Autoliv, Inc. · NYSE:ALV
Autoliv — Non-Deal Roadshow (August 2015)
46 slides from Autoliv's roadshow presentation, Aug 5, 2015
Slide 1: Post Q2'15 Earnings Non-Deal Roadshow
Post Q2’15 Earnings Non-Deal Roadshow Boston, NYC Jan Carlson – Chairman, President & CEO August 5-6, 2015 Saving more lives 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: Q2'15 Highlights
Q2’15 Highlights Sales growth in line, margins better than expected Financial Performance • Organic sales* growth 6.1%, vs. an LVP decline of 0.3% • Operating margin* 9.5%, ~ 50 bps better than expected • EPS* $1.62, 12% better than PY • Operating cash flow $154M • RoCE* ~ 24%, RoE* ~ 17% Shareh
Slide 4: Enhancing our Growth and System Capability Thru Strategic M&A
Enhancing our Growth and System Capability Thru Strategic M&A Entered into an IP license with Volvo Car Corporation (VCC) • Provides access to advanced driver assistance algorithms and certain active safety features (ex. ACCPlus, emergency maneuver and intersection assist, sensor fusion). In combi
Slide 5: Strong Performing Models
Strong Performing Models Contributing to solid organic sales* growth in Q2’15 Mercedes C-Class Hyundai Tucson/ix35 Mercedes B-Class Acura TLX KIA Sorento Ford Escort VW Passat Baojun 730 Land Rover Discovery Sport Active Safety organic sales* growth ~ 26% in Q2’15. (*) Non-US GAAP measure. ALV Post
Slide 6: Strong Volume Growth
Strong Volume Growth Unit growth exceeds LVP in all product areas Autoliv Quantities Delivered Q2’15 vs. PY (Millions unless specified) Seatbelts 37.2 2% • Pretensioners (of which) 15.2 1% • Active Seatbelts (of which) 0.8 18% Frontal Airbags 12.4 8% • Knee Airbags (of which) 1.5 12% Side Airbags 23
Slide 7: Light Vehicle Production Q2'15
Light Vehicle Production Q2’15 2015 vs. 2014 ALV Vehicles in millions 2015 2014 @ Jul 16 @ Apr 16 Organic * Growth Americas 5.3 5.4 (1)% 1% 8.2% North America 4.5 4.4 2% 3% South America 0.8 1.0 (17)% (5)% Europe 5.4 5.3 0% (2)% 8.0% Western Europe 3.7 3.5 4% 2% Eastern Europe 1.7 1.8 (7)% (9)% Asia
Slide 8: Market Conditions
Market Conditions Increasing uncertainty in the macro environment Asia FY’15 LVP * @ July. 16, 2015 Vehicles (Mil’s) • Slowing growth in China with increasing inventories, Region YoY Chg. China 22.9 +5% LVP increase ~ 5% for H2’15 Japan 8.5 (6)% • Japan LVP is expected to decline ~ 2% for H2’15 Ro
Slide 9: China Market Uncertainty Increasing
China Market Uncertainty Increasing Light vehicle growth is slowing Market driven • YTD’15 LVP growth rate is slowing • Negative inventory trend over the last 18 months • Many customers extending summer downtime or reducing shifts ALV specific • Negative vehicle mix including model transitions •
Slide 10: Business Segment Update
Business Segment Update During the last twelve months Passive Safety Inflator replacement program • Current best estimate is to supply up to 20 million inflators • Increase in new business awards for frontal airbags Electronics Expanding customer base, 43 model awards System award with a n
Slide 11: Q2 Financial Overview
Q2 Financial Overview Solid financial performance (US$ Million’s unless specified) 2015 2014 Sales $2,292 $2,383 Gross Profit $460 20.1% $464 19.5% Operating Income* $217 9.5% $221 9.3% EPS* (assuming dilution) $1.62 $1.45 RoCE* 24% 25% RoE* 17% 14% Operating Cash flow $154 $86 Dividend** $0.56 $0.5
Slide 12: Operating Income and Margin Bridge
Operating Income and Margin* Bridge Q2’15 vs. Guidance and Prior Year Q2’15 vs. Guidance (50 bps better) Q2’15 vs. Prior Year (20 bps better) Operating Margin* 9.5%. (*) Non-US GAAP measure, excludes costs for capacity alignments and antitrust matters. ALV Post Q2’15 Earnings Release - 12 Copyright
Slide 13: Cash Flow
Cash Flow Investments for growth in CapEx and shareholder returns (US$ Million’s unless specified) Q2 Q2 LTM FY FY FY FY 2015 2014 2014 2013 2012 2011 Net Income 137 83 427 469 490 486 627 Depreciation & Amortization 76 77 304 305 286 273 268 Other, net 4 5 27 42 43 10 38 Change in operating WC * (6
Slide 14: Estimated Currency Effects Q2'15
Estimated Currency Effects Q2’15 Translation and Transaction (including revaluation) YoY change Q2-15 Sales % (only translation) (9.9%) Sales $ (only translation) ~ ($237M) EBIT (translation + transaction & revaluation) (10) + 4 = ~ ($6M) BPS (translation + transaction & revaluation) 50 + 20 = 70 EP
Slide 15: Dividend Trend
Dividend Trend per share and cash payments* 0.6 60 Dividend per share 0.4 40 $ per share US$ Millions 0.2 20 Dividend Payments 0 0 1997 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 10 ‘11 ‘12 ‘13 ‘14 ’15 Annualized dividend $2.24 per share based on dividend declared for Q3’15. (*) Estimated divi
Slide 16: Share Repurchase Program as of Q2'15
Share Repurchase Program as of Q2’15* Program was re-initiated in October 2013 43.1 million shares 104 average cost $54.36 616 remaining authorization ~ 4.4 million shares 148 173 380 2,341 221 378 43 144 30 103 2000 2001 2002 2003 2004 2005 2006 2007 2008 2013 2014 2015 TOTAL Cost / share $22
Slide 17: Share Repurchase Summary
Share Repurchase Summary 2014-15 Period Days Total Avg. cost Shares (M) Shares / day Per day (M) Comments Trade ($M) * (000’s) d Q2’15 0 N/A N/A N/A N/A N/A N/A Q1’15 24 $104 $112.81 0.9 39 $4.3 Share price>mandate week 1 Q4’14 29 $186 $96.03 1.94 67 $6.4 extra week Q3’14 29 $238 $102.58 2.32 80 $8.
Slide 18: Segment Reporting Q2
Segment Reporting Q2 Organic Operating Margin CapEx D&A Growth * 2015 2014 2015 2014 2015 2014 Passive Safety *** 5.7% 10.2% 5.5% 5.3% 4.8% 3.3% 3.2% Airbags 7.1% Seatbelts 2.9% Electronics *** 8.3% 3.2% 4.8% 3.5% 4.7% 2.9% 2.9% Passive Safety Electronics 0.7% Active Safety 25.6% Autoliv Group ****
Slide 19: Looking Ahead Q3'15 Guidance
Looking Ahead Q3’15 Guidance** Sales • YoY organic sales* increase > 7% - Mainly related to strong growth in Active Safety, Europe, North America, and inflator replacement business along with growth in China • Sequential consolidated sales decrease ~ 5% - Mainly due to the seasonality effect in Eu
Slide 20: Looking Ahead FY'15 Indication
Looking Ahead FY’15 Indication** Sales • YoY organic sales* increase > 6% - Mainly related to strong growth in Active Safety, Europe, North America and the inflator replacement business • YoY currency translation effect > (8)% - Primarily due to the strengthening US $ Operating Margin* ~ 9.5% •
Slide 21: Financial Outlook
Financial Outlook** Q3’15 FY’15 Sales Organic* >7% > 6% Acquisitions / (Divestitures) - - Fx*** > (9)% > (8)% Consolidated Sales < (2)% ~ (2)% Operating Margin* ~ 9% ~ 9.5% Exchange rates*** Q3 2015 FY 2015 EUR / US$ 1.1063 1.1110 US$ / JPY 121.39 120.90 US$ / KRW 1134 1116 US$ / MXN 15.80 15.46 US$
Slide 22: Currency Effects Summary
Currency Effects Summary Translation vs. Transaction Translation Transaction** Limited Hedging possibilities Natural Hedging Strategy*** Net exposure in FY’15 ~$2.1B corresponding to ~75% of sales non US $, mainly EUR, CNY, ~23% of ALV sales JPY, MXN & KRW Impacts margins and earnings Im
Slide 23: H1'15 Highlights
H1’15 Highlights Sales growth in line, margins better than expected Financial Performance • Organic Sales* growth 5.0%, vs. an LVP increase of 1.3% • Operating margin* 9.2% • EPS* $3.04, ~ 6% better than PY • Operating cash flow $238M • RoCE* ~ 23%, RoE* ~ 16% Shareholders returns and Capital St
Slide 24: H1 Financial Overview
H1 Financial Overview Solid financial performance (US$ Million’s unless specified) 2015 2014 Sales $4,466 $4,679 Gross Profit $883 19.8% $910 19.4% Operating Income* $410 9.2% $418 8.9% EPS* (assuming dilution) $3.04 $2.88 RoCE* 23% 24% RoE* 16% 14% Operating Cash flow $238 $271 Dividend** $1.10 $1.
Slide 25: Segment Reporting H1
Segment Reporting H1 Organic Operating Margin CapEx D&A Growth * 2015 2014 2015 2014 2015 2014 Passive Safety *** 4.4% 6.9% 6.7% 5.9% 4.5% 3.3% 3.2% Airbags 5.1% Seatbelts 3.1% Electronics *** 8.0% 2.9% 5.0% 3.4% 4.1% 3.0% 2.9% Passive Safety Electronics (0.9)% Active Safety 28.4% Autoliv Group ****
Slide 26: Light Vehicle Production H1
Light Vehicle Production H1 2015 vs. 2014 ALV Vehicles in millions 2015 2014 @ Jul 16 @ Apr 16 Organic * Growth Americas 10.3 10.5 (1)% 0% 5.7% - North America 8.7 8.6 2% 2% - South America 1.6 1.9 (16)% (9)% Europe 10.8 10.5 2% 0% 8.2% - WEU 7.3 7.0 4% 2% - EEU 3.5 3.5 (2)% (4)% Asia 21.7 21.4 1% 2
Slide 27: Strong Volume Growth H1'15
Strong Volume Growth Unit growth exceeds LVP in all product areas Autoliv Quantities Delivered H1’15 vs. PY (Millions unless specified) Seatbelts 73.8 2% • Pretensioners (of which) 30.2 2% • Active Seatbelts (of which) 1.5 16% Frontal Airbags 24.2 6% • Knee Airbags (of which) 2.7 7% Side Airbags 44.
Slide 28: Autoliv in Brief
Autoliv in Brief Products Sales and technology leader Sales US$9.2 billion Sales to all major vehicle Seatbelts Airbags 30% manufacturers Fortune 500 company with an Sales A- credit rating (S&P) 2014 55% ~ 80 facilities in 28 countries Active Safety 5% 18 technical centers and Electronic
Slide 29: Autoliv in Brief: Global Footprint
Autoliv in Brief Global Footprint Sales and technology leader RoA Sales US$9.2 billion Japan Europe Sales to all major vehicle manufacturers Fortune 500 company with an China Sales A- credit rating (S&P) 2014 ~ 80 facilities in 28 countries 18 technical centers and 20 crash test tracks
Slide 30: Autoliv in Brief: Customers
Autoliv in Brief Customers Sales and technology leader Others Sales US$9.2 billion Local Chinese OEM’s 5% 2%2% 14% Sales to all major vehicle 3% 2% manufacturers 4% 11% 5% Fortune 500 company with an Sales 5% A- credit rating (S&P) 2014 5% 11% ~ 80 facilities in 28 countries 7% 18 techni
Slide 31: Market Shares 2014
Market Shares 2014 Global Safety Market Share by Product Overall Passive Safety 37% 1 Seatbelts 1 Frontal Airbags 1 Side Airbags 1 Steering Wheels 1 ECU 1 Active Safety sensors 1 0% 20% 40% 60% Autoliv’s share ALV Post Q2’15 Earnings Release - 31 Copyright Autoliv Inc., All Rights Reserved
Slide 32: Key Focus Areas
Key Focus Areas Savings lives and safety around the automobile Lead through innovation and technology Leverage global footprint and talented- skilled people Zero defects and customer focus ALV Post Q2’15 Earnings Release - 32 Copyright Autoliv Inc., All Rights Reserved
Slide 33: Company Strategies
Company Strategies Core Strategies One Product Quality Innovation One Process Zero Defects by To improve cost Create unique selling points flawless execution effectiveness and robustness ALV Post Q2’15 Earnings Release - 33 Copyright Autoliv Inc., All Rights Reserved
Slide 34: Our Zero Defect Policy
Our Zero Defect Policy Design robust products Buy flawless components Manufacture flawless products Verify conformity of products Product & Process Supplier Production System After Delivery Development Management ALV Post Q2’15 Earnings Release - 34 Copyright Autoliv Inc., All Rights Reserved
Slide 35: Autoliv Inflators
Autoliv Inflators an industry standard Pyrotechnical Inflator Manufacturing Footprint Propellant Sweden Initiator France Japan USA (Utah) Romania China Filter Housing New Production Investment 12 Inflator Lines 4 Initiator Lines 1 Spray Dryer 5 Presses Current best estimate is to supply up t
Slide 36: Light Vehicle Production Outlook
Light Vehicle Production Outlook 2004 thru 2019 Million Units ~99M 100.0 ~ 86M 30 Other 80.0 25 ~58M Growth Markets ~ 60M 60.0 ~ 58M 28 China 15 18 22 ~30M 4 40.0 9 8 Japan 12 9 Western 7 14 16 13 ~41M Europe 20.0 Developed Markets ~28M 12 North 16 17 19 America 9 0.0 2004 2009 2014 2019 Source: IHS
Slide 37: Growth Drivers by Product
Growth Drivers by Product Strong presence in product growth segments US$ (Billions) 40 ~ $29B 30 CAGR ~ 5% ~ $25B 3.9 2.0 Active Safety * 3.0 2.6 CAGR ~ 26% 20 3.8 3.4 Steering Wheels CAGR ~ 4% Electronics 10.9 10.2 CAGR ~ 4% 10 Airbags CAGR ~ 2% 6.8 Seatbelts 7.6 CAGR ~ 4% 0 2014 2017 (*) Includes
Slide 38: Growth Drivers by Region
Growth Drivers by Region Strong presence in growth markets * US$ (Billions) 40 30 CAGR ~ 5% ~ $29B ~ $25B 6.1 Other 4.8 CAGR ~ 8% 20 6.2 4.7 China CAGR ~ 10% 2.8 2.9 Japan CAGR ~ (1%) 6.3 10 5.1 Western Europe CAGR ~ 7% 7.5 North America 7.9 CAGR ~ 2% 0 2014 2017 (*) Growth Markets (Eastern Europe,
Slide 39: The Road to Saving More Lives
The Road to Saving More Lives Passive safety products, such as airbags and seatbelts, are there to help protect you from injury if a crash is unavoidable. PROTECTION AUTONOMOUS More than a million human beings owe their life to them. DRIVING In the future, self driving The major advancement from Act
Slide 40: Automated Driving
Automated Driving Traffic Deaths By eliminating human errors that Other cause traffic accidents, Automated ~7% Driving can: • Prevent millions of crashes • Reduce the severity of injuries and property damage • Save lives Traffic Deaths - Human Error Additional benefits: ~93% • Increase driver comfor
Slide 41: Integrated safety
Integrated safety - The traditional view POINT OF NO RETURN Assistance Prevention Protection Features Features Features ALV Post Q2’15 Earnings Release - 41 Copyright Autoliv Inc., All Rights Reserved
Slide 42: The integrated safety chain model
The integrated safety chain model Deviation Normal from Emerging Critical Crash Driving normal situation situation unavoidable driving Crash ALV Post Q2’15 Earnings Release - 42 Copyright Autoliv Inc., All Rights Reserved
Slide 43: Evolution of Driver Assistance
Evolution of Driver Assistance Mind off Eyes off Hands off Feets off 2000 2015 2018 >2020 ALV Post Q2’15 Earnings Release - 43 Copyright Autoliv Inc., All Rights Reserved
Slide 44: Autonomous Emergency Braking (AEB)
Autonomous Emergency Braking (AEB) an important enabler for Automated driving Autoliv • Radar based AEB in production since 2013 • Sensor fusion AEB launching in 2015 • Vision based collision warning launching in 2015 night time and City Interurban Pedestrian Cyslist Intersections all weather 24h/36
Slide 45: 2015 Autoliv Vision System
2015 Autoliv Vision System In-house developed algorithms for scalability Lane Departure High-Beam Traffic Sign Automatic Pedestrian Free Space Lane Keep Assist Assist Recognition Emergency Braking Protection Road Surface Premium Safety / NCAP Assist ALV Post Q2’15 Earnings Re
Slide 46: Every year, Autoliv's products save over 30,000 lives
Every year, Autoliv’s products save over 30,000 lives and prevent ten times as many severe injuries ALV Post Q2’15 Earnings Release - 46 Copyright Autoliv Inc., All Rights Reserved