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WIKI ANALYSIS
Autoliv, Inc. (NYSE: ALV) manufactures protection systems for automobiles, with a product portfolio consisting primarily of safety airbags, seat belts, and steering wheels.[1] Autoliv sells its products to automobile manufacturers such as Ford Motor Company (F), Nissan Motor (NSANY), General Motors (GM), and Volkswagen (VLKAY).[2]
Autoliv is the largest airbag and seat belt producer with 33% of the world market. Despite Autoliv's large size, it is heavily exposed to a few customers as sales to the company's five largest customers comprise nearly 60% of Autoliv's revenues.[3]
Business Overview
Business & Financial Metrics[4]
In 2009, ALV generated a net income of $10 million on revenues of $5.12 billion. This represents a 93.9% decrease in net income and a 20.9% decrease in revenues from 2008, when the company earned $165 million on $6.47 in revenues.
Business Segments
Autoliv's main products are airbags and seat belts, but the company also makes related automobile safety products, including night vision systems, steering wheels, and electronic control systems.[5] The company operates through a single reportable operating segment.[6]
Airbags and Associated Products
Airbags and Associated Products manufactures airbags and related products, such as airbag inflators and modules that control when the airbags deploy.[7] Autoliv's airbags include innovations such as the "Safety-Vent Airbag" which changes size and shape based on the weight and build of the driver or passenger it is protecting. Due to new federal laws in the U.S. requiring that all passenger vehicles in the United States have side curtain airbags by 2012, Autoliv said it expects side curtain airbags to be this segment's strongest growth driver.[8]
Seat Belts and Associated Products
In addition to seat belts, the Seat Belts and Associated Products segment makes related components like pretensioners, which tighten the seat belt right before a crash to help prevent injury, and load limiters, which loosen seat belt tension in a controlled way to decrease pressure on the occupants chest.[9]
Key Trends and Forces
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Exchange rates affect ALV's revenues
Because Autoliv reports its revenue in U.S. dollars but does 75% of its business outside of North America, its revenue is highly exposed to fluctuations in exchange rates. When foreign currencies depreciate, the dollar value of Autoliv's international revenues decreases. On the other hand, when the value of the dollar decreases (foreign currencies appreciate), the dollar value of Autoliv's international revenues increases.
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References
- ↑ ALV 2007 10-K Exhibit 13: Note 19 to Consolidated Financial Statements
- ↑ ALV 2007 10-K Exhibit 13: Note 19 to Consolidated Financial Statements
- ↑ ALV 10-K Risk Factors: Our business could be materially and adversely affected if we lost any of our largest customers
- ↑ ALV 2009 10-K Ex-13
- ↑ ALV 2007 10-K Item 1 Business: Business
- ↑ ALV 2009 10-K
- ↑ ALV 2007 10-K Item 1 Business: General
- ↑ ALV 2007 Annual Report: Technology, pg 18
- ↑ ALV 2007 Annual Report: Autoliv-Driven for Life, pg 3
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