Financial Report July - September 2006

Net sales: Up 1% to $1.4 billion
Operating income: Down 2% to $102 million
Operating margin: 7.2%

Strong long-term cash flow

(Stockholm, Oct. 26, 2006) – During the quarter ended September 30, 2006, Autoliv Inc. (NYSE: ALV and SSE: ALIV) managed to withstand strong headwinds from the struggling automotive market and met its guidance of an operating margin of 7.2%.

Consolidated sales increased by 1% to $1,411 million. Organic sales declined by only 2% despite a 5% decrease in West European and an 8% drop in North American light vehicle production. Operating income decreased by 2% to $102 million. Income before taxes decreased by 3% to $92 million. Net income and earnings per share have been positively affected by $66 million from a release of tax reserves and other discrete tax items. As a consequence, reported net income rose by $63 million to $122 million and reported earnings per share by 82 cents to $1.48 compared to $0.66 per share in 2005. Adjusted net income and earnings per share, excluding the release of tax reserves and the discrete tax items, were $56 million and $0.68, respectively.

During the quarter, 1,600 jobs were added in low-cost countries, which is more than in any previous quarter, while 400 jobs were cut in high-cost countries.

Cash flow provided from operations totaled $102 million and $24 million after investing activities. Cash flow has, in the quarter, been negatively impacted by $20 million from lower factoring.
Consolidated sales for the fourth quarter 2006 are expected to increase by 6% with the organic sales portion estimated at 2%, despite anticipated lower light vehicle production in both Western Europe and North America.