Analyst Note| Richard Hilgert |
Narrow-moat Autoliv, supplier of air bags, seat belts, and steering wheels to the global auto industry, reported third-quarter earnings per share before special items of $0.73, missing the $0.82 FactSet consensus EPS by $0.09 and $0.75 below $1.48 reported last year. While the microchip shortage, which caused sporadic customer production changes, and higher raw material costs contributed to the year-over-year decline, we were impressed with a 25% decremental margin performance. Revenue declined 9% versus the year-ago period, to $1.8 billion due to customers’ call-offs on the chip crunch. Excluding the positive currency effect, organic revenue was down 12%, outperforming a 20% drop in global light-vehicle production by 8 percentage points on a strong new business launch schedule that continues in the fourth quarter.