Autoliv Reaffirms Outlook as Organic Growth Stays Muted
Operating cash flow reached $434 million as working capital shifted from a use of cash to a source.
Autoliv (ALV), the automotive safety supplier, lifted its adjusted operating margin to 9.6% in the second quarter from 8.9% in the first, even as underlying sales growth remained subdued.
Organic sales rose 1.0%, edging up from 0.8% in the prior quarter while remaining well below the 4.2% pace recorded in the final quarter of 2024. Autoliv’s outperformance against global light-vehicle production narrowed to 1.3 percentage points from 4.2 points as regional and customer mix became a drag.
Net sales rose 3.3% from a year earlier to $2.803 billion, slowing from first-quarter reported growth of 6.8%. Diluted earnings fell 38% to $1.35 a share after a 12% decline in the prior quarter, while adjusted earnings reversed course and rose 10% to $2.43 a share.
Airbags, steering wheels and other products drove the improvement, with organic sales growth accelerating to 3.0% from 0.7%. Seatbelt products and other sales declined 3.0% after growing 1.1% in the first quarter. Asia remained the strongest region: organic sales rose 11.3% outside China and 3.4% in China, while sales declined in the Americas and Europe, the Middle East and Africa.
The China business shifted further toward domestic manufacturers. Sales to Chinese auto makers grew about 44%, and those customers accounted for 55% of China sales, up from about 40% a year earlier. Sales to global manufacturers in China declined roughly 24%. India’s organic growth eased to 36% from 38%, supported mainly by greater safety content per vehicle.
Türkiye restructuring costs separated reported performance from the underlying result. Reported operating margin fell to 6.8% from 9.1% a year earlier, while adjusted operating income rose 7.3%. Autoliv recognized $90 million of charges tied to plans to close manufacturing operations affecting about 2,200 employees; total expected charges are approximately $142 million.
Cash generation strengthened as working-capital changes provided $240 million, compared with a $349 million use in the first quarter. Free operating cash flow reached $340 million, helping reduce net debt by $78 million to $1.695 billion despite $200 million of share repurchases.
Autoliv continues to expect roughly flat organic sales growth, an adjusted operating margin of 10.5% to 11% and about $1.2 billion of operating cash flow for the year. The outlook now assumes a 2.5% decline in light-vehicle production and about $110 million of raw-material pressure. Third-quarter adjusted margin is expected near the first half’s 9.3% level, followed by significant improvement in the fourth quarter as customer compensation and mitigation benefits increase.