Autoliv, Inc. · NYSE:ALV
Autoliv — Q3 2018 Earnings Presentation
33 slides from Autoliv's earnings presentation, Oct 29, 2018
Slide 1: Autoliv
1st Autoliv October 29th, 2018 Mikael Bratt President & CEO 1 Copyright Autoliv Inc., All Rights Reserved 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: Autoliv – 65 years of Dedication to Saving Lives
Autoliv – 65 years of Dedication to Saving Lives Entering the next phase Autoliv Lindblads becomes a Period of First Night Vision ̶ Autoservice Acquired by subsidiary of acquisitions and First Knee First Inflatable the start of Active AB is founded First subsidiary Gränges Weda Electrolux joint vent
Slide 4: Millions of Reasons to Do More
Millions of Reasons to Do More Road Fatalities Worldwide Number of Traffic Fatalities, Globally(1) 1.3 million 2017E 2030E (1) WHO February, 2018 4 Autoliv September, 2018 Copyright Autoliv Inc., All Rights Reserved
Slide 5: Creating the New Autoliv
Creating the New Autoliv Our Strategic Direction More Focused Increased Operational Higher Potential for Dedicated Culture Strategy Flexibility Profitable Growth 5 Autoliv September, 2018 Copyright Autoliv Inc., All Rights Reserved
Slide 6: 3rd Quarter 2018 Financial Results
1st 3rd Quarter 2018 Financial Results 6 Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved
Slide 7: Q3'18 Highlights
Q3’18 Highlights ▪ Strong organic growth, despite weaker market development − Execution on strong order book − Launches on track albeit still with elevated launch related costs − Continued high order intake supporting our strong market position longer term ▪ Operating cash flow on a high level, supp
Slide 8: Q3'18 Sales Growth
Q3´18 Sales Growth Sales Bridge Regional Organic Growth** $ million +4.1% Org. growth** +6.4% EUROPE (3.6)% JAPAN LVP* (5)% 2.1% LVP* (3)% AMERICAS 21.8% CHINA LVP* 2% 4.5% LVP* (4)% REST OF ASIA 1.5% LVP* 2% (*) Light Vehicle Production (LVP) according to IHS @ October 16, 2018, (**) Non-US GAAP me
Slide 9: Q3'18 - Key Model Launches
Q3’18 - Key Model Launches VW Tharu Honda Crider Haval F7 . . Audi Q3 BMW X5 . . Chevrolet Silverado Audi A1 Subaru Forester Nissan Altima . 9 October 26, 2018 ALV – Q3-2018 Earnings Call and Webcast Copyright Autoliv Inc., All Rights Reserved
Slide 10: Number of Launches
Product Launches per Quarter YTD increased >30% YoY +25% 250 ~740 200 ~600 ~600 Number of Launches 150 100 50 0 2016 2017 2018 2019 10 October 26, 2018 ALV – Q3-2018 Earnings Call and Webcast Copyright Autoliv Inc., All Rights Reserved
Slide 11: Overall Market Conditions
Overall Market Conditions Light Vehicle Sales LTM** Softening of Major light vehicle markets ▪ Asia − In September, China’s LV sales declined by 11%, marking the third consecutive monthly decline − LVP in the third quarter declined by 4%, this was more than 7 pp lower than expected in July − The Q4’
Slide 12: Q3'18 Financial Overview
Q3´18 Financial Overview (US $ Millions unless specified) Q3’18 Q3’17 Sales $2,033 $1,953 Gross Profit $386 19.0% $395 20.2% Operating Income* $194 9.5% $205 10.5% EPS (assuming dilution) $1.34 $1.21 RoCE** 20.4% n/a RoE** 23.2% n/a Operating cash flow $238 $218 Dividend per share $0.62 $0.60 GLVP**
Slide 13: Adj. Operating Margin Bridge
Adj. Operating Margin* Bridge Q3’18 vs. Prior Year (1.0)pp Adj. EBIT* (5.5)% Adjusted Operating Margin of 9.5% includes ~40 bps increase in Raw material and Currency impact (*) Non-US GAAP measure excludes costs for capacity alignments, antitrust related matters and separation of our business segmen
Slide 14: Margin headwinds Q3'18
Margin headwinds Q3´18 Unbalanced Organic Sales Growth* ▪ Raw material − Continued YoY headwinds from raw materials Asia ▪ Currencies − Currency effects, translation and transaction, slightly worse than expected China ▪ Supply chain, production and logistic challenges − Exceptional growth in America
Slide 15: Cash Flow – including discontinued operations
Cash Flow – including discontinued operations Investments for growth and shareholder returns (US $ Millions unless specified) Q3’18 Q3’17 LTM* 2017 2016 2015 Net Income 118 88 219 303 562 458 Depreciation & Amortization*** 85 104 650 660 383 319 Other, net (8) (6) 27 (27) 1 0 Change in operating WC*
Slide 16: Strong Balance Sheet and Prudent Financial Policy
Strong Balance Sheet and Prudent Financial Policy Committed to Maintain “Strong Investment Grade” Rating Supported by High FCF Conversion Net Debt/ EBITDA* x ✓ Provided $1B of cash liquidity for Veoneer at time of spin-off 2.0 ‒ Mix of new debt and existing cash 1.6 ✓ S&P confirmed long-term credit
Slide 17: Financial Outlook
Financial Outlook Consolidated sales, net and operating margin* FY’18 Sales Organic* ~6% Fx** ~2% Consolidated Sales, net ~8% Operating Margin* ~10.5% Exchange rates** FY’18 EUR / US$ 1,1858 US$ / JPY 110,31 US$ / KRW 1103 US$ / MXN 18,98 US$ / CNY 6,61 (*) Non-US GAAP measures exclude costs for cap
Slide 18: Strategic Direction
1st Strategic Direction 18 Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved
Slide 19: Autoliv Key Targets
Autoliv Key Targets >$10 Bn Revenue ~13% Adj. Operating Margin* ~1.0x Net Debt/ EBITDA 2020 2020 Over Time (*) Non-US GAAP measure excludes costs related to Antitrust matters, Leverage Ratio and Net Debt includes Pension Liability. The forward looking non-U.S. GAAP financial measures herein are prov
Slide 20: Our road to Success
Our road to Success We are fully We operate in a focused on market with long- delivering on our term sustainable Operational 2020 targets growth excellence is in our DNA, and it is what will take us to the next level We have the tools to maintain our new market position 20 Autoliv September, 2018 Co
Slide 21: Unprecedented Business Momentum Translating Into Growth
Unprecedented Business Momentum Translating Into Growth Order Intake Tailwind Driving Sales Growth: ~8% Revenue CAGR 2017A to 2020 Strong Order Momentum… …Translating Into Significant Revenue Growth(1) Order Intake Share; 2014A-17A Revenue; 2017A-20 18-36 months lead time to start of production >50%
Slide 22: Multiple Levers for Continued Margin Improvements
Multiple Levers for Continued Margin Improvements Operating Leverage and Efficiency Improvements Driving Margin Expansion Adj. Operating Margin(1, 2) Driven by ~13% ✓ Utilizing existing footprint for growth A ~11% ✓ RD&E normalization B ✓ Ongoing efficiency improvements C 2017A 2020E (1) Autoliv con
Slide 23: Long-Term Customer Focus, Local Presence & Quality Pays Off
Long-Term Customer Focus, Local Presence & Quality Pays Off Strong & Improving Positions With Key OEMs, Including Ambitious Chinese OEMs Market Share by Brand Origin % Chinese S. Korean European Japanese American Global 2017A 2020E 23 Autoliv September, 2018 Copyright Autoliv Inc., All Rights Reserv
Slide 24: Content per Vehicle Growth Propelled by Emerging Markets
Content per Vehicle Growth Propelled by Emerging Markets Safety System Penetration Correlates to GDP/ Capita Autoliv’s Total Addressable Market(1) Gap to Developed Markets Expected to Close as Emerging Markets Mature… $ Bn Passive Safety Content per Vehicle(1) vs. Economic Development 400 28 ~26 Nor
Slide 25: Global Drive for Increased Safety Standards
Global Drive for Increased Safety Standards Stricter Regulations & Increasingly Stringent Rating Frameworks A Far-Side Airbag Required in Europe Europe A USA China Ratings Japan India South Korea Latin America Protection for both occupants 2019 2020 Roadmap for Vehicle Crash Safety Requirements 2025
Slide 26: Each year, Autoliv's products save over 30,000 lives
Each year, Autoliv’s products save over 30,000 lives autoliv.com
Slide 27: Market Development
Market Development 27 Autoliv September, 2018 Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved
Slide 28: Update U.S. and Mexico NAFTA negotiations
Update U.S. and Mexico NAFTA negotiations ▪ Some of the issues that were negotiated, according to the US: − increase the percentage from 62.5% to 75% of a car that must be sourced from a NAFTA nation to move freely across the borders. − A threshold for the amount of manufacturing that must be perfor
Slide 29: U.S. and China Trade
U.S. and China Trade ▪ 301 relates to intellectual property protection and the US would impose tariffs of autos and auto part imports from China. China has already imposed tariffs on US auto and auto parts imports. − Under this section, the impact to ALV comes indirectly from the vehicle unit volume
Slide 30: Development of FY 2018 LVP forecasts acc to IHS
Development of FY 2018 LVP forecasts acc to IHS (mn) mn LVP 2018 China mn LVP 2018 W Europe +/-0% -2.0% 27.4 15.2 27.2 15 27 14.8 26.8 26.6 14.6 26.4 14.4 26.2 14.2 26 25.8 14 Sep 2017 Dec 2017 Mar 2018 Jun 2018 Jul 2018 Aug 2018 Sep 2018 Oct 2018 Sep 2017 Dec 2017 Mar 2018 Jun 2018 Jul 2018 Aug 201
Slide 31: Light Vehicle Sales
Light Vehicle Sales 31 Autoliv September, 2018 Copyright Autoliv Inc., All Rights Reserved
Slide 32: Saving More Lives & Creating More Value
Saving More Lives & Creating More Value Visible Near-Term and Sustainable Long-Term Growth Profitability Improvement Cash Flow Generation Opportunities and Over- Focus and Shareholder the-Cycle Resilience Profitable Returns Growth Strong Balance Sheet and Prudent Leverage Policy 32 Autoliv September
Slide 33: Each year, Autoliv's products save over 30,000 lives
Each year, Autoliv’s products save over 30,000 lives autoliv.com