Autoliv, Inc. · NYSE:ALV
Autoliv — Baird Industrial Conference 2005
67 slides from Autoliv's conference presentation, Nov 8, 2005
Slide 1: Baird Industrial Conference
Baird Industrial Conference Chicago November 8-9, 2005 Ray Pekar Autoliv Inc. The Worldwide Leader in Automotive Safety Systems
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements that are not statements of historical facts, but instead are forward-looking statements. All forward-looking statements involve risks and uncertainties. Actual results could differ materially from those contained in forward-looking statemen
Slide 3: Agenda
AGENDA • Company Overview • Growth Drivers and Market Position • Cost Control • Creating Shareholder Value November 8-9, 2005, Baird Industrial Conference - 3 AUTOLIV PROPRIETARY
Slide 4: Autoliv in Brief
Overview Autoliv in Brief • Sales and technology leader with $6.1B Sales in 2004 • Fortune 500 company with Sales to all major OEM customers • 39,765 employees with close to 10% in R,D&E • 12 Development Centers and 20 crash tracks • 80 subsidiaries and JV’s in 30 countries North Japan America Front
Slide 5: Net Sales
Overview Net Sales MUSD 7,000 6,000 CAGR 10% 5,000 4,000 * 3,000 * 2,000 1,000 * 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 LTM * Autoliv’s estimates. Data on Takata includes non-safety products. November 8-9, 2005, Baird Industrial Conference - 5 AUTOLIV PROPRIETARY
Slide 6: Market Shares - 2004
Overview Market Shares - 2004 Takata Other 19% 26% % 70 2000 60 2004 TRW 20% 50 Autoliv 35% 40 30 20 10 0 Bags Belts Bags Belts Bags Belts Bags Belts North America Europe Japan Asia November 8-9, 2005, Baird Industrial Conference - 6 AUTOLIV PROPRIETARY
Slide 7: Sales by Customer 2004
Overview Sales by Customer 2004 Ford split-up Ford Ford PAG Other 23% N.A 18% 6% 9% 2% 1% 5% Ford Toyota Mazda E.U Ford 7% RoW Daimler/Chrysler Renault 7% 10% Peugeot/Citroen Nissan 8% 5% Volkswagen GM GM split-up 10% 12% GM other 2% GM E.U 4% GM N.A 6% November 8-9, 2005, Baird Industrial Conferenc
Slide 8: Autoliv Improving Sales Mix
Overview Autoliv Improving Sales Mix 5% RoW 10 % Europe & Japan Trans- plants 11 % North 9% America Big 3 22 % 16 % 2000 - $4.1B 2004 - $6.1B November 8-9, 2005, Baird Industrial Conference - 8 AUTOLIV PROPRIETARY
Slide 9: Technology Leader
Overview Technology Leader 2004 • Fixed-Hub SW • Asymmetric airbag • Pedestrian protection • Conduct scientific studies 2002 • Anti-sliding bag • Adaptive load limiter • Enhance safety in traffic 2000 • Occupant spatial sensing • Improve performance 1998 • Telematics • Anti-whiplash seat • Curtain a
Slide 10: Acquisitions
Overview Acquisitions 2004 - Asia Pacific 100 2003 - NSI 90 80 70 2002 - VRE 60 2000 50 2001 - Mando JV 40 30 2000 - Izumi, NSK, OEA, 20 1995 Norma, Inflator JV 10 0 1 2 3 4 5 6 7 8 9 1998 - Van Oerle,Sagem,Nokia 1997- Merger with Morton ASP 1996 - Livbag, NCS 1995 - Iso Delta 1992 - Autoflug 1990 -
Slide 11: Market Growth Drivers
Market Growth Market Growth Drivers US$ Million units 300 100 250 Global average content per vehicle CAGR 3% 80 200 CAGR 2% 60 150 Global light vehicle production 40 100 20 50 0 0 1997 1998 1999 2000 2001 2002 2003 2004 November 8-9, 2005, Baird Industrial Conference - 11 AUTOLIV PROPRIETARY
Slide 12: VW Golf – Content per Vehicle
Market Trends VW Golf – Content per Vehicle EUR/car 350 300 Electronics 250 Head airbag 200 Chest airbag 150 Passenger airbag 100 Driver airbag 50 Seatbelt 0 75 83 84 90 91 94 97 02 November 8-9, 2005, Baird Industrial Conference - 12 AUTOLIV PROPRIETARY
Slide 13: Global Light Vehicle Production
Market Trends Global Light Vehicle Production In million units 26 RoW (CAGR 9%) 24 22 Europe 20 18 North America 16 14 12 10 Japan 8 6 4 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Source J.D Power - LMC November 8-9, 2005, Baird Industrial Conference - 13 AUTOLIV PROPRIETARY
Slide 14: European Light Vehicle Production
Market Trends European Light Vehicle Production In million units 18 Western Europe 16 14 12 10 8 6 Eastern Europe (CAGR 8%) 4 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Source J.D Power - LMC November 8-9, 2005, Baird Industrial Conference - 14 AUTOLIV PROPRIETARY
Slide 15: Life Cycle of Contract
Market Trends Life Cycle of Contract Annual prod. volume in relation to peak volume 100% 100 91% 89% 86% 80% 71% 63% 50 10% 0 2002 2003 2004 2005 2006 2007 2008 2009 November 8-9, 2005, Baird Industrial Conference - 15 AUTOLIV PROPRIETARY
Slide 16: Reasons for Outperformance
Market Trends Reasons for Outperformance Largest platforms in EU* No. of vehicles** ALV products SOP Major models VW’s PQ 35 1.100 PAB,IC, S/B 2002 Golf 5, (Skoda Octavia, Seat Altea, Audi A3/TT) PSA PF1 1.100 All products 1998 Peugeot 206 (1007, C2, C3) Ford’s P1 800 PAB,IC,SAB,S/B,EL 2004 Volvo S4
Slide 17: Growth Drivers
Market Growth Growth Drivers Side Impact, Seat Belt content, Similar to Pedestrian Protection, • Belgium Europe • Czech Republic Telematics, • Estonia Active Safety Canada • France • Germany • Hungary • Italy Japan USA Korea • Netherlands • Poland China • Romania Taiwan Mexico • Spain • Sweden Thai-
Slide 18: Side Curtain Airbags
Market Position Side Curtain Airbags W. Europe N. America Japan RoW Penetration rates % 70 Estimated life-saving effect: 50% or 6,000 lives in the US 60 50 40 30 20 10 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 November 8-9, 2005, Baird Industrial Conference - 18 AUTOLIV PROPRIETARY
Slide 19: Side Impact in North America
Market Growth Side Impact in North America NPRM Voluntary Commitment • Final rule expected in 2005 • 50% by 2007 & 100% by 2009 • Phase in during 2009-11 • All light vehicles < 10,000 lb. • All light vehicles < 10.000 lb. • Honda …… 50% by 2006 CY & 100% by 2007 • 1 yr. delay of phase in November 8-
Slide 20: Inflatable Curtain
Market Position Inflatable Curtain November 8-9, 2005, Baird Industrial Conference - 20 AUTOLIV PROPRIETARY
Slide 21: Content per Vehicle Restraints Systems in Asia
Market Growth Content per Vehicle Restraints Systems in Asia - 2004 Global Average India Indonesia Thailand China Malaysia Taiwan Philippines Korea Australia 0 50 100 150 200 250 300 USD November 8-9, 2005, Baird Industrial Conference - 21 AUTOLIV PROPRIETARY
Slide 22: Sales in Asia Pacific
Market Position Sales in Asia Pacific MUSD 900 830 800 760 700 640 600 560 500 460 400 310 300 200 200 140 100 0 2000 2001 2002 2003 2004 2005 2006 2007 Others Australia China Korea November 8-9, 2005, Baird Industrial Conference - 22 AUTOLIV PROPRIETARY
Slide 23: Rollovers in the U.S.
Market Growth Rollovers in the U.S. ¾ Annual fatalities 10,000 ¾ Total injuries 200,000 ¾ Percent of total cost 33 ¾ Percent of all crashes 2.5 November 8-9, 2005, Baird Industrial Conference - 23 AUTOLIV PROPRIETARY
Slide 24: Roll Over – An example
Market Growth Roll Over – An example November 8-9, 2005, Baird Industrial Conference - 24 AUTOLIV PROPRIETARY
Slide 25: Reversed Belt Geometry
Market Position Reversed Belt Geometry 200 ms 500 ms 1000 ms November 8-9, 2005, Baird Industrial Conference - 25 AUTOLIV PROPRIETARY
Slide 26: Inflatable Belt
Market Position Inflatable Belt ¾ Frontal Impact - Improved Chest Loading Distribution ¾ Side Impact (Far Side Impact) - Head Neck Support on Reversed Belt Geometry ¾ Rollover- Improved Occupant Support November 8-9, 2005, Baird Industrial Conference - 26 AUTOLIV PROPRIETARY
Slide 27: “New” Belt & Airbag
Market Position “New” Belt & Airbag Far-side Impact Test November 8-9, 2005, Baird Industrial Conference - 27 AUTOLIV PROPRIETARY
Slide 28: Pre-Pretensioners
Market Position Pre-Pretensioners November 8-9, 2005, Baird Industrial Conference - 28 AUTOLIV PROPRIETARY
Slide 29: Seat Belt Projects
Market Position Seat Belt Projects Belt Presenter November 8-9, 2005, Baird Industrial Conference - 29 AUTOLIV PROPRIETARY
Slide 30: Low-risk Deployment instead of Suppression & Sensors
Market Position Low-risk Deployment instead of Suppression & Sensors November 8-9, 2005, Baird Industrial Conference - 30 AUTOLIV PROPRIETARY
Slide 31: Safety Phase Chart
Integrated Safety Safety Phase Chart Active Safety Passive Safety Crash is avoidable Mitig.long Contact term Driver is in control Driver is fit ¤ Point of no + Protect Mitig. short term return Car is fit Prepare for the crash Car driver aid autom. vehicle Pre-Crash In-Crash and Post-Crash dynamics c
Slide 32: Current Active Safety Focus
Integrated Safety Current Active Safety Focus ESC and Electronic Integration + Night Vision with FIR ACC, LDW, Stop&Go, Pre-Protect Enhanced Occupant Protection Fusion of Radar and Stereo Vision Blind Spot, Side Impact Precrash Radar Automatic May Day Safety Telematics November 8-9, 2005, Baird Indu
Slide 33: Night Vision System
Integrated Safety Night Vision System November 8-9, 2005, Baird Industrial Conference - 33 AUTOLIV PROPRIETARY
Slide 34: Night Vision Camera
Integrated Safety Night Vision Camera November 8-9, 2005, Baird Industrial Conference - 34 AUTOLIV PROPRIETARY
Slide 35: On-call systems
Integrated Safety On-call systems Market share in Europe Other 10% Autoliv 20% Siemens 20% Motorola 20% Magneti Marelli 30% Telematics Proposal from e-Safety Forum* November 8-9, 2005, Baird Industrial Conference - 35 AUTOLIV PROPRIETARY
Slide 36: Actions in Progress
Cost Control Actions in Progress • Product re-design and eliminate tail end products • Supply base reduction and move to CCC • Move to LLCC Improve • Invest in high value-added business profitability • Outsourcing and Restructuring November 8-9, 2005, Baird Industrial Conference - 36 AUTOLIV PROPRIE
Slide 37: Supplier Consolidation
Cost Control Supplier Consolidation Actual plan No. of suppliers 2 500 ** Consolidation for current programs Consolidation for future programs 2 000 1 500 1 000 Target 500 356 at end of Q1’05 0 2003 2004 2005 2006 2007 2008 2009 2010 **Note: The increase in 2003 is due to acquisitions in 2002 and 20
Slide 38: Purchase in Cost Competitive Countries (CCC)
Cost Control Purchase in Cost Competitive Countries (CCC) 100% 90% 80% 50 70% 60 70 60% 82 75 87 High cost 50% Low cost 40% 30% 50 20% 40 25 30 10% 18 13 0% Q1'04 Q1'05 Q1'06 Q1'07 Q1'08 Q1,09 How? Grow business volume with current LCC supply base Encourage « Key » HCC suppliers to establish in LCC
Slide 39: Steel World Prices
Cost Control Steel World Prices (Cold Rolled Coil, Source: MEPS International) 800 700 Absorbed by our suppliers 600 Where we are 500 USD / Tonne What we pay Where we were ~ + $75 M / Year 400 300 200 100 0 Jan-2001 Jul-2001 Jan-2002 Jul-2002 Jan-2003 Jul-2003 Jan-2004 Jul-2004 Jan-2005 Jul-2005 Jan
Slide 40: Employee Location vs. Sales
Cost Control Employee Location vs. Sales Headcount Sales MUSD LTM 40,000 6,000 35,000 45% 30,000 42% CCC 5,000 25,000 20,000 4,000 15,000 HCC 55% 10,000 3,000 5,000 0 2,000 1999 2000 2001 2002 2003 2004 2005 2006F November 8-9, 2005, Baird Industrial Conference - 40 AUTOLIV PROPRIETARY
Slide 41: Improving Gross Margin Despite Tough Market
Shareholder Value Improving Gross Margin Despite Tough Market % 25.0 20.0 18.8 20.2 19.1 18.1 18.0 18.3 15.0 * Excluding Unusual Items in Q3, 2001. 10.0 ** Including one-time charges in Q4, 2003 which reduced gross margin by 0.5 pp. 5.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 42: Operating Margin
Shareholder Value Operating Margin % 12 10 According to new accounting principle (SFAS 142) 8.3 7.5 8 7.5 7.2 7.1 6.5 6 5.8 4 * Excluding Unusual Items in Q3, 2001 ** Including special items in Q4, 2003 which boosted the margin by 1.2 pp 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 43: Return on Capital Employed
Shareholder Value Return on Capital Employed % 45 Excl. G/W & Intangibles 40 35 30 25 20 15 10 Incl. G/W & Intangibles 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '02 '03 '04 '05 November 8-9, 2005, Baird Industrial Conference - 43 AUTOLIV PROPRIETARY
Slide 44: Net Debt to Capital & Gearing
Shareholder Financials Value Net Debt to Capital & Gearing % 45 Cap acc. to policy 40 35 30 1,800 1,600 25 1,400 1,200 20 1,000 800 15 600 Estimated Gearing head room 600-900 MUSD 10 400 200 5 0 2004 Net debt Cash flow fluctuation Max debt with BBB+ rating 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 45: Strong Free Cash Flow
Shareholder Value Strong Free Cash Flow 9% Free Cash Flow yield in 2004 MUSD 2001 2002 20031) 2004 LTM Net income 53 176 268 326 316 Depreciation & amortization 280 249 279 298 315 Other non-cash items2) 71 38 12 (12) 23 Change in WC (138) 46 (30) 68 (104) Cash from operations 266 509 529 680 550 Ca
Slide 46: Return to Shareholders
Shareholder Value Return to Shareholders Dividend Share buy-backs MUSD 160 • Dividend $1.28 per share 140 • 3.3M outstanding shares Q305 • 5M shares re-purchased YTD 120 100 80 60 40 +7% +20% +33% +25% 20 +18% +15% 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 November 8-9, 2005, B
Slide 47: Share Repurchase Program
Shareholder Value Share Repurchase Program 233.3 Total: 16.7 million 143.9 shares Average price: $33.13 43.0 30.4 MUSD 103.0 2000 2001 2002 2003 2004 2005Q3 Share price US$ 22.64 19.52 20.92 41.88 45.64 November 8-9, 2005, Baird Industrial Conference - 47 AUTOLIV PROPRIETARY
Slide 48: Outlook for Q4, 2005
Shareholder Value Outlook for Q4, 2005* Change Quarter over Quarter • Consolidated Sales: -9% due to reporting days and currency • Organic sales per reporting day: +-0% • EBIT margin: approaching the same level as in the fourth quarter 2004 * Based on the assumptions provided in the quarterly report
Slide 49: Summary
Shareholder Value Summary • Continued growth….albeit at a lower rate • Possible to maintain current (above industry) margins, despite pricing and commodity costs • Improving returns trend continues • Improving balance sheet efficiency • Accelerated Returns to shareholders (dividend and share repurch
Slide 50: Driven for Life
Driven for Life Every year, Autoliv’s products save 10,000 lives and prevent ten times as many severe injuries.
Slide 51: Side Airbag Feature
Market Growth Side Airbag Feature November 8-9, 2005, Baird Industrial Conference - 51 AUTOLIV PROPRIETARY
Slide 52: Consumer Safety
Market Growth Consumer Safety November 8-9, 2005, Baird Industrial Conference - 52 AUTOLIV PROPRIETARY
Slide 53: Superior Global Presence
Overview Superior Global Presence – local production EL SB AB SW EL SB AB SW EL SB AB SW EL SB AB SW EL SB AB SW North America Europe Japan Asia other South America Australia EL=Electronics SB=Seat belts AB=Airbags SW=Steering wheels November 8-9, 2005, Baird Industrial Conference - 53 AUTOLIV PROPR
Slide 54: Superior Global Presence - appropriate vertical integration
Overview Superior Global Presence - appropriate vertical integration Pyrotechnics Inflators Foundry Steering wheels Weaving Textiles Software Electronics November 8-9, 2005, Baird Industrial Conference - 54 AUTOLIV PROPRIETARY
Slide 55: New Side Airbag for Convertibles
Market Position New Side Airbag for Convertibles November 8-9, 2005, Baird Industrial Conference - 55 AUTOLIV PROPRIETARY
Slide 56: Pedestrian Protection
Market Growth Pedestrian Protection Globally approx. 760,000 pedestrians are killed in vehicle impacts every year. This accounts to 65 % of all traffic fatalities. November 8-9, 2005, Baird Industrial Conference - 56 AUTOLIV PROPRIETARY
Slide 57: Other Products
Market Growth Other Products ¾ Improved Roll-over protection ¾ Seat Belts Performance, Comfort, Ease of Use ¾ Frontal Air Bag Low Risk Deployment, Adaptive ¾ Fixed-Hub & Self Cooled Steering Wheel ¾ Collision Warning and Avoidance ¾ Night Vision ¾ Telematics November 8-9, 2005, Baird Industrial
Slide 58: Seat Belt Projects
Market Position Seat Belt Projects Buckle Presenter 80mm November 8-9, 2005, Baird Industrial Conference - 58 AUTOLIV PROPRIETARY
Slide 59: Bags Adaptive for Occupants Size, Crash Severity or Belt Use
Market Position Bags Adaptive for Occupants Size, Crash Severity or Belt Use Adaptive venting Adaptive volume Fracture Zone Sharp Corner to Sharp Corner Active vent open and release gas through “trunk” November 8-9, 2005, Baird Industrial Conference - 59 AUTOLIV PROPRIETARY
Slide 60: Non-Rotating Driver Airbag Module functions
Market Growth Non-Rotating Driver Airbag Module 21 functions November 8-9, 2005, Baird Industrial Conference - 60 AUTOLIV PROPRIETARY
Slide 61: World’s First Asymmetric Driver Airbag
Market Growth World’s First Asymmetric Driver Airbag November 8-9, 2005, Baird Industrial Conference - 61 AUTOLIV PROPRIETARY
Slide 62: ALV’s Strategy
Integrated Safety ALV’s Strategy Interface Technology Partners November 8-9, 2005, Baird Industrial Conference - 62 AUTOLIV PROPRIETARY
Slide 63: Sewn Bags with Optimised Material Use and Straight Sews
Cost Control Sewn Bags with Optimised Material Use and Straight Sews November 8-9, 2005, Baird Industrial Conference - 63 AUTOLIV PROPRIETARY
Slide 64: Accumulated Raw Materials
Cost Control Accumulated Raw Materials Price Increase (gross) per Quarter Confirmed changes Carry-over from 2004 MUSD 30 30 Forecast 3 28 27 27 20 4 15 10 12 5 7 2 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 Raw material will cost Autoliv about $92 million more in 2005 than in 2004 before compensation from
Slide 65: Our Direct Labor Cost per Country
Cost Control Our Direct Labor Cost per Country Index Sweden 100 France 94 Germany 81 UK 72 USA 63 Australia 62 Japan 61 Spain 53 Taiwan 29 Korea 23 340 Estonia 17 240 Hungary 17 140 Turkey 15 40 Mexico 10 10 Canada Poland Australia China Romania Turkey Sweden France Mexico Poland Estonia U.K. USA -6
Slide 66: Estimated Savings in MUSD
Cost Control Estimated Savings* in MUSD 2000 2001 2002 2003 2004 2005 (Q1) Savings compared to last year 59 106 81 68 78 13 Savings compared to 1999 59 165 246 314 392 111 Accumulated savings since 1999 59 224 470 784 1176 1287 *As cost difference between HLCC and LLCC multiplied by number of heads
Slide 67: Return on Equity
Shareholder Value Return on Equity % 18 16 14 12 11.0 10 9.6 9.3 8 7.2 6.6 6 *) Excl. Unusual Items in Q3 and adjusted for new accounting principle 4 **) Including special items in Q4 which boosted the return by 2.9 pp 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2001* 2002 2003** 20