Auto production has been especially weak in June, Autoliv says

By Tomi Kilgore

Autoliv's stock tumbles as weak light vehicle production at key customers led to a big profit miss

Shares of Autoliv Inc. sank toward an eight-month low Friday, after the automotive safety parts maker reported a surprise decline in second-quarter profit amid weaker auto industry sales.

The Sweden-based company also lowered its full-year outlook for sales growth, citing further declines in global auto production.

"[L]ight vehicle production with certain key customers follower weaker sales and inventory adjustments were lower than expected in the quarter, especially in June," said Chief Executive Mikael Bratt.

The stock (ALV) tumbled 10.4% in midday trading, putting it on track for the lowest close since Nov. 13, 2023. It was also in danger of the biggest one-day selloff since it shed 12.9% on March 18, 2020.

The selloff appeared to be weighing on shares of other auto parts makers, as Advance Auto Parts Inc.'s stock (AAP) fell 2% and Genuine Parts Co. shares (GPC) lost 1.8%.

Autoliv said before Friday's open that net income jumped to $139 million, or $1.71 a share, from $53 million, or 61 cents a share, in the same period a year ago. Excluding nonrecurring items, earnings per share fell to $1.87 from $1.93, while the FactSet consensus was for a rise to $2.20.

Net sales declined 1.1% to $2.61 billion, below the FactSet consensus of $2.73 billion.

Sales of airbags, steering wheels and other products slipped 0.6% to $1.75 billion, while sales of seatbelt products and other dropped 2.2% to $858 million.

The company said global light vehicle production during the quarter declined 0.7%, as weakness in Europe, the Americas and Asia, excluding China, offset growth in China. That compared with a LVP increase of 2.7% in the first quarter.

For the full year, Autoliv now expects global LVP to worsen to decline of around 3%, compared with an expectation provided in April of a 1% decline.

As a result, the company reduced its full-year guidance for organic sales growth to around 2% from around 5%. The company also cut its outlook for adjusted operating margin to 9.5% to 10% from around 10.5% and for operating cash flow to $1.1 billion from $1.2 billion.

The stock has dropped 11.7% year to date, while the S&P 500 has rallied 15.7%.

-Tomi Kilgore

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07-19-24 1206ET

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