Autoliv, Inc. · NYSE:ALV

Autoliv — Investor Day (May 2013)

53 slides from Autoliv's investor day presentation, May 20, 2013

  1. Slide 1: Autoliv - the global leader in automotive safety

    Autoliv - the global leader in automotive safety Presentation at Financial Analyst Training Stockholm, May 20, 2013 Mats Ödman V. President, emeritus Corp. Communications Driven for Life. © Autoliv Inc., All Rights Reserved

  2. Slide 2: Autoliv in Brief

    Autoliv in Brief  Global sales and technology leader in automotive safety RoA  Sales: US $8.3 billion 10% Europe Japan  Fortune 500 company 10% 32%  Sales to all major vehicle 2012 China 13% manufacturers  More than 80 facilities in 29 countries 35%  Technical centers in 9 countries with 20 cr

  3. Slide 3: Autoliv Production Volumes 2012

    Autoliv Production Volumes 2012 Million Units 150.00 125.00 Global car Knee production Without 100.00 pret. Head 75.00 50.00 Chest With pret. 25.00 Front 0.00 Seatbelt Airbag Steering Wheel ECU Financial Analyst Training Stockholm, May 20, 2013– Page 3 © Autoliv Inc., All Rights Reserved

  4. Slide 4: Sales by Customer - 2012

    Sales by Customer - 2012 Others 10% 15% 3% 4% 5% 11% 5% 6% 11% 6% 7% 9% 8% Financial Analyst Training Stockholm, May 20, 2013– Page 4 © Autoliv Inc., All Rights Reserved

  5. Slide 5: Sales Development

    Autoliv in Brief Sales Development Light vehicle production in million units US$ million Millions units 9000 100.0 8000 90.0 80.0 7000 70.0 6000 60.0 5000 50.0 4000 40.0 3000 30.0 ASP 2000 20.0 1000 10.0 0 0.0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

  6. Slide 6: Net Income

    Autoliv in Brief Net Income US$ million 700 600 500 400 300 200 100 0 ** * *** 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 *) Excl. favorable one-time tax effects of $95 million **) Incl. $96 million for restructuring ***) Incl. $71 million for cap

  7. Slide 7: Market Growth Drivers

    Market Growth Drivers Market share Occupant Restraint Market x Supply value/car x Car built  New contracts  New products  GNP growth  Acquisitions  New regulations  Age of cars  Customer mix  Penetration rates  Prices  Country mix Financial Analyst Training Stockholm, May 20, 2013– Page 7

  8. Slide 8: Market Forecast

    Market Forecast 40 35 Potential Market 30 CAGR 5% US$ (Billions) 25 20 Current Market 15 10 5 0 2012 2015 2017 Passive Safety Developed Markets Passive Safety Growth Markets Active Safety Potential market: Stability Control and Rear/Surround View Systems Financial Analyst Training Stockholm, May 20,

  9. Slide 9: Light Vehicle Production Growth 2012 thru 2017

    Light Vehicle Production Growth - 2012 thru 2017 2012-17 CAGR LVP ~ 98M 4% 100.0.0 Global Market ~ 91M Growth Markets 7% ~ 80M 33 80.0.0 30 RoW + EEU 5% 25 ~59M 60.0.0 ~42M China 9% 26 23 17 40.0.0 Japan (4%) 8 8 Light vehicles millions 9 13 13 WEU 2% 20.0.0 13 ~39M ~37M 15 17 18 North America 3% .0

  10. Slide 10: Content per Vehicle

    Content per Vehicle * - Active and Passive Safety (incl. steering wheels) US$ / vehicle 400 Triad ** 300 Global 200 Growth markets *** 100 2008 2009 2010 2011 2012 * Seatbelts, Airbags, Steering Wheels, Electronic Control Unit, Crash Sensors, Night Vision, Radar and Vision Systems ** Triad (Western

  11. Slide 11: Market Drivers: Increasing penetration in growth markets

    Market Drivers: - Increasing penetration in growth markets China India 100% 100% 90% 90% 80% 80% 70% 70% 60% Frontal 60% Frontal 50% 50% Chest Chest 40% 40% 30% Head 30% Head 20% 20% 10% 10% 0% 0% 2012 2015 2017 2012 2015 2017 South America Global 100% 100% 80% 80% 60% Frontal 60% Frontal Chest Ches

  12. Slide 12: Rating and Regulations

    Rating and Regulations - Strong growth driver for vehicle safety India Only seatbelt regulations Financial Analyst Training Stockholm, May 20, 2013– Page 12 © Autoliv Inc., All Rights Reserved

  13. Slide 13: Market Drivers: Rating programs evolution

    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 • ChinaNCAP upgrade in

  14. Slide 14: Rating and Regulations - knee airbags

    Rating and Regulations - knee airbags to prevent long-term disabling injuries Instalation Rates 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2012 2015 2017 Europe North America Financial Analyst Training Stockholm, May 20, 2013– Page 14 © Autoliv Inc., All Rights Reserved

  15. Slide 15: Rating and Regulations - Pedestrian Airbag

    Rating and Regulations - Pedestrian Airbag Financial Analyst Training Stockholm, May 20, 2013– Page 15 © Autoliv Inc., All Rights Reserved

  16. Slide 16: Rating and Regulations - Rear Seat Safety

    Rating and Regulations - Rear Seat Safety Bag-in-Belt: New smart retractor:  A combination of a seatbelt and an airbag  For all occupants (adaptivity)  Distributes the crash force over a three time  Fully mechanical solution to reduce system larger surface cost Financial Analyst Training Stockho

  17. Slide 17: How to continue to outperform the market?

    How to continue to outperform the market? 9,000 6,000 * US$ (Millions) * 3,000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (*) DIR estimate. Takata Guidance for FY2012 period ending March 2013 (*) TRW OSS, excludes electronics and driver assi

  18. Slide 18: Complete Safety System Supplier

    Complete Safety System Supplier 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 Integrated child seat Pelvis restraint cushion Side airbag Knee airbag An

  19. Slide 19: Superior Global Presence - Local Production

    Superior Global Presence – Local Production SB AB SW EL SB AB SW EL SB AB SW EL SB AB SW EL North America South America Europe Japan China Korea India Asia other Seatbelts Airbags Steering wheels Electronics Financial Analyst Training Stockholm, May 20, 2013– Page 19 © Autoliv Inc., All Rights Reser

  20. Slide 20: India - ALV sales expected to increase 80%

    India - ALV sales expected to increase 80% Light Vehicle Production 30 2012 2015 25 20 Million units ALV ALV 42% 35% 15 Others 58% Others 10 65% 5 0 Current CPV: $60 per vehicle Source : IHS data Financial Analyst Training Stockholm, May 20, 2013– Page 20 © Autoliv Inc., All Rights Reserved

  21. Slide 21: ASEAN - Strong growth with JOEMs

    ASEAN - Strong growth with JOEMs Light Vehicle Production 30 2012 2015 25 20 ALV Million units 32% ALV 37% 15 Others Others 68% 63% 10 5 0 Current CPV: $200 per vehicle Source : IHS data Financial Analyst Training Stockholm, May 20, 2013– Page 21 © Autoliv Inc., All Rights Reserved

  22. Slide 22: South America - stable market shares

    South America - stable market shares with increasing CPV Light Vehicle Production 30 2012 2015 25 20 ALV ALV Million units 32% 33% 15 Others Others 10 68% 67% 5 0 Current CPV: $140 per vehicle Source : IHS data Financial Analyst Training Stockholm, May 20, 2013– Page 22 © Autoliv Inc., All Rights Re

  23. Slide 23: South America - Brazil frontal airbags mandated

    South America - Brazil: Frontal airbags mandated by law from 2014 Light Vehicle Production 30 Safety Content & Safety Market Brazil 25 180 800 160 700 20 140 600 120 Million units CPV USD/ ca r 500 100 MUSD 15 400 80 300 10 60 40 200 20 100 5 0 0 2012 2015 0 Supply Value Market Value Current CPV: $1

  24. Slide 24: China - Increasing market share, CPV & LVP

    China - Increasing market share, CPV & LVP Light Vehicle Production 30 2012 2015 25 20 ALV Million units ALV 35% 15 38% Others 10 Others 62% 65% 5 0 Current CPV: $210 per vehicle Source : IHS data Financial Analyst Training Stockholm, May 20, 2013– Page 24 © Autoliv Inc., All Rights Reserved

  25. Slide 25: Conclusions Growth Markets 2012-15

    Conclusions Growth Markets 2012-15 - Rapid sales growth at least in line with the growth markets 30 000 Market Share Growth Markets 25 000 40% 35% 20 000 Growth Markets CAGR 12% 30% 25% 15 000 Japan CAGR -4% 20% 10 000 15% North America CAGR 4% 10% 5 000 5% W.Europe CAGR 2% 0% 0 2009 2010 2011 2012

  26. Slide 26: Conclusion: Better Balanced Sales Mix Globally

    Conclusion: - Better Balanced Sales Mix Globally 100% 90% 80% Asian OEMs 70% 60% Other 50% Chinese OEMs 40% Korean OEMs Japanese OEMs 30% European Volume 20% European Premium 10% D3 0% 2012 2015 Financial Analyst Training Stockholm, May 20, 2013– Page 26 © Autoliv Inc., All Rights Reserved

  27. Slide 27: Sales Drivers: Strong presence in product growth segments

    Sales Drivers: - Strong presence in product growth segments Market by Product Autoliv Market Shares 30 Active Safety CAGR 27% 25 Product 2012 2015 US$ (Billions) Steering Wheel CAGR 4% Active 20% 24% Safety 20 Electronics Steering 27% 27% CAGR 4% Wheel 15 Side Airbags Electronics 22% 24% CAGR 3% 10

  28. Slide 28: Investment in R,D&E

    Investment in R,D&E US$ (millions) % 10 600 8 500 400 6 300 4 200 2 100 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 RD&E expenses net Customer funded % of sales, gross % of sales, net Financial Analyst Training Stockholm, May 20, 2013– Page 28 © Autoliv Inc., All Rights Reserved

  29. Slide 29: Is our RD&E paying off?

    Is our RD&E paying off? - New products and Patents 2013 Bag-in-belt Safety Patents First Filings 2010 2012 Pedestrian airbag* / Dynamic Spot Light*/ Animal detection system* 2011 Camera-based Advanced Driver Assistance System 2010 Locking tongue* GM AUTOLIV 2008 Integrated safety electronics* / Pede

  30. Slide 30: How ALV will Capture the Lead in Integrated Safety?

    How ALV will Capture the Lead in Integrated Safety? The Right People Speed to Market The Right Partners The Right Products Leverage Our Passive Safety Leadership Financial Analyst Training Stockholm, May 20, 2013– Page 30 © Autoliv Inc., All Rights Reserved

  31. Slide 31: Leverage Our Passive Safety Leadership - ECU

    Leverage Our Passive Safety Leadership - Example Electronic Control Units (ECU) Restraint Controls Volumes 2008-2015 up 230% 20 Brake ECU 15 ESC IMU Restraint Control Millions + IMU 10 5 0 IMU Integration 2008 2008 2010 2012 F2015 Financial Analyst Training Stockholm, May 20, 2013– Page 31 © Autoliv

  32. Slide 32: Leverage Our Passive Safety Leadership - ECU

    Leverage Our Passive Safety Leadership - Example Electronic Control Units (ECU) Brake Brake OEM ECU ECU ESC IMU Restraint Control Restraint/ + IMU Chassis Controller IMU Integration 2008 Brake Controls Integration 2014 Financial Analyst Training Stockholm, May 20, 2013– Page 32 © Autoliv Inc., All R

  33. Slide 33: Leverage Our Passive Safety Leadership - ECU

    Leverage Our Passive Safety Leadership - Example Electronic Control Units (ECU) Brake Brake OEM ECU ECU ESC IMU Restraint Control Restraint/ + IMU Chassis Controller  Electronic Stability Control (ESC)  Anti-Lock Brakes (ABS)  Traction Control  Autonomous Emergency Braking (AEB) IMU Integration

  34. Slide 34: Leverage Our Passive Safety Leadership - ECU

    Leverage Our Passive Safety Leadership - Example Electronic Control Units (ECU) Radar Steering ECU Brake Brake OEM Brake Suspension ECU ECU ECU ECU Vision ESC IMU Safety/ Restraint Chassis Control Restraint/ Radar Controller Radar + IMU Chassis Controller GPS Driveline ECU Radar Radar IMU Integratio

  35. Slide 35: The Right Products - Active Safety Sensors

    The Right Products - Active Safety Sensors Supplier Vision Radar Night Vision Potential Market Mono Stereo 77 24 NB 25 UWB Far Near Rear Surround Stability Radar Radar Radar Infrared Infrared View View Control Autoliv • • • • • • 2014 Continental • • • • • • • • Bosch • • • • • • • Delphi • • • Magn

  36. Slide 36: The Right Partners - Our Development Partners

    The Right Partners - Our Development Partners Vision Systems Radar Night Vision Financial Analyst Training Stockholm, May 20, 2013– Page 36 © Autoliv Inc., All Rights Reserved

  37. Slide 37: Co-development - Mercedes' Collision Prevention Assist

    Co-development -Mercedes’ Collision Prevention Assist (CPA) Financial Analyst Training Stockholm, May 20, 2013– Page 37 © Autoliv Inc., All Rights Reserved

  38. Slide 38: Night Vision Gen-2

    Night Vision Gen-2 - with pedestrian detection and warning Financial Analyst Training Stockholm, May 20, 2013– Page 38 © Autoliv Inc., All Rights Reserved

  39. Slide 39: Night Vision Gen-3

    Night Vision Gen-3 - with Animal Detection and Warning

  40. Slide 40: Active Safety - a Strategic Journey

    Active Safety - a Strategic Journey - On track to reach 500 MUSD sales target Night Vision/ Radar/ Mono Vision/ Brake Stereo Launches BMW Mercedes BMW Control Vision 1000 900 Potential 800 Acquisitions 700 Astyx US$ Millions Radar 600 Visteon Acquisitions 500 Visteon RC Tyco Radar Radar Hella Vision

  41. Slide 41: Long-Term Targets

    Long-Term Targets*  Grow organic sales at least in line with our market  Net Debt/EBITDA around one times  Operating margin 8-9% over the business cycles  Grow EPS faster than organic sales *Long-term targets exclude potential costs and expenses from on-going antitrust investigations, and curren

  42. Slide 42: Average Selling Price Index

    Average Selling Price Index Index 100 80 Electronics Side, head 60 Driver 40 Side, chest Passenger airbag 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2 008 2009 2010 2011 Financial Analyst Training Stockholm, May 20, 2013– Page 42 © Autoliv Inc., All Rights Reserved

  43. Slide 43: Financial Strategy for Margins - Cost Structure

    Financial Strategy for Margins - Cost Structure (% of Sales) Before Crisis After Crisis 7.4 8.5 11.4 12.4 EBIT 4.7 3.3 Other Major Fixed Costs D&A Major Fixed Costs 20.5 % 15.8 13.9 17.2 % Indirect labor 9.6 Direct labor 8.1 26.4 30.7 Value Add Major Direct Costs Major Direct Costs 60.7 % 61.9 % Raw

  44. Slide 44: Financial Strategy for Margins - Direct Material

    Financial Strategy for Margins - Direct Material Direct material savings ≥ 3% thru: Direct Material Savings* (%) 6%  Supply base consolidation and local sourcing  Product re-designs and reduce tail-end products  Vertical integration in certain key components 3% 0% 2007 2008 2009 2010 2011 2012 20

  45. Slide 45: Cost Control Re-design

    Cost Control Re-design - Saves Both Costs and the Environment 1996 ASH-1 2005 ASP-2 2010 ASP-5 Weight 300 g. Weight 170 g. Weight 125 g. -45% -60% 300g. 170g. 125g. Life time saving 20,000 ton Financial Analyst Training Stockholm, May 20, 2013– Page 45 © Autoliv Inc., All Rights Reserved

  46. Slide 46: Financial Strategy for Margins - Vertical Integration

    Financial Strategy for Margins - Vertical Integration Steering Wheel Cushion Why Vertical Integration?  Margins  Process flow  Supply Chain Management  Quality Module Inflator Initiator Propellant Also produce close to 100% of our seatbelt webbing in house Financial Analyst Training Stockholm, M

  47. Slide 47: Financial Strategy for Margins - Direct Labor

    Financial Strategy for Margins - Direct Labor 10.0% Direct labor savings ≥ 5% thru: LMPU Improvements  Productivity  Adapting our global footprint 5.7% 6.2% 6.1% 6.0% 6.1%  Automation 5.0%  One Product, One Process Target 0.0% 2008 2009 2010 2011 2012 Direct labor Headcount Automation (when & wh

  48. Slide 48: Direct Labor Cost Index per Country

    Direct Labor Cost Index per Country - 2012 Sweden 100 France 98 Germany 79 Canada 76 Japan 67 Spain 65 US 60 South Korea 45 Brazil 26 South Africa 21 Estonia 20 Turkey 20 Poland 20 Hungary 18 Taiwan 17 Romania 13 China 10 Mexico 10 Thailand 8 Indonesia 8 Tunisia 6 Phillipines 5 India 5 Financial Ana

  49. Slide 49: Return on Capital Employed

    Return on Capital Employed - Among industry leading returns 4,000 RoCE* Excluding Goodwill 60 3,500 Operating Working Capital 50 3,000 U S $ ( m illio n s ) 40 2,500 Property, Plant & Equipment, net 2,000 % 30 1,500 20 Goodwill & other 1,000 intangible assets 10 500 RoCE Including Goodwill 0 0 '97 '

  50. Slide 50: Capital Structure - Debt Limitation Policy

    Capital Structure - Debt Limitation Policy 4 Old Policy < 3 times Effects of Revised Policy Leverage Ratio *  $1.3B headroom available for acquisitions, Long-term Range shareholder returns and others 3 Current limitation  We intend to start adjusting this year and plan to be within the range durin

  51. Slide 51: Autoliv in Summary

    Autoliv in Summary  Sustainable growth  Above industry margins  Solid balance sheet and cash flow  Historically strong returns to shareholders Basis for a sound investment Financial Analyst Training Stockholm, May 20, 2013– Page 51 © Autoliv Inc., All Rights Reserved

  52. Slide 52: Financial Outlook

    Financial Outlook Q2 2013 FY2013 Sales Organic ~ 3% 2 to 4% Acquisitions / ~ (0.3%) ~ (0.2%) (Divestitures) Fx** ~ 0.4% ~ (0.1%) Consolidated Sales ~ 3% 2 to 4 % EBIT Margin * ~ 8.5% ~9% (*) Excludes legal costs & other charges related to the ongoing antitrust investigations and alignment costs (**)

  53. Slide 53: Autoliv - Safety Systems

    Autoliv - Safety Systems Active Safety Autoliv Every year, Autoliv’s products save over 25,000 lives The Worldwide Leader in Automotive Safety Systems Passive Safety Financial Analyst Training Stockholm, May 20, 2013– Page 53 © Autoliv Inc., All Rights Reserved

Autoliv — Investor Day (May 2013) on 6ix