Autoliv, Inc. · NYSE:ALV

Autoliv — Investor Conferences, NYC (August 2014)

40 slides from Autoliv's conference presentation, Aug 12, 2014

  1. Slide 1: Autoliv: The Worldwide Leader in Automotive Safety

    Autoliv The Worldwide Leader in Automotive Safety Investor Conferences NYC Ray Pekar, VP IR Americas & Business Development August 12-13, 2014 Driven for Life. © Autoliv, Inc. All Rights Reserved.

  2. 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

  3. Slide 3: Autoliv in Brief

    Autoliv in Brief  Sales LTM US$ 9.2 billion RoA  Sales to all major vehicle Europe 10% manufacturers Japan 8%  Fortune 500 company with an 33% A- credit rating (S&P) China 16% 2013  ~ 80 facilities in 29 countries  18 technical centers and 20 crash test tracks 33%  ~ 59,000 associates of which

  4. Slide 4: Autoliv in Brief

    Autoliv in Brief  Sales LTM US$ 9.2 billion  Sales to all major vehicle manufacturers Seatbelts Airbags  Fortune 500 company with an 31% A- credit rating (S&P) 65% 2013  ~ 80 facilities in 29 countries  18 technical centers and Active 4% 20 crash test tracks Safety  ~ 59,000 associates of whic

  5. Slide 5: Autoliv in Brief

    Autoliv in Brief  Sales LTM US$ 9.2 billion Others  Sales to all major vehicle Local Chinese OEM’s 7% manufacturers 2% 2% 15% 3%  Fortune 500 company with an 4% 5% 11% A- credit rating (S&P) 5% 2013  ~ 80 facilities in 29 countries 5% 11%  18 technical centers and 6% 20 crash test tracks 7% 9%

  6. Slide 6: Market Shares 2013

    Market Shares 2013 - Global Safety Market Share by Product 37% 1 1 1 1 1 1 21 Autoliv’s share ALV Post Q2’14 Financial Earnings Report - 6 © Autoliv Inc., All Rights Reserved

  7. Slide 7: Key Focus Areas

    Key Focus Areas Saving lives and safety around the automobile Lead thru innovation and technology Leverage global footprint and talented- skilled people Zero defects and customer focus ALV Post Q2’14 Financial Earnings Report - 7 © Autoliv Inc., All Rights Reserved

  8. Slide 8: Quality is our First Priority

    Quality is our First Priority - Our Zero-Defect Policy Design robust products Buy flawless components Manufacture flawless products Verify conformity of products Product Development Supply Base Production System Mistake Proofing Quality focus in all dimensions of our business ALV Post Q2’14 Financia

  9. Slide 9: Market Conditions - Update as of Q2'14

    Market Conditions - Update as of Q2’14  Asia • Growth rate is slowing in China, expect FY’14 LVP growth ~ 9% • Japan much stronger LVP than expected at the beginning of the year • RoA slightly weaker LVP than expected at the beginning for the year, now roughly flat YoY  Americas • Steady U.S. SAAR

  10. Slide 10: Looking Ahead - Q3 2014

    Looking Ahead - Q3 2014  Sales • YoY organic sales* increase ~ 6%  Mainly due to JOEMs in North America, China and Active Safety • Sequential organic sales* decline ~ 5%  Mainly due to seasonality effect in EU and North America  Operating Margin* ~ 8.5% • YoY  RD&E net and mainly the ramp-up of

  11. Slide 11: Financial Outlook

    Financial Outlook Q3 2014 FY2014 Sales Organic* ~ 6% > 6% Acquisitions / (Divestitures) - - Fx** ~ 1% < 1% Consolidated Sales ~ 7% ~ 7% Operating Margin* ~ 8.5% ~ 9% Expect another year of solid financial performance in 2014 (*) Non US GAAP measure, excludes costs for capacity alignments and antitru

  12. Slide 12: Cause of Traffic Accidents U.S.

    Cause of Traffic Accidents U.S. US Traffic Deaths: 1.3 million Other ~ 7% Human Error ~ 93% Automated Driving can save millions of lives ALV Post Q2’14 Financial Earnings Report - 12 © Autoliv Inc., All Rights Reserved

  13. Slide 13: Assistance – Prevention – Protection

    “Assistance – Prevention – Protection” - Safety in all aspects POINT OF NO RETURN Assistance Prevention Protection Features Features Features  Adaptive Cruise Control  Forward Collision Warning &  Blind Spot Monitor Auto. Emergency Braking  Airbags  Lane Departure Warning &  Seatbelts  High B

  14. Slide 14: New Car Assessment Programs (NCAP)

    New Car Assessment Programs (NCAP) Specification Current Status 2013 2014 2015 2016 2017 2018 Start rating AEB AEB City City Start rating AEB AEB Inter-Urban Inter-Urban Start rating AEB Night EuroNCAP AEB Pedestrian Pedestrian performance Start rating LDW/LKA Upgrade with regards to LKA LDW/LKA Sta

  15. Slide 15: Automated Driving Definitions - NHTSA 2013

    Automated Driving Definitions - NHTSA 2013 >2025 Target 2019 Level 4 2014 Level 3 Autonomous Vehicle Automation with Now Level 2 full monitoring of Automate two environment No occupants Now Level 1 or more required to be in the Automate one primary tasks vehicle. Potentially no steering wheel, prima

  16. Slide 16: Key Active Safety Sensors

    Key Active Safety Sensors Are important to Understanding Surroundings, State of Driver and Vehicle  Camera based – Visual features like lane, traffic signs, light, vehicles and pedestrians  Radar based – Accurate & robust measurement of distance and velocity to various objects  Far Infrared based

  17. Slide 17: Active Safety Features

    Active Safety Features AEB: Autonomous TSR: Traffic Sign HBA: High Beam Assist Emergency Braking Recognition Function: Function: Function: automatically switches alerts the driver, tightens a symbol is displayed in between high and low the active seatbelt, puts the instrument cluster or beams. the b

  18. Slide 18: Key Enablers - System Elements & Design Considerations

    Key Enablers - System Elements & Design Considerations Electronic Controllers with powerful microcontrollers and multiple communication ports Software / Algorithms for execution of performance feature logic  Sensor Data Fusion  Higher automation and autonomy require multiple sensors  Reasoning an

  19. Slide 19: Key Enablers - System Architecture Design

    Key Enablers - System Elements and Design Considerations System Architecture Design  Interconnections of sensors, controllers, and actuators  Partitioning of software functions among controllers  Communication networks (CAN, FlexRay, Ethernet, etc.)  Power distribution Considerations for fault h

  20. Slide 20: Autoliv - Thank you!

    Thank you! Autoliv - Safety Systems Active Autoliv Safety Every year, Autoliv’s products save over 30,000 lives Passive …and prevent more than ten The Worldwide Leader in Automotive Safety Systems Safety times as many severe injuries ALV Post Q2’14 Financial Earnings Report - 20 © Autoliv Inc., All

  21. Slide 21: Q2 Highlights

    Q2 Highlights - Solid financial performance driven by record sales  Financial Performance • Organic sales* growth 7.4%, > 2 pp better than guidance • Operating margin* 9.3%, ~ 30 bps better than guidance • EPS* $1.45 YoY improvement mostly offset by higher interest cost • RoCE* ~ 25%, RoE* ~ 14% 

  22. Slide 22: Strong Performing Models

    Strong Performing Models contributing to strong organic growth in Q2’14 Mercedes S-Class Ford Transit Mercedes B-Class/GLA Mitsubishi RVR/ASX Jeep Cherokee Peugeot 308 BMW 3-Series Hyundai i10 Nissan Rogue Active Safety organic sales growth ~ 40% ALV Post Q2’14 Financial Earnings Report - 22 © Autol

  23. Slide 23: Strong Organic Growth

    Strong Organic Growth - Unit growth exceeds LVP in most product areas Autoliv Quantities Delivered Q2’14 vs. PY (Millions unless specified) Seatbelts 36.3 0% • Pretensioners (of which) 15.0 5% • Active Seatbelts (of which) 0.7 56% Frontal Airbags 11.5 5% • Knee Airbags (of which) 1.3 21% Side Airbag

  24. Slide 24: Q2 Financial Overview

    Q2 Financial Overview - Solid financial performance (US$ Million’s unless specified) 2014 2013 Sales $2,383 $2,198 Gross Profit $464 19.5% $431 19.6% Operating Income* $221 9.3% $200 9.1% EPS* (assuming dilution) $1.45 $1.48 RoCE* 25% 23% RoE* 14% 15% Operating Cash flow $86 $192 Dividend** $0.52 $0

  25. Slide 25: Q2 2014 - Operating Income Bridge vs. Guidance and Prior Year

    Q2 2014 - Operating Income* Bridge vs. Guidance and Prior Year Q2 vs. Guidance 30 bps better Q2 vs. Prior Year 20 bps better $187 $198 Operating Margin* 9.3% (*) Non US GAAP measure, excludes costs for capacity alignments and antitrust matters (including settlements of class actions). ALV Post Q2’14

  26. Slide 26: Cash Flow

    Cash Flow - Investments for growth in CapEx and shareholder returns (US$ Million’s unless specified) Q2 Q2 FY FY FY FY 2014 2013 LTM * 2013 2012 2011 2010 Net Income 83 139 440 490 486 627 596 Depreciation & Amortization 77 70 297 286 273 268 282 Other, net 5 11 18 43 10 38 57 Change in operating WC

  27. Slide 27: Capacity Alignment Program

    Capacity Alignment Program is making steady progress (US$ Million’s unless otherwise specified) FY13 Q1’14 Q2’14 FY14E Cost (gross) $40 ~ $5 ~ $11 > $40 Cash outlay $20 ~ $5 ~ $7 > $40 Savings ~ $12 ~ $1 ~ $2 ~ $8 Balance Sheet* $94 ~ $94 ~ $96 Expected payback 2-3 years from the cash outlay (*) Emp

  28. Slide 28: Light Vehicle Production - 3rd Quarter

    Light Vehicle Production - 3rd Quarter 2014 2013 2014 vs. 2013 ALV YoY Vehicles in millions @ Jul 16 @ Jan 16 Org. Growth Americas 5.3 5.1 5% 7% - North America 4.2 3.9 9% 9% - South America 1.1 1.2 (11%) 3% Europe 4.5 4.5 0% (1%) - WEU 2.9 2.9 1% (1%) - EEU 1.6 1.6 (2%) 1% Japan 2.2 2.3 (3%) (15%)

  29. Slide 29: Light Vehicle Production - 2nd Half

    Light Vehicle Production - 2nd Half 2014 2013 2014 vs. 2013 ALV YoY Vehicles in millions @ Jul 16 @ Jan 16 Org. Growth Americas 10.5 10.2 4% 5% - North America 8.4 7.9 6% 4% - South America 2.1 2.3 (5%) 7% Europe 9.5 9.5 0% 1% - WEU 6.2 6.1 2% 1% - EEU 3.3 3.4 (4%) 2% Japan 4.3 4.6 (7%) (16%) China

  30. Slide 30: Light Vehicle Production - FY

    Light Vehicle Production - FY 2014 vs. 2013 ALV YoY Vehicles in millions @ Jul 16 @ Jan 16 Org. Growth 2014 2013 Americas 21.0 20.7 2% 4% - North America 17.0 16.2 5% 4% - South America 4.0 4.5 (11%) 2% Europe 19.9 19.4 2% 1% - WEU 13.1 12.7 4% 1% - EEU 6.8 6.7 0% 1% Japan 8.7 8.8 0% (8%) China 21.5

  31. Slide 31: Long-Term Targets

    Long-Term Targets - Creating 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

  32. Slide 32: Light Vehicle Production Outlook 2003 thru 2018

    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

  33. Slide 33: Market Outlook - Our current market

    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

  34. Slide 34: 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

  35. Slide 35: 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

  36. Slide 36: Executing our Growth Strategies - China

    Executing our Growth Strategies - China organic growth ~ 16% during H1’14 Investments for Growth:  Infrastructure & Equipment  New customer programs China External Revenues  Vertical Integration 1,600 16  RD&E US$ Millions 1,200 12 % of ALV Sales 800 8 2013 – Market Share* % Autoliv 400 4 35 LVP

  37. Slide 37: Executing our Growth Strategies - Active Safety

    Executing our Growth Strategies - Active Safety organic growth ~ 52% during H1’14 RD&E Investments:  Many new technologies in development 5 Active Safety Sensors  Increasing customer expectations Millions of units 80 No. of vehicle models 70  Improve leverage as we gain critical mass 4 60 3 50 Ac

  38. Slide 38: 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 $2.16 per share based on dividend declared for Q3’14 (*) Estimated divi

  39. Slide 39: Share Repurchase Program

    Share Repurchase Program* - Re-initiated in October 2013  37.9 million shares 192  average cost $47.84 148  remaining authorization ~ 9.6 million shares 173 380 1,813 221 378 144 30 43 103 2000 2001 2002 2003 2004 2005 2006 2007 2008 2013 2014 TOTAL Cost / share $22.68 0 $19.57 $20.97 $41.97 $44.

  40. Slide 40: Capital Structure - Debt Maturity Profile

    Capital Structure - Debt Maturity Profile 1,000 900 Medium term notes 2014 Private Debt Offering: Overdraft/Other short-term debt 800  Raised $1.25B Other long-term loans, incl. current portion 700 U.S. Private Placement notes  Average interest rate ~ 3.8% US $ Millions 600  In-line with gross de

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