Autoliv: Financial Report July - September 2024

Rhea-AI Summary

Autoliv (NYSE: ALV) reported its Q3 2024 financial results, showing a 1.6% decrease in net sales to $2,555 million and a 0.8% organic sales decline. Despite this, the company outperformed global light vehicle production by 4 percentage points. The operating margin remained stable at 8.9%, with an adjusted operating margin of 9.3%. Diluted EPS increased by 11% to $1.74.

Key highlights include:

• Strong performance in Europe and Asia (excluding China)
• 18% sales growth to domestic Chinese OEMs
• Continued cost reduction efforts, including headcount decrease
• Operating cash flow of $177 million
• Full year 2024 guidance reaffirmed with slight adjustments

Autoliv maintains its commitment to shareholder returns and financial targets, supported by a strong balance sheet with a debt leverage of 1.4x.

Positive

• Outperformed global light vehicle production by 4 percentage points
• 11% increase in diluted EPS to $1.74
• 18% sales growth to domestic Chinese OEMs
• Successful execution of cost reductions and commercial recoveries
• Operating cash flow on track towards $1.1 billion for 2024
• Maintained strong balance sheet with debt leverage of 1.4x

Negative

• 1.6% decrease in net sales to $2,555 million
• 0.8% organic sales decline
• Underperformance in China due to substantial negative market mix
• Reduced full year 2024 organic growth expectation from 2% to 1%
• $14 million cost related to a supplier settlement

Insights

Financial Analyst

Autoliv's Q3 2024 results show resilience in a challenging market. Despite a 1.6% decrease in net sales to $2,555 million, the company outperformed global light vehicle production (LVP) by 4 percentage points. The 8.9% operating margin and 9.3% adjusted operating margin remained stable year-over-year, demonstrating effective cost management.

Key positives include:

• Solid sales outperformance in Europe and Asia (excluding China)
• 18% growth in sales to domestic Chinese OEMs
• Continued reduction in direct and indirect headcount
• Strong operating cash flow of $177 million

However, challenges persist, including underperformance in China due to negative market mix and a $14 million cost related to a supplier settlement. The company has slightly lowered its full-year 2024 organic growth expectation to 1% from 2%.

With a leverage ratio of 1.4x and reaffirmed guidance for adjusted operating margin, Autoliv appears well-positioned to navigate market uncertainties while maintaining shareholder returns.

Market Research Analyst

Autoliv's Q3 performance reflects broader industry trends and regional variations in the automotive market. The company's 4% outperformance against global LVP decline showcases its competitive positioning, particularly in Europe and Asia excluding China.

Notable market insights include:

• Global LVP declined by 4.8%, indicating ongoing industry challenges
• Strong growth with domestic Chinese OEMs (18% vs 8.5% LVP growth) suggests shifting market dynamics in China
• Negative mix effect in China highlights the trend towards lower safety content models

The company's success in cost reduction and commercial recoveries has helped maintain profitability despite inflationary pressures. However, the revised organic growth forecast for 2024 (down to 1% from 2%) suggests caution about market conditions.

Autoliv's performance relative to market trends indicates resilience, but also highlights the importance of adapting to regional market shifts, particularly in China.

STOCKHOLM, Oct. 18, 2024 /PRNewswire/ -- (NYSE: ALV) (SSE: ALIV.sdb)

Q3 2024: Solid sales outperformance

Financial highlights Q3 2024
$2,555 million net sales
1.6% net sales decrease
0.8% organic sales decline*
8.9% operating margin
9.3% adjusted operating margin*
$1.74 diluted EPS, 11% increase
$1.84 adjusted diluted EPS*, 11% increase

Full year 2024 guidance
Around 1% organic sales growth
Around 1% negative FX effect on net sales
Around 9.5-10.0% adjusted operating margin
Around $1.1 billion operating cash flow

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

Key business developments in the third quarter of 2024

• Third quarter sales decreased organically* by 0.8%, which was 4pp better than global LVP decline of 4.8% (S&P Global Oct 2024). We outperformed in Europe and Asia excl. China, mainly due to high level of product launches and positive pricing. Our sales to domestic Chinese OEMs grew by 18%, which is twice as much as their LVP growth of 8.5%. Despite this, we underperformed in China, due to a substantial negative LVP mix as lower safety content models grew strongly while higher content models declined.
• Profitability was unchanged despite a slight net sales decline. This was mainly due to successful execution of cost reductions and commercial recoveries and despite inflationary cost increases and a $14 million cost related to a supplier settlement. Both direct and indirect headcount continued to decrease. Operating income was $226 million and operating margin was 8.9%. Adjusted operating income* was $237 million and adjusted operating margin* was 9.3%. Return on capital employed was 22.9% and adjusted return on capital employed* was 23.9%.
• Operating cash flow was $177 million, as expected, and we are on track towards $1.1 billion for 2024. Free cash flow* was $32 million compared to $50 million last year. At 1.4x, the leverage ratio* remained within our target range. In the quarter, a dividend of $0.68 per share was paid, and 1.33 million shares were repurchased and retired.

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

Key Figures

(Dollars in millions, except per share data)	Q3 2024	Q3 2023	Change	9M 2024	9M 2023	Change
Net sales	$2,555	$2,596	(1.6) %	$7,774	$7,724	0.7 %
Operating income	226	232	(2.4) %	626	453	38 %
Adjusted operating income1)	237	243	(2.3) %	657	586	12 %
Operating margin	8.9 %	8.9 %	(0.1)pp	8.1 %	5.9 %	2.2pp
Adjusted operating margin1)	9.3 %	9.4 %	(0.1)pp	8.5 %	7.6 %	0.9pp
Earnings per share - diluted	1.74	1.57	11 %	4.98	3.04	64 %
Adjusted earnings per share - diluted1)	1.84	1.66	11 %	5.30	4.48	18 %
Operating cash flow	177	202	(12) %	639	535	19 %
Return on capital employed2)	22.9 %	24.2 %	(1.3)pp	21.2 %	15.6 %	5.6pp
Adjusted return on capital employed1,2)	23.9 %	24.5 %	(0.7)pp	22.1 %	19.8 %	2.3pp
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) Annualized operating income and income from equity method investments, relative to average capital employed.

Comments from Mikael Bratt, President & CEO

Light vehicle production was weak in the third quarter, declining by close to 5% globally. This was driven by a combination of inventory reductions, especially in the Americas and a high comparison base, especially in China. In this tough environment, Autoliv managed to outgrow LVP by 4pp, enabling almost unchanged sales and operating income. This is despite a $14 million cost item related to a supplier settlement. 

We were able to achieve these results mainly due to our cost control, including a continued reduction of our indirect workforce. We accelerated our efficiency improvements, contributing to a reduction of direct headcount by 3,100 compared to a year earlier, which is a reduction of 6%. 

I am pleased that we outgrew LVP on a global basis following substantial outperformance in Europe and Asia excl. China. Our sales underperformed LVP in China due to a substantial negative market mix, however, our position with Chinese OEMs continues to improve. 

Based on sales trends and order intake in recent years, we expect further market share gains with domestic Chinese OEMs in the coming years.

Excess inflation compensation negotiations with our customers have developed in line with our expectations with a few negotiations still outstanding.

With the seasonally strong fourth quarter remaining of the year, we reaffirm our guidance of around 9.5-10.0% adjusted operating margin for 2024. We expect to be at the low end of this range, as we now expect full year 2024 organic growth to be 1% instead of previously expected 2% due to the unfavorable market mix development.

Our operating cash flow is on track towards the full year guidance of $1.1 billion and our balance sheet remains strong with a debt leverage of 1.4x, which supports our continued commitment to a high level of shareholder returns and our financial targets.

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 October 18, 2024.

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/autoliv/r/financial-report-july---september-2024,c4053263

The following files are available for download:

https://mb.cision.com/Main/751/4053263/3062016.pdf

The full report (PDF)

 

View original content:https://www.prnewswire.com/news-releases/autoliv-financial-report-july---september-2024-302280303.html

SOURCE Autoliv

FAQ

What was Autoliv's (ALV) Q3 2024 net sales performance?

Autoliv's Q3 2024 net sales decreased by 1.6% to $2,555 million, with an organic sales decline of 0.8%.

How did Autoliv (ALV) perform compared to global light vehicle production in Q3 2024?

Autoliv outperformed global light vehicle production by 4 percentage points in Q3 2024.

What is Autoliv's (ALV) full year 2024 guidance for adjusted operating margin?

Autoliv reaffirmed its full year 2024 guidance for adjusted operating margin at around 9.5-10.0%, expecting to be at the low end of this range.

How much did Autoliv's (ALV) diluted EPS grow in Q3 2024?

Autoliv's diluted EPS increased by 11% to $1.74 in Q3 2024.

What was Autoliv's (ALV) operating cash flow in Q3 2024?

Autoliv's operating cash flow was $177 million in Q3 2024, on track towards $1.1 billion for the full year 2024.