Autoliv: Financial Report July - September 2021
STOCKHOLM,Oct. 22,2021 -- (NYSE: ALV)(SSE: ALIV.sdb)
Q3 2021: Accelerating global supply chain disruptions
Financial highlights Q3 2021
$1,847mnet sales
12% organic sales decline*
5.4%operating margin
5.6%adjusted operating margin*
$0.68EPS - a decrease of $0.44
$0.73adjusted EPS* - a decrease of $0.75
Full year 2021 indications
Around 11%net sales growth
Around 8%organic sales growth
Around 8%adjusted operating margin
Key business developments in the third quarter of 2021
Significant organic sales decline* as global LVP declined by 20% vs. Q3 last year (according to IHS Markit Oct 2021). Sales decreased organically by 12%,yet outperformed global LVP by almost 8pp,mainly due to product launches and positive vehicle mix effects and despite negative geographical mix effects. All regions outperformed LVP by 6-16pp.
Profitability declined due to the lower sales and higher raw material costs. Adjusted operating margin* declined by 4.5pp to 5.6%. Return on capital employed declined to 10.5% and return on equity declined 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 continued balance sheet improvement. A dividend of $0.62 per share was declared and paid in the quarter. Net debt* declined,resulting in a leverage ratio* of 1.1x.
*For non-U.S. GAAP measures see enclosed reconciliation tables. All change figures in this release compare to the same period of previous year except when stated otherwise.
Key Figures
(Dollars in millions,except per share data)
Q3 2021
Q3 2020
Change
9 M 2021
9 M 2020
Change
Net sales
$1,847
$2,037
(9.3)%
$6,111
$4,931
23.9%
Operating income
$99
$175
(43.2)%
$500
$75
564%
Adjusted operating income1)
$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 costs for capacity alignment and in 2020 antitrust related matters. 2) Assuming dilution when applicable and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 4) Annualized operating income and income from equity method investments,relative to average capital employed. 5) Annualized operating income and income from equity method investments,relative to average capital employed. Non-U.S. GAAP measure,see reconciliation table.
Comments from Mikael Bratt,President & CEOThe adverse business trends from earlier in the year accelerated in the third quarter. Supply shortages of semiconductors and other components led to a third quarter global LVP decline of 20% vs. a year earlier,which was 17pp lower than what was expected at the beginning of the quarter (according to IHS Markit,October 2021). The decline in LVP,unpredictable changes in customer call-offs and higher raw material costs resulted in reduced profitability despite significant cost control measures,including headcount reductions.I am pleased that we outperformed the global LVP by almost 8pp,significantly reducing the impact of the 20% drop in LVP. We had a record number of new launches in the quarter and expect a full year record as well. This includes products to a large number of electrified vehicles,a market that amounted to around 10% of our total sales last year. We expect an almost doubling of sales to this market in 2021.I am also pleased with our order intake for the first nine months of the year and that we continue to implement the projects and actions needed to support our growth opportunities and our journey to reach the next level of profitability as expressed by our medium term targets.Despite the challenging environment,our leverage ratio* remains well within our target range and we declared and paid a dividend of $0.62 per share in the quarter.Through successful mitigation efforts,the raw materials headwind in the third quarter was slightly lower than expected. However,we see new raw material headwinds,including higher magnesium and resin costs,which means we still expect a full year operating margin headwind from raw materials of around 130 basis points. We expect supply disruptions to continue to impact LVP negatively in the fourth quarter,and although there are some indications of moderate improvement in semiconductor availability in Asia and North America,visibility remains poor.We are planning and implementing stricter measures to mitigate the current adverse business headwinds,including capacity alignments in Europe and the US. However,as a result of the significantly reduced LVP outlook for the year,we are adjusting our full year indication. Based on an assumption of around 0% global LVP growth for the full year 2021,we expect an organic sales growth of around 8%,and an adjusted operating margin of around 8%.With our relentless focus on quality and execution as well as mitigating near term headwinds,we continue to drive forward towards our medium term targets. This and more will be explored at our virtual CMD on November 16,2021.
Inquiries: Investors and AnalystsAnders Trapp
Vice President Investor Relations
Tel +46(0)8 5872 0671Henrik Kaar
Director Investor Relations
Tel +46 (0)8 5872 0614Inquiries: MediaGabriella Ekelund
Senior Vice President Communications
Tel +46 (0)70 612 6424Autoliv,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 October 22,2021.This information was brought to you by Cision http://news.cision.comhttps://news.cision.com/autoliv/r/financial-report-july---september-2021,c3438295The following files are available for download:https://mb.cision.com/Main/751/3438295/1484787.pdfThe full report (PDF)
