March 26, 2013 / 3:00 PM / 5 years ago

Autoliv looks for deals to expand in high-tech car safety

* Autoliv ponders use of cash pile

* Swedish company leader in car safety equipment

* Europe market soft, America, China better

By Helena Soderpalm and Niklas Pollard

STOCKHOLM, March 26 (Reuters) - Autoliv, the world’s biggest maker of car safety equipment, is on the look out for acquisitions in new high-tech areas, enticed by strong growth prospects for products that can help cars to avoid accidents.

Chief Executive Jan Carlson said Autoliv was keen to expand into this new technology that includes sensors and radar but that there were few companies willing to sell.

“This is a growth area and many see opportunities and growth and therefore they don’t sell,” he said in an interview. “There are always discussions back and forth, but there is nothing obvious.”

So-called “active” car safety technology as opposed to “passive” seatbelts and airbags is widely considered to be the future in this business.

Various new products being developed mainly by small specialist companies can help to prevent accidents. It is a priority for car makers such as Autoliv’s domestic customer Volvo Car Corp.

“We’re looking a lot at the sensor field. But we’re also looking at electronic stability control and chassis systems,” said Carlson, referring to technology that allows a car to independently avoid a collision.

The company has money to spend, with net cash of $361 million at the year-end. But analysts have raised the question of whether some of this could be handed back to shareholders.

“So far, the board has prioritised raising the dividend and building a strong balance sheet so we can make acquisitions when they come,” Carlson said.

The company has 3.2 million shares remaining of a share buyback mandate that it has not used since September 2008 when the financial crisis made keeping a strong balance sheet key.

Autoliv has been able to weather the downturn in Europe since then because of the global spread of its business.

But the firm has felt the impact of a steep drop in car sales in Europe due to a squeeze on consumer spending that has led to big losses for the car industry.

In January, Autoliv said sales in the first quarter of 2013 were likely to fall four percent due to weakness in Europe.

Autoliv generates nearly 30 percent of its sales in Europe, where the impact of the euro zone debt crisis has exposed the overcapacity in the region’s auto industry.

“There are few positive signs in terms of coming to grips with the situation (industry overcapacity),” Carlson said. “I respect that it is difficult, but if the demand is not there that doesn’t help. You have got to handle the problem anyway.”

He said the North American and Chinese markets remained healthier than those in Europe.

“That means one part of the world is suffering a big fall while another is seeing a pretty big rise,” Carlson said. “It is a matter of pressing the accelerator and the brake at the same time.”

Carlson said Autoliv was sticking to its financial guidance which estimates a four percent fall in sales and an operating margin of about 8 percent in the first quarter. For the full year, the company expects sales growth of 2-4 percent at a margin of about 9 percent.

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