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(NYSE: ALV and SSE: ALIV.sdb)
Q3 2021: Accelerating global supply chain disruptions
Financial highlights Q3 2021
12% organic sales decline*
5.4% operating margin
5.6% adjusted operating margin*
Full year 2021 indications
Around 11% net sales growth
Around 8% organic sales growth
Around 8% adjusted operating margin
Key business developments in the third quarter of 2021
* Significant organic sales decline* as global LVP declined by 20% vs. Q3 last year (according to IHS Markit
* Profitability declined due to the lower sales and higher raw material costs. Adjusted operating margin* declined by 4.5pp to 5.6%. Return on capital employed declined to 10.5% and return on equity declined to 9.3%.
* Strong balance sheet and leverage ratio well within target range. Operating cash flow of
*For non-
Comments from
The adverse business trends from earlier in the year accelerated in the third quarter. Supply shortages of semiconductors and other components led to a third quarter global LVP decline of 20% vs. a year earlier, which was 17pp lower than what was expected at the beginning of the quarter (according to
I am pleased that we outperformed the global LVP by almost 8pp, significantly reducing the impact of the 20% drop in LVP. We had a record number of new launches in the quarter and expect a full year record as well. This includes products to a large number of electrified vehicles, a market that amounted to around 10% of our total sales last year. We expect an almost doubling of sales to this market in 2021.
I am also pleased with our order intake for the first nine months of the year and that we continue to implement the projects and actions needed to support our growth opportunities and our journey to reach the next level of profitability as expressed by our medium term targets.
Despite the challenging environment, our leverage ratio* remains well within our target range and we declared and paid a dividend of
Through successful mitigation efforts, the raw materials headwind in the third quarter was slightly lower than expected. However, we see new raw material headwinds, including higher magnesium and resin costs, which means we still expect a full year operating margin headwind from raw materials of around 130 basis points. We expect supply disruptions to continue to impact LVP negatively in the fourth quarter, and although there are some indications of moderate improvement in semiconductor availability in
We are planning and implementing stricter measures to mitigate the current adverse business headwinds, including capacity alignments in
With our relentless focus on quality and execution as well as mitigating near term headwinds, we continue to drive forward towards our medium term targets. This and more will be explored at our virtual CMD on
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