The Chicago Entrepreneur

: Autoliv stock falls after profit matches expectations but cash flow turns negative

Shares of Autoliv Inc. ALV dropped 4.0% in premarket trading Friday, after the automotive safety systems company reported revenue that beat expectations but profit that matched, and cash flow that turned negative. Net income fell to $74 million, or 86 cents a share, from $83 million, or 94 cents a share, in the year-ago period. Adjusted earnings per share, which excludes nonrecurring items, came in at 90 cents, the same as the FactSet consensus. Sales grew 17.4% to $2.49 billion, above the FactSet consensus $2.32 billion. Operating cash flow swung to negative $46 million from $70 million, due mainly to negative working capital effects from strong sales growth in March, with free cash flow at negative $189 million as expenditures increased due to capacity expansions. “The operating margin impact of the strong sales growth was lower than it should be in the quarter,” said Chief Executive Mikael Bratt. “This is because new product launches normally have lower operating leverage initially.” The stock has run up 20.0% year to date through Thursday, while the S&P 500 SPX has gained 7.6%.

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