Autoliv (ALV) has been awarded the safety products for the smart fortwo from Daimler (DAI). The smart fortwo is a micro-car that achieves 33 mpg in the city and 41 mpg on the highway according to 2008 EPA testing requirements. It is manufactured in the Mercedes-Benz division of Daimler.
Currently, the safety products for the smart fortwo are supplied by the Michigan-based auto parts manufacturer, Delphi Corporation, formerly a subsidiary of General Motors (MTLQQ). But following the acquisition of certain assets of Delphi’s European airbag and steering wheel operations by Autoliv, the products will be supplied by the latter.
Earlier this year, Delphi had announced its plan to exit from its Occupant Protection Safety (OPS) business in North America, Europe and Asia by the end of the year. The transaction is expected to close by Dec 31.
Autoliv will assume control of Delphi’s airbag and seatbelt assets in North America, which will be consolidated into the former’s existing facilities. Autoliv will also gain control of Delphi’s steering wheel operations in Matamoros, Mexico.
The OPS business has customers such as General Motors, Hyundai (HYMLF), Ford (F), Daimler (DAI) and Navistar (NAV), with expected combined sales of $125 million in 2010.
In the third quarter, Autoliv returned to profitability with a net income of $33.7 million or 37 cents per share after reporting losses for the preceding three quarters. With this, the Sweden-based supplier of automotive safety systems has also beaten the Zacks Consensus Estimate profit of 24 cents per share. The company credited higher light vehicle production due to the “Cash for Clunkers” program and other stimulus packages to have boosted its earnings.
Recently, Autoliv has raised its fourth quarter outlook on the back of stronger light vehicle market in China and other emerging markets. The company now expects consolidated net sales to increase by at least 35%, given the current exchange rates. Organic sales are anticipated to improve by at least 20% and its operating margin, excluding restructuring charges, to grow to at least 9% during the quarter.
While reporting the third quarter results, Autoliv had expected consolidated net sales to rise by 25% with organic sales growing by more than 10% due to an expected rebound in the European light vehicle production (LVP) mix following the expiration of many incentive programs that favored small vehicles with low safety values. The operating margin was expected to be at least 7%, excluding restructuring charges.
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