Financial Report April – June 2017
Meeting margin guidance despite flat LVP
(Stockholm, Sweden, July 21, 2017) – For the three-month period ended June 30, 2017, Autoliv, Inc. (NYSE: ALV and SSE: ALIV.Sdb), the worldwide leader in automotive safety systems, reported consolidated sales of $2,545 million. Quarterly organic sales* grew by 0.2%. The reported operating margin was 8.5% while the adjusted operating margin* was 8.4% (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 by “around 2%” and an adjusted operating margin of “around 8.5%”. The lower than expected organic sales growth reflects lower customer call-offs due to lower than expected light vehicle production in China and North America.
For the third quarter of 2017, the Company expects organic sales to increase in the range of 0-2% and an adjusted operating margin in the 7.5-8.0% range. 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 around 2%. (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).
Key Figures
For Key Figures summary table, please refer to attached file below.
Comments from Jan Carlson, Chairman, President & CEO
"I am pleased that we continue to execute well in Passive Safety and that proactive adjustments to a weaker market in China and North America helped the segment generate another quarter of double digit operating margin, despite continued elevated investments for growth. We managed another quarter with good operating efficiency, and our strong gross margin performance enabled us to meet our adjusted operating margin* expectation although the organic sales growth* was slightly below our expectation due to lower light vehicle production in China and North America. Order intake continued on a high level in Passive Safety in the quarter.
We accelerated our efforts to strengthen our foundation in Electronics to capture growth opportunities through the strategic agreements we announced in June and July. The agreements with NVIDIA and Velodyne further improve our capabilities in developing next generation self-driving technologies by accessing NVIDIA’s AI car computing platform and Velodyne’s LiDAR sensing technology while our investment in Autotech provides effective scouting of new technologies in autonomous driving. Electronics booked a handful of smaller orders in Active Safety in the quarter, including one new customer and one vision order.
To meet the strong momentum in Passive Safety and Electronics, we continue to invest in competence and capacity, and in the ongoing competition for engineering talent, we have been able to exceed our target of recruiting 1,000 engineers between July 2016 and June 2017. Combined with the formation of the Zenuity joint venture in April and the strategic agreements announced since then, we are continuously strengthening our ability to win new business.
We carefully monitor the readiness level for the upcoming increase in new vehicle launches and I am pleased that they are on track. We still see high light vehicle inventories, slow sales momentum and continued uncertainty in China and North America and we expect organic sales growth in the range of 0-2% for the third quarter.
Staying focused on quality, innovation and product robustness is more important than ever as we execute on accelerating business volumes and new opportunities, which we will elaborate on at our Capital Markets Day on September 14, 2017.”
An earnings conference call will be held at 2:00 p.m. (CET) today, July 21. 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.
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