Autoliv Hikes Dividend - Analyst Blog

Autoliv Inc. (ALV) raised its quarterly dividend payment for the second time of the year by 14% to 40 cents per share from 35 cents. The raised dividend is close to the highest dividend of 41 cents paid by the company before the global economic crisis. It will be paid on March 3, 2010 to shareholders of record as of February 3, 2010 for the first quarter of 2011.

In August this year, Autoliv raised its quarterly dividend payment by 17% to 35 cents per share for the fourth quarter of the year from 30 cents. The company had suspended its dividend payment since the third quarter of last year in view of the decline in global light vehicle production due to the global economic recession.

However, Autoliv resumed its dividend payment in the third quarter of the year backed by its strong financial position and improved macroeconomic environment.

In the third quarter of 2010, Autoliv posted a profit of $140.1 million or $1.51 per share, which more than quadrupled from the year-ago level of $32.8 million or 37 cents per share. The profit also exceeded the Zacks Consensus Estimate of $1.22 per share during the quarter.

Consolidated sales appreciated 31% to $1.74 billion reflecting a boost of 10% due to acquisitions, offset partially by a negative currency translation effect of 2%. Consequently, organic sales rose by 23% during the quarter.

The company's sales were highly influenced by sales to General Motors (GM), Honda Motor (HMC), Nissan Motor (NSANY) and Ford Motor (F). Meanwhile, organic sales growth was driven by sales to Mitsubishi, Honda and Hyundai/KIA.

Operating income increased by $142.1 million to $202.1 million (11.6%) from $60 million (4.5%) in the prior-year quarter. This was attributable to a rise in gross profit by $135 million and a decline in restructuring charges by $12 million, offset partially by a rise in research, development and engineering expenses by $6 million.

For the upcoming quarter, Autoliv expects consolidated sales to grow by 15%, backed by an organic sales growth of 12%. The company has upgraded its consolidated sales growth outlook to 40% for full year 2010 from 35% predicted earlier based on the organic sales growth expectation of at least 30%. The company also expects an operating margin of at least 12% both for the fourth quarter and for the full year 2010.

Due to the improved results and strong outlook, Autoliv has a Zacks #1 Rank (Strong Buy) on its stock. Following the announcement of a dividend hike, the company's share price inched up more than 2% to $80.03 after the market closed yesterday.

 
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