Autoliv: Financial Report July – September 2021

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Posted: October 22, 2021 at 6:24 a.m. EDT|Update: 14 hours ago

STOCKHOLM, 22 October 2021 / PRNewswire / – (NYSE: ALV) (SSE: ALIV.sdb)

Q3 2021: Accelerating disruptions in the global supply chain

Q3 2021 Financial Highlights

$ 1,847 million net sales
12% drop in organic sales *
5.4% operating margin
5.6% adjusted operating margin *
$ 0.68 EPS – a decrease in $ 0.44
$ 0.73 Adjusted EPS * – a decrease of $ 0.75

Indications for the year 2021

About 11% net sales growth
About 8% organic sales growth
About 8% adjusted operating margin

Main commercial developments in the third quarter of 2021

  • Significant organic drop in sales * while global LVP fell 20% from the third quarter of last year (according to IHS Markit October 2021). Sales were down 12% organically, but outperformed global LVP by nearly 8 pp, mainly due to product launches and positive vehicle mix effects and despite negative geographic mix effects. All regions outperformed LVP by 6 to 16 points.
  • Profitability has fallen due to lower sales and higher raw material costs. The adjusted operating margin * fell 4.5 points to 5.6%. Return on capital employed decreased to 10.5% and return on equity decreased to 9.3%.
  • Strong balance sheet and leverage ratio well within target range. Operating cash flow of $ 188 million and free cash flow * of $ 77 million support the continuous improvement of the balance sheet. A dividend of $ 0.62 per share was declared and paid during the quarter. Net debt * decreased, resulting in a leverage ratio * of 1.1x.

* For non-US GAAP measures, see accompanying reconciliation tables. All change figures in this version compare to the same period of the previous year, unless otherwise noted.

Key figures

(Dollars in millions, except per share data)

Q3 2021

Q3 2020

Switch

9M 2021

9M 2020

Switch

Net sales

$ 1,847

$ 2,037

(9.3)%

$ 6,111

$ 4,931

23.9%

Operating result

$ 99

$ 175

(43.2)%

$ 500

$ 75

564%

Adjusted operating profit1)

$ 103

$ 206

(49.7)%

$ 506

$ 170

197%

Operating margin

5.4%

8.6%

(3.2) pp

8.2%

1.5%

6.7pp

Adjusted operating margin1)

5.6%

10.1%

(4.5) pp

8.3%

3.5%

4.8pp

Earnings (loss) per share, diluted2, 3)

$ 0.68

$ 1.12

(39.4)%

$ 3.65

(0.02) $

n / A

Adjusted earnings per share, diluted1, 2, 3)

$ 0.73

$ 1.48

(50.7)%

$ 3.72

$ 0.95

291%

Operating cash flow

$ 188

$ 352

(46.6)%

$ 437

$ 380

15.0%

Return on capital employed4)

10.5%

18.7%

(8.2) pp

18.1%

2.7%

15.4pp

Adjusted return on capital employed 1.5)

10.9%

21.7%

(10.8) pp

18.3%

6.1%

12.2pp

1) Excluding capacity alignment costs and in 2020 competition related issues. 2) Assuming the net dilution, if any, of treasury shares. 3) Allocations of participating shares with the right to receive dividend equivalents are (according to the two-class method) excluded from the calculation of EPS. 4) Annualized operating income and income from equity-accounted investments, compared to the average capital employed. 5) Annualized operating income and income from equity-accounted investments, compared to average capital employed. Non-US GAAP measure, see reconciliation table.


Comments from Mikael bratt, President and CEO

The unfavorable business trends at the start of the year accelerated in the third quarter. Supply shortages in semiconductors and other components caused global LVP to drop 20% in the third quarter from a year ago, 17pp lower than expected at the start of the quarter (according to IHS Markit, October 2021). Declining LVP, unpredictable changes in customer calls and rising raw material costs have resulted in lower profitability despite significant cost control measures, including downsizing.

I’m glad we outperformed Global LVP by almost 8pp, significantly reducing the impact of the 20% drop in LVP. We had a record number of new launches during the quarter and we also expect a record full year. This includes products for a large number of electrified vehicles, a market that represented around 10% of our total sales last year. We expect sales to almost double in this market in 2021.

I am also pleased with our order intake for the first nine months of the year and the fact that we continue to implement the projects and actions necessary to support our growth opportunities and our journey to reach the next level of profitability. as expressed by our medium term objectives.

Despite the difficult environment, our leverage * ratio remains well within our target range and we have declared and paid a dividend of $ 0.62 per share during the quarter.

Thanks to successful mitigation efforts, the headwind for commodities in the third quarter was slightly lower than expected. However, we are seeing new headwinds for raw materials, including higher costs for magnesium and resin, which means we still expect a headwind in raw materials operating margin in a full year of business. ‘about 130 basis points. We expect supply disruptions to continue to negatively impact LVP in the fourth quarter, and although there are indications of a moderate improvement in semiconductor availability in Asia and North America, visibility remains poor.

We are planning and implementing more stringent measures to mitigate current adverse trade barriers, including capacity alignments in Europe and the United States. However, due to the significantly reduced LVP outlook for the year, we are adjusting our indication for the entire year. Based on an assumption of around 0% global LVP growth for the full year 2021, we forecast organic sales growth of around 8% and an adjusted operating margin of around 8%.

By relentlessly focusing on quality and workmanship as well as mitigating headwinds in the short term, we continue to move forward towards our mid-term goals. This and more will be explored during our virtual CMD on November 16, 2021.

Inquiries: Investors and Analysts

Anders Trapp
Vice President Investor Relations
Phone +46 (0) 8 5872 0671

Henrik kaar
Investor Relations Director
Phone +46 (0) 8 5872 0614

Requests: Media

Gabriella Ekelund
Senior Vice President of Communications
Phone +46 (0) 70 612 6424

Autoliv, Inc. is obligated to make this information public in accordance with the EU Market Abuse Regulation. The information was submitted for publication, through the Vice President of Investor Relations noted above, at 12:00 p.m. CET on 22 October 2021.

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SOURCE Autoliv

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