# Autoliv Inc: Form 10-Q for the period ended Jun 30, 2024

- Company: [Autoliv Inc](/companies/alv.md) (CIK 1034670)
- Form: 10-Q
- Filed: 2024-07-19
- Accepted by EDGAR: Jul 19, 2024, 09:18 ET
- Period: 2024-06-30
- Accession: 0000950170-24-084773
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1034670/000095017024084773/alv-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1034670/000095017024084773/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $2.60bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $5.22bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $2.13bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $4.30bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $475.0m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $917.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $116.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $229.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $138.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $270.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $206.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $400.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $28.0m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $54.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $44.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $91.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $138.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $265.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.71 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $3.23 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.71 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $3.24 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 81,100,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 82,100,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $462.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $294.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-01-01 to 2024-06-30 | $111.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-06-30 | $408.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $3.70bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $8.01bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $3.79bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-06-30 | $1.54bn | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2024-06-30 | $455.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-06-30 | $2.30bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 44,648 characters.

*The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States Securities and Exchange Commission (the “SEC”) on February 20, 2024. Unless otherwise noted, all dollar amounts are in millions.*

Autoliv, Inc. (“Autoliv” or the “Company”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal operating subsidiaries, Autoliv AB and Autoliv ASP, Inc.

Through its operating subsidiaries, Autoliv is a supplier of automotive safety systems with a broad range of product offerings, including modules and components for passenger and driver airbags, side airbags, curtain airbags, seatbelts, steering wheels, and pedestrian protection systems.

Autoliv’s filings with the SEC, including this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements, and all of our other reports and statements, and amendments thereto, are available free of charge on our corporate website at www.autoliv.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC (generally the same day as the filing).

The primary exchange market for Autoliv’s securities is the New York Stock Exchange ("NYSE") where Autoliv’s common stock trades under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts ("SDRs") are traded on Nasdaq Stockholm’s list for large market cap companies under the symbol “ALIV SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv shares are traded on Nasdaq OMX PHLX and on NYSE Amex Options under the symbol “ALV”.

Autoliv’s fiscal year ends on December 31.

### Non-U.S. GAAP financial measures

Some of the following discussions refer to non-U.S. GAAP financial measures: see reconciliations for “Organic sales”, “Trade working capital”, “Free cash flow”, “Net debt”, “Leverage ratio”, “Adjusted operating income”, “Adjusted operating margin” and “Adjusted earnings per share, diluted” provided below. Management believes that these non-U.S. GAAP financial measures provide supplemental information to investors regarding the performance of the Company’s business and assist investors in analyzing trends in the Company's business. Additional descriptions regarding management’s use of these financial measures are included below. Investors should consider these non-U.S. GAAP financial measures in addition to, rather than as substitutes for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial measures have been identified as applicable in each section of this report with a tabular presentation reconciling them to the most directly comparable U.S. GAAP financial measures. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

### EXECUTIVE OVERVIEW

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 customers and target to close most of the remaining claims in the third quarter. 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.

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 the second quarter. We grew sales to this group by 39% in the second quarter versus a year ago, and by 25% versus the previous quarter. However, the market developed unfavorably in the second quarter, 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 (Non-U.S. GAAP measure) target, although we are adjusting 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 (Non-U.S. GAAP measure) 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.

### Financial highlights in the three months period ended June 30, 2024

*Change figures below compare to the same period of the previous year, except when stated otherwise.*

**$2,605 million** net sales

**1.1%** net sales decrease

**0.7%** organic sales growth (Non-U.S. GAAP measure, see reconciliation table below)

**7.9%** operating margin

**8.5%** adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below)

**$1.71** EPS, 178% increase

**$1.87** adjusted EPS (Non-U.S. GAAP measure, see reconciliation table below), 3% decrease

### Key business developments in the three months period ended June 30, 2024

*Change figures below compare to the same period of the previous year, except when stated otherwise.*

- **Second quarter sales increased organically by 0.7%** (Non-U.S. GAAP measure, see reconciliation table below), 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. The 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 (Non-U.S. GAAP measure, see reconciliation table below) improved to $221 million and adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below) increased from 8.0% to 8.5%. Return on capital employed was 21.0%.
- **Operating cash flow was strong**, at $340 million, albeit slightly below last year as the second quarter last year was supported by positive timing effects. Free cash flow (Non-U.S. GAAP measure, see reconciliation table below) of $194 million was thereby also down somewhat compared to last year. The leverage ratio (Non-U.S. GAAP measure, see reconciliation table below) 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.

### Business and market condition update for the second quarter 2024

### Supply Chain

In the second quarter, global light vehicle production declined by 0.7% year-over-year (according to S&P Global July 2024). Call-off volatility was lower compared to a year earlier, as supply chains are less strained than they were a year ago. However, volatility did not improve compared to the first quarter 2024, and is still higher than pre-pandemic levels. Low customer demand visibility and changes to customer call-offs with short notice had a negative impact on our production efficiency and profitability in the quarter. We continue to expect call-off volatility in 2024 on average to be lower than it was in 2023 but remain higher than the pre-pandemic level.

### Inflation

In the second quarter, cost pressure from labor and other items had a negative impact on our profitability. Most of the inflationary cost pressure was offset by price increases and other customer compensations in the quarter. Raw material price changes had a negligible impact on our profitability during the second quarter. We now expect raw material prices in 2024 to increase slightly for the full year. We expect continued cost pressure from inflation relating mainly to labor, especially in Europe and the Americas. We continue to execute on productivity and cost reduction activities to offset these cost pressures, and will continue to seek inflation compensation from our customers.

### RESULTS OF OPERATIONS

### Overview

The following table shows some of the key ratios management uses internally to analyze the Company's current and future financial performance and core operations as well as to identify trends in the Company’s financial conditions and results of operations. The Company has provided this information to investors to assist in meaningful comparisons of past and present operating results and to assist in highlighting the results of ongoing core operations. These ratios are more fully explained below and should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The Company's management uses the Return on capital employed (ROCE) and Return on total equity (ROE) measures for purposes of comparing its financial performance with the financial performance of other companies in the industry and providing useful information regarding the factors and trends affecting the Company’s business. As used by the Company, ROCE is annualized operating income and income from equity method investments relative to average capital employed. The Company believes ROCE is a useful indicator of long-term performance both absolute and relative to the Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its peers.

ROE is the ratio of annualized income (loss) relative to average total equity for the periods presented. The Company’s management believes that ROE is a useful indicator of how well management creates value for its shareholders through its operating activities and its capital management.

### KEY RATIOS

### (Dollars in millions, except per share data)

|  | Three Months Ended or As of June 30, 2024 | 2023 | Six Months Ended or As of June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Trade working capital1) | 1,169 | 1,292 | 1,169 | 1,292 |
| Trade working capital relative to sales, %2) | 11.2% | 12.3% | 11.2% | 12.3% |
| Receivables outstanding relative to sales, %3) | 20.1% | 20.8% | 20.1% | 20.8% |
| Inventory outstanding relative to sales, %4) | 9.0% | 9.0% | 9.0% | 9.0% |
| Payables outstanding relative to sales, %5) | 17.8% | 17.5% | 17.8% | 17.5% |
| Gross margin, %6) | 18.2% | 17.0% | 17.6% | 16.1% |
| Operating margin, %7) | 7.9% | 3.6% | 7.7% | 4.3% |
| Capital employed8) | 3,890 | 3,856 | 3,890 | 3,856 |
| Net debt9) | 1,579 | 1,299 | 1,579 | 1,299 |
| Return on total equity, %10) | 23.4% | 8.2% | 21.8% | 9.8% |
| Return on capital employed, %11) | 21.0% | 9.5% | 20.4% | 11.4% |
| Headcount at period-end12) | 68,700 | 71,200 | 68,700 | 71,200 |

1\) Outstanding receivables and outstanding inventory less outstanding payables. See calculation of this non-U.S. GAAP measure in the table below.

2\) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales.

3\) Outstanding receivables relative to annualized quarterly sales.

4\) Outstanding inventory relative to annualized quarterly sales.

5\) Outstanding payables relative to annualized quarterly sales.

6\) Gross profit relative to sales.

7\) Operating income relative to sales.

8\) Total equity and net debt.

9\) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below.

10\) Net income relative to average total equity.

11\) Operating income and income from equity method investments, relative to average capital employed.

12\) Employees plus temporary, hourly personnel.

### three months period ended June 30, 2024 COMPARED WITH three months period ended June 30, 2023

### Consolidated Sales Development

#### (dollars in millions)

|  | Three Months Ended June 30, 2024 | 2023 | Reported change | Components of change in net sales Currency effects 1) | Organic 3) |
| --- | ---: | ---: | ---: | ---: | ---: |
| Airbags, Steering Wheels and Other2) | $1,747 | $1,757 | (0.6)% | (1.8)% | 1.2% |
| Seatbelt products and Other2) | 858 | 878 | (2.2)% | (1.9)% | (0.3)% |
| **Total** | **$2,605** | **$2,635** | **(1.1)%** | **(1.9)%** | **0.7%** |
| Americas | $893 | $916 | (2.6)% | 0.3% | (2.8)% |
| Europe | 761 | 751 | 1.4% | (0.2)% | 1.6% |
| China | 468 | 497 | (5.9)% | (3.1)% | (2.8)% |
| Asia excl. China | 483 | 471 | 2.6% | (7.4)% | 10% |
| **Total** | **$2,605** | **$2,635** | **(1.1)%** | **(1.9)%** | **0.7%** |

1\) Effects from currency translations.

2\) Including Corporate sales.

3\) Non-U.S. GAAP measure.

### Sales by product - Airbags, Steering Wheels and Other

Sales grew organically (Non-U.S. GAAP measure, see reconciliation table above) by 1.2% in the quarter. The largest contributor to the increase was steering wheels, followed by center airbags, inflatable curtains, side airbags, and driver airbags, partly offset by decreases for passenger airbags and knee airbags.

### Sales by product - Seatbelts and Other

Sales for Seatbelt Products and Other decreased organically (Non-U.S. GAAP measure, see reconciliation table above) by 0.3% in the quarter. Sales declined organically in China and the Americas, while it increased in Asia excluding China with Europe being virtually unchanged.

### Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 0.7% compared to the global LVP decrease of 0.7% (according to S&P Global, July 2024). The outperformance was mainly driven by new product launches and higher prices carried over from last year, partly offset by negative customer and model mix.

Our organic sales growth outperformed LVP growth by 13pp in Asia excluding China and by 7.7pp in Europe, while it underperformed by 2.3pp in the Americas, and by 7.3pp in China. LVP growth in China was heavily tilted to domestic OEMs with typically lower safety content. In addition, certain models with low Autoliv content grew very fast in the quarter. Domestic OEM LVP in China grew by 20% while LVP declined by 10% for global OEMs in the second quarter.

**Second quarter of 2024 organic growth**1)

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | --- | --- | --- | --- | --- |
| Autoliv | (2.8)% | 1.6% | (2.8)% | 10% | 0.7% |
| Main growth drivers | VW, Hyundai, Subaru | Mercedes, Renault, Hyundai | Geely, BMW, BYD | Hyundai, Suzuki, EV OEM | Geely, Mercedes, Hyundai |
| Main decline drivers | Stellantis, EV OEM, GM | Stellantis, VW | EV OEM, Honda, GM | KG Mobility, Stellantis | Stellantis, EV OEM, GM |

1\) Non-U.S. GAAP measure.

### Light Vehicle Production Development

#### Change second quarter of 2024 versus second quarter of 2023

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | ---: | ---: | ---: | ---: | ---: |
| LVP1) | (0.5)% | (6.1)% | 4.5 % | (2.6)% | (0.7)% |

1\) Source: S&P Global, July 2024.

### Earnings

*(Dollars in millions, except per share data)*

|  | Three Months Ended June 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net Sales | $2,605 | $2,635 | (1.1)% |
| Gross profit | 475 | 447 | 6.2% |
| % of sales | 18.2% | 17.0% | 1.3 pp |
| S, G&A | (138) | (130) | 6.5% |
| % of sales | (5.3)% | (4.9)% | (0.4 )pp |
| R, D&E, net | (116) | (120) | (3.4)% |
| % of sales | (4.5)% | (4.6)% | 0.1 pp |
| Other income (expense), net | (14) | (103) | (86)% |
| Operating income | 206 | 94 | 120% |
| % of sales | 7.9% | 3.6% | 4.4 pp |
| Adjusted operating income1) | 221 | 212 | 4.4% |
| % of sales | 8.5% | 8.0% | 0.5 pp |
| Financial and non-operating items, net | (23) | (11) | 108% |
| Income before taxes | 183 | 83 | 121% |
| Income taxes | (44) | (30) | 49% |
| Tax rate | 24.1% | 35.8% | (11.7 )pp |
| Net income | 139 | 53 | 162% |
| Earnings per share, diluted2) | 1.71 | 0.61 | 178% |
| Adjusted earnings per share, diluted1,2) | 1.87 | 1.93 | (2.9)% |

1\) Non-U.S. GAAP measure, excluding effects from capacity alignments, antitrust related matters and for fiscal year 2023 the Andrews litigation settlement.

2\) Assuming dilution, when applicable, and net of treasury shares.

### Second quarter of 2024 financial development

**Gross profit** increased by $28 million, and the gross margin increased by 1.3pp compared to the same quarter 2023. The gross profit increase was primarily driven by lower costs for labor and production overhead, as well as customer compensations and positive foreign currency effects. This was partly offset by higher material costs.

**S,G&A** costs increased by $8 million compared to the prior year, impacted by higher personnel and IT costs as well as higher legal costs. S,G&A costs in relation to sales increased from 4.9% to 5.3%.

**R,D&E, net** costs decreased by $4 million compared to the prior year, mainly due to higher engineering income. R,D&E, net, in relation to sales decreased from 4.6% to 4.5%.

**Other income (expense), net** was negative $14 million mainly due to capacity alignment accruals, compared to negative $103 million in the same period last year. Q2 2023 was negatively impacted by around $109 million in accruals for capacity alignments.

**Operating income** increased by $112 million compared to the same period in 2023, mainly due to lower capacity alignment accruals and the increase in gross profit.

**Adjusted operating income** (Non-U.S. GAAP measure, see reconciliation table below) increased by $9 million compared to the prior year, mainly due to higher gross profit, partly offset by higher S,G&A costs.

**Financial and non-operating items, net**, was negative $23 million compared to negative $11 million a year earlier. The difference was mainly due to increased interest expense as the result of higher debt and higher interest rates.

**Income before taxes** increased by $100 million compared to the prior year, mainly due to the increase in operating income.

**Tax rate** was 24.1% compared to 35.8% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 4.9pp. Discrete tax items, net, decreased the tax rate by 4.5pp in the same period last year.

**Earnings per share, diluted** increased by $1.09 compared to a year earlier. The main drivers were $1.21 from higher operating income and $0.09 from lower number of shares, partly offset by $0.13 from higher income taxes and $0.09 from higher financial and non-operating items, net.

### six months period ended June 30, 2024 COMPARED WITH six months period ended June 30, 2023

### Consolidated Sales Development

#### (dollars in millions)

|  | Six Months Ended June 30, 2024 | 2023 | Reported change | Components of change in net sales Currency effects 1) | Organic 3) |
| --- | ---: | ---: | ---: | ---: | ---: |
| Airbags, Steering Wheels and Other2) | $3,528 | $3,430 | 2.9% | (1.2)% | 4.0% |
| Seatbelt products and Other2) | 1,692 | 1,698 | (0.3)% | (1.2)% | 0.9% |
| **Total** | **$5,220** | **$5,127** | **1.8%** | **(1.2)%** | **3.0%** |
| Americas | $1,786 | $1,747 | 2.2% | 1.5% | 0.7% |
| Europe | 1,531 | 1,476 | 3.7% | 1.1% | 2.6% |
| China | 928 | 950 | (2.3)% | (3.9)% | 1.6% |
| Asia | 975 | 954 | 2.1% | (7.0)% | 9.1% |
| **Total** | **$5,220** | **$5,127** | **1.8%** | **(1.2)%** | **3.0%** |

1\) Effects from currency translations.

2\) Including Corporate sales.

3\) Non-U.S. GAAP measure.

### Sales by product - Airbags, Steering Wheels and Other

Sales grew organically (Non-U.S. GAAP measure, see reconciliation table above) by 4.0% in the period. The largest contributor to the increase was steering wheels, followed by center airbags, inflatable curtains, side airbags, and driver airbags, partly offset by decreases for knee airbags and passenger airbags.

### Sales by product - Seatbelts and Other

Sales for Seatbelt Products and Other increased organically (Non-U.S. GAAP measure, see reconciliation table above) by 0.9% in the period. Sales increased organically in Asia excluding China, the Americas and Europe while it declined in China.

### Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 3.0% compared to the global LVP decrease of 0.3% (according to S&P Global, July 2024). The outperformance was mainly driven by new product launches and higher prices carried over from last year, partly offset by negative customer and model mix.

Our organic sales growth outperformed LVP growth by 14pp in Asia excluding China, by 6.0pp in Europe and by 1.0pp in the Americas, while it underperformed by 4.0pp in China. LVP growth in China was heavily tilted to domestic OEMs with typically lower safety content. In addition, certain models with low Autoliv content grew strongly. Domestic OEM LVP in China grew by 19% while LVP declined by 7% for global OEMs in the first half year.

**First six months 2024 organic growth**1)

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | --- | --- | --- | --- | --- |
| Autoliv | 0.7% | 2.6% | 1.6% | 9.1% | 3.0% |
| Main growth drivers | VW, Mercedes, Toyota | Mercedes, Renault, BMW | Geely, BMW, Chery | Hyundai, Tata, Suzuki | Mercedes, Hyundai, Geely |
| Main decline drivers | Stellantis, EV OEM, GM | Stellantis, VW, Ford | EV OEM, Honda, GM | Nissan, Renault | Stellantis, EV OEM, GM |

1\) Non-U.S. GAAP measure.

### Light Vehicle Production Development

#### Change first six months of 2023 versus first six months of 2022

|  | Americas | Europe | China | Asia excl. China | Global |
| --- | ---: | ---: | ---: | ---: | ---: |
| LVP1) | (0.3)% | (3.4)% | 5.6 % | (4.6)% | (0.3)% |

1\) Source: S&P Global, July 2024.

### Earnings

*(Dollars in millions, except per share data)*

|  | Six Months Ended June 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net Sales | $5,220 | $5,127 | 1.8% |
| Gross profit | 917 | 826 | 11% |
| % of sales | 17.6% | 16.1% | 1.5 pp |
| S, G&A | (270) | (262) | 3.2% |
| % of sales | (5.2)% | (5.1)% | (0.1 )pp |
| R, D&E, net | (229) | (237) | (3.3)% |
| % of sales | (4.4)% | (4.6)% | 0.2 pp |
| Other income (expense), net | (18) | (107) | n/a |
| Operating income | 400 | 221 | 81% |
| % of sales | 7.7% | 4.3% | 3.4 pp |
| Adjusted operating income1) | 420 | 343 | 22% |
| % of sales | 8.0% | 6.7% | 1.4 pp |
| Financial and non-operating items, net | (43) | (29) | 47% |
| Income before taxes | 356 | 191 | 86% |
| Income taxes | (91) | (64) | 42% |
| Tax rate | 25.5% | 33.4% | (7.9 )pp |
| Net income | 266 | 127 | 108% |
| Earnings per share, diluted2) | 3.23 | 1.47 | 119% |
| Adjusted earnings per share, diluted1,2) | 3.45 | 2.82 | 22% |

1\) Non-U.S. GAAP measure, excluding effects from capacity alignments, antitrust related matters and for fiscal year 2023 the Andrews litigation settlement.

2\) Assuming dilution, when applicable, and net of treasury shares.

### First six months 2024 financial development

**Gross profit** increased by $91 million, and the gross margin increased by 1.5pp compared to the same period 2023. The gross profit increase was primarily driven by volume growth, customer compensations and lower costs for labor, material, production overhead and premium freight.

**S,G&A** costs increased by $8 million compared to the prior year, mainly due to higher personnel costs and legal fees, partly offset by lower costs for professional service. S,G&A costs in relation to sales increased from 5.1% to 5.2%.

**R,D&E, net** costs decreased by $8 million compared to the prior year, mainly due to higher engineering income. R,D&E, net, in relation to sales decreased from 4.6% to 4.4%.

**Other income (expense), net** was negative $18 million mainly due to capacity alignment accruals, compared to negative $107 million in the same period last year, mainly due to $112 million in capacity alignment accruals.

**Operating income** increased by $179 million compared to the same period in 2023, mainly due to the increase in gross profit and lower capacity alignment accruals.

**Adjusted operating income** (Non-U.S. GAAP measure, see reconciliation table below) increased by $77 million compared to the prior year, mainly due to higher gross profit and lower R,D&E, net partly offset by higher costs for S,G&A.

**Financial and non-operating items, net**, was negative $43 million compared to negative $29 million a year earlier. The difference was mainly due to increased interest expense as the result of higher debt and higher interest rates.

**Income before taxes** increased by $165 million compared to the prior year, mainly due to the increase in operating income.

**Tax rate** was 25.5% compared to 33.4% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 3.7pp. Discrete tax items, net, decreased the tax rate by 1.5pp in the same period last year.

**Earnings per share, diluted** increased by $1.75 compared to a year earlier. The main drivers were $1.71 from higher operating income and $0.15 from lower number of shares, partly offset by $0.11 from higher financial and non-operating items, net.

### LIQUIDITY AND CAPITAL RESOURCES

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial position, results of operations or cash flows. The Company’s future contractual obligations have not changed materially from the amounts reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.

### Second quarter of 2024 development

**Changes in operating working capital** was $128 million positive, compared to $230 million positive in the same period the prior year. The $102 million decrease was mainly due to the positive effects from accounts payable and accrued expenses were smaller, partly offset by more positive effects from receivables and other assets.

**Other, net** was $23 million negative compared to $2 million positive in the same period the prior year. The difference relates mainly to deferred income taxes and other, net.

**Operating cash flow** decreased by $39 million to $340 million compared to the same period last year, mainly due to less positive effects from operating working capital changes.

**Capital expenditure, net** increased by $22 million compared to the same period the previous year. Capital expenditure, net in relation to sales was 5.6% versus 4.7% a year earlier.

**Free cash flow** (Non-U.S. GAAP measure, see calculation table below) was positive $194 million compared to positive $255 million in the same period the prior year. The decrease was due to the lower operating cash flow and higher capital expenditure, net.

**Cash conversion** (Non-U.S. GAAP measure, see calculation table below) defined as free cash flow (Non-U.S. GAAP measure) in relation to net income, was 140% in the quarter.

**Trade working capital** (Non-U.S. GAAP measure, see calculation table below) decreased by $123 million compared to the same period last year, where the main drivers were $99 million in lower accounts receivables, $14 million in higher accounts payable and $11 million in lower inventories. In relation to sales, trade working capital decreased from 12.3% to 11.2%.

**Liquidity position.** As of June 30, 2024, our cash balance was around $0.4 billion, and including committed, unused loan facilities, our liquidity position was around $1.5 billion.

**Net debt** (Non-U.S. GAAP measure, see reconciliation table below) was $1,579 million as of June 30, 2024, which was $280 million higher than a year earlier

**Total equity.** As of June 30, 2024, decreased by $246 million compared to June 30, 2023. This was mainly due to $223 million in dividend payments and stock repurchases including taxes of $597 million, as well as $76 million in negative currency translation effects, partly offset by $627 million from net income.

**Leverage ratio** (Non-U.S. GAAP measure, see calculation table below). As of June 30, 2024, the Company had a leverage ratio of 1.2x compared to 1.3x as of June 30, 2023, both the 12 months trailing adjusted EBITDA (Non-U.S. GAAP measure, see calculation table below) and the net debt (Non-U.S. GAAP measure) increased by around $270 million.

### First six months of 2024 development

**Operating cash flow** increased by $129 million compared to the same period last year, to $462 million, mainly due to higher net income.

**Capital expenditure, net** increased by $19 million. Capital expenditure, net in relation to sales was 5.5% versus 5.2% the prior year period.

**Free cash flow** (Non-U.S. GAAP measure, see calculation table below) was positive $176 million, compared to positive $66 million in the same period last year. The improvement was due to the higher operating cash flow partly offset by higher capital expenditure, net.

**Cash conversion** (Non-U.S. GAAP measure, see calculation table below) defined as free cash flow (Non-U.S. GAAP measure) in relation to net income, was 66% in the period.

### NON-U.S. GAAP MEASURES

The Company believes that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items.

With respect to the Andrews litigation settlement, the Company has treated this specific settlement as a non-recurring charge because of the unique nature of the lawsuit, including the facts and legal issues involved.

Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.

### Reconciliation of U.S. GAAP financial measures to “Adjusted operating income”, “Adjusted operating margin” and “Adjusted Earnings per share, diluted”

### (Dollars in millions, except per share data)

|  | Three Months Ended June 30, 2024 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP | Three Months Ended June 30, 2023 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $206 | $15 | $221 | $94 | $118 | $212 |
| Operating margin, % | 7.9% | 0.6% | 8.5% | 3.6% | 4.5% | 8.0% |
| Earnings per share, diluted | $1.71 | $0.17 | $1.87 | $0.61 | $1.31 | $1.93 |

1\) Effects from capacity alignments, antitrust related matters and for fiscal year 2023 the Andrews litigation settlement.

|  | Six Months Ended June 30, 2024 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP | Six Months Ended June 30, 2023 Reported U.S. GAAP | Adjustments1) | Non-U.S. GAAP |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $400 | $20 | $420 | $221 | $122 | $343 |
| Operating margin, % | 7.7% | 0.4% | 8.0% | 4.3% | 2.4% | 6.7% |
| Earnings per share, diluted | $3.23 | $0.22 | $3.45 | $1.47 | $1.35 | $2.82 |

1\) Effects from capacity alignments, antitrust related matters and for fiscal year 2023 the Andrews litigation settlement.

### Items included in Non-U.S. GAAP adjustments

### (Dollars in millions, except per share data)

|  | Three Months Ended June 30, 2024 Millions | Per share | Three Months Ended June 30, 2023 Millions | Per share |
| --- | ---: | ---: | ---: | ---: |
| Capacity alignments | $14 | $0.17 | $109 | $1.26 |
| Andrews litigation settlement | — | — | 8 | 0.09 |
| Antitrust related matters | 1 | 0.01 | 1 | 0.01 |
| **Total adjustments to operating income** | **15** | **0.18** | **118** | **1.36** |
| Tax on non-U.S. GAAP adjustments1) | (1) | (0.02) | (5) | (0.06) |
| **Total adjustments to net income** | **$14** | **$0.16** | **$113** | **$1.30** |

1\) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).

|  | Six Months Ended June 30, 2024 Millions | Per share | Six Months Ended June 30, 2023 Millions | Per share |
| --- | ---: | ---: | ---: | ---: |
| Capacity alignments | $16 | $0.19 | $112 | $1.29 |
| The Andrews litigation settlement | — | — | 8 | 0.09 |
| Antitrust related matters | 4 | 0.05 | 2 | 0.02 |
| **Total adjustments to operating income** | **20** | **0.24** | **122** | **1.41** |
| Tax on non-U.S. GAAP adjustments1) | (2) | (0.02) | (6) | (0.07) |
| **Total adjustments to net income** | **$18** | **$0.22** | **$116** | **$1.34** |

1\) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).

The Company uses the non-U.S. GAAP measure “Trade working capital,” as defined in the table below, in its communications with investors and for management’s review of the development of the trade working capital cash generation from operations. The reconciling items used to derive this measure are, by contrast, managed as part of the Company’s overall cash and debt management, but they are not part of the responsibilities of day-to-day operations’ management.

### Calculation of “Trade working capital”

### (Dollars in millions)

|  | June 30, 2024 | March 31, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: |
| Receivables, net | $2,090 | $2,194 | $2,189 |
| Inventories, net | 936 | 997 | 947 |
| Accounts payable | (1,858) | (1,855) | (1,844) |
| **Trade working capital** | **$1,169** | **$1,336** | **$1,292** |

Management uses the non-U.S GAAP measure "Net debt" to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore the Company provides this non-U.S. GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

### Reconciliation of U.S. GAAP financial measure to “Net debt”

### (Dollars in millions)

|  | June 30, 2024 | March 31, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: |
| Short-term debt | $455 | $310 | $481 |
| Long-term debt | 1,540 | 1,830 | 1,290 |
| **Total debt** | **1,996** | **2,140** | **1,771** |
| Cash and cash equivalents | (408) | (569) | (475) |
| Debt issuance cost/Debt-related derivatives, net | (8) | (9) | 4 |
| **Net debt** | **$1,579** | **$1,562** | **$1,299** |

The non-U.S. GAAP measure “Net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses the non-U.S. GAAP measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company's long-term target for the leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) is 1.0x with the aim to operate within the range of 0.5x to 1.5x. For details and calculation of leverage ratio, refer to the table below.

### Calculation of “Leverage ratio”

### (Dollars in millions)

|  | June 30, 2024 | March 31, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: |
| Net debt1) | $1,579 | $1,562 | $1,299 |
| Pension liabilities | 140 | 149 | 152 |
| **Debt per the Policy** | **1,720** | **1,711** | **1,451** |
| Net income2) | 627 | 541 | 390 |
| Income taxes 2) | 150 | 136 | 168 |
| Interest expense, net2,3) | 89 | 83 | 67 |
| Other non-operating items, net2) | 8 | 1 | 1 |
| Income from equity method investments2) | (6) | (5) | (4) |
| Depreciation and amortization of intangibles2) | 384 | 381 | 363 |
| Capacity alignments, antitrust related matters and the Andrews litigation settlement2) | 128 | 231 | 127 |
| **EBITDA per the Policy (Adjusted EBITDA)** | **$1,380** | **$1,369** | **$1,112** |
| **Leverage ratio** | **1.2** | **1.3** | **1.3** |

1\) Net debt (non-U.S. GAAP measure) is short- and long-term debt and debt-related derivatives, less cash and cash equivalents.

2\) Latest 12-months.

3\) Interest expense, net including cost for extinguishment of debt, if any, less interest income.

Management uses the non-U.S. GAAP measure “free cash flow” to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on the calculation of free cash flow, see the table below. Management uses the non-U.S. GAAP measure “cash conversion” to analyze the proportion of net income that is converted into free cash flow. The measure is a tool to evaluate how efficiently the Company utilizes its resources. For details on cash conversion, see the table below.

### Calculation of “Free Cash Flow”

### (Dollars in millions)

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net income** | **$139** | **$53** | **$266** | **$127** |
| Changes in operating working capital | 128 | 230 | 14 | 28 |
| Depreciation and amortization | 96 | 94 | 192 | 186 |
| Other, net | (23) | 2 | (9) | (8) |
| **Operating cash flow** | **340** | **379** | **462** | **334** |
| Capital expenditure, net | (146) | (124) | (286) | (267) |
| Free cash flow1) | **$194** | **$255** | **$176** | **$66** |
| Cash conversion2) | 140% | 481% | 66% | 52% |
| 1) Operating cash flow less Capital expenditures, net. |  |  |  |  |
| 2) Free cash flow relative to Net income. |  |  |  |  |

### Headcount

|  | June 30, 2024 | March 31, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: |
| Total headcount | 68,700 | 70,100 | 71,200 |
| Whereof: |  |  |  |
| Direct personnel in manufacturing | 51,100 | 52,500 | 52,600 |
| Indirect personnel | 17,500 | 17,600 | 18,600 |
| Temporary personnel | 9% | 10% | 11% |

As of June 30, 2024, total headcount (Full Time Equivalent) decreased by 2,500, or by 3.5%, compared to a year earlier. The indirect workforce decreased by 1,100, or by 5.9%, mainly reflecting our structural reduction initiatives. The direct workforce decreased by 1,400, or by 2.7%.

Compared to March 31, 2024, total headcount (FTE) decreased by 1,500, or by 2.1%. Indirect headcount decreased by 100, or by 0.6%, while direct headcount decreased by 1,400, or by 2.7%.

### Full year 2024 guidance

Our 2024 guidance is mainly based on our customer call-offs, a full year 2024 global LVP decline of around 3%, the achievement of our targeted cost compensation effects, and a sustained reduction in customer call-off volatility.

| Financial measure | Full year indication |
| --- | --- |
| Organic sales growth | Around 2% |
| Foreign currency impact on net sales | Around 1% negative |
| Adjusted operating margin 1) | Around 9.5-10.0% |
| Tax rate 2) | Around 28% |
| Operating cash flow 3) | Around $1.1 billion |
| Capital expenditures, net % of sales | Around 5.5% |
| 1) Excluding effects from capacity alignments, antitrust related matters and other discrete items. |  |
| 2) Excluding unusual tax items. |  |
| 3) Excluding unusual items. |  |

This report includes content supplied by S&P Global; Copyright © Light Vehicle Production Forecast, July 2024. All rights reserved.

The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. The Company has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs and gains related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and the Company is unable to determine the probable significance of the unavailable information.

### Other recent events

### Key launches in the six months period ended June 30, 2024

- **Nissan Kicks:** Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Front Center Airbag, Seatbelts
- **Stelato S9:** Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel
- **Lynk&Co Z10:** Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel, Seatbelts
- **Ford Explorer EV**: Driver/Passenger Airbags, Steering Wheel, Front Center Airbag
- **Chery Fengyun T9:** Side Airbags, Head/Inflatable Curtain Airbags, Knee Airbag, Front Center Airbag, Seatbelts
- **Lancia Ypsilon:** Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel, Seatbelts
- **Honda e:NS2/e:NP2:** Driver/Passenger Airbags, Side Airbags, Steering Wheel, Front Center Airbag, Seatbelts
- **Mini Aceman/Cooper E:** Driver/Passenger Airbags, Steering Wheel, Seatbelts, Hood Lifter
- **LEVC L380:** Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel, Front Center Airbag, Seatbelts

### Other Items

- On June 4, 2024, Autoliv announced that Autoliv China and XPENG AEROHT, Asia's leading flying car innovator, signed a strategic cooperation agreement to pioneer safety solutions for future mobility. Based on a shared commitment to future mobility safety, Autoliv and XPENG AEROHT will collaborate on a range of initiatives to develop safety solutions for flying cars.
- On June 18, 2024, Autoliv announced that it continues its journey to a sustainable future by introducing airbag cushions made of 100% recycled polyester that significantly reduce the greenhouse gas (GHG) footprint of airbags.
- On June 24, 2024, Autoliv and the UN Road Safety Fund (UNRSF) announced the renewal of their collaboration to enhance motorcycle safety globally. The collaboration supports UN Sustainable Development Goal 3.6 which aims to reduce road traffic fatalities and injuries by 2030, and Autoliv's goal of saving 100,000 lives annually.
- Staffan Olsson was promoted to the role of EVP, Operations, a role he had filled in an acting capacity, and as a member of the Executive Management Team effective June 1, 2024.
- In Q2 2024, Autoliv repurchased and retired 1.31 million shares of common stock at an average price of $122.19 per share under the Autoliv 2022-2024 stock purchase program.
- Autoliv has entered into an additional Revolving Credit Facility Agreement with Standard Chartered Bank that can be used for general corporate purposes. The Agreement provides for a $125 million revolving credit facility that matures in 2029 and the does not contain any financial covenants.
- In addition to the credit rating from S&P, Autoliv has now added a second credit rating as Moody’s on July 17 assigned a long-term credit rating of Baa1 with stable outlook.

## Market risk

As filed, 286 characters.

As of June 30, 2024, there have been no material changes to the information related to quantitative and qualitative disclosures about market risk that were provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.

## Controls and procedures

As filed, 1,140 characters.

(a) Evaluation of Disclosure Controls and Procedures

An evaluation has been carried out, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 223 characters.

As of June 30, 2024, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.

Filed Jul 19, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-084773. Last ingested by Listed: Nov 6, 2026, 12:28 ET. No prices; not investment advice.