5 | | $6,789.8 | | $8,878.1 | | $8,549.9 |
16
Q4 Report – 2018
Consolidated Statements of Cash Flow
| | Fourth Quarter | | Full Year | | Full Year |
(Dollars in millions, unaudited) | | 2018 | | 2017 | | 2018 | | 2017 |
Net income (loss) Continuing Operations | | $(92.8) | | $197.4 | | $377.5 | | $588.0 |
Net income (loss) Discontinued Operations | | 2.0 | | (253.0) | | (193.8) | | (285.0) |
Depreciation and amortization | | 88.7 | | 107.2 | | 397.1 | | 425.8 |
Legal provision | | 210.0 | | – | | 210.0 | | – |
Goodwill impairment charges | | – | | 234.2 | | – | | 234.2 |
Other, net | | 9.4 | | (4.1) | | 29.1 | | (26.8) |
Changes in operating assets and liabilities | | 72.1 | | 107.7 | | (229.3) | | (0.3) |
Net cash provided by operating activities | | $289.4 | | $389.4 | | $590.6 | | $935.9 |
| | | | | | | | |
Capital expenditures, net | | (133.4) | | (167.8) | | (554.8) | | (569.6) |
Acquisitions of businesses and other, net | | – | | (14.6) | | (72.9) | | (127.7) |
Net cash used in investing activities | | $(133.4) | | $(182.4) | | $(627.7) | | $(697.3) |
| | | | | | | | |
Net cash before financing1) | | $156.0 | | $207.0 | | $(37.1) | | $238.6 |
| | | | | | | | |
Net increase (decrease) in short-term debt | | (19.5) | | (162.5) | | 355.4 | | (208.6) |
Issuance of long-term debt | | – | | – | | 582.2 | | – |
Debt issuance costs | | – | | – | | (2.6) | | – |
Dividends paid | | (53.6) | | (52.3) | | (214.3) | | (208.7) |
Shares repurchased | | – | | – | | – | | (157.0) |
Common stock options exercised | | 0.0 | | 2.7 | | 8.2 | | 7.9 |
Dividend paid to non-controlling interests | | (0.1) | | 0.2 | | (2.1) | | 0.2 |
Capital contribution to Veoneer | | – | | – | | (971.8) | | – |
Effect of exchange rate changes on cash | | (0.7) | | 6.1 | | (61.6) | | 60.4 |
Increase (decrease) in cash and cash equivalents | | $82.1 | | $1.2 | | $(343.7) | | $(267.2) |
Cash and cash equivalents at period-start | | 533.7 | | 958.3 | | 959.5 | | 1,226.7 |
Cash and cash equivalents at period-end | | $615.8 | | $959.5 | | $615.8 | | $959.5 |
1) Non-U.S. GAAP measure comprised of "Net cash provided by operating activities" and "Net cash used in investing activities". |
17
Q4 Report – 2018
RECONCILIATION OF U.S. GAAP TO NON-U.S. GAAP MEASURES
In this report we sometimes refer to non-U.S. GAAP measures that we and securities analysts use in measuring Autoliv's performance. We believe that these measures assist investors and management in analyzing trends in the Company's 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
Since the Company generates approximately 75% of sales in currencies other than in the reporting currency (i.e. U.S. dollars) and currency rates have been rather volatile, we analyze the Company's 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 on pages 3, 7 and 8 present changes in organic sales growth as reconciled to the change in the total U.S. GAAP net sales.
18
Q4 Report – 2018
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. The historical periods in the table have been restated to only reflect Continuing Operations.
| | December 31 | | September 30 | | June 30 | | March 31 | | December 31 |
(Dollars in millions) | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 |
Total current assets Continuing Operations | | $3,285.4 | | $3,348.1 | | $3,373.8 | | $3,631.9 | | $3,557.5 |
Total current liabilities Continuing Operations | | (2,865.5) | | (2,683.8) | | (2,753.3) | | (2,183.0) | | (2,086.4) |
Working capital | | $419.9 | | $664.3 | | $620.5 | | $1,448.9 | | $1,471.1 |
Cash and cash equivalents | | (615.8) | | (533.7) | | (507.5) | | (793.9) | | (959.5) |
Short-term debt | | 620.7 | | 573.0 | | 605.6 | | 60.2 | | 19.7 |
Derivative liability and (asset), current | | (0.8) | | 1.8 | | 2.9 | | (1.5) | | (2.1) |
Dividends payable | | 54.0 | | 54.0 | | 54.0 | | 53.9 | | 52.2 |
Operating working capital | | $478.0 | | $759.4 | | $775.5 | | $767.6 | | $581.4 |
Net Debt
As part of efficiently managing the Company’s overall cost of funds, we routinely enter into debt-related derivatives (DRD) as a part of our debt management. Creditors and credit rating agencies use net debt adjusted for DRD in their analyses of the Company’s 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 is disclosed without grossing debt up with currency or interest fair values.
| | December 31 | | September 30 | | June 30 | | March 31 | | December 31 |
(Dollars in millions) | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 |
Short-term debt | | $620.7 | | $573.0 | | $605.6 | | $60.2 | | $19.7 |
Long-term debt | | 1,609.0 | | 1,677.5 | | 1,678.0 | | 1,310.2 | | 1,310.7 |
Total debt | | $2,229.7 | | $2,250.5 | | $2,283.6 | | $1,370.4 | | $1,330.4 |
Cash & cash equivalents | | (615.8) | | (533.7) | | (507.5) | | (793.9) | | (959.5) |
Debt-related derivatives | | 4.9 | | 7.6 | | 8.6 | | (1.6) | | (2.5) |
Net debt | | $1,618.8 | | $1,724.4 | | $1,784.7 | | $574.9 | | $368.4 |
Leverage ratio
The non-U.S. GAAP measure net debt 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.
| | December 31 | | September 30 | | December 31 |
(Dollars in millions) | | 2018 | | 2018 | | 2017 |
Net debt1) | | $1,618.8 | | $1,724.4 | | $368.4 |
Pension liabilities | | 198.2 | | 204.3 | | 206.8 |
Debt per the Policy | | $1,817.0 | | $1,928.7 | | $575.2 |
| | | | | | |
Net income2) | | 183.7 | | 218.9 | | 303.0 |
Less; Net loss, discontinued operations 2) | | 193.8 | | 448.8 | | 285.0 |
Net income, continuing operations 2) | | 377.5 | | 667.7 | | 588.0 |
Income taxes2) | | 234.9 | | 183.4 | | 204.4 |
Interest expense, net2, 3) | | 59.2 | | 54.8 | | 53.7 |
Depreciation and amortization of intangibles2) | | 342.0 | | 332.6 | | 307.0 |
Antitrust related matters2 ) | | 212.0 | | 2.5 | | 18.0 |
EBITDA per the Policy | | $1,225.6 | | $1,241.0 | | $1,171.1 |
| | | | | | |
Leverage ratio | | 1.5 | | 1.6 | | 0.5 |
1) Net debt is short- and long-term debt less cash and cash equivalents and debt-related derivatives. 2) Latest 12 months. 3) Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income. |
19
Q4 Report – 2018
Items Affecting Comparability
We believe that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items. Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.
| | | | | | |
| Fourth Quarter 2018 | Fourth Quarter 2017 |
(Dollars in millions, except per share data) | Reported
U.S. GAAP |
Adjustments1)
| Non-U.S.
GAAP | Reported
U.S. GAAP |
Adjustments1)
| Non-U.S.
GAAP |
Operating income | $21.0 | $218.9 | $239.9 | $250.3 | $3.4 | $253.7 |
Operating margin, % | 1.0 | 9.9 | 10.9 | 11.6 | 0.2 | 11.8 |
Income before taxes from Continuing Operations | $2.1 | $218.9 | $221.0 | $240.8 | $3.4 | $244.2 |
Net income attributable to controlling interest from Continuing Operations | $(93.0) | $217.5 | $124.5 | $196.7 | $3.2 | $199.9 |
Return on capital employed, %2) | 2.4 | 23.2 | 25.6 | n/a | n/a | n/a |
Return on total equity, %3) | (18.8) | 42.7 | 23.9 | n/a | n/a | n/a |
Earnings per share Continuing Operations, diluted4, 5) | $(1.06) | $2.48 | $1.42 | $2.26 | $0.03 | $2.29 |
1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Operating income and income from equity method investments Continuing Operations, relative to average capital employed. 3) Income from Continuing Operations relative to average total equity. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from the EPS calculation. |
| | | | | | |
| Full Year 2018 | Full Year 2017 |
| Reported
U.S. GAAP |
Adjustments1)
| Non-U.S.
GAAP | Reported
U.S. GAAP |
Adjustments1)
| Non-U.S.
GAAP |
Operating income | $686.0 | $222.2 | $908.2 | $859.6 | $39.7 | $899.3 |
Operating margin, % | 7.9 | 2.6 | 10.5 | 10.6 | 0.5 | 11.1 |
Income before taxes from Continuing Operations | $612.4 | $222.2 | $834.6 | $792.4 | $39.7 | $832.1 |
Net income attributable to controlling interest from Continuing Operations | $375.9 | $220.0 | $595.9 | $586.0 | $38.7 | $624.7 |
Capital employed | $3,516 | $220 | $3,736 | $4,538 | $39 | $4,577 |
Return on capital employed, %2) | 16.8 | 5.2 | 22.0 | n/a | n/a | n/a |
Return on total equity, %3) | 13.0 | 7.3 | 20.3 | n/a | n/a | n/a |
Earnings per share Continuing Operations, diluted4, 5) | $4.31 | $2.52 | $6.83 | $6.68 | $0.44 | $7.12 |
Total parent shareholders' equity per share | $21.63 | $2.52 | $24.15 | $46.38 | $0.44 | $46.82 |
1) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 2) Operating income and income from equity method investments Continuing Operations, relative to average capital employed. 3) Income from Continuing Operations relative to average total equity. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two class method) excluded from the EPS calculation. |
20
Q4 Report – 2018
Items included in Non-GAAP adjustments | | Fourth quarter 2018 | | Fourth quarter 2017 |
| | Adjustment | | Adjustment | | Adjustment | | Adjustment |
| | Millions | | Per share | | Millions | | Per share |
Capacity alignment | | $3.5 | | $0.04 | | $2.1 | | $0.02 |
Antitrust related matters | | 211.0 | | 2.42 | | 1.3 | | 0.01 |
Separation costs | | 4.4 | | 0.05 | | - | | - |
Total adjustments to operating income | | $218.9 | | $2.51 | | $3.4 | | $0.03 |
Tax on non-U.S. GAAP adjustments1) | | (1.4) | | (0.03) | | (0.2) | | 0.00 |
Total adjustments to net income | | $217.5 | | $2.48 | | $3.2 | | $0.03 |
| | | | | | | | |
Weighted average number of shares outstanding - diluted | | | | 87.4 | | | | 87.2 |
| | | | | | | | |
Return on capital employed2, 3) | | $875.7 | | | | n/a | | |
Adjustment Return on Capital employed, % | | 23.2% | | | | n/a | | |
| | | | | | | | |
Return on total equity4, 5) | | $870.0 | | | | n/a | | |
Adjustment Return on Total equity, % | | 42.7% | | | | n/a | | |
1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) After adjustment for annualized Q4 non-U.S. GAAP EBIT adjustment. 3) Operating income and income from equity method investments Continuing Operations, relative to average capital employed. 4) Income from Continuing Operations relative to average total equity. 5) After adjustment for annualized Q4 non-U.S. GAAP Net income adjustment. |
Items included in Non-GAAP adjustments | | Full Year 2018 | | Full Year 2017 |
| | Adjustment | | Adjustment | | Adjustment | | Adjustment |
| | Millions | | Per share | | Millions | | Per share |
Capacity alignment | | $4.5 | | $0.05 | | $21.5 | | $0.24 |
Antitrust related matters | | 212.3 | | 2.43 | | 18.2 | | 0.21 |
Separation costs | | 5.4 | | 0.06 | | - | | - |
Total adjustments to operating income | | $222.2 | | $2.54 | | $39.7 | | $0.45 |
Tax on non-U.S. GAAP adjustments1) | | (2.2) | | (0.02) | | (1.0) | | (0.01) |
Total adjustments to Income from Continuing operations | | $220.0 | | $2.52 | | $38.7 | | $0.44 |
| | | | | | | | |
Weighted average number of shares outstanding - diluted | | | | 87.3 | | | | 87.7 |
| | | | | | | | |
Return on capital employed2, 3) | | $222.2 | | | | n/a | | |
Adjustment Return on Capital employed, % | | 5.2% | | | | n/a | | |
| | | | | | | | |
Return on total equity4, 5) | | $220.0 | | | | n/a | | |
Adjustment Return on Total equity, % | | 7.3% | | | | n/a | | |
1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) After adjustment for annualized non-U.S. GAAP EBIT adjustment. 3) Operating income and income from equity method investments Continuing Operations, relative to average capital employed. 4) Income from Continuing Operations relative to average total equity. 5) After adjustment for annualized non-U.S. GAAP Net income adjustment. |
21
Q4 Report – 2018
Multi-year Summary Continuing Operations
(Dollars in millions, except per share data) | 2018 | 2017 | 2016 | 2015 |
Sales and Income | | | | |
Net sales | $8,678 | $8,137 | $7,922 | $7,636 |
Operating income | 686 | 860 | 831 | 708 |
Income before income taxes | 612 | 792 | 784 | 655 |
Net income attributable to controlling interest | 376 | 586 | 558 | 443 |
| | | | |
Financial Position | | | | |
Current assets excluding cash | 2,670 | 2,598 | 2,269 | 2,259 |
Property, plant and equipment, net | 1,690 | 1,609 | 1,329 | 1,265 |
Intangible assets (primarily goodwill) | 1,423 | 1,440 | 1,430 | 1,445 |
Non-interest bearing liabilities | 2,595 | 2,418 | 2,154 | 2,049 |
Capital employed | 3,516 | 4,538 | 4,225 | 3,670 |
Net debt (cash) | 1,619 | 368 | 299 | 202 |
Total equity | 1,897 | 4,169 | 3,926 | 3,468 |
Total assets | 6,722 | 6,947 | 6,565 | 6,518 |
Long-term debt | 1,609 | 1,311 | 1,313 | 1,499 |
| | | | |
Share data | | | | |
Earnings per share (US$) – basic | 4.32 | 6.70 | 6.33 | 5.03 |
Earnings per share (US$) – assuming dilution | 4.31 | 6.68 | 6.32 | 5.02 |
Total parent shareholders’ equity per share (US$) | 21.63 | 46.38 | 41.69 | 39.22 |
Cash dividends paid per share (US$) | 2.46 | 2.38 | 2.30 | 2.22 |
Cash dividends declared per share (US$) | 2.48 | 2.40 | 2.32 | 2.24 |
Share repurchases | - | 157 | - | 104 |
Number of shares outstanding (million)1) | 87.1 | 87.0 | 88.2 | 88.1 |
| | | | |
Ratios | | | | |
Gross margin (%) | 19.7 | 20.6 | 20.6 | 20.5 |
Operating margin (%) | 7.9 | 10.6 | 10.5 | 9.3 |
Pretax margin (%) | 7.1 | 9.7 | 9.9 | 8.6 |
Return on capital employed (%) | 17 | n/a | n/a | n/a |
Return on total equity (%) | 13 | n/a | n/a | n/a |
Total equity ratio (%) | 28 | 49 | 48 | 46 |
Net debt to capitalization (%) | 46 | 8 | 7 | 6 |
Days receivables outstanding | 71 | 76 | 70 | 71 |
Days inventory outstanding | 35 | 35 | 32 | 31 |
| | | | |
Other data | | | | |
Airbag sales2) | 5,699 | 5,342 | 5,256 | 5,036 |
Seatbelt sales | 2,980 | 2,794 | 2,665 | 2,599 |
Net cash provided by operating activities3) | 591 | 936 | 868 | 751 |
Capital expenditures, net3) | 555 | 570 | 499 | 450 |
Net cash used in investing activities3) | (628) | (697) | (726) | (591) |
Net cash provided by (used in) financing activities3) | (245) | (566) | (200) | (319) |
Number of employees, December 31 | 57,700 | 56,700 | 55,800 | 51,300 |
1) At year end, excluding dilution and net of treasury shares. 2) Including steering wheels, inflators and initiators. 3) Including Discontinued Operations. |
22
Geely SX11
Driver/Passenger Airbags
Seatbelts
Side Airbags
Steering Wheel
Head/Inflatable Curtain Airbags
Knee Airbags