UPDATE 1-Auto safety group Autoliv wary on margin, shares fall

Thu Oct 24, 2013 7:02am EDT

* Says currency, investment weighing on margin

* Sees headwinds carrying into 2014

* Sees strong sales growth in Q4

* Shares fall by more than 6 pct

STOCKHOLM, Oct 24 (Reuters) - Autoliv , the world's top maker of seat belts and airbags, forecast a strong fourth quarter for sales but said currency headwinds and higher investments meant this would not translate into a similar boost in profitability.

The company, a supplier to all leading global car manufacturers, said these headwinds along with an unfavourable product mix were seen continuing in next year, sending its shares down 6.2 percent by 1059 GMT.

"These challenges in combination with our continued investments within Active Safety will continue to put pressure on our margins also in 2014," the company said.

Pretax profit at the Sweden-based manufacturer rose to $177 million in the third quarter from $175 million a year ago to come in ahead of the $167 million seen in a Reuters poll of nine analysts.

"The comment the market has caught on to is that capacity adjustments in the European organisation and heavy investment in Active Safety will result in a some margin headwind next year as well," Handelsbanken analysts Hampus Engellau said.

"Those who thought margins would be cranked up next year, they are disappointed."

But if the outlook for profitability was gloomy, the picture was rosier in regard to sales.

The company, whose top customers include Volkswagen , General Motors and Ford, was more upbeat on sales, forecasting a rise of at least 9 percent in the fourth quarter, stripped of currency swings and acquisitions.

The strong growth toward year-end, underpinned by demand in China and within Active Safety -- technology that allows a car to independently avoid accidents -- meant the company raised its full-year sales growth outlook to 5 percent from 4 percent.

It also affirmed its guidance for a full-year operating margin of about 9 percent, excluding costs stemming from ongoing anti-trust probes and costs for capacity alignments, with profitability seen at the same level during the fourth quarter.

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