Autoliv, Inc. · NYSE:ALV
Autoliv — JP Morgan Industrial Conference 2018
62 slides from Autoliv's conference presentation, Mar 15, 2018
Slide 1: Investor Meetings
1st Investor Meetings Ray Pekar – VP IR Americas & Corp. Bus. Development NYC – March 15, 2018 1 March 15, 2018 Q1'18 NYC Investor Meetings 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: Industry Pioneer with Strong Heritage
Industry Pioneer with Strong Heritage More than 60 years of innovation in Automotive Safety MECHANICAL PYROTECHNICAL ELECTRONICS DIGITAL 1950s 1980s 1990s 2000s 2010s PROTECT PREVENT 3 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 4: FY'17 Recap
FY’17 Recap Strong order intake in both segments Passive Safety Electronics RD&E ~50% of the Electronics orders over RD&E 7.1% of sales in 2017 ~50% Order intake win rate for three years (2015-2017) last four years (2014-2017) is in Passive Safety RD&E% of sales peak ACTIVE SAFETY FY’17 while Electr
Slide 5: FY'17 Recap - Strategic Review Process Concluded
FY’17 Recap - Strategic Review Process Concluded Prepare for next steps for “Tax-free Spin-off” of Electronics Business during Q3’18 ▪ Both entities will be US companies with HQ* in Stockholm − Dual listings on the stock market in the US (primary listing) and Sweden ▪ RemainCo (Passive Safety) to re
Slide 6: FY'18 - Looking ahead
FY’18 - Looking ahead Executing towards the targets of the standalone businesses ▪ The Spin next steps − H1’18 Disclose recast historical figures (2015, 2016, 2017) for new standalone entities, Form 10 filing, Host Analyst Days and Deal Roadshows in the US and Europe for standalone entities ahea
Slide 7: Targets Stand Alone Passive Safety and Electronics
Targets Stand Alone Passive Safety and Electronics CMD 2017 – Target Update 2020 Target 2022 Target ▪ Sales – at least hold market share Autoliv ▪ Sales >$10B and at least grow LVP plus 1% Passive Safety ▪ Sales CAGR*** ~8% ▪ Sales CAGR*** ~6% ▪ Adj. Operating Margin* ~13% ▪ Adj. Operating Margin* –
Slide 8: Passive Safety never in a better position
Passive Safety never in a better position 8 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved
Slide 9: A Winning Business Formula
A Winning Business Formula 7% 5%5% Today the global leader in passive safety 8% 5% 32% 7% 7% Frontal Side 12% 49% Airbags Airbags 13% 40% 15% 21% 14% 35% 30% 39% global market share* 11% 10% 25% 3% 4% 7% 9% 32% 39% 20% Steering Seatbelts 16% 10% Wheels 15% 15% 20% 24% 10% 5% Serving 1,300 models and
Slide 10: Passive Safety - Installation Rates show long term upside potential
Passive Safety – Installation Rates show long term upside potential Continued market potential beyond 2020 from Continued market potential beyond 2020 from increasing increasing installation rates* installation rates* Pretensioners (front & rear) Active Seatbelt Driver and passenger Side airbags 100
Slide 11: Passive Safety a ~$25B Market in 2025
Passive Safety a ~$25B Market in 2025 Market is expected to grow 1 pp faster than the underlying LVP LVP CAGR: ~2% US$ (Billions) CAGR: ~3% Content Per Vehicle CPV ($) 26 ~$25B 300 24 ~$23B RoW 250 4,7 22 India ~$20B 4,3 200 20 0,7 China 3,8 0,5 Triad 18 150 16 0,3 6,5 5,3 100 14 4,4 50 12 12,9 13,1
Slide 12: The Veoneer brand will be a visionary pioneer
Heading The Veoneer brand will be a visionary pioneer in automotive ▪ Text electronics, ADAS, automation and new mobility 12 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 13: Customer Trust
Customer Trust Our Passive Safety quality journey extends really well into Electronics All Safety Products Electronics Autoliv Autoliv 2% Electronics <1% ~ 170M ~ 32M recalled recalled since 2010 since 2010 Scope: Japan, Canada, US, China, South Korea, Australian, EU, UK, DE / AB, SB, Electronics fo
Slide 14: One of the World's broadest Safety Electronics Product Portfolios
One of the World’s broadest Safety Electronics Product Portfolios Brake Systems Restraint Control Systems Active Safety 14 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 15: FY'17 Recap - Active Safety and Zenuity Update
Customer** Snapshot – Dec’17 FY’17 Recap Active Safety and Zenuity Update ▪ Active Safety − Strong order intake in FY’17, estimated market share in the “high teens” − Order intake includes a 4th vision customer and our 1st LiDAR and ROADSCAPE customers − Temporary lower growth in FY’17-18 due to low
Slide 16: The Developing Eco-System
The Developing Eco-System Zenuity provides Sensor Fusion, Decision and Control Cloud Partner Sensors Actuators Decision & Control Sensor Fusion Partners Partner Partners System 16 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 17: Electronics Active Safety - Building for the long-term
Electronics Active Safety – Building for the long-term OUR FOOTPRINT Recent JVs WITHIN THE PYRAMID Autonomous and M&A Driving Partners Automated Route Automated Route In-house 2013 (Trained) (Destination) Automated Automated City Automated Valet Evasive Highway Driving Driving Parking Maneuvers AEB
Slide 18: Electronics Active Safety - Building for the long-term
Electronics Active Safety – Building for the long-term OUR FOOTPRINT Recent JVs WITHIN THE PYRAMID Autonomous and M&A Driving Partners Automated Route Automated Route In-house TODAY (Trained) (Destination) Automated Automated City Automated Valet Evasive Highway Driving Driving Parking Maneuvers AEB
Slide 19: Technology Collaborations and Acquisition
Technology Collaborations and Acquisition SEATING EXPERTISE Recently announced Collaboration in the areas of safety, comfort and convenience of future cars HUMAN CENTERED OPTICS EXPERTISE** DRIVER MONITORING LiDAR AI* EXPERTISE Acquisition in the product area of Collaboration to develop driver Volum
Slide 20: Active Safety - Customer snapshot
Active Safety – Customer snapshot Customer RADAR VISION* ADAS ECU LIDAR Customer 1 2013 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Represents >90% of global light Customer 9 vehicle production Customer 10 Customer 11 Customer 12 Awarded Customer 13 business Customer
Slide 21: Active Safety - Customer snapshot
Active Safety – Customer* snapshot Customer RADAR VISION* ADAS ECU LIDAR Customer 1 Today Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 Customer 11 Customer 12 Awarded business Customer 13 Customer 14 Technical Customer 15 Qualification Customer
Slide 22: Electronics - built for the future
Electronics - built for the future 22 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved
Slide 23: Electronics ~$43B Market in 2025
Electronics ~$43B Market in 2025 ~10% CAGR 2017 to 2025 Electronics TAM* US$ (Billions) CAGR: ~10% 50 45 ~$43 40 35 ~$32 30 ~$28 25 ~$20 20 15 10 5 0 2017 2020 2022 2025 *) TAM (Total Addressable Market), CAGR (Compound Annual Growth Rate), **) Active Safety Market includes Radar (Front/side/rear),
Slide 24: Active Safety Sensor Market
Active Safety Sensor Market Active Safety* US$ (millions) 25 000 CAGR: 23% 20 000 15 000 Night Vision ADAS ECU LiDAR 10 000 Radar Systems Vision Systems 5 000 0 2017 2018 2019 2020 2025 *) Active Safety Market includes Radar (Front/side/rear), Forward looking Cameras (Mono/Stereo/Night Vision), Othe
Slide 25: Autoliv Electronics - Market Shares 2016
Autoliv Electronics – Market Shares 2016 RESTRAINT CONTROL SENSING ACTIVE SAFETY BRAKE CONTROL Autoliv 5% Autoliv Autoliv 26% 18% Others 25 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 26: Active Safety Revenue by OEM group
Active Safety Revenue* by OEM group 2022 Sales 2020 Sales LTM Sales ~$2 B >$1 B $0.75 B (*) Non-US GAAP measure excludes costs related to Antitrust matters and capacity alignment, (**) Active Safety, (***) Compound Annual Growth Rate 2017 to 2020 and 2017 to 2022 assuming 2017 LTM as of Q2’17. . 26
Slide 27: Active Safety - Selected Customer Launches
Active Safety - Selected Customer Launches Vision Radar 24 GHz NB ▪ Europe (SOP 2018) ▪ Europe (SOP 2020) ▪ Europe (SOP 2019) ▪ Asia (SOP 2019) ▪ Asia (SOP 2018) ▪ North America (SOP 2019) ADAS ECU Radar 77GHz ▪ Europe (SOP 2019) ▪ Europe (SOP 2019) ▪ Asia (SOP 2019) Night Vision ▪ North America (SO
Slide 28: Zenuity - the technology
Zenuity – the technology ▪ World-class driver-assistance Concrete ADAS offer in production now More than 200 designed customer features ▪ Self-driving technologies Complete, from raw sensor data to vehicle actuators Volvo Drive-Me as development platform Deep learning integration demonstrated Automo
Slide 29: Zenuity - Where are we now?
Zenuity - Where are we now? Products 29 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 30: Safety Electronics Technology - Radar
Safety Electronics Technology Leading radar sensors to cover complex real life driving scenarios Autoliv develops leading 24GHz and 77GHz Radar sensor systems. Using unique Radar Signal Processing methods and very high bandwidth allow best in market performance. 30 March 15, 2018 Q1'18 NYC Investor
Slide 31: Safety Electronics Technology - Vision Systems
Safety Electronics Technology New Vision Systems and Algorithms 2017 Mono Vision AEB (3rd Generation) Autoliv Vision Systems ▪ Mono Camera with Autoliv Vision based AEB ▪ Cost effective solution to meet NCAP 2018 (Lane, AEB, TSR) 2019 Mono and Stereo Vision (4th Generation) ▪ Next generation Stereo
Slide 32: Safety Electronics Technology - Far Infrared
Safety Electronics Technology Far Infrared Technology (Night Vision) Autoliv Vision Systems ▪ Far Infrared was introduced into automotive market in late Generation 3 FIR Camera 1990’s and has grown to over 30 vehicle lines by 2017 SOP 2015 ▪ Termed “Night Vision” but has many other benefits to handl
Slide 33: Safety Electronics Technology - Computing Platforms
Safety Electronics Technology Higher performing computing platforms Autoliv develops customized ADAS/AD ECU technology and provides outstanding functional safety integration capability ▪ Connectivity ▪ Cyber Security ▪ Multi SoC integration ▪ Deep Learning Acceleration 33 March 15, 2018 Q1'18 NYC In
Slide 34: Safety Electronics Technology - LiDAR
Safety Electronics Technology LiDAR Sensing to Complement Vision and Radar 2018 AUTONOMOUS (L4/5) 2021 PREMIUM OEMs (L3/4) 2024 MASS MARKET (L3/4) 2027 WAVE 1 WAVE 2 WAVE 3 Mobility as Service Drives Highway Pilot (L3/L4) Vehicle Market led by New Launches for Traditional Entrants Automotive OEM Bus
Slide 35: Roadscape - Positioning, Mapping and V2X Connectivity
Safety Electronics Technology Roadscape – Positioning, Mapping and V2X Connectivity… 6th Gen Positioning Module ▪ Best in Class Accuracy V2V DSRC + Horizon Module ▪ Secure, Small Footprint Digital Mapping & Horizon Module ▪ SD + HD + Sensor Maps ▪ Real-time Updates ▪ Map Streaming 35 March 15, 2018
Slide 36: Safety Electronics Technology - Driver Monitoring
Safety Electronics Technology Monitor driver behavior to improve comfort, safety and automated driving Driver Monitoring Systems ▪ Innovation for growing interior safety market and autonomous driving ▪ Synergies with partner, Seeing Machines, to improve speed to market ▪ Focus to provide best in cla
Slide 37: Autoliv and Nissin Kogyo form a Joint Venture
Enhancing our Growth and System Capability Autoliv and Nissin Kogyo form a Joint Venture ▪ Overview • Closed March 31, 2016 • Strengthens our product portfolio towards autonomous driving - technology and knowledge in brake control and brake apply • Manufacturing footprint in Japan, China and US - in
Slide 38: ANBS - Autoliv Nissin Brake Systems
ANBS – Autoliv Nissin Brake Systems * e.g no add’l engine component to support, start/stop, coasting w/ engine off, … 38 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 39: ANBS - System & Product Roadmap
ANBS – Autoliv Nissin Brake Systems System & Product Roadmap – ANBS Chassis Controls 39 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 40: ANBA Building - Findlay, Ohio
ANBA Building – Findlay, Ohio ▪ Lease signed on 10-12-17 Elevation Views ▪ VT will close on property by 10-24-17 ▪ Earthwork will start week of Nov. 6th ▪ Filter pit will be ready for Henry Filter install Apr. 2018 ▪ Building ready for Grob machines on 8-20-18 & Xigent equipment on 9-15-18 ▪ Full oc
Slide 41: Restraint Control Trends
Safer automated driving Restraint Control Trends by sharing sensor data and processing power - Advanced IMU G-based Better field performance - Horizon Pressure Hybrid by pre-setting crash algorithms - Safe stop Hybrid + Pre-crash before impact - Basic ADAS - fewer false positives ! Concept phase - c
Slide 42: Integrated Safety towards a Safety Domain Controller
Integrated Safety towards a Safety Domain Controller Future of Restraint Control as ADAS moves mainstream Restraint control for the Future Car is tightly coupled to Automated Driving. There are 3 possible trends: Backbone Backbone Backbone Objects & ADAS ADAS Free-space Gateway ADAS & Impact IMU Cri
Slide 43: Each year, Autoliv's products save over 30,000 lives
Each year, Autoliv’s products save over 30,000 lives autoliv.com 43 March 15, 2018 Q1'18 NYC Investor Meetings Copyright Autoliv Inc., All Rights Reserved
Slide 44: FY'17 Recap
FY’17 Recap Strong performance even with increased RD&E investments for long-term growth ▪ Growth and Margins − Record sales as a result of consolidated sales growth of ~3% where of organic sales* growth ~1.5% − Record gross profit resulting in an 8.6% adjusted operating margin* where RD&E was 7.1%
Slide 45: Q4'17 Highlights
Q4’17 Highlights Strengthening our market position and preparing for our step-up in growth ▪ Financial Performance − Organic Sales* growth 1.1%, slightly better than guidance and LVP** − Adjusted Operating Margin* 9.6%, better than guidance − Adjusted EPS* $2.03, ~19% increase YoY ▪ Capital Structur
Slide 46: Q4 Financial Overview
Q4 Financial Overview Record sales, gross profit and operating cash flow for any quarter (US $ Millions unless specified) 2017 2016 Sales $2,729 $2,604 Gross Profit $567 20.8% $534 20.5% Operating Income* $263 9.6% $243 9.3% EPS* (assuming dilution) $2.03 $1.71 RoCE* 21% 23% RoE* 14% 15% Operating c
Slide 47: Operating Income and Margin Bridge Q4'17 vs. Prior Year
Operating Income* and Margin* Bridge Q4’17 vs. Prior Year Q4’17 vs. Prior Year (30 bps better) 9.3% 9.6% $243 $263 MUS$ Operating Margin* of 9.6% includes ~60 bps increase in RD&E, net vs. Prior Year (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters, separatio
Slide 48: Q4'17 Strong Performing Models
Q4’17 Strong Performing Models Contributing to our overall Organic Sales* growth Great Wall WEY VV7 Nissan Qashqai / Rogue Sport Honda Accord Mercedes E-Class Ford Mustang Honda CR-V Toyota C-HR Jeep Compass Volvo S90 / V90 Strong Organic Sales* growth on these models were mitigated by lower inflato
Slide 49: Currency Effects
Currency Effects* Translation, Transaction and Revaluation ▪ Translation could have a margin impact due to our mix, as margins FY’17 Translation Exposure ~76% may not be evenly distributed across countries Non US$ US$ 24% ▪ Transaction exposure, net for FY’17 accounts for approximately 24% of sales
Slide 50: Commodity Price Trends
Commodity Price Trends Raw material cost development ▪ Autoliv avoids forward hedging contracts against commodity cost changes FY’17 Direct Material ~54% of sales or ~$5.6B ▪ Consequently, Autoliv manages the risk between suppliers and customers 32% 28% 20% 8% 12% Steel Petroleum based Electronics N
Slide 51: China Update
China Update Q4’17 light vehicle production reached ~31.8 million annual run-rate Light Vehicle Production - China ▪ Market Monthly LTM Monthly Millions 3 − Q4’17 LVP** decrease YoY ~1% − Driven by domestic OEMs** 2 − Monthly fluctuations remain erratic 1 − LV Inventories** decreased during Q4’17 ▪
Slide 52: FY Financial Overview
FY Financial Overview Record sales, gross profit and operating cash flow (US $ Millions unless specified) 2017 2016 Sales $10,383 $10,074 Gross Profit $2,149 20.7% $2,057 20.4% Operating Income* $892 8.6% $885 8.8% EPS* (assuming dilution) $6.58 $6.75 RoCE* 19% 21% RoE* 13% 15% Operating cash flow $
Slide 53: FY Segment Reporting
FY Segment Reporting Strong operational performance in Passive Safety driving group profitability Organic Sales* Sales (US$ Millions) Operating Margin (%) CapEx (%) D&A (%) Headcount Growth (%) 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Passive Safety *** 2.2% 8,135 7,919 10.2 10.3 5.7 5.0 3.
Slide 54: Cash Flow
Cash Flow Investments for growth and shareholder returns (US $ Millions unless specified) Q4’17 Q4’16 2017 2016 2015 2014 2013 2012 Net Income (56) 144 303 562 458 469 490 486 Depreciation & Amortization*** 341 104 660 383 319 305 286 273 Other, net (4) (16) (27) 1 0 42 43 10 Change in operating WC*
Slide 55: Capital Structure
Capital Structure Debt limitation policy and shareholder returns 800 Dividend Share Repurchase 2,5 600 Free Cash flow Leverage Ratio * US $ Millions 2,0 Long-term Range Long-term Target 400 1,5 Times 1,0 200 0,5 0 0,0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '97 '99 '01 '03 '05 '0
Slide 56: FY'18 - Key Models in Passive Safety
FY’18 - Key Models in Passive Safety Contributing to the ramp-up of our expected organic sales* growth Honda Accord Tesla Model 3 JOEM JOEM EU OEM Honda Odyssey VW Polo D3 D3 Honda CR-V Nissan Qashqai / Rogue Hyundai Genesis G70 D3 These models are anticipated to contribute ~$500M towards the expect
Slide 57: Overall Market Conditions
Overall Market Conditions Major light vehicle markets remain mixed and uncertain FY 2018 LVP* Millions of YoY Chg. Region ▪ Asia China Vehicles 26.8 @ Jan 16 1% − China inventories** declined during FY17 to relatively low levels Japan 8.7 (3)% − The Q1’18 LVP* is expected to decline YoY* in China ~4
Slide 58: Q1 Light Vehicle Production
Q1 Light Vehicle Production 2018 vs. 2017 (%) ALV Organic** Vehicles in millions 2018 2017 @ Jan 16th @ Oct 17th Sales Growth (%) Americas 5.1 4.9 3 4 ▪ North America 4.3 4.2 1 2 ▪ South America 0.8 0.7 15 13 Europe 6.0 5.8 2 2 ▪ WEU 4.0 3.9 2 4 ▪ EEU 2.0 1.9 2 0 Asia 12.0 12.2 (1) (1) ▪ Japan 2.4 2
Slide 59: FY'18 Light Vehicle Production
FY’18 Light Vehicle Production 2018 vs. 2017 (%) ALV Organic** Vehicles in millions 2018 2017 @ Jan 16th @ Oct 17th Sales Growth (%) Americas 20.0 19.2 4 4 ▪ North America 16.3 15.9 2 3 ▪ South America 3.7 3.3 13 11 Europe 22.6 22.2 2 2 ▪ WEU 15.0 14.8 1 2 ▪ EEU 7.6 7.4 3 1 Asia 48.6 48.2 1 0 ▪ Japa
Slide 60: Looking Ahead Q1'18 Guidance
Looking Ahead Q1’18 Guidance ▪ Sales − Organic Sales* growth <1% YoY** − Strong growth in Thailand and India, South America and Japan is partially offset by a decline in Europe, South Korea and China − Currency translation >6% YoY − Mainly due to the weakening of the US$ during 2017 ▪ Operating Marg
Slide 61: Looking Ahead FY'18 Indication
Looking Ahead FY’18 Indication ▪ Sales − Organic Sales* growth >7% YoY** − Mainly related to strong growth in all major regions including Active Safety which is partially offset by South Korea and lower Restraint Controls and Brake Systems − Currency translation ~4% YoY − Mainly due to the continued
Slide 62: Financial Outlook
Financial Outlook Consolidated sales, net and operating margin* initial FY indication ALV Group Q1’18 FY’18 Segments FY’18 Passive Safety Electronics Sales Sales Organic* <1% >7% Organic* >10% ~(3)% Acquisitions - - Acquisitions - - Fx** >6% ~4% Fx** ~4% ~3% Consolidated Sales, net >7% >11% Consolid