Autoliv, Inc. · NYSE:ALV
Autoliv — BoAML 2014 New York Auto Summit
43 slides from Autoliv's conference presentation, Apr 16, 2014
Slide 1: BoAML 2014 New York Auto Summit
BoAML 2014 New York Auto Summit Ray Pekar – VP IR Americas, M&A April 16, 2014 Driven for Life. © 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
Slide 3: Autoliv in Brief
Autoliv in Brief Sales and technology leader RoA Sales US ~ $8.8 billion 10% Europe Sales to all major vehicle Japan 8% manufacturers 33% Fortune 500 company with an A- credit rating (S&P) China 16% 2013 ~ 80 facilities in 29 countries 18 technical centers and 20 crash test tracks 33% ~ 56,500 assoc
Slide 4: Autoliv in Brief - Sales by product and customer
Autoliv in Brief - Sales by product and customer Others Seatbelts Local Chinese OEM’s 7% 2% 15% 2% 3% 31% 4% 5% 11% 2013 5% 2013 5% 11% 4% 65% 6% Airbags 7% 9% 8% Active Safety Attractive Passive and Active Safety portfolio along with a diversified customer base ALV Q12014 Post Q4’13 result - 4 © Au
Slide 5: Global Safety Market Share by Product
Global Safety Market Share by Product - 2013 Steering Wheels 1 Seatbelts 1 ECU 1 Side Airbags 1 Frontal Airbags 1 Overall PassiveSafety 1 Active Safety 21 0% 20% 40% 60% Autoliv’s share Autoliv market shares are estimated to be ~37% in Passive Safety and >20% in Active Safety ALV Q12014 Post Q4’13 r
Slide 6: Long-Term Targets
Long-Term Targets * to create long-term shareholder value Organic sales growth at least in line with our market • and faster than our market including acquisitions Operating margin range 8-9% over the business cycles • US GAAP excluding costs related to the antitrust investigations EPS growth faster
Slide 7: Our Key Strategies
Our Key Strategies Focus on savings lives and safety around the automobile Lead thru innovation and technology Leverage global footprint and talented-skilled people Zero defects and customer focus “One Stop Shop” for automotive safety system solutions ALV Q12014 Post Q4’13 result - 7 © Autoliv Inc.,
Slide 8: Strong Acquisition Track Record
Strong Acquisition Track Record supports organic growth strategy US$ (millions) Visteon Radar, Aztyx/Hella IP Delphi OPS 9 000 Tyco Radar 8 000 Izumi 7 000 Norma VRE NSK Mando OEA 6 000 Morton ASP 5 000 LivBag 4 000 IsoDelta Autoflug 3 000 Sale of Italy 2 000 Britax Klippan 1 000 0 1982 1985 1988 19
Slide 9: Our Focus to Save More Lives
Our Focus to Save More Lives Passive safety products, such as airbags and seatbelts, are there to help protect you from injury if a crash is PROTECTION AUTONOMOUS unavoidable. More than a million human beings owe their life to them. DRIVING In the future, self driving The major advancement from Acti
Slide 10: Market Drivers
Market Drivers - Rating programs evolution EuroNCAP 2014 • Active Safety weighting increases from 10% to 20% • Active Safety required to achieve 5 Star 2015 • Revision of passive safety side impact test 2017 • Active Safety required to achieve 4 Star Other NCAP programs • Active safety inclusion in
Slide 11: Rating and Regulations
Rating and Regulations - US NCAP migration to Active Safety and Adaptive IIHS Ratings: • New IIHS Small Overlap test – Integrated into Top Safety Pick “Plus” for 2013. • FCW and/or AEB – “Availability” of FCW required for Top Safety Pick “Plus” for 2014. NHTSA - USNCAP: • Back-over Safety – ESC reco
Slide 12: Light Vehicle Production Outlook
Light Vehicle Production Outlook - 2003 thru 2018 2013-18 CAGR LVP .100,0 ~ 99M Global LVP 4% Growth Markets 6% ~ 83M 32 .80,0 RoW + EEU 5% 25 ~59M ~ 66M .60,0 ~ 57M China 7% 21 ~28M 28 12 20 4 1% .40,0 8 Developed Markets 9 7 Japan (4%) Light vehicles millions 11 9 16 15 ~38M 13 ~40M WEU 3% .20,0 1
Slide 13: Market Outlook
Market Outlook - Our current market 40 ~ $28B 30 CAGR ~ 5% ~ $24B 2.8 US$ (billions) 1.3 Active Safety * CAGR ~ 29% 20 11.3 8.9 Passive Safety Growth Markets CAGR ~ 8.5% 10 13.9 Passive Safety 14.1 Developed Markets 0 CAGR 0.5% 2013 2016 During this period our market is expected to grow ~1% faster t
Slide 14: Growth Drivers by Region
Growth Drivers by Region - Strong presence in growth markets * 40 30 ~ $28B CAGR ~ 5% ~ $24B 6.3 US$ (billions) RoW + Eastern Europe 4.8 CAGR ~ 10% 20 5.7 4.2 China CAGR ~ 11% 2.4 2.7 Japan CAGR ~ (4%) 6.0 10 5.3 Western Europe CAGR ~ 4% 7.1 North America 7.8 CAGR ~ 3% 0 2013 2016 Growth markets* co
Slide 15: Growth Drivers by Product
Growth Drivers by Product - Strong presence in product growth segments 40 30 CAGR ~ 5% ~ $28B ~ $24B 2.8 US$ (billions) 1.3 Active Safety * 2.9 2.5 CAGR ~ 29% 20 4.0 Steering Wheels 3.7 CAGR ~ 5% Electronics 5.3 4.9 CAGR ~ 3% Side Airbags 10 CAGR ~ 3% 5.6 5.1 Frontal Airbags CAGR ~ 3% 6.6 Seatbelts
Slide 16: Active Safety Sensors Market
Active Safety Sensors Market - Strong presence in radar and night vision 4 ~ $2.8B US$ (billions) CAGR ~ 29% 1.0 2 ~ $1.3B Night Driving Assist Autoliv CAGR ~ 11% 0.4 Front-view Vision 1.6 CAGR ~ 36% 0.8 Radar CAGR ~ 26% 0 2013 2016 Overall market growth ~29% ALV Q12014 Post Q4’13 result - 16 © Auto
Slide 17: Capital Structure
Capital Structure - Debt Limitation Policy 4 Leverage Ratio * Long-term Range Capital Structure Target 3 Long-term leverage ratio around one time Times 2 and within the range of 0.5 to 1.5 times. Max Started to adjust in Q4 2013 Target 1 Aim to be within the range by the end of Min 2014 0 '03 '04 '0
Slide 18: Financial Strategy for Free Cash flow
Financial Strategy for Free Cash flow * - Free Cash flow, Net Income and Use of Free Cash flow Use of Free Cash flow 1997 - 2013 Net Income Free Cash flow 600 Cash Acquisitions 19% 17% U S $ m illio n s 400 30% 34% 200 Dividends Buybacks ~ 81% of Free Cash flow has been returned to 0 Shareholders or
Slide 19: Financial Strategy for RoCE
Financial Strategy for RoCE - Increasing Capital Employed Turnover * 2.6 Capital Management: 2.4 Supplier terms to match our customers 2.2 Source CapEx from low cost countries 2 Turns 1.8 Campus Facility Concept 1.6 Global Products and Processes 1.4 Local Sourcing 1.2 1 Value creating Acquisitions '
Slide 20: Market Conditions
Market Conditions - Early look at 2014 light vehicle production Asia • Strong growth to continue in China setting new records • Japan is expected to decline for the full year after a strong Q1 • RoA combined is expected to have moderate growth Americas • Steady US SAAR, inventories remain stable • G
Slide 21: Key Model Launches
Key Model Launches - FY2014 Ford F-Series Great Wall Haval H8 Chrysler 200C VW Passat Hyundai Sonata Haima Auto M3 Fiat Freemont KIA Sorento Geely Emgrand EC7 Acura TLX China will continue to show strong growth in 2014 ALV Q12014 Post Q4’13 result - 21 © Autoliv Inc., All Rights Reserved
Slide 22: Financial Outlook
Financial Outlook Q1 2014 FY2014 Sales Organic* ~ 7% ~ 5% Acquisitions / (Divestitures) - - Fx** (0.4%) 0.1% Consolidated Sales ~ 6.5% ~ 5% EBIT Margin * ~ 8% ~ 9% Expect another year of solid financial performance in 2014 (*) Non US GAAP measure, Earnings Before Interest and Taxes excludes costs fo
Slide 23: Key Investment Considerations
Key Investment Considerations Industry technology leader with attractive product mix Diverse customer base and global presence Solid track record of steady growth and cost control Strong cash flow generation and debt protection measures Experienced management team committed to quality ALV Q12014 Pos
Slide 24: Thank you! Autoliv - Safety Systems
Thank you! Autoliv - Safety Systems Autoliv Active Safety Every year, Autoliv’s products save over 30,000 lives and prevent or reduce ten times Passive The Worldwide Leader in Automotive Safety Systems as many severe injuries annually. Safety ALV Q12014 Post Q4’13 result - 24 © Autoliv Inc., All Rig
Slide 25: Our Vision and Mission
Our Vision and Mission Our vision To substantially reduce traffic accidents, fatalities and injuries Our mission To create, manufacture and sell state-of-the-art automotive safety systems We are “Driven for Life” ALV Q12014 Post Q4’13 result - 25 © Autoliv Inc., All Rights Reserved
Slide 26: We Care
We Care Our Values Life - we have a passion for saving lives. Customers - we are dedicated to providing satisfaction for our customers and value for the driving public. Employees - we are committed to the development of our employees’ skills, knowledge and creative potential. Innovation - we are dri
Slide 27: FY 2013 Recap
FY 2013 Recap - Organic sales offset by currencies and margin challenges Growth • Record sales on organic* sales growth of 7% mostly driven by China ~26% and Active Safety ~ 57% • Solid financial performance and cash flow generation Capital structure • Share repurchase re-initiated, announced record
Slide 28: Operational Priorities
Operational Priorities - Strong sales growth brings related margin challenges Europe • Operating inefficiencies related to; • underutilized capacity • steering wheel growth • capacity alignments Brazil • Ramp-up for growth and supply chain issues Investments for growth • Improving R,D&E leverage whi
Slide 29: Leading thru Innovation
Leading thru Innovation with many industry first’s 1956 Seatbelt 1989 Pretensioner 1995 Knee Airbag 1953 1980 Airbag 1994 Side Airbag 2012 Pedestrian 2008 Pedestrian 2005 Pedestrian Protection Airbag Warning Protection 2012 2006 Active Seatbelt 1998 Side Curtain Airbag ALV Q12014 Post Q4’13 result -
Slide 30: Technology Leadership
Technology Leadership thru early lead-to-market and intellectual property Customer World’s Firsts where Passive safety patent filings in more than one country 2011 Autoliv has contributed; • Volvo - Side airbags (1994) • Kia - Knee airbags(1995) • BMW - Side airbags for head protection (1997) AUTOLI
Slide 31: Our Product Portfolio
Our Product Portfolio Bag-in-belt Extra safety belt Far-side airbag Inflatable curtain airbag Vision system Electronic control unit and Brake control/ESC Blind spot radar Rear-side airbag Driver airbag Steering wheel Pelvis restraint cushion Side airbag Knee airbag Anti-whiplash system Battery disco
Slide 32: Leading thru Innovation
Leading thru Innovation with another strong year of new product introductions INNOVATIONS 2013 Improving automotive safety for both vehicle occupants and vulnerable road users ALV Q12014 Post Q4’13 result - 32 © Autoliv Inc., All Rights Reserved
Slide 33: Superior Global Presence
Superior Global Presence resulting from Long-term expansion in the growth markets Steering Wheels Active Safety Electronics Headcount Seatbelts Airbags 60 000 Manufacturing Facilities North America Developed South America 40 000 Markets 28% Europe Japan China 20 000 Korea Growth India Markets 72% As
Slide 34: Financial Guiding Principles
Financial Guiding Principles Cash flow generation focus • Growth with tight cost and capital control “Strong Investment Grade” credit rating • “Financial Flexibility” for growth in a cyclical industry “Shareholder Friendly” • Increasing Shareholder Value thru acquisitions and Shareholder returns Val
Slide 35: Light Vehicle Production - FY
Light Vehicle Production - FY 2014 vs. 2013 ALV YoY Vehicles in millions @ Jan 16 Org. Growth 2014 2013 Americas 21.4 20.7 4% - North America 16.8 16.2 4% - South America 4.6 4.5 2% Europe 19.5 19.3 1% - WEU 12.7 12.6 1% - EEU 6.8 6.7 1% Japan 8.2 8.9 (8%) China 21.6 19.6 10% RoA 12.9 12.6 3% Other
Slide 36: Light Vehicle Production - 1st Quarter
Light Vehicle Production - 1st Quarter 2014 2013 2014 vs. 2013 ALV YoY Vehicles in millions @ Jan 16 Org. Growth Americas 5.3 5.0 5% - North America 4.3 4.0 6% - South America 1.0 1.0 (1%) Europe 5.0 4.8 4% - WEU 3.3 3.2 5% - EEU 1.7 1.6 2% Japan 2.5 2.2 14% China 5.4 4.8 8% RoA 3.1 3.3 (7%) Other *
Slide 37: CapEx, net and Free Cash flow
CapEx, net and Free Cash flow * - 2006 through 2013 by quarter 350 CapEx, net 300 Free Cash flow 250 200 US$ (millions) 150 ` 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 -50 Only one quarter of negative free cash flow in the history of our company (*) Non US GAAP measure, Cash flow before finan
Slide 38: Capacity Alignment Program
Capacity Alignment Program (US$ millions unless otherwise specified) FY12 Q1’13 Q2’13 Q3’13 Q4’13 FY13 Cost (gross) $79 $3 $3 $1 $33 $40 Cash outlay - $5 $4 $5 $6 $20 Savings ** - ~ $3 ~ $3 ~ $3 ~ $3 ~ $12 Balance Sheet * $75 $70 $70 $68 $94 $94 Estimate the cost and cash outlay to be in the range o
Slide 39: Financial Strategy for Cash Flow
Financial Strategy for Cash Flow - Capital Expenditures, Depreciation and Amortization D&A 900 CapEx, net 8 CapEx % of Sales Capital Management: D&A % of Sales 6 Source CapEx from low cost countries US$ (millions) 600 % Campus Facility Concept 4 300 Global Products and Process 2 Vertical Integration
Slide 40: Dividend Trend
Dividend Trend - Per share and cash payments * 0,6 60 Dividend per share 0,4 40 US$ millions $ per share 0,2 20 Dividend Payments 0 0 1997 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 2010 ‘11 ‘12 ‘13 ‘14 Annualized dividend $2.08 per share (*) Estimated dividend payment for Q1 & Q2 2014 based o
Slide 41: Share Repurchase Program
Share Repurchase Program * was re-initiated in October 2013 35.9 million shares average cost $45.09 148 remaining authorization ~ 11.6 million shares 173 380 221 1,621 378 144 30 43 103 2000 2001 2002 2003 2004 2005 2006 2007 2008 2013 TOTAL Cost / share $22.68 0 $19.57 $20.97 $41.97 $44.86 $55.69 $
Slide 42: Cost Structure Transformation
Cost Structure Transformation - % of sales 7.4 EBIT * 8.6 11.4 Other 11.5 4.7 Depreciation & Amortization 3.2 Major Major Fixed Costs 15.8 Indirect labor 14 Fixed Costs 20.5 % 17.2 % Direct labor 8.2 9.6 Value Add 26.7 Major 30.7 Major Direct Costs Direct Costs 60.7 % 62.7 % Raw Material 27.8 20.4 2
Slide 43: Major Occupant Restraint Suppliers
Major Occupant Restraint Suppliers - Net Sales Development 9 000 US$ (millions) ~ 8% CAGR 6 000 ** * 3 000 0 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 (*) TRW OSS, estimate $300M in 2011, $350M in 2012, $400 in 2013 safety