STOCKHOLM (Reuters) - Autoliv on Tuesday forecast lower-than-expected organic sales growth this year and pushed back 2020 sales and margin targets, blaming a slowdown in car production and sales and an increase in raw material prices.
The world’s largest maker of airbags and seat-belts said it was maintaining its targets of reaching more than $10 billion in sales and around 13 percent in adjusted operating margin, but no longer expected to reach them in 2020.
“Compared to when we put these targets out in 2017 ... there has been a big (drop) in underlying light vehicle production that requires us to push out the targets somewhat,” CEO Mikael Bratt told Reuters. He declined to set a new date for achieving the targets.
A string of carmakers and their suppliers have issued warnings in so many months hit by slower demand in China under the strain of Beijing’s trade war with the United States and new emission rules delaying sales in Europe.
China, the world’s biggest auto market, is expected to see slower growth this year even as some eurozone economies slow down.
Evercore analysts said with the “unrealistic” targets being dropped, they expected 2019 earnings per share consensus to be cut 11-12 percent, with “similar if not greater” moves to 2020 consensus forecasts. Evercore has an “underperform” rating and $70 price target on Autoliv shares.
Autoliv’s Stockholm-listed shares were down 2.3 percent at 718.80 Swedish crowns (60.29 pounds) by 1241 GMT.
Veoneer, which was spun out of Autoliv last year and focuses on high-tech safety gear for self-driving cars, delayed its 2020 targets in October.
Bratt said he expected the first half to be the more challenging half, with weakness stemming mainly from China and Europe at this point.
He also forecast that North America sales, a bright spot so far, would move sideways this year but said he expected “no dramatic shift” when asked if U.S. carmakers such as GM ending production of unprofitable car lines was hurting outlook.
Autoliv forecast organic sales growth of around 5 percent this year, unchanged from 2018 and below the 7.1 percent seen by analysts in a poll.
Reporting by Esha Vaish in Stockholm; editing by Niklas Pollard and Jane Merriman