Autoliv, Inc. · NYSE:ALV
Autoliv — Barclays Industrial Select Conference 2017
44 slides from Autoliv's conference presentation, Feb 22, 2017
Slide 1: Barclays Industrial Select Conference - Miami
Barclays Industrial Select Conference - Miami Johan Löfvenholm, President Electronics February 22, 2017 1 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 2: Safe Harbor Statement
Safe Harbor Statement* This presentation contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments t
Slide 3: Saving Lives and Creating Value
Saving Lives and Creating Value Customers Owners & Business Creditors Partners VALUE Family & Employees Society 3 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 4: We Save More Lives while Creating Value
We Save More Lives while Creating Value Human lives saved by our products … additionally they prevent ten times as many severe injuries 160000 140000 120000 100000 80000 60000 40000 20000 0 2015 Target 4 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All
Slide 5: Saving more lives One Autoliv
Our Guiding Principles OUR VISION OUR MISSION OUR VALUES Saving more To be the One Autoliv lives leading supplier of Safety Systems Transparent for the Future Car, Innovative well integrated with Autonomous Agile Driving 5 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyrigh
Slide 6: Our Strategy to Stay Ahead
Our Strategy to Stay Ahead Quality is our first priority, in all we do Behavior Q5 is about Quality in all dimensions and is our journey towards “Zero Defects” 6 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 7: Our Strategy to Stay Ahead
Our Strategy to Stay Ahead Relentless focus on Operational Excellence Zero Defects by flawless execution One Product One Process to improve cost effectiveness and robustness Innovation to lead industry in Real Life Safety 7 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyrig
Slide 8: Industry Pioneer with Strong Heritage
Industry Pioneer with Strong Heritage More than 60 years of innovation in Automotive Safety MECHANICAL PYROTECHNICAL ELECTRONICS DIGITAL 1950s 1980s 1990s 2000s 2010s 8 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 9: Changing Industry Landscape
Changing Industry Landscape New technology change the way we drive and shape competition Future Active Passive 9 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 10: Real Life Safety
Real Life Safety The Road to Saving More Lives REAL LIFE SAFETY System Traffic Safety Integration Research Active Passive Technologies Technologies Beyond Standardized Test Scenarios… …Towards Real Life Situations and Benefit 10 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Co
Slide 11: Long-term Targets
Long-term Targets Remain unchanged Organic* sales Operating margin* EPS* growth faster Net Debt*/EBITDA growth at least range 8-9% over than organic sales around one times in line with our the business growth (Debt Limitation market cycles Policy) … and faster than our … US GAAP excl. costs … US GAA
Slide 12: End of Decade Targets
End of Decade Targets CMD – October 2015 Changing industry landscape Focus on Quality and Real Life Safety is our way to stay ahead Strategic targets through end of decade: − Sales target is $12B with an ambition to reach up to $15B − Expect to Surpass $12B in 2019 based on Q2-2016 − Expand ou
Slide 13: New ELE Operating Model focuses on customer centricity and simplicity
New ELE Operating Model focuses on customer centricity and simplicity, in line with design principles President J. Löfvenholm HR Finance Legal Quality Sales Engineering Operations ANBS ODEN OEM MPP Sys D E* P MD E* Plants Sales 1 2 3 • ELE-dedicated sales force with clear • Dedicated Development tea
Slide 14: Benefits of the new Operating Model
Benefits of the new Operating Model Key benefits Customer impact • Strong customer focus in Sales and OEM Project Managers in Application Engineering • Fully aligned market view and product roadmaps between Sales, Engineering and Operations Financial impact • Single points of accountability for key
Slide 15: Eliminating human error by Autonomous Driving can prevent millions of crashes
Eliminating human error by Autonomous Driving can prevent millions of crashes … …while adding convenience Traffic fatalities Autonomous Driving: Additional Benefits: Prevents millions of crashes Increases driver comfort and productivity 7% Reduces the severity of injuries Uses infrastructure
Slide 16: Automated Driving Roadmap
Automated Driving Roadmap Feet off 2015 Eyes off 2020 Driver off 2000 Hands off 2018 Mind off >2020 16 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 17: Towards Autonomous Driving the Real Life Safety way
Towards Autonomous Driving the Real Life Safety way Recent JVs and M&A Our current footprint within the pyramid Partners Autonomous In-house Driving Automated Route Automated Route (Trained) (Destination) Automated Automated Automated Evasive Highway Driving City Driving Valet Parking Maneuvers AEB
Slide 18: The role of the joint venture solutions
The role of the joint venture solutions AUTOMATED DRIVING MODEL 1. Sensors to see the environment 2. Intelligence to interpret and make decisions – Role of Autoliv-Volvo joint venture 3. Actuators to execute decisions The JV will focus on developing algorithms and software for automotive Advanced Dr
Slide 19: Autoliv Business Model
Autoliv Business Model JV Software Systems for ALV: ADAS ECU’s, ADAS and HAD Sensors, sensor level software Autoliv System integration and customer applications ADAS/HAD customer solution 19 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Meetings Copyright Autoliv Inc., All Rights Reser
Slide 20: Q4'16 Highlights
Q4’16 Highlights Solid performance Financial Performance − Organic sales* growth ~1% (including 3 fewer days affect of 5pp) vs. LVP** increase ~7% − Operating margin* 9.3% − EPS* $1.71 and Operating cash flow $294M Capital Structure − $51M returned to shareholders through dividends − RoCE* ~23%,
Slide 21: Q4'16 Strong Performing Models
Q4’16 Strong Performing Models Contributing to our overall organic sales* growth Kia Sportage Renault Megane Honda Civic Havel H6 Mercedes C-Class Chrysler Pacifica Ford Escort Mercedes E-Class Fiat Tipo / Egea Q4’16 organic sales* growth ~1% (including 3 fewer days effect of ~5pp), all of these mod
Slide 22: Q4 Financial Overview
Q4 Financial Overview Record sales and gross profit (US $ Millions unless specified) 2016 2015 Sales $2,604 $2,520 Gross Profit $534 20.5% $521 20.7% Operating Income* $243 9.3% $279 11.1% EPS* (assuming dilution) $1.71 $2.08 RoCE* 23% 29% RoE* 15% 21% Operating cash flow $294 $321 Dividend per shar
Slide 23: Operating Income and Margin Bridge
Operating Income* and Margin* Bridge Q4’16 vs. Guidance and Prior Year Q4’16 vs. Guidance (20 bps better) Q4’16 vs. Prior Year (180 bps lower) 9.1% 9.3% 11.1% 9.3% $279 $243 MUS$ MUS$ Operating margin* 9.3% includes 50 bps increase in RD&E, net and 70 bps of negative acquisition effects YoY (*) Non-
Slide 24: Recap - 2016
Recap - 2016 Solid performance while improving overall market position Growth and Margins − Strong organic sales* growth 7.2%, ~2.5pp better than the LVP* − Active Safety organic* sales growth ~16% − Overall consolidated sales growth ~10% including acquisitions − Adjusted operating margin* 8.8% wi
Slide 25: Recap - 2016
Recap - 2016 Strong order in-take continued contributing to long-term growth Order Intake 150 ALV Customer Application Projects Initiated In 2016 ~55% increase vs. PY* − Record order in-take in PAS* for 2016 continued from 2015 100 No. TG-0 Passed − Record order in-take in ELE* for 2016 with ~25%
Slide 26: Recap - 2016
Recap - 2016 Active Safety Update Factors affecting our Organic Sales* Growth 1,000 Active Safety Sales End of Decade Sales Target @ 2015 CMD > $1B (US $ Millions) − Program timing 750 − Phase-out of incumbent Brake Control programs 500 2009 to 2016 − Volumes ramping down earlier than expected on
Slide 27: Recap - 2016
Recap - 2016 Unit Volume growth exceeds global LVP* in most product areas Autoliv Quantities Delivered FY’16 FY vs. PY* (%) (Millions unless specified) Seatbelts 148.7 2.1 Pre-tensioners (of which) 69.3 8.8 Active Seatbelts (of which) 3.7 15.6 Frontal Airbags 50.6 4.8 Knee Airbags (of which) 5
Slide 28: FY Light Vehicle Production
FY Light Vehicle Production 2pp better than at the beginning of the quarter 2016 vs. 2015 (%) ALV Organic** Vehicles in millions 2016 2015 @ Jan 16th @ Oct 17th Sales Growth (%) Americas 19.4 19.4 0 0 2.4 North America 16.7 16.4 2 2 South America 2.7 3.0 (10) (12) Europe 21.5 20.9 3 2 9.8 WEU
Slide 29: Unit Volume
Unit Volume Growth exceeds LVP* in most product areas Autoliv Quantities FY vs. PY* Delivered Q1’16 Q2’16 Q3’16 Q4’16 FY’16 (%) (Millions unless specified) Seatbelts 38.0 38.0 34.2 38.5 148.7 2.1 Pre-tensioners (of which) 17.5 17.8 16.1 17.9 69.3 8.8 Active Seatbelts (of which) 0.9 0.8 1.0 1.0 3
Slide 30: FY Financial Overview
FY Financial Overview Record sales and gross profit (US $ Millions unless specified) 2016 2015 Sales $10,074 $9,170 Gross Profit $2,057 20.4% $1,844 20.1% Operating Income* $885 8.8% $893 9.7% EPS* (assuming dilution) $6.75 $6.65 RoCE* 21% 24% RoE* 15% 17% Operating cash flow $868 $751 Dividend per
Slide 31: FY Segment Reporting
FY Segment Reporting Strong growth in all product areas Organic Sales* Operating Margin (%) CapEx (%) D&A (%) Headcount Growth (%) 2016 2015 2016 2015 2016 2015 2016 2015 Passive Safety *** 6.0 10.3 8.8 5.0 5.3 3.5 3.5 63,134 59,861 Airbags 6.1 Seatbelts 5.4 Electronics *** 13.3 2.8 4.1 4.6 3.3
Slide 32: Cash Flow
Cash Flow Investments for growth and shareholder returns (US $ Millions unless specified) Q4’16 Q4’15 2016 2015 2014 2013 2012 Net Income 144 186 562 458 469 490 486 Depreciation & Amortization 104 89 383 319 305 286 273 Other, net (16) 13 1 0 42 43 10 Change in operating WC * 62 33 (78) (26) (103)
Slide 33: Capital Structure
Capital Structure Debt profile, Debt limitation policy, and Shareholder returns Strong balance sheet for market uncertainties and strategic alternatives for long-term growth Strong Free Cash and shareholder returns over the long-term 3 Leverage Ratio Long-term Range Long-term Target 2 Times 1 0
Slide 34: Currency Effects
Currency Effects* Translation, Transaction and Revaluation Translation could have a margin impact due to our mix, as margins FY’16 Translation Exposure ~73% may not be evenly distributed across countries Non US$ US$ ~26.7% Transaction exposure, net for FY’16 accounts for approximately 19% of sal
Slide 35: Commodity Price Trends
Commodity Price Trends Raw material cost development Autoliv avoids forward hedging contracts against commodity cost changes FY’16 Direct Material ~54% of sales or ~$5.4B Consequently, Autoliv manages the risk between suppliers and Steel Petroleum based Electronics Non Ferrous Other customers 32
Slide 36: Commodity Index Trends
Commodity Index Trends Major commodities impacting Direct Material Cost 6 500 Yarn Steel - Hot Rolled Coil Yarn price dropped in late 2014, remains at low levels 6 000 900 Steel - US Steel dropped during 2015 and has since increased 800 Steel (yearly avg) 5 500 700 USD/t USD/t due to higher raw
Slide 37: China Update
China Update Q4’16 light vehicle production reached a 32 million run-rate Market − FY’16 increase YoY in LVP** of ~14% driven by a strong H2’16, likely boosted by government incentives − Monthly fluctuations remain erratic − LV Inventories** improved during throughout 2016 Autoliv − Strong organ
Slide 38: Overall Market Conditions
Overall Market Conditions Macro environment remains mixed and uncertain FY 2017 LVP* Asia Region Vehicles (Millions) YoY Chg. − China sales** recovery continues, LVP* increase ~3% YoY for Q1’17 China 26.6 +3% Japan 8.7 +2% − Japan LVP increase >6% YoY for Q1’17 RoA 12.8 +3% − RoA LVP decline of ~2
Slide 39: Looking ahead - 2017
Looking ahead - 2017 Executing towards our end of decade targets Growth and Margins − Organic sales* growth ~4%, >2 times better than LVP** − Growth from Acquisitions ~1% (ANBS JV**) − Adjusted operating margin* ~8.5% Capital Structure − Operating cash flow >$0.8B, excluding any discrete items −
Slide 40: Key Launches during 2017
Key Launches during 2017 Passive Safety and Electronics Honda Accord Tesla Model 3 VW Polo / Gol Honda Odyssey Volvo XC60 KIA Stinger Genesis G70 Nissan Micra VW Atlas Combined these models represent around 5% of Autoliv annual sales 40 February 22, 2017 ALV – Post Q4-2016 Earnings Call Investor Mee
Slide 41: Looking Ahead Q1'17 Guidance
Looking Ahead Q1’17 Guidance Sales − Organic* sales growth >3% YoY** − Mainly related to strong growth in Europe, China, India and South America partially off-set by lower inflator replacements − Acquisition effect ~5% YoY** − Sequential consolidated sales ~(1)% − Mainly due to the normal seasonal
Slide 42: Looking Ahead FY'17 Indication
Looking Ahead FY’17 Indication Sales − Organic* sales growth ~4% YoY** − Mainly related to strong growth in Europe, China, Japan, India and Active Safety partially offset by lower inflator replacement sales − Acquisition effect ~1% YoY** − Currency translation effect ~(3)% YoY** − Primarily due to
Slide 43: Financial Outlook
Financial Outlook 2017 Q1’17 FY’17 Sales Exchange rates** Q1’17 FY’17 Organic* >3% ~4% EUR / US$ 1,0580 1,0592 Acquisitions ~5% ~1% US$ / JPY 114,72 114,22 US$ / KRW 1185 1182 Fx** <(3)% ~(3)% US$ / MXN 21,50 21,56 Consolidated Sales, net >5% ~2% US$ / CNY 6,91 6,90 Operating Margin* ~8% ~8.5% Stron
Slide 44: Each year, Autoliv's products save over 30,000 lives
Each year, Autoliv’s products save over 30,000 lives autoliv.com