Autoliv’s (ALV) credit rating has been upgraded by both Standard and Poor’s and Moody’s Investor Service due to its strong financial position and credit-supportive financial policy. The company has suspended dividend payments and share buybacks on one hand and issued new equity and reduced investment on the other.
Standard and Poor’s has revised the credit rating to “BBB/A-2 with a stable outlook” from “BBB-/A-3 with a stable outlook.” Meanwhile, Moody’s Investor Service has raised its outlook to stable from negative while the credit rating remained P-2.
In the third quarter of the year, Autoliv has shown a profit of $33.7 million or 37 cents per share, after reporting losses for the preceding three quarters. The company has also beaten the Zacks Consensus Estimate of 24 cents per share. The company believed that higher light vehicle production from the “Cash for Clunkers” program and other stimulus packages have boosted its earnings.
Autoliv had cash and cash equivalents of $430 million as of Sept. 30, 2009, which more than doubled from $214 million in the year-ago period. Long-term debt amounted to $1.19 billion as on that date, reflecting a debt-to-capitalization ratio that stood at 33%. The company has significantly reduced its capital expenditures to $90 million in the first nine months of 2009 from $202 million in the year-ago period.
Autoliv, based in Stockholm, Sweden, is a holding company operating through two principal subsidiaries: Autoliv AB and Autoliv ASP. The company manufactures occupant restraint systems for automobiles and has a product portfolio consisting primarily of safety airbags, seat belts and steering wheels. We continue to recommend the shares of the company as Outperform.
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