STOCKHOLM -- Sweden's Autoliv cut its 2019 sales growth outlook on Friday, as the car safety equipment maker became the latest casualty of a deteriorating global auto industry to report weaker than expected quarterly earnings.
Autoliv said it was stepping up actions to curb costs, which included plans to cut about 1,000 jobs in r&d and sales and implement a sharper purchasing process. During the past quarter, it cut 1,200 jobs.
Several carmakers, including Autoliv's top customers Daimler and BMW, along with its suppliers have issued warnings in recent weeks as an expected recovery in demand has not panned out and trade wars inflate costs.
Autoliv, the world's largest maker of airbags and seatbelts, said it had experienced a challenging second quarter, dominated by "severe weakness" in global car markets and high raw material costs that reduced profitability.
"The uncertainty remains high in a falling market and we currently do not see any signs of a turnaround in light vehicle demand. Therefore we now indicate lower full year 2019 sales and profitability," CEO Mikael Bratt said in a statement.
Bratt told Reuters that car production was at its worst since the financial crisis, with demand weakest in China, where the earlier-than-planned introduction of new emission rules had heightened uncertainty, and Western Europe.
"We see customers here, some who have withdrawn or changed their footprint, and we need to follow that," he said, linking it partly to No. 4 customer Ford's plans to scale back its European presence.
"We have been able to drive the efficiency in a good way in the second quarter and we have continued to scrutinize all our costs in the system here and we are stepping up the work here to counterbalance the development in the marketplace."
Bratt said Autoliv would perform some productivity actions sooner than it had planned, with the company's profitability being hit by higher costs for key raw materials like steel and an indirect impact from suppliers facing tariffs.
Autoliv told analysts it had already found ways to mitigate almost all of the expected $30 million hit in the United States from the latest batch of tariffs and that its sharpening of sourcing would cover 75 percent of its total purchasing costs.
The company, which competes with Joyson Safety Systems and ZF Friedrichshafen, forecast organic sales growth of 1-3 percent for 2019 and an adjusted operating margin of 9.0-9.5 percent, compared with its previous expectations of around 5 percent and about 10.5 percent respectively.
It also reported a fall in second-quarter operating profit to $170 million from $229 million a year ago. Analysts on an average had expected $199 million according to Refinitiv data.
Autoliv ranks No. 29 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $8.68 billion in 2018.