Autoliv - Q2 2024: Sales headwinds from lower LVP
(NYSE: ALV) and (SSE: ALIV.sdb)
Financial highlights Q2 2024 |
Full year 2024 guidance |
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Around 2% organic sales growth |
1.1% net sales decrease |
Around 1% negative FX effect on net sales |
0.7% organic sales growth* |
Around 9.5-10.0% adjusted operating margin |
7.9% operating margin |
Around |
8.5% adjusted operating margin* |
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All change figures in this release compare to the same period of the previous year except when stated otherwise. |
Key business developments in the second quarter of 2024
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Second quarter sales increased organically* by 0.7%, which was 1.4pp better than global LVP decline of 0.7% (S&P Global
July 2024 ). We outperformed inAsia excl.China and inEurope , mainly due to product launches and pricing while we underperformed inAmericas and inChina , mainly due to lower light vehicle production with certain key customers, as a consequence of weaker sales and inventory reductions. InChina , the LVP mix was negative as several models with limited content grew strongly.Autoliv -
Profitability improved despite a slight net sales decline. Sales were lower than expected, which impacted our profitability in the quarter with an operating leverage at the high end of our normal 20%-30% range. Profits improved mainly due to the successful execution of cost reductions and increased pricing. Indirect headcount continued to decrease. Operating income was
$206 million and operating margin was 7.9%. Adjusted operating income* improved to$221 million and adjusted operating margin* increased from 8.0% to 8.5%. Return on capital employed was 21.0% and adjusted return on capital employed* was 22.5%. -
Operating cash flow was strong, at
$340 million , albeit slightly below last year as Q2 last year was supported by positive timing effects. Free cash flow* of$194 million was thereby also down somewhat compared to last year. The leverage ratio* improved to 1.2x. In the quarter, a dividend of$0.68 per share was paid, and 1.31 million shares were repurchased and retired.
*For non- |
(Dollars in millions, except per share data) |
Q2 2024 |
Q2 2023 |
Change |
6M 2024 |
6M 2023 |
Change |
Net sales |
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(1.1) % |
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1.8 % |
Operating income |
206 |
94 |
120 % |
400 |
221 |
81 % |
Adjusted operating income1) |
221 |
212 |
4.4 % |
420 |
343 |
22 % |
Operating margin |
7.9 % |
3.6 % |
4.4pp |
7.7 % |
4.3 % |
3.4pp |
Adjusted operating margin1) |
8.5 % |
8.0 % |
0.5pp |
8.0 % |
6.7 % |
1.4pp |
Earnings per share2) |
1.71 |
0.61 |
178 % |
3.23 |
1.47 |
119 % |
Adjusted earnings per share1,2) |
1.87 |
1.93 |
(2.9) % |
3.45 |
2.82 |
22 % |
Operating cash flow |
340 |
379 |
(10) % |
462 |
334 |
39 % |
Return on capital employed3) |
21.0 % |
9.5 % |
11.5pp |
20.4 % |
11.4 % |
9.1pp |
Adjusted return on capital employed1,3) |
22.5 % |
21.0 % |
1.5pp |
21.4 % |
17.4 % |
4.0pp |
1) Excluding effects from capacity alignments, antitrust related matters and for FY 2023 the Andrews litigation settlement. Non- |
Comments from |
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In the second quarter, profitability continued to improve despite a slight decline in net sales. The improvement was driven by better pricing and successful execution of cost reductions, with indirect headcount reduced by 1,100 since the start of the program. We have settled cost compensation claims with a majority of |
We continued to outperform LVP significantly in
We continue to expand our business with domestic Chinese OEMs, positioning us well to benefit from the new structure of the Chinese market. Domestic Chinese OEMs accounted for 38% of our We remain fully focused on delivering on the around 12% adjusted operating margin target, although we adjust our full year 2024 guidance slightly, reflecting changes in LVP and adverse customer mix. We continue to expect a significant increase in profitability in the second half year with an adjusted operating margin of around 11-12% compared to the first half year's 8.0%. The positive development of our cash flow and balance sheet supports our continued commitment to a high level of shareholder returns. |
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customers and target to close most of the remaining claims in Q3. Return on capital employed was good and cash flow continued to be strong, supporting a high level of shareholder returns and an improvement of the leverage ratio to 1.2x. We remain on track with our strategic and structural initiatives to sustainably strengthen our footprint and operations. However, light vehicle production with certain key customers following weaker sales and inventory adjustments were lower than expected in the quarter, especially in June. The lower than expected sales impacted our profitability with an operating leverage at the high end of our normal 20%-30% range. It is encouraging that customer production plans for the third quarter are normalizing, indicating that the June weakness should be temporary. |
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Inquiries: Investors and Analysts
Vice President Investor Relations Tel +46 (0)8 5872 0671
Director Investor Relations Tel +46 (0)8 5872 0614 Inquiries: Media
Senior Vice President Communications Tel +46 (0)70 612 6424
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