Autoliv, Inc. · NYSE:ALV

Autoliv — Investor Day (September 2017)

32 slides from Autoliv's investor day presentation, Sep 14, 2017

  1. Slide 1: Creating more value, Saving more lives

    Creating more value Saving more lives Copyright Autoliv Inc., All Rights Reserved

  2. Slide 2: Financial Strategy for Creating Shareholder Value

    Financial Strategy for Creating Shareholder Value Mats Backman – CFO September 14, 2017 Copyright Autoliv Inc., All Rights Reserved

  3. Slide 3: 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

  4. Slide 4: Our Board has initiated a strategic review

    Our Board has initiated a strategic review As announced earlier today, Board of Directors has instructed management to conduct a strategic review of its operating structure with the intent to create separate companies of its two current business segments, Passive Safety and Electronics. Certain CMD

  5. Slide 5: Guiding Financial Principles

    Guiding Financial Principles to create long-term shareholder value Cash flow Strong Investment Shareholder generation Grade credit rating friendly focus …financial flexibility for …with a tight cost and growth in a cyclical industry …increasing shareholder capital control to support value through sh

  6. Slide 6: A decade of transformation – built a new company and strengthened existing business further

    A decade of transformation – built a new company and strengthened existing business further A decade of growth investments Sales 1,600 16% Electronics Passive Safety 1,400 14% 1,200 12% 1,000 10% 8,000 800 8% 2,000 600 6% 45% 400 4% 39% share 4,000 32% share 200 2% share** 0 0% 0 0 2008 LTM* 2020 20

  7. Slide 7: A decade of transformation – increased investments for growth while increasing shareholder returns

    A decade of transformation – increased investments for growth while increasing shareholder returns and asset returns An accumulated $2.6B returned to shareholders Return on Capital Employed above pre-crisis levels (%) US$ Millions 3,000 30 2,500 25 2,000 20 1,500 15 1,000 10 500 5 0 0 Dividend Share

  8. Slide 8: Value Creating Capital Structure

    Value Creating Capital Structure Strong FCF conversion supporting a strong balance sheet Net Debt* / EBITDA Times 2.5 Leverage Ratio* 2.0 1.5 Over the business cycles free cash flow conversion is ~90% of net 1.0 Long-term Target Long-term income and leverage ratio* was Range 0.7 times end of second

  9. Slide 9: Update on 2019 Financial Targets

    Update on 2019 Financial Targets 9 Copyright Autoliv Inc., All Rights Reserved

  10. Slide 10: CMD 2015 – Autoliv Long Term Targets

    CMD 2015 – Autoliv Long Term Targets Organic* Sales Operating Margin* EPS* growth faster Net Debt*/EBITDA growth at least in line range 8-9% over the than organic sales around one times with our market business cycles growth (Debt Limitation Policy) …and faster than our …US GAAP excl. costs …US GAAP

  11. Slide 11: 2019 Autoliv Targets CMD 2015 – Status Update

    2019 Autoliv Targets CMD 2015 – Status Update Key end of decade Targets Sales Operating Margin* EPS* ALV: ~$12B  >$12B ELE: 8-9% Grow EPS faster than the targeted  0-5% sales growth PAS:~$9B  >$9.5B (from 2015 to ’19) PAS: At least maintain ELE:~$3B  ~$2.5B  Increase AS: >$1B  ~$1B Expand PAS

  12. Slide 12: Strategic review of transition to stand alone entities

    Strategic review of transition to stand alone entities* Corporate costs and allocations of group resources distributed to entities.** Passive Safety Electronics Standalone Standalone (*) Illustrative indication of what two standalone companies may look like if our Board were to approve of a separati

  13. Slide 13: Autoliv Passive Safety

    Autoliv Passive Safety 13 Copyright Autoliv Inc., All Rights Reserved

  14. Slide 14: Passive Safety – Market Trends and Growth Drivers

    Passive Safety – Market Trends and Growth Drivers Content per Vehicle* $ 2017 300  Increasing GDP/capita in growth markets 250  Higher LVP in Growth Markets  More stringent safety rating & regulations 200 ‒ China NCAP 2018 ‒ Regulations in India 150 ‒ Additional crash test in Triad  Consumer dem

  15. Slide 15: Passive Safety – Airbag Market and Installation Rates

    Passive Safety – Airbag Market and Installation Rates Airbag Market* US$ Billions CAGR* % Continued market potential beyond 2020 from increasing installation rates* 2017-’20 Driver and passenger airbags Side airbags 16 ~$15 ~4% 100% 100% ~$13 Steering 3.4 80% 80% ~5% Wheels 12 3.0 60% 60% 5.9 Side ~

  16. Slide 16: Passive Safety – Seatbelt Market and Installation Rates

    Passive Safety – Seatbelt Market and Installation Rates Seatbelt Market* US$ Billions CAGR* % Continued market potential beyond 2020 from increasing installation rates* 2017-’20 Pretentioners (front & rear) Active Seatbelt 10 100% 100% ~5% ~$8 80% 80% 8 ~$7 0.5 Active Seatbelts ~11% 60% 60% 0.4 6 3.

  17. Slide 17: Light Vehicle Outlook

    Light Vehicle Outlook Growth is mainly driven by the growth markets Global LVP Global LVP Millions LVP* CAGR* 2017-’20 2017-’25 ~107 2.5% 1.9% ~99 ~102 8.1 100 ~92 5.6 6.6 India ~9% ~8%  Global LVP CAGR ~2% through 2025 4.4 80 29.0 30.4 32.0  China LVP is expected to reach 30M 26.3 China ~3% ~3% v

  18. Slide 18: Passive Safety – Market Overview

    Passive Safety – Market Overview ~4.7% CAGR 2017 to 2020 Passive Safety TAM* Market CAGR* % US$ Billions 2017-’20 2017-’25  Passive Safety TAM grows 1 to 2 ~4.7% ~2.9% percentage points faster than the 30 underlying LVP ~$25B RoW ~4% ~3% 25 ~$23B 4.7  All markets are expected to grow in line ~$20B

  19. Slide 19: Passive Safety: ~50% of Industry Order Wins in 2015 to 2017 YTD

    Passive Safety ~50% of Industry Order Wins in 2015 to 2017 YTD Order Intake* US$ Billions  Recent order intake well above historical $2.4 $2.2 $2.3 levels  Lead time from time of order to start of ~51% ~50% ~50% ~48% ~50% production is usually 18-36 months. $1.3 ~50% ~50%  Orders taken during 201

  20. Slide 20: Passive Safety: 2020 Sales target of >$10B

    Passive Safety 2020 Sales target of >$10B corresponds to a ~8% CAGR from 2017 Passive Safety Sales – US$ Billions LVP* +1% CAGR* ~8% 2025 Ambition  ~50% new order wins LVP* during 2015-17 ~2%  Grow at least in line with LVP* >2% Passive Safety market  Majority of launches in >10 2018 / ’19 / ‘20

  21. Slide 21: Passive Safety - Operating Leverage Starting '18

    Passive Safety - Operating Leverage Starting ’18 Improving margins as investment in RD&E returns to a more normalized level Application projects & RD&E headcount Improved profitability due to: 160 5,500  Operating leverage on RD&E 140 5,300 5,100  Operating leverage from sales growth* within 120 4

  22. Slide 22: Autoliv Electronics

    Autoliv Electronics 22 Copyright Autoliv Inc., All Rights Reserved

  23. Slide 23: Electronics – Market Trends and Growth Drivers

    Electronics – Market Trends and Growth Drivers Increasing levels of software in the future are required to enhance safety  Safety Market Growth ‒ AEB* Content per Vehicle $US ‒ Blind Spot 450 ‒ Lane Keep 400  Comfort and assistance 350 ‒ Traffic Sign Presentation 300 ‒ Road Surface detection 250 ‒

  24. Slide 24: Electronics – Market Overview

    Electronics – Market Overview Safety Electronics TAM* Market CAGR* %  Brake Control market is US$ Billions growing faster than the LVP 2017-’20 2020-’25 2017-’25 and we have an opportunity to 50 ~12% ~9% ~10% grow our market share ~$43 45  The Active Safety market to Brake 40 ~10% CAGR Systems ~4%

  25. Slide 25: Electronics – Our Growth Outlook

    Electronics – Our Growth Outlook Expect to increase sales in all three sub-segments over the next 5 years ALV Electronics – Order Intake* US$ Millions 1,000  Due to a significant broadening of the product offering and customer bid-list, 800 order intake in 2016 increased substantially over previous

  26. Slide 26: Autoliv Electronics Sales Growth

    Autoliv Electronics Sales Growth 2020 Sales target of ~$3B corresponds to a ~10% CAGR from 2017 Electronics Sales – US$ Billion CAGR* ~15%  High market growth CAGR* ~10% 2025 Ambition  Strong product offering  Electronics sales >$6B  Strong bid-list presence LVP* ~4 >2%  Active Safety sales ~$4

  27. Slide 27: Autoliv Electronics – RD&E for investment to capture growth

    Autoliv Electronics – RD&E for investment to capture growth Engineering headcount has more than doubled since 2014 RD&E Headcount 3,500 Medium term profitability impacted by: 3,000  Continued high investments in new technology 2,500 to secure long-term success 2,000  Limited sales growth in 2018 d

  28. Slide 28: Financial Targets

    Financial Targets 28 Copyright Autoliv Inc., All Rights Reserved

  29. Slide 29: Targets Stand Alone Passive Safety and Electronics

    Targets Stand Alone Passive Safety and Electronics CMD 2017 – Target Update 2020 Target 2022 Target  Sales – at least hold market share and at least grow LVP plus Autoliv  Sales >$10B 1% Passive Safety  Adj. Operating margin* ~13%  Adj. Operating Margin* – at least maintain margins from 2020 lev

  30. Slide 30: Each year, Autoliv's products save over 30,000 lives

    Each year, Autoliv’s products save over 30,000 lives autoliv.com Internal

  31. Slide 31: Glossary of abbreviations

    Glossary of abbreviations AB Airbags Active Safety Market Radar (Front/side/rear), Forward looking Cameras (Mono/Stereo/Night Vision), Other (Advanced Driver Assist Electronic Control Unit, LiDAR) ACC Adaptive Cruise Control AD Autonomous Driving ADAS Automated Driver Assistance Systems AEB Autonomo

  32. Slide 32: Glossary of abbreviations

    Glossary of abbreviations JV Joint Venture LIDAR Light Detection and Ranging Technology LTM Last Twelve month LVP Light Vehicle Production MCM Multi-Chip Module NCAP New Car Assessment Program NCE Non-conforming events NHTSA National Highway Traffic Safety Administration NPRM New Proposed Rule Makin

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