Autoliv Inc. (ALV), the world's largest supplier of car airbags and seatbelts, Thursday increased its earnings forecasts for the rest of the year after better-than-expected sales in the third quarter due to a recovery in light-vehicle production.

The Swedish-American company, which supplies customers such as Ford Motor Co. (F), Volkswagen AG (VOW.XE) and General Motors Co., said full-year sales could reach nearly $4.9 billion despite an expected 25% drop in North American and West European light-vehicle production.

The company said its operating margin, excluding restructuring charges, is expected to be 4% for the third quarter of 2009, up from 1% to 3% forecast in July. Consolidated sales for the quarter are expected to decline by 15% to 20%, instead of 20% to 25%, provided current currency-exchange rates prevail. Organic sales are expected to decline by 10% to 15%.

Autoliv said it expects restructuring costs of $100 million. In July, Autoliv said that it expected restructuring costs for 2009 to exceed the $75 million it had announced previously without specifying a new amount. Despite this increase, Autoliv said it now believes that it could reach a break-even operating margin for the full year, including restructuring charges.

Autoliv said in December last year that it had cut 5,900 jobs, or 14% of its workforce, in a cost-cutting program initiated in July. The measures aimed to save $120 million in 2010 at an initial cost estimate of $75 million.

Autoliv shares gained as much as 3% after the news, but, at 1107 GMT, the stock traded up 0.50 Swedish kronor, or 0.2%, at SEK249.

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-By Ian Edmondson, Dow Jones Newswires; +46-8-5451-3094;