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UPDATE 2-Cost cuts, emerging markets boost Autoliv Q3

Published 10/26/2010, 10:15 AM
Updated 10/26/2010, 10:16 AM

* Has record third quarter, beats pretax profit forecast

* Gets restructuring, emerging markets boost company

* Sees sales growing faster than market (Adds quotes, updates share price)

By Patrick Lannin and Johannes Hellstrom

STOCKHOLM, Oct 26 (Reuters) - World No.1 auto safety gear company Autoliv posted strong earnings on Tuesday, driven by cost cuts and growth in emerging markets, particularly China, and forecast market-beating growth.

The company sells seatbelts, airbags and other safety equipment to many of the world's leading auto makers.

It has been growing in China with sales to both domestic suppliers like Geely, which this year bought Swedish car maker Volvo, as well as to foreign manufacturers.

It said it saw sales growing faster than the market in the next few months.

"These record results reflect our ongoing restructuring efforts, and our rapid growth in emerging markets," the company said after reporting a pretax profit of $190 million, above the average Reuters poll forecast of $174 million.

It said its results represented its best showing in a third quarter. Sales came in at $1.74 billion, also slightly ahead of the $1.69 billion forecast.

Sales to GM, Honda Motor Co, Nissan Motor Co and Ford contributed most to revenue growth, while the highest organic sales growth was in sales to Mitsubishi Motors, Honda and Hyundai/KIA.

Though 75 percent of Autoliv's sales still come from the traditional developed markets of Europe, North America and Japan, the company has targeted China.

"We are growing market share (in China)," Chief Executive Jan Carlson told a conference call, adding that a manufacturer like Geely was now stocking some its vehicles with as much safety equipment as a Western car maker.

Alongside emerging markets growth, Autoliv has also been shifting production to low cost countries.

It recently bought a Chinese seatbelt maker and opened a seatbelt webbing factory in India.

Autoliv shares, up about 46 percent this year, outpacing a 20 percent rise in the STOXX European auto index, stood 0.5 percent higher by 1406 GMT.

Autoliv said it expected to outperform global car production, leading to consolidated sales growth of 15 percent in the fourth quarter and about 40 percent in the year.

It saw its operating margin at about 12 percent for both the full year and the fourth quarter.

Its previous forecast was for sales to rise 35 percent in the year and for operating margin to be more than 11 percent.

Carlson also said that spending the company's cash on growth was the main priority for the balance sheet, though he noted Autoliv had been a "shareholder friendly" company. (Reporting by Patrick Lannin; Editing by Will Waterman and Sitaraman Shankar)

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