Autoliv - Q2 2024: Sales headwinds from lower LVP

Financial highlights Q2 2024

Full year 2024 guidance

$2,605 million net sales 

Around 2% organic sales growth

1.1% net sales decrease

Around 1% negative FX effect on net sales

0.7% organic sales growth*

Around 9.5-10.0% adjusted operating margin

7.9% operating margin

Around $1.1 billion operating cash flow

8.5% adjusted operating margin*

$1.71 EPS, 178% increase

$1.87 adjusted EPS*, 3% decrease

All change figures in this release compare to the same period of the previous year except when stated otherwise.

*For non-U.S. GAAP measures see enclosed reconciliation tables.

(Dollars in millions, except per share data)

Q2 2024

Q2 2023

Change

6M 2024

6M 2023

Change

Net sales

$2,605

$2,635

(1.1) %

$5,220

$5,127

1.8 %

Operating income

206

94

120 %

400

221

81 %

Adjusted operating income¹⁾

221

212

4.4 %

420

343

22 %

Operating margin

7.9 %

3.6 %

4.4pp

7.7 %

4.3 %

3.4pp

Adjusted operating margin¹⁾

8.5 %

8.0 %

0.5pp

8.0 %

6.7 %

1.4pp

Earnings per share²⁾

1.71

0.61

178 %

3.23

1.47

119 %

Adjusted earnings per share^1,2)

1.87

1.93

(2.9) %

3.45

2.82

22 %

Operating cash flow

340

379

(10) %

462

334

39 %

Return on capital employed³⁾

21.0 %

9.5 %

11.5pp

20.4 %

11.4 %

9.1pp

Adjusted return on capital employed^1,3)

22.5 %

21.0 %

1.5pp

21.4 %

17.4 %

4.0pp

1) Excluding effects from capacity alignments, antitrust related matters and for FY 2023 the Andrews litigation settlement. Non-U.S. GAAP measure, see reconciliation table. 2) Assuming dilution when applicable and net of treasury shares. 3) Annualized operating income and income from equity method investments, relative to average capital employed.

Comments from Mikael Bratt, President & CEO

In the second quarter, profitability continued to improve despite a slight decline in net sales. The improvement was driven by better pricing and successful execution of cost reductions, with indirect headcount reduced by 1,100 since the start of the program. We have settled cost compensation claims with a majority of

We continued to outperform LVP significantly in Asia excluding China and in Europe, fueled by product launches and better pricing. In Americas, we underperformed slightly, as some key customers reduced production.

We continue to expand our business with domestic Chinese OEMs, positioning us well to benefit from the new structure of the Chinese market. Domestic Chinese OEMs accounted for 38% of our China sales in Q2. We grew sales to this group by 39% in Q2 vs. a year ago, and by 25% vs. the previous quarter. However, the market developed unfavorably in Q2, with sales for certain brands and models with low Autoliv content growing strongly, while some of our key global customers production declined significantly, leading to 7pp underperformance in China.

We remain fully focused on delivering on the around 12% adjusted operating margin target, although we adjust our full year 2024 guidance slightly, reflecting changes in LVP and adverse customer mix. We continue to expect a significant increase in profitability in the second half year with an adjusted operating margin of around 11-12% compared to the first half year's 8.0%. The positive development of our cash flow and balance sheet supports our continued commitment to a high level of shareholder returns.

customers and target to close most of the remaining claims in Q3. Return on capital employed was good and cash flow continued to be strong, supporting a high level of shareholder returns and an improvement of the leverage ratio to 1.2x.

We remain on track with our strategic and structural initiatives to sustainably strengthen our footprint and operations. However, light vehicle production with certain key customers following weaker sales and inventory adjustments were lower than expected in the quarter, especially in June. The lower than expected sales impacted our profitability with an operating leverage at the high end of our normal 20%-30% range.

It is encouraging that customer production plans for the third quarter are normalizing, indicating that the June weakness should be temporary.

Inquiries: Investors and Analysts

Anders Trapp

Vice President Investor Relations

Tel +46 (0)8 5872 0671

Henrik Kaar

Director Investor Relations

Tel +46 (0)8 5872 0614

Inquiries: Media

Gabriella Etemad

Senior Vice President Communications

Tel +46 (0)70 612 6424

Autoliv, Inc. is obliged to make this information public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on July 19, 2024.