STOCKHOLM, July 19, 2024 /PRNewswire/ —
(NYSE: ALV) and (SSE: ALIV.sdb)
Financial highlights Q2 2024
Full year 2024 guidance
$2,605 million net sales
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 $1.1 billion operating cash flow
8.5% adjusted operating margin*
$1.71 EPS, 178% increase
$1.87 adjusted EPS*, 3% decrease
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
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 in Asia excl. China and in Europe, mainly due to product launches and pricing while we underperformed in Americas and in China, mainly due to lower light vehicle production with certain key customers, as a consequence of weaker sales and inventory reductions. In China, the LVP mix was negative as several models with limited Autoliv content grew strongly. 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-U.S. GAAP measures see enclosed reconciliation tables.
Key Figures
(Dollars in millions, except per share data)
Q2 2024
Q2 2023
Change
6M 2024
6M 2023
Change
Net sales
$2,605
$2,635
(1.1) %
$5,220
$5,127
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-U.S. GAAP
measure, see reconciliation table. 2) Assuming dilution when applicable and net of treasury shares. 3) Annualized operating income and
income from equity method investments, relative to average capital employed.
Comments from Mikael Bratt,
President & CEO
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 Asia excluding China and in Europe, fueled by product launches and better pricing. In Americas, we underperformed slightly, as some key customers reduced production.
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 China sales in Q2. We grew sales to this group by 39% in Q2 vs. a year ago, and by 25% vs. the previous quarter. However, the market developed unfavorably in Q2, with sales for certain brands and models with low Autoliv content growing strongly, while some of our key global customers production declined significantly, leading to 7pp underperformance in China.
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.
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.
Inquiries: Investors and Analysts
Anders Trapp
Vice President Investor Relations
Tel +46 (0)8 5872 0671
Henrik Kaar
Director Investor Relations
Tel +46 (0)8 5872 0614
Inquiries: Media
Gabriella Etemad
Senior Vice President Communications
Tel +46 (0)70 612 6424
Autoliv, Inc. is obliged to make this information public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on July 19, 2024.
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ALV ER Q2 2024
Source : Autoliv – Q2 2024: Sales headwinds from lower LVP
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