autoliv profile 2005 3ed corp - just-auto · autoliv inc is a holding corporation incorporated in...

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Autoliv Inc. 2005 company profile edition 3

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Autoliv Inc. 2005 company profile edition 3 November 2005 Published by Aroq Limited Seneca House

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Table of contents

Multi-user licence edition............................................................................................ ii Copyright statement ..................................................................................................ii

Table of contents ........................................................................................................ iii List of tables................................................................................................................ iv

List of figures ............................................................................................................... v

just-auto.com’s research portfolio ............................................................................ vi Incredible ROI for your budget – single and multi-user licences..............................vi

just-auto.com membership ....................................................................................... vii Chapter 1: Company Dossier...................................................................................... 1

Chapter 2: Worldwide Locations ................................................................................ 4

Chapter 3: Financial Analysis ..................................................................................... 7

Chapter 4: Competitor Analysis ................................................................................. 8

Chapter 5: Key Events ................................................................................................. 9

Chapter 6: SWOT Analysis........................................................................................ 12

Strengths................................................................................................................ 12

Weaknesses........................................................................................................... 12

Opportunities.......................................................................................................... 12

Threats ................................................................................................................... 13

Chapter 7: Customers................................................................................................ 14

Chapter 8: Products................................................................................................... 18

Chapter 9: Product Development ............................................................................. 21

Chapter 10: Prospects ............................................................................................... 22

Online sources of information.................................................................................. 23

Free email newsletters ........................................................................................... 23

Other research reports ........................................................................................... 23

Global news and feature articles............................................................................ 23

Search the web ...................................................................................................... 23

Your feedback ............................................................................................................ 24


Page iv

List of tables Table 1: Autoliv Inc’s worldwide locations................................................................ 4 Table 2: Autoliv Inc’s key financial performance, 2000-2004................................... 7 Table 3: Autoliv Inc’s products across categories .................................................. 19


Page v

List of figures Figure 1: Contribution of various customers to sales (as a % of sales) ................. 14 Figure 2: Autoliv Inc’s sales by geographical region, 2003-2004 (% of sales) ....... 16 Figure 3: Autoliv Inc’s sales by key product segments, 2003-2004 (% of sales)...................................................................................................................... 20


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Chapter 1 Company Dossier Page 1

Chapter 1: Company Dossier Company name Autoliv Inc.

Business activity

Headquartered at Stockholm, Sweden, and incorporated at Delaware, US, Autoliv Inc is

a global leader in the area of automotive safety systems. The company specialises in the

supply of automotive occupant safety restraint systems, including modules and

components for passenger and driver-side airbags, seat belts, safety seats, steering

wheels, side-impact airbag protection systems and other safety systems, to leading car

manufacturers. The company's product offerings are classified into two broad product

categories, namely Airbags and related products segment (which includes electronics,

steering wheels, initiators and inflators), and the Seat belts and related products

segment (which includes seat components). Autoliv Inc's sales during the fiscal year

ended December 31, 2004 (or fiscal 2004) totalled US$x,xxx million, an increase of xx%

over fiscal 2003.

Stock symbol

Autoliv Inc’s shares are traded on the New York Stock Exchange under the ticker symbol

ALV. The company’s Swedish Depositary Receipts are represented as ALIV on the

Stockholm Stock Exchange.

Key executives

Lars Westerberg, President & Chief Executive Officer

Halvar Jonzon, Vice President, Purchasing

Magnus Lindquist, Vice President & Chief Financial Officer

Mats Ödman, Vice President, Corporate Communications

Hans-Göran Patring, Vice President, Human Resources

Jan Carlson, Vice President, Engineering


Chapter 2 Worldwide Locations Page 4

Chapter 2: Worldwide Locations Autoliv Inc is a holding corporation incorporated in Delaware, US, and has its principal

executive offices located in Stockholm, Sweden. It had xx,xxx employees, at the end of

September 2005. Autoliv has xx manufacturing facilities (inclusive of both completely

and partially owned facilities) spread across xx countries. North America, Europe and

Japan, collectively referred to as the “Triad”, are the major markets for Autoliv.

Table 1: Autoliv Inc’s worldwide locations

Country Company Europe Belgium Autoliv Belgium Czech Republic Autoliv GmbH Estonia Norma

Autoliv Automation Autoliv France, Paris EAK - Composants Pour l'Automobile Autoliv France, Gournay Autoliv Isodelta OEA Initiator Facility, France N.C.S. Surveilliers Livbag SA Autoliv Electronics SAS, Rouen

France

Autoliv Electronics, Pontoise Autoliv Sicherheitstechnik GmbH, Werk Ost Autoliv GmbH, Werk Nord Autoliv GmbH, Braunschweig Autoliv GmbH, Werk Süd Autoliv Protektor GmbH

Germany

Autoliv Stakupress GmbH Hungary Autoliv Kft Netherlands Van Oerle Alberton B.V. Poland Autoliv Poland Sp.zo.o. Autoliv Poland Restraint Systems Romania Autoliv Romania S. A. Italy Autoliv Italia SPA

Autoliv KLE S.A. Spain Autoliv BKI S.A.

Autoliv Development AB Autoliv Sverige AB Autoflator AB

Sweden

Autoliv Research


Chapter 3 Financial Analysis Page 7

Chapter 3: Financial Analysis

For the fiscal ended December 31, 2004, Autoliv Inc posted sales of US$x,xxx million,

an increase of xx% over 2003. The company registered an organic growth of x% in spite

of the flat rate of vehicle production in North America, Japan, and Europe (the Triad)

during the year. The increase in organic growth was chiefly due to the higher market

shares achieved in inflatable curtains, seat belts, safety electronics and steering wheels.

Autoliv also enjoyed higher penetration for its side airbags designed for chest protection.

Net income increased xx.x% year-on-year to US$xxx million in 2004, helped by lower

interest expense and higher operating profit.

For the third quarter ended September 2005, Autoliv Inc posted a consolidated net sales

of US$x,xxx.x million, reporting a marginal increase of x.x% over the corresponding

quarter of fiscal 2004. The company witnessed sales growth despite a x% decline in the

Western European light vehicle production. Operating income remained flat during the

quarter totalling US$xxx.x million. However, the company’s net income dropped xx.x%

year-on-year to US$xx.x million. Autoliv’s sales from airbag products totalled US$xxx.x

million, increasing by x.x% over third quarter 2004. The marginal increase was led by

growth in sales of side curtain airbags, knee airbags and steering wheels. Seat belt

products sales stood at US$xxx.x million for the quarter under consideration, increasing

by x.x% due to the consolidation of the results of a Chinese joint venture.

Table 2: Autoliv Inc’s key financial performance, 2000-2004

(Figures are in millions of US$, unless otherwise indicated) 2000 2001 2002 2003 2004 Sales x,xxx x,xxx x,xxx x,xxx x,xxx Net income xxx* xxx* xxx xxx xxx Capital expenditures xxx xxx xxx xxx xxx Net cash provided by operating activities xxx xxx xxx xxx xxx Total shareholders' equity x,xxx x,xxx x,xxx x,xxx x,xxx Total assets x,xxx x,xxx x,xxx x,xxx x,xxx Number of employees at the end of the fiscal

xx,xxx x,xxx x,xxx xx,xxx xx,xxx

Note: * - Adjusted for the effect of the accounting principle FAS-142 Fiscal year ended December 31

Source: Autoliv Inc.


Chapter 4 Competitor Analysis Page 8

Chapter 4: Competitor Analysis

As of December 2004, Autoliv Inc commanded around a third of the global automotive

safety market. The company’s competitive strengths include technological leadership

and an extensive worldwide presence. Its closest competitors are Takata of Japan and

TRW of the US. Part of Autoliv’s worldwide strategy has been to strengthen its position

in Asia to leverage the impressive growth that the region is experiencing. Its Asian thrust

has allowed it to diversify its customer mix worldwide. Takata accounted for around a

fifth of the global market at the end of 2004. It has been able to expand its business due

to the global success that Japanese OEMs are experiencing.

Another key competitor, TRW Automotive, also commands around a fifth of the global

automotive safety systems market. It was acquired by the private equity fund,

Blackstone Group, in 2003. In 2004, TRW listed xx% of its common stock on the New

York Stock Exchange. Additionally, its customer base is well diversified with no single

customer contributing more than xx% to the total sales and no specific product line

contributing more than xx% to the total sales of the company. With xx% of TRW

Automotive’s sales in 2003 contributed by safety-related products, the company sees a

potential market in North America and Europe in the integrated safety systems segment,

largely triggered off by the side-impact regulation in North America. All other major

competitors, including Key Safety Systems, accounted for approximately xx% of the

global automotive safety market in 2004.


Chapter 5 Key Events Page 9

Chapter 5: Key Events

Autoliv Inc was formed through the 1997 merger of Sweden-based Autoliv AB and

Morton ASP (Automotive Safety Products), an airbag manufacturer operating in North

America and Asia.

In 1956, Autoliv AB was the forerunner in the area of seat belt technology. Morton ASP

was a leader in the development of airbag technology, and played a crucial role in the

launch of the first air bag system in 1980, which went on to become a sizeable

commercial success. In 1992, Autoliv started production of textile cushions with its

innovative one-piece-weaving (OPW) technology for driver airbags. This technology was

patented and turned out to be the key for the production of the inflatable curtains

launched in 1998. The company was acquired by Gränges Weda AB, a manufacturer of

seat belt retractors, in 1974. Following the acquisition of the Gränges group by

Electrolux in 1980, the Gränges Weda name was changed to Electrolux Autoliv.

In the 1980s and 1990s, Autoliv pursued a series of acquisitions, primarily of seat belt

manufacturers based in Europe, New Zealand and Australia. Several instances among

many include the acquisition of Germany-based Autoflug Sicherheitstechnik GmbH in

1992 and Britax Overseas Ltd, which had operations in Germany, the UK and Australia,

in 1998.

In 1994, Electrolux sold its stake in Autoliv, and the company was renamed Autoliv AB.

A couple of years later, Autoliv acquired Autoliv Mekan AB and Autoliv Hammarverken

AB to form Autoliv Seat Sub-Systems. Moreover, during 1996, Autoliv increased its

holding in the joint venture Livbag SA to xx%.

During the period 1996-99, Autoliv executed three decisive steps in the acquisition of

shares in Isodelta, a leading manufacturer of steering wheels in Europe, in order to

develop airbags integrated with steering wheels.

In a bid to consolidate its supplier base, Autoliv acquired one of its chief suppliers,

Marling Industries plc, and its subsidiary, Van Oerle Alberton, a global leader in the

manufacture of seat belt webbing, in 1997. The following year, Autoliv made several


Chapter 6 SWOT Analysis Page 12

Chapter 6: SWOT Analysis Strengths

Between fiscal 2000 and 2004, Autoliv Inc’s sales grew nearly xx% and, as of December

2004, the company commanded around a third of the worldwide automotive safety

market. This is a significant statistic showcasing the company’s leadership position in the

industry, particularly considering the fact that the industry actually registered a decline of

x% in the production of light vehicles in Europe and North America over the same

period. The company’s sales growth is partly explained by its significant global

diversification over the years, which fortifies the company’s defences against the short-

term vagaries across key automotive markets.

Weaknesses

Though Autoliv is the current market leader in the area of automotive safety restraint

systems, its dependence on the struggling US automaker, Ford Motors, for nearly xx%

of its sales is a formidable weakness.

Opportunities

Within a few years, Autoliv is expected to consolidate its supplier base worldwide from

x,xxx at the end of 2004, to just 500. The consolidation will provide the company with

significant cost savings.

In 2003, US vehicle manufacturers declared a self-commitment for improved side-impact

safety, and the plan is to be implemented in phases, to culminate by September 2009.

The commitment espouses the use of airbag curtains and side airbags to increase

safety. Moreover, in June 2003, a US Senate committee introduced draft legislation

intended for rollover protection, which calls for advanced safety features, such as side

impact airbags and side curtains. These developments are likely to push up demand for

Autoliv’s airbag related products in the principal markets of the US and Europe.


Chapter 7 Customers Page 14

Chapter 7: Customers Autoliv Inc supplies products to a number of leading automotive OEMs worldwide. The

key global customers of the company are Ford, Renault/Nissan, General Motors (GM),

Volkswagen, Peugeot-Citroen, DaimlerChrysler and Toyota. The following table

illustrates the various customers of Autoliv Inc in terms of percentage contribution to total

company sales.

Figure 1: Contribution of various customers to sales (as a % of sales)

2003

GMxx%

Othersxx%

Ford Groupxx%

Renault/Nissanxx%


Chapter 8 Products Page 18

Chapter 8: Products

Autoliv Inc ranks as one of the leading global suppliers of automotive occupant safety

restraint systems, offering a wide array of products.

The company's product offerings are classified into two broad product segments, namely

the Airbags and related products segment (which includes electronics, steering wheels,

initiators and inflators), and the Seat belts and related products segment (which includes

seat components).

In fiscal 2004, the Airbags and related products segment contributed US$x,xxx million

(or xx% of company sales), while the Seat belts and associated products segment

contributed US$x,xxx (or xx% of total sales).

The products manufactured in 2004 by Autoliv's wholly owned factories included over xx

million entire seat belt systems (of which over xx million were equipped with

pretensioners), over xx million modules of frontal airbags, side-impact airbags (inclusive

of curtain airbags) of over 30 million, close to 10 million steering wheel units and over xx

million electronic units.

For the third quarter of 2005, Autoliv’s airbag products segment contributed xx.x% of net

sales. Seat belts products segment accounted for the remaining xx.x% sales.

Autoliv’s product launches during the third quarter 2005:

• Side airbags – Buick Lucerne, Porsche Cayman

• Safety electronics – Ford Explorer, Ford Fusion, Lincoln Zephyr, Mercury

Mountaineer and Milan, Porsche Cayman

• Driver airbags – Chrysler PT Cruiser, Honda Civic, Porsche Cayman

• Passenger airbags – Porsche Cayman, VW Jetta

• Inflatable curtains – Honda Pilot, Chrysler PT Cruiser, VW Jetta

• Seatbelts – Toyota Ractis, Pontiac Torrent


Chapter 9 Product Development Page 21

Chapter 9: Product Development Autoliv Inc spends a significant amount of its revenues on research and development. In

2004, the company's R&D and engineering expenses was US$xxx.x million,

representing approximately x% of sales. At the end of fiscal 2004, Autoliv had x,xxx

R&D projects, which mostly were related to application engineering on extant products

based on customer supply contracts.

Autoliv Inc released details about two key R&D projects at the end of 2004:

• Fixed-hub steering wheel with optimised airbag: Autoliv developed a steering

wheel equipped with a fixed hub, which allows for the development of driver

airbags that prevent the driver from coming into contact with the windshield in

cases of oblique crashes. The newly developed steering wheel also eliminates

the necessity of a connecting coil. In 2004, the fixed-hub steering wheel was

introduced in the Citroën C4.

• New side-impact airbag: At the end of 2004, Autoliv reported that it was

developing special airbags for convertibles, as conventional curtain airbags do

not lend themselves for applications in convertibles. The new door-mounted

airbags feature Autoliv’s patented one-piece weaving technology.


Chapter 10 Prospects Page 22

Chapter 10: Prospects

In the period 1997-2004, Autoliv Inc’s sales grew at a compounded annual growth rate

(CAGR) of 10%. The company has increased its market share steadily over the years

and is aggressively following its strategy of globalisation. Over the past five years,

Autoliv has been investing heavily in Asia, especially in Korea, China and Japan. Such

efforts are also helping the company to diversify its worldwide customer mix. Moreover,

Autoliv is shifting production to countries such as Romania, Mexico and China in order to

trim costs and offset customer pricing pressures. Apart from geographic expansions, the

company also expanded manufacturing capacity in 2004, particularly for side airbags.

Furthermore, the company has announced plans to expand production capacity for the

‘Inflatable Curtain’, as new US regulations on side-impact protection raise demands for

the product.

Autoliv Inc has projected better sales growth for fiscal 2005 as against the underlying

market rate. As part of the company’s cost reduction activities, its airbag plant in the UK

is to be phased out within a year, and the majority of the production is planned for

relocation to Turkey. The total cost for the plant closure was estimated at US$xx million,

of which US$xx million was charged in fiscal 2005’s first quarter, while the majority of

the remaining US$x million was expected to be accounted for before the close of 2005.

Overall, Autoliv is in a very strong position in relation to its competitors and is set for

substantial growth. The company must also work towards diversifying its customer base

and avoid being dependent on Ford to such a large extent. However, unfavourable

exchange fluctuation is a continuing cause for concern.


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