Autoliv Beats Q4 Earnings Expectations

Autoliv (NYSE: ALV) reported mixed Q4 results, significantly topping earnings estimates but slightly missing revenues expectations.

However, shares of the automotive safety systems maker gained almost 1% to close at $96.79 on January 28.

Q4 Performance

Adjusted earnings of $1.30 per share declined 40.5% year-over-year, but beat analysts’ expectations of $1.17 per share. The company reported earnings of $2.19 per share for the prior-year period.

However, net sales decreased 15.8% year-over-year to $2.12 billion and fell modestly short of consensus estimates of $2.16 billion.

The decline in revenues reflected a 16% dip in organic sales due to a negative impact from an unfavorable geographical mix, after light vehicle production (LVP) in high safety content per vehicle markets significantly declined compared to LVP in low content markets.

To top it off, adjusted operating margin declined by 400 bps to 8.3% due to lower sales and higher raw material costs.

FY2022 Outlook

For the full year 2022, the company projects to grow organically by around 20%, and report an adjusted operating margin of around 9.5%. Aided by a positive regional mix and several product launches, the FY2022 outlook is based on an assumption of around 9% LVP growth.

CEO Comments

Cautioning on the outlook for FY2022, Autoliv CEO, Mikael Bratt, commented, “We expect rising raw material costs to amount to around 3pp in operating margin headwind for full year 2022, with around 5pp y-o-y impact in the first half year and around 1-2 pp in the second half. We expect customer recoveries to offset some of the expected raw material cost increases, mainly in the second half of the year.”

He concluded, “Combined, this means that the first half year will be quite challenging. In 2021, we reduced headcount by 11%, and we will continue a strict cost control in 2022 including executing on capacity alignments, footprint optimization, and strategic initiatives. A record number of new product launches in 2021 supports a strong outperformance in 2022.”

Wall Street’s Take

Following Q4 results, one of Top Analysts at Mizuho Securities analyst Vijay Rakesh maintained a Buy rating on Autoliv with a price target of $110 (13.65% upside potential).

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 5 Buys and 9 Holds. The average Autoliv stock price projection of $108.32 implies 11.9% upside potential to current levels.

Investors Weigh In

According to TipRanks’ Stock Investors tool, investors currently have a Very Positive stance on Autoliv, with 19.8% of investors increasing their exposure to ALV stock over the past 30 days.

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