Financial Report July – September 2017
Preparations for future growth on track
(Stockholm, Sweden, October 26, 2017) – For the three-month period ended September 30, 2017, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb), the worldwide leader in automotive safety systems, reported consolidated sales of $2,500 million. Quarterly organic sales* grew by 0.5%. The reported operating margin was 6.3% and the adjusted operating margin* was 7.9% (for non-U.S. GAAP measures see enclosed reconciliation tables).
The expectation at the beginning of the quarter was for quarterly organic sales to increase “in the range of 0-2%” and an adjusted operating margin “in the 7.5-8.0% range.”
For the fourth quarter of 2017, the Company expects organic sales to be virtually flat and the adjusted operating margin to be more than 9%. The consolidated sales growth is expected to be around 4% in the fourth quarter. The indication for the full year remains unchanged for adjusted operating margin at around 8.5% and consolidated sales growth at around 3%, while we now expect an organic sales growth of more than 1%. (See the “Outlook” section on the next page for further discussion of organic sales and adjusted operating margin, which are forward-looking non-U.S. GAAP measures).
For Key Figures summary table, please refer to attached file below.
Comments from Jan Carlson, Chairman, President & CEO
“The third quarter turned out essentially as we had expected. We are in the midst of an intense period of preparing for our future growth, while delivering at the high end of our guided margin range for the quarter.
These preparations continues into the fourth quarter, where we look forward to see the first step-up in growth in Passive Safety, before gaining momentum early on in 2018. Passive Safety is planning for a total of around 340 product launches in the October 1, 2017 to March 31, 2018 time frame, compared to a total of around 285 product launches in the same period a year earlier. This is supporting the anticipated 8% CAGR from 2017 to 2020 that we outlined at our Capital Markets Day on September 14. In the fourth quarter we expect the ramp-up of these product launches to add more than 2pp to organic sales growth* in Passive Safety, although this is offset in the fourth quarter by a temporary unfavorable model mix. Order intake continued to be strong in Passive Safety, while we are looking at a more back end loaded order intake year for Electronics.
On September 14, we announced that we will undertake a strategic review of our operating structure with the intent to create two separate publicly listed companies of our current business segments, Passive Safety and Electronics. The review process is continuing according to plan and we expect to be able to provide an update before year end.
At our Capital Markets Day, we outlined new financial targets, including that Passive Safety as a standalone entity is expected to surpass $10 billion in sales in 2020, reaching around 13% adjusted operating margin. Electronics is projected to reach approximately $3 billion in sales by 2020, including more than $1 billion in Active Safety sales.
Electronics continues to build a stronger position by entering several partnerships and agreements, including with Seeing Machines, a leader in driver monitoring systems and through an agreement to acquire certain assets and competence from LiDAR specialist Fotonic. Passive Safety entered a collaboration with Adient to address the vehicle seating opportunities presented by the future car and autonomous driving.
We continue with a clear focus on execution. Quality first, the robustness of our products and focus on operations are more important than ever as we deal with accelerating future business volumes.”
An earnings conference call will be held at 2:00 p.m. (CET) today, October 26. To follow the webcast or to obtain the pin code and phone number, please access www.autoliv.com. The conference slides will be available on our web site as soon as possible following the publication of this earnings report.