Autoliv, Inc. (ALV) on Q1 2021 Results - Earnings Call Transcript

Operator: Welcome to Q1 2021 Autoliv Inc. Earnings Conference Call. Today, I'm pleased to present Anders Trapp, VP Investors Relations. Please begin your meeting. Anders Trapp: Thank you, Akwasi. Welcome everyone to our first quarter 2021 financial results earnings presentation. On this call, we have our President and CEO, Mikael Bratt and our Chief Financial Officer, Fredrik Westin and I'm Anders Trapp, VP Investor Relations. Mikael Bratt: Thank you, Anders. Looking now into the Q1 2021 highlights on the next slide. Before we start with the formal foreign presentation, I would like to acknowledge our employees for their hard work and commitment to health and safety, cost control, quality and delivery precision. Our focus throughout this crisis has been the health and safety of our employees and to come out of it as a stronger company. Although the COVID-19 pandemic is not yet behind us, the performance over the past three quarters shows that we have built a solid platform towards our mid-term targets. The global automotive industry continues to wrestle with the semiconductor shortage and other components supply disruptions, while managing a strong end customer demand for new vehicles. In light of this, light vehicle production in Q1 2021, according to IHS Markit, exceeded expectations from a few months ago. As a consequence of the strong demand and component supply disruption, the industry is facing headwinds from rising raw materials and commodity prices. I am very pleased that our operations reported strong sales growth, profits and cash flow. We continued to execute on our strong order book and our sales increased organically by 18%, which was more than 4 percentage points better than the increase of global light vehicle production. This was despite negative geographic light vehicle production mix with high growth in lower content for vehicle markets. The solid operating income was a result of strong sales growth, good operation execution, cost control and effects from the structural efficiency programs. I am pleased that we improved the adjusted operating margin significantly, versus both 2020 and 2019. Our strong free cash flow generation allowed further deleveraging and our leverage ratio is now back inside our target range of 0.5 times to 1.5 times. Fredrik Westin: Thank you, Mikael. This slide highlights our key figures for the first quarter. Our net sales were over 2.2 billion, a 21% increase compared to the same quarter last year. Compared to the first quarter 2019 it was an increase of 3%, despite light vehicle production being 12% lower. Gross profit increased by 127 million and the gross margin increased by 250 basis points. The higher gross margin was primarily driven by the higher sales and direct labor and material efficiency. In the quarter, neither capacity alignments nor antitrust-related matters had an impact on the operating profit. The adjusted operating income increased by 101 million to 237 million due to the higher gross profits. The adjusted operating margin improved by 320 basis points versus Q1 2020 and improved by 290 basis points versus Q1 2019. The operating cash flow was 186 million, the second highest for any first quarter. This was achieved despite adverse effects from changes in working capital. Reported earnings per share more than doubled to $1.79 or adjusted return on capital employed was 26% and return on equity was 25%. The good performance in ROCE and ROE shows our commitment to and focus on capital efficiency. Looking now on the adjusted operating margin bridge on the next slide. Our adjusted operating margin of 10.6% was 320 basis points higher than in the first quarter of 2020. The impact of raw material price changes was small in the first quarter. FX impacted the operating margin negatively by 20 basis points. This is caused by transactional effects from a number of different currency payers, the most significantly negative impact from a stronger Canadian dollar versus the US dollar. As illustrated by the chart, the adjusted operating margin was positively impacted by lower SG&A and RD&E of 110 basis points, mainly due to lower personnel costs in relation to sales. Operational improvements contributed with 230 basis points. This was the result of higher sales, cost discipline and effects from our structural efficiency programs, partly offset by the negative impact of direct COVID-19 related costs of around 5 million and indirect COVID-19 related inefficiencies in both supply chain and manufacturing. Support from governments in connection with a pandemic was not material in the quarter. Looking on the next slide. For the first quarter of 2021, operating cash flow was 186 million, an increase of 30 million compared to last year. The increase in operating cash flow was a result of the higher net income, partly offset by cash but for the structural efficiency programs and changes in trade working capital. Trade working capital developed unfavorably with increased inventories and receivables with lower payables. Especially inventories were impacted by the supply chain uncertainties. Mikael Bratt: Thank you, Fredrik. Turning to the next slide. Demand for new vehicles remains high and inventory levels of new vehicles remains at a record low level in some regions. For example, the inventory levels in North America at an 11-year low, the lowest since the cash for clunkers program in August of 2009. Dealers inventory are at a normal level in China and we believe that European inventory levels are fairly low, especially for premium vehicles. Assuming that the component availability develops as expected, we expect the good demand and low inventories support a recovery in light vehicle production in the second half of the year. We think it's worth a reminder that the second quarter last year was a virtual standstill for a number of weeks in most markets, except China; hence the very high growth rates year-over-year, expected for the second quarter for 2021. As you can see in the table on the slide, light vehicle production in Europe is expected to more than double in Q2, while North America is expected to almost triple. Globally, light vehicle production is forecasted to grow by around 60% in Q2. The strong light vehicle production growth expected in the high content per vehicle markets, such as Europe and North America should support our global growth outperformance in the second quarter. On to the next slide. Here we highlight some positive and negative factors behind our 2021 indication. Our full year 2021 indications for organic growth and adjusted operating margin are unchanged despite increased market headwinds. Compared to our previous guidance, the light vehicle production outlook is lowered by almost 2 percentage points due to component shortage. Our estimate of raw material price headwinds is increased from 40 basis points to 90 basis points for 2021. Despite these negative effects, we reiterate our full year guidance as these effects are offset by an improved sales mix and improved cost structure, as evidenced by the first quarter performance. Operator: Thank you. Our first question comes from Colin Langan from Wells Fargo. Please go ahead. Your line is now open. Colin Langan: Great. Well, thank you very much for taking the question. Maybe just first question you're now within your target leverage range, sales seem to be holding up relatively well. Why not bring back a dividend or a large buyback, any thoughts there on sort of capital allocation plans going forward? Mikael Bratt: As you know, I mean, this is a Board decision and a dividend or buyback decisions. So this is a quarterly call, and we revisit that question with the Board on a quarterly basis, so - in connection with the Board meeting. So this is not the topic for today. So, we have to come back later when it's time for it. Colin Langan: Okay. And then just looking at the guidance, it implies about 8% over market, I think you're talking about mid-term 4 to 5, I think Q1 was just 4. What's driving the very strong growth over market through the rest of the year? I mean, are launches coming in at higher levels? Are largely being pulled forward and what's sort of the driver there? Thank you. Mikael Bratt: It's at the back of our strong order books that were built over the years and continuing to build. So, this is in line with what we'd indicated before and we continue to deliver on that. And as you said, I mean we have a slight increase of launches here that contributes to that. So I would say according to plan. And of course, in the mix as we'd talked about, we see the content per vehicle increasing regularly , in line with what we also said in the past. Colin Langan: Okay. Alright. Thank you for taking my question. Operator: Thank you. Our next question comes from Mattias Holmberg from DNB. Please go ahead. Your line is now open. Mattias Holmberg: Thank you. I have two questions. The first one is on the investigation that I see in the US where some faulty airbags of GM vehicles are looked at. Can you make any comments if you're involved in this in any way? Mikael Bratt: I mean, we are aware of the investigation and GM is an important customer of us and we are delivering among other things airbags to different GM models. So, if GM needs our help in the investigation, we will of course support but based upon our understanding, we do not see this is an issue for which we should be responsible. Mattias Holmberg: Thank you. And on the recent announcement that you will make disconnect devices for electric vehicles, can you perhaps elaborate a bit on what type of growth outlook potential you see for this business, if it's something that could become material or sort of more a small side business? Mikael Bratt: No, I don't have any numbers to give you at this point. But of course it's a meaningful effort in terms of growing content per vehicle and our also role in electrical vehicle development. So we see this as a very interesting opportunity for sure to continue growing that part. Mattias Holmberg: Great. Thank you. Mikael Bratt: Thank you. Operator: Our next question comes from James Picariello from Key Banc. Please go ahead. James Picariello: Hey, guys, just on the guide, in the unchanged organic growth and operating margins. Starting on the top line, you're acknowledging the 2-to-3-point headwind from the semiconductor shortage but maintained your organic revenue growth guide. So is that just a function of new launches, the new business backlog or is there - how much of it is attributed with a favorable mix? Mikael Bratt: No, I think it is several factors. I think I mean, first of all, we had the strong start of the year. We have also seen the improved sales mix. And yeah, I think that's the main factors there. So we believe in the numbers that we're talking about here and see good development in general when it comes to us delivering on our order booking. Fredrik Westin: Maybe one addition - sort of maybe one addition to that the 4% of performance that we achieved here in the first quarter was with a rather significant negative currency mix for us in terms of CPV and that will have a much more positive impact, especially in the second quarter, as we laid out that both Europe and North America will grow substantially faster. So that would then be a tailwind for us to much larger extent, especially in the second quarter. James Picariello: Right. And collectively, 2 to 3 points better than what you expected as of last quarter. Okay. And then on the margin side, the commodities headwind has essentially doubled right from 40 basis points to 90, it's about 40 million difference. What's the offset to that? Is that - because your top line revenue growth hasn't changed, are the structural savings higher? Just curious on that. Thank you. Fredrik Westin: I think first of all, I think the first quarter shows that we have a very strong foundation to build on. And that the structural efficiency programs are coming through. They were basically 80% through now on the second one and aim to complete that here in the second quarter. Then we see the Strategic Initiatives paying off as well. And then it is really about the agility to react to the demand changes, which I think we proven that we can be doing in both at fourth - in the fourth quarter and the first quarter here. And then we see good progress in productivity improvement, both materials, but also the direct labor side. So that all combined, then makes it possible for us to offset the higher impact received from raw materials and that's how we can perform the guidance, also the 10% margin side. James Picariello: Okay. Thanks, guys. Operator: Thank you. Our next question comes from Joseph Spak from RBC. Please go ahead. Joseph Spak: Thank you very much everyone. I guess last quarter, right, you talked about how - this is what I trust is forecasting for the year, but maybe you saw some concern to that forecast. Now you've lowered that right and acknowledged sort of that there's a bigger semiconductor hurdle. So I just want to be clear, like, is your guidance still actually assuming 12% or are you assuming something internally a little bit different? And I'll stop there for a second. Mikael Bratt: No, I think I mean, as always, we - I mean, we'd take a view on the visibility that we have and see that and further out in time it come, we use then the external references to that. But I think what we have seen here now is that the semiconductor, according to our judgment, would have impact in the range of 2% to 3% for the full year. And that, of course, is baked into the outlook we are talking about here and the net effect is what you see in our guidance there when it comes through the full year number. Joseph Spak: Okay. And then, as has been alluded to a couple of times, your outgrowth actually, I guess, got better versus your prior guidance. I'm wondering if you could talk a little bit about the convexity of that outgrowth, as you see it to light vehicle production, meaning, if it ends up being, I don't know, 9% or 10%, sort of 12%, like, do you see a meaningful change to your outgrowth there or to organic growth or it should be pretty linear? Fredrik Westin: I wouldn't go into any details in terms of the timing and so forth. But I think, once again, here, I mean, what you see is that there is also of a strong order books that we are delivering. And also now - and also particularly now, in combination with a good mix, plus that we also have content growth that we see that is coming through nicely with many new models and new development in, I'd say, across the globe with more safety parts coming into the vehicle. Joseph Spak: Okay. Yeah, I guess that was sort of the question. Like, it seems like that the - what's keeping the outgrowth is automakers are making a stronger mix of products that sort of helping you, so you would expect something similar to continue or would seem going that through the balance. Fredrik Westin: Yes, yes. Joseph Spak: Okay. Thank you. Operator: Thank you. Our next question comes from Hampus Engellau from Handelsbanken. Please go ahead. Hampus Engellau: Thank you very much. Two questions for me. Sort of going back on this collaboration with Mersen but it would be interesting to hear your view on the potential for having this include that in the NCAPs for EVs, given the significant step up with potentially 8.5, maybe 11 millimeters by 2025. Second question is, coming back to the semis. I believe we are starting to pick up that some subsidize have said that even if the OEMs are stopping the production to balancing semi shortage, they will take delivery from other subsidized makers because they fear that it could be other shortages for the remainder of the year. Is this something that has impacted you guys, i.e. you will still deliver airbags even if OEMs have stopped production for two weeks or three weeks. Those were my questions. Thank you. Mikael Bratt: Thank you. Let - yeah, then NCAP question, first. I can't say that until we don't see anything in the NCAP pipeline, if I put like that that would include this kind of product. But I think there is a growing interest with this kind of product. And I think with higher voltage vehicles also, we have an opportunity here to provide power safeties, which is into those vehicles with this collaboration. So as I said, we are quite positive about this opportunity, but no numbers of details further than that at this point in time here. On the semiconductor side here and the production, I mean, of course, we are delivering to our customers according to their call out. We do not have detailed insight in how those vehicles ultimately are ending up either on their yard or fully delivered to the dealers. But it's nothing really that we have heard or seen in an extend - meaningful extend. So for us, it's all about delivering according to the call outs and expectation from our customers and we are doing that. Hampus Engellau: Can I ask that question in this way instead of then? For instance, given the planned stoppage that General Motors has announced, did that change the call outs that they provided to you guys, after that announcement? Mikael Bratt: I can't comment on a specific OEM's call offs. But I mean, we - once again, we are delivering according to their schedules and we are following our customers' request there, so we don't see any specific behavior in regards to your comments there, so. Hampus Engellau: Thank you. Thank you. Operator: Our next question comes from Sascha Gommel from Jefferies. Please go ahead. Sascha Gommel: Good afternoon. Good afternoon. Thanks for taking my question. The first one would actually be on bit color on the second quarter. How that started? Because I think you mentioned that Q2 is as exposed to same shortage as Q1. Does that mean you're on a run rate in the second quarter that would be similar to the first quarter in terms of top line and earnings? Fredrik Westin: I mean, as you know, I can't comment any outlook on the next quarter here. Sascha Gommel: And how has April started, any color on that? Fredrik Westin: I mean, if your question is about the - related to the semiconductors, I think I mean, we are still in the same situation as we were a couple of weeks ago. I think it's not any worse or any better in that regard. So we have to see how it plays out. But I think I mean, it will take some time before we are through the semiconductor issue . Sascha Gommel: Okay. Very clear. And my second question would be, again, on the safety switch. Just technology wise, does every car need one or are they competing technology - or every EV needs one or are they competing technologies that are available for it is not very clear that technology will have a broad adoption at all? Mikael Bratt: No, I think in terms of that particular feature, it's - that's the main solution, I would say. But it - as their voltage goes up, of course it becomes even more relevant. So I think we have a role to play there to add safety features into a new type of technology that we see from the EV transformation, so to speak. So I think a good opportunity there to build the business. Sascha Gommel: Alright. Appreciate it. Thank you. Mikael Bratt: Thank you. Operator: Thank you. Our next question comes from Erik Golrang from SEB. Please go ahead. Erik Golrang: Thank you. I've few questions. First one, coming back to your organic outperformance guidance. If I'm not wrong, you've guided for mid-single digit outperformance in the last quarter as well. And either you say that 8% outperformance is mid-single digit or you are implicitly assuming a higher LVP figure than 12% growth. Which one is it? Fredrik Westin: I mean, mid-single digit is mid-single digit and I think it is no further comments to that. And I mean, we have built it on the same assumptions as we always do. Erik Golrang: Okay. So 8% . Fredrik Westin: Maybe I should clarify that we also say around 20, so in the calculation, for your help. Erik Golrang: Okay, thank you. The two questions on the raw material side, I think last time around you made an assumption of particularly steel prices coming down at some point, is that still the case? And then the second question is, if there was zero margin impact in Q1, you would have around 120 in the remaining three quarters on a 20 basis points. And I guess it's right to assume given that that's more than 120 then in the second half compared to the second quarter. Mikael Bratt: So the guidance we gave 40 basis points was on the assumption that the raw material prices would not increase further from that point of time on, which they now of course have. And we're basing the 90 basis points on a significantly higher impact on all our steel components that we're buying but it is not only steel, it's also from - actually the impact is also from textile and plastics almost equally, large, if you compare guidance to guidance here. But we don't assume any tailwind from say reduced raw material prices going forward. So, it's based on that the prices remain at the current levels. And then in terms of the timing, yes, the impact in Q1 was close to zero. And then it will not be a gradual increase Q2, Q3. It would probably peak into the third quarter and then come down a bit from the fourth quarter, if you look at the year-over-year hit. Erik Golrang: Very good. Thank you. Operator: Thank you. Our next question comes from Brian Johnson from Barclays. Please go ahead. Brian Johnson: Yeah, so I have two questions, a bit more strategic. So first is around the quarter, looking at China, there was very significant growth over market. Is that just a random accident or is there something around either your mix in China or a move to more content in China that could be a more permanent tailwind? Mikael Bratt: No, I think it's - I mean, it's not random. I think it is that you see content per vehicle are growing. I think also we have a good position with strong customers in China and we growing our portfolio there. So I think it's a growing market that does support the safety products. Brian Johnson: Okay, and speaking of safety, obviously, your mission and you had a great slide on life saved. When you talk to ESG investors, how do they view Autoliv as an ESG company, aside from your carbon footprint? And is your contribution to saving lives over the decades, does that come up in the E discussions, does it come up in the S discussions or do you think kind of investors with maybe a big focus on green energy and EVs kind of miss the societal improvements you've been driving? Mikael Bratt: I think I mean - I think we believe that we have a strong position in this and of course, saving more lives is definitely a sustainability activity, no doubt about it. So I think we are well positioned there. With that said, I think we of course still have more to do all together in all those areas you mentioned. But I think we are well positioned and you can see that also in our sustainability report, little bit more details there. But I think we are well positioned and get good feedback. Brian Johnson: And do you think that's reflected in your ownership in ESG funds in Europe and North America? My impression is the Europeans understand that better than the American ESG investors? Mikael Bratt: Yeah, could be like that. Yes. Brian Johnson: Okay, thanks. Operator: Thank you. Our next question comes from Bjorn Enarson from Danske Bank. Please go ahead. Bjorn Enarson: Yes, thank you. A little bit on your development now in Q1 gross margin device versus the OpEx. Can you say something about that the OpEx level going forward or what will lead you to your margin targets for the year? Are at the reasonable OpEx level right now or are they little bit elevated or even low? Fredrik Westin: Now in terms of the gross margin development in the first quarter, I mean, of course, the volume was one major contributing factor. But then as we highlighted, we also had good both material and labor productivity. On the labor side, we have been struggling in the previous quarters because of the constraints that we've had in both from the volatility and the core loss, but also having to operate under COVID restrictions in the factories. But we see that coming through much better in the first quarter than what we've had during the year before. And then the third element is really the Structural Efficiency Programs where a large part of that is targeted at the production overhead structure in our manufacturing setup. And that has been coming through nicely. As I said, there's a little bit left from the Structural Efficiency Program here to come in through the remainder of the year. And then we remain very, very focused on continuing to improve productivity both on the material side and the labor side but a very, very good development so far. And it's also definitely one of the reasons we can also offset and increase headwinds of materials. Bjorn Enarson: So, it was nothing, basically extraordinary in the quite solid gross margin development in the quarter, it is volumes and less of disturbances in production, as we've seen for quite some time. Fredrik Westin: I wouldn't call it less disturbances, but I think we are strict, we're getting our arms around it better and managing it better, yeah, but nothing extraordinary in the quarter that would be of any interest. Bjorn Enarson: Perfect. And if you can say something about potential buybacks and etc. on your gearing situation now, when you are within your guidance range. Mikael Bratt: No, I think I will refer to my answer earlier here. I mean, when it comes to dividends, it's a Board decision in connection with quarterly reviews with the Board when we have the Board meetings there. And I think when it comes to the buybacks, we announced that one when it happens, so to speak. So not nothing to report at this point in time. Bjorn Enarson: Nope. Got it. Thank you. Mikael Bratt: Thank you. Operator: Our next question comes from Vijay Rakesh from Mizuho. Please go ahead. Vijay Rakesh: Yeah. Hey, thanks, guys. Just briefly, I know you talked about fiscal '21 LVP about 12% year-on-year. Do you see some push out in fiscal '22? Any thoughts on how fiscal '22 goes up or do you see some of the demand just going away? Mikael Bratt: If on a same a question, the outlook for 2022 when it comes to the LVP, was that your question? Vijay Rakesh: Yeah. Yes, yes. Mikael Bratt: Yeah. No, I mean, we have no comments on 2022 at this point. I mean, we have commented around 2021 but I mean as we have said here, I think we see a positive demand situation. We have very low inventories in the chain - supply chain with the as we mentioned here. And right now, I think it's more of a supply situation which is glaring and how that will carry into 2022, we will have to come back to. Vijay Rakesh: Got it. And on the inventory side, I know you mentioned, you look at auto inventories, US was at an 11-year low in terms of dealership inventories. Any thoughts on where China is trending in terms of dealer inventories and same for Europe? I know you mentioned low but just want to get some - if you had concrete number there. Thanks. Mikael Bratt: I have no numbers. But I mean, what we see here is that China, inventory seems to be stable, nothing dramatic there. And in Europe, a little bit on the lower side. I wouldn't say anything dramatic there. And it's primarily geared towards the more luxury cars or more premium course I should say in Europe where you have a little bit of a lower inventory situation. But that's about where we are. Vijay Rakesh: Got it. Thanks. Operator: Thank you. Our next question comes from Emmanuel Rosner from Deutsche Bank. Please go ahead. Emmanuel Rosner: Yeah, thank you very much. Sorry to come back to this but I'm still trying to understand the positive offsets on the top line to the lower LVP outlook and in particular, the improved sales mix. Can you just go back and explain once again, I guess, what is playing out better than you expected a few months ago from the sales mix point of view? Mikael Bratt: I think I mean, it's the - I mean, one thing is, of course, the mix. I mean, how it comes out here and we have high content vehicles with premium cars that that's favorable. But otherwise, I think it's - I mean, it's - as we said here, I mean, it's the back of strong order book that we are delivering here. And it's in - I mean, we have indicated that we should outperform this year as well. So it's really only the mix that is maybe more positive than then what you indicated. Emmanuel Rosner: Would it be a function of, in the context of chip shortages, automakers essentially fearing there are fewer available chips to some of the highest contented vehicles? And if that's the case, is that something that could be - would be sustainable longer term or is that something that just last during the time where the shortages are there? Mikael Bratt: As I indicated before, yeah, I mean, it plays out very different between the different OEMs in terms of how they are impacted. And what we can see is that we have reshuffling in their programs, which in terms where, of course, they need to make their priorities where they get best use for the semiconductors that they get, so not hard to imagine that they optimize that from that point of view in a support phase. Could be, but I mean, we don't have the full insights on that. Emmanuel Rosner: Okay. And then a question on the order intake, I think you commented in the press release that - and in the slides that it was stable year-over-year, was this a comment in dollar term or a win rate? And I guess, what is the expectation for this year compared to last year? Mikael Bratt: I mean, as you know, we only give the shares, so to speak, once a year, when we close the year. What we're indicating here is the order intake was in line with last year's in dollar terms. Emmanuel Rosner: Okay. And just to remind us, last year, wasn't impacted by COVID yet, so was it a good result in Q1? Last year Q1. Mikael Bratt: No, I mean, there was no COVID impact in Q1, no problem in that regards, no. Emmanuel Rosner: All right. Thank you. Operator: Thank you. Our next question comes from Chris McNally from Evercore. Please go ahead. Chris McNally: Thank team. Two quick ones, just one on - the first one on raw mat. Given the 90 basis points, you talked a little bit about, take some time, 6 to 12 months for the tier twos to pass it through things like steel in belts and fasteners. Would it make sense to think about even if raw materials stayed where they are flat right now, we probably have some raw material pressure into next year, just given the annualization and maybe it takes some one or two price increases to send it through. We should think about this pressure probably continuing into next year? Mikael Bratt: Sorry. We don't give guidance on 2022. But of course, if you look at the impact, we had in the first quarter, and should they raw material prices remain at the levels where they are currently that I think it would also be fair to assume that there will be a carryover effect into the next year. Chris McNally: Okay, great. And then the second just on a longer-term question on your content per vehicle growth. Primarily from the market share gain and I know you don't really comment on '22, is it possible that we could think about, based on your revenue projections, where you think that puts you in terms of market share for 2021, sort of faculty envelope, it could be sort of 44%, maybe 45%. And it sounds like from your order book over the last three to four years, you'll probably peak out at something 47%, 48%. So you just wanted to kind of have a high-level view that '22 and '23 will still see market share gains, so good content per vehicle growth. Mikael Bratt: I mean, we don't give market share targets by year, but what we have indicated is that we believe that we will grow into a market share position of around, mid-40s, around 45-ish in the years to come here and the pace there, we have not given, so to speak. But I mean, we have built a strong order book and we continue to build an order book here. So we will define that market share going forward. Chris McNally: Okay, great. Operator: Thank you. Our next question comes from Agnieszka Vilela from Nordea. Please go ahead. Agnieszka Vilela: Thank you. My first question is concerning your headcount situation. When I look at the number of your indirect workers, I can see that the numbers started to increase now in the quarter. Can you share with us how do you think about the money situation and also, is it the kind of step back from your structural action, given the fact that the car production on a quarterly basis is lower now than what was in Q4, for example. Fredrik Westin: I mean, first of all, if you compare it year-over-year, the headcount is down and if you take the support headcount, it is down around 800 employees, and then it's more or less flat versus end of year. So we've had some selective additions that we have had, mainly in the area of IT and digitalization to support the strategic initiatives we have ongoing there. But we remain very, very cost focused and also headcount focused and very diligent about any additions. And as I said also before, we're not through yet with the second step of the efficiency program, which will most likely be completed here during the second quarter. Agnieszka Vilela: Perfect, thank you. And then also, I would like to ask you about the pricing environment right now for your industry. I think that historically, you used to say that you meet a kind of price pressure of 2% to 4% every year. Is the situation now the same and now also excluding their own material impact, so in general, do you see similar pricing pressure on your products or is becoming a bit more positive for you guys? Mikael Bratt: No, I think it's definitely within that range today and we don't expect to see any changes to that going forward in the interim at least, so 2 to 4 is a good reference point still. Agnieszka Vilela: Thank you. Mikael Bratt: Thank you. Operator: Thank you. There appears to be no further questions registered. So I will now hand it back to the speakers. Mikael Bratt: Thank you, Akwasi. Before we end, today's call, I would like to say that our progress in the past few quarters supports our confidence in our journey towards our mid-term targets, and our opportunities for shareholder value creation. Despite the fact that global light weight production is almost back to the 2019 level, we are still in a pandemic and our first priority remains the health and safety of our employee. Our second quarter earnings call is scheduled for Friday, July 16, 2021. Thank you, everyone for participating on today's call. We sincerely appreciate your continued interest in Autoliv. Until next time, stay safe.
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Autoliv Inc. (NYSE: ALV) Reports Q3 Earnings, Faces Market Challenges

  • Earnings per Share (EPS) of $1.84 fell short of the estimated $1.95, marking an earnings surprise of -8%.
  • Revenue for the quarter was $2.56 billion, slightly exceeding the Zacks Consensus Estimate of $2.54 billion.
  • Full-year 2024 organic sales growth forecast revised down to approximately 1% from the earlier projection of 2%.

Autoliv Inc. (NYSE:ALV) is a leading manufacturer of automotive safety systems, including airbags, seatbelts, and steering wheels. The company operates globally, with a significant presence in markets like Europe, North America, and Asia. Autoliv faces competition from other automotive safety suppliers such as ZF Friedrichshafen AG and Joyson Safety Systems.

On October 18, 2024, Autoliv reported its third-quarter earnings, revealing an earnings per share (EPS) of $1.84. This figure fell short of the estimated $1.95, marking an earnings surprise of -8%. Despite this, the EPS showed an 11% increase from the previous year, when it was $1.66. The company's revenue for the quarter was $2.56 billion, slightly exceeding the Zacks Consensus Estimate of $2.54 billion, but still below the expected $2.73 billion.

Autoliv's organic sales decreased by 0.8% year over year, missing the anticipated growth of 1.5%. This decline was primarily due to a negative light vehicle production mix in China. The company's adjusted operating income was $237 million, a 2.3% decrease from the previous year, with an adjusted operating margin of 9.3%, slightly down from 9.4% in the prior year. This decline was attributed to lower gross profit and increased selling, general, and administrative costs.

Looking forward, Autoliv has revised its full-year 2024 organic sales growth forecast to approximately 1%, down from the earlier projection of 2%. This adjustment reflects the challenges the company faces in the current market environment. Despite these challenges, Autoliv's stock is currently priced at $98.32, reflecting a decrease of 1.2% or $1.20. The stock has fluctuated between a low of $97.69 and a high of $100.10 during the trading day.

Autoliv Surpasses Q1 2024 Earnings Estimates with Robust Financial Performance

Autoliv Exceeds Market Expectations with Strong Q1 Earnings

On Friday, April 26, 2024, before the market opened, Autoliv (ALV:NYSE) announced its earnings per share (EPS) of $1.58, beating the estimated EPS of $1.4 set by analysts. This performance is a clear indicator of the company's financial health and its ability to exceed market expectations. Additionally, ALV reported revenue of $2.615 billion for the quarter, which also surpassed the estimated revenue of $2.600 billion. This slight but significant increase in revenue compared to the estimates suggests that Autoliv is maintaining a steady growth trajectory in its operations.

The financial report released by Autoliv for the first quarter of 2024, as highlighted by PRNewsWire, provides a comprehensive overview of the company's financial achievements during this period. Notably, the company reported a 5% increase in net sales compared to the same period in the previous year, reaching approximately $2.6 billion. This growth is attributed to a 5% organic sales growth, demonstrating Autoliv's ability to expand its business operations effectively. Furthermore, the company's operating margin was reported at 7.4%, with an adjusted operating margin slightly higher at 7.6%. These figures indicate a healthy profit margin that Autoliv is managing to maintain, reflecting efficient operational management and cost control measures.

The earnings per share (EPS) for Autoliv showed a significant rise, with a reported 77% increase to $1.52, and the adjusted EPS also grew by 76% to $1.58. This substantial growth in EPS is a testament to Autoliv's strong financial performance and its ability to generate increased profits for its shareholders. The company's focus on improving its profitability is evident from these figures, which also surpassed the Zacks Consensus Estimate of $1.40 per share, marking a substantial improvement from the $0.90 per share recorded a year ago.

Looking ahead, Autoliv has set ambitious goals for the full year of 2024, expecting around 5% organic sales growth and an adjusted operating margin of approximately 10.5%. The company also anticipates an operating cash flow of around $1.2 billion for the year, indicating confidence in its financial stability and cash-generating capabilities. This forward-looking guidance suggests that Autoliv is optimistic about its future performance and is committed to achieving continued growth and profitability.

A key highlight from Autoliv's first-quarter report is the record first-quarter sales, which increased organically by 5%. This performance was notably 6 percentage points better than the global Light Vehicle Production (LVP) decline of 1%, as reported by S&P Global in April 2024. This indicates that Autoliv is outperforming the broader industry trends, showcasing its resilience and strategic positioning to capitalize on market opportunities despite challenges in the global automotive sector.

Autoliv Q1 Financial Analysis 2024: Automotive Safety Sector Insights

Autoliv's Q1 Financial Outcomes: A Deep Dive into Automotive Safety Sector's Performance

Autoliv (ALV), a leading player in the automotive safety sector, has unveiled its financial outcomes for the first quarter ending in March 2024, sparking interest among investors and market analysts. According to the analysis by Zacks Investment Research, this period has been significant for Autoliv, as it allows for a direct comparison of the company's financial health against both Wall Street's expectations and its performance in the same quarter of the previous year. This comparison is crucial for understanding the trajectory of Autoliv's growth and operational efficiency.

The focus on Autoliv's top and bottom line numbers is particularly important. The top line, or revenue, indicates the total income generated from the company's business activities, while the bottom line, or net income, reflects the profit after all expenses have been deducted. These figures are essential for assessing the company's ability to generate sales, manage costs, and ultimately deliver value to shareholders. By comparing these numbers to analyst forecasts, investors can gauge whether Autoliv is performing above, meeting, or falling short of market expectations, which can influence the company's stock price.

Moreover, the year-over-year comparison provides insights into Autoliv's growth and operational improvements. An increase in revenue or net income compared to the previous year suggests that the company is expanding and possibly gaining market share, which is a positive sign for investors. Conversely, a decline could indicate challenges in the company's operations or competitive landscape, prompting a closer examination of the underlying issues.

The detailed report available on Zacks' website offers an in-depth analysis of Autoliv's Q1 earnings, including specific figures and metrics that shed light on the company's financial performance. By accessing this report, interested parties can obtain a clearer picture of Autoliv's operational success and its position in the competitive automotive safety industry. This information is invaluable for making informed investment decisions and understanding the factors driving Autoliv's financial outcomes.

Autoliv Shares Up 8% Since Q3 Announcement

Autoliv (NYSE:ALV) shares rose more than 8% since the company’s reported Q3 results on Friday. Both EPS of $1.23 and revenue of $2.3 billion came in line with the Street estimates.

Q3 revenues grew 25% year-over-year (up 32% organic), and operating margins came in at 7.5%, above the Street estimate of 7.2%. 2022 organic growth was indicated at 15%, while margins are now indicated at the upper end of the 6-7% range implying Q4 margins of close to 10%. Full-year raw material headwind also lowered to 5% from 5.5% so inputs moving in the right direction.

Analysts at RBC Capital provided their views on the company. While there is still a good level of industry uncertainty, the analysts were encouraged by margin progression, positive conversations on recoveries and margin drivers into 2023. The analysts raised their price target to $93 from $90, while maintaining their Outperform rating.

Autoliv Shares Down 3% on Significant Q1 Miss

Autoliv, Inc. (NYSE:ALV) shares were trading more than 3% lower Tuesday afternoon following the company’s reported Q1 results, with EPS of $0.45 coming in significantly below the Street estimate of $1.18. Revenue was $2.12 billion, compared to the Street estimate of $2.23 billion.

Analysts at Deutsche Bank provided their views on the company, stating that the quarterly disappointing results reflect a challenging near-term operating environment for the entire auto suppliers group.

The analysts mentioned that the company’s revenue growth in 2022 is still expected to outperform the overall market by 12%, supported by a strong business backlog, growing CPV, and continued market share gains.

However, the analysts are modeling operating margin compressing toward the high-end of the revised guidance to around 6.5% due to ongoing inflationary pressure from commodities and other inputs including premium freight.

The analysts still view Autoliv as one of the best plays for the industry recovery, despite macro challenges. The analysts expect $4.40 of EPS in 2022, $7.10 in 2023, and $9.00 in 2024.