STOCKHOLM, July 21, 2023 /PRNewswire/ -- (NYSE:ALV) (SSE: ALIV.sdb)

Q2 2023: Record second quarter sales

Financial highlights Q2 2023

$2,635 million net sales

27% net sales increase

27% organic sales increase*

3.6% operating margin

8.0% adjusted operating margin*

$0.61 EPS, 32% decrease

$1.93 adjusted EPS*, 115% increase

Full year 2023 indications

Around 15% organic sales growth

Around 1% positive FX effect on net sales

Around 8.5%-9.0% adjusted operating margin

Around $900 million operating cash flow

Key business developments in the second quarter of 2023

Sales increased organically* by 27%, which was 11pp better than global LVP growth of 15.5% (S&P Global July 2023). We outperformed significantly in all regions, mainly due to new product launches and higher prices.
Profitability improved substantially, positively impacted by price increases, organic growth and our cost reduction activities. Operating income was $94 million and operating margin was 3.6%. Adjusted operating income* improved from $124 million to $212 million and adjusted operating margin* increased from 6.0% to 8.0%, despite inflationary pressure, adverse FX effects and two isolated supply chain disruptions. Return on capital employed was 9.5% and adjusted return on capital employed* was 21.0%.
Operating cash flow increased from negative $51 million to $379 million, driven mainly by improved adjusted operating income and positive working capital effects. Free cash flow* increased to $255 million from negative $190 million. The leverage ratio* improved from 1.6x in the first quarter 2023 to 1.3x, impacted by lower net debt and higher adjusted EBITDA. A dividend of $0.66 per share was paid, and 0.48 million shares were repurchased and retired in the quarter.

*For non-U.S. GAAP measures see enclosed reconciliation tables.

Key Figures

(Dollars in millions, except per share data)	Q2 2023	Q2 2022	Change	6M 2023	6M 2022	Change
Net sales	$2,635	$2,081	27 %	$5,127	$4,206	22 %
Operating income	94	124	(24) %	221	258	(15) %
Adjusted operating income¹⁾	212	124	71 %	343	192	79 %
Operating margin	3.6 %	6.0 %	(2.4)pp	4.3 %	6.1 %	(1.8)pp
Adjusted operating margin¹⁾	8.0 %	6.0 %	2.1pp	6.7 %	4.6 %	2.1pp
Earnings per share²⁾	$0.61	$0.91	(32) %	$1.47	$1.85	(20) %
Adjusted earnings per share^1,2)	1.93	0.90	115 %	2.82	1.36	107 %
Operating cash flow	379	(51)	n/a	334	19	1654 %
Return on capital employed³⁾	9.5 %	13.1 %	(3.6)pp	11.4 %	13.8 %	(2.4)pp
Adjusted return on capital employed^1,3)	21.0 %	13.3 %	7.7pp	17.4 %	10.4 %	7.1pp
1) Excluding effects from capacity alignment, antitrust related matters and 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

During the quarter, we took further steps towards our full year indications, that support our medium term targets. First, we achieved new second quarter records for sales, adjusted operating income and operating cash flow since the Veoneer spin-off in 2018. Second, we achieved the price compensations from customers we planned for. Third, to secure our medium and long term competitiveness, we announced the acceleration of our structural cost reductions. Last week, we announced the first step towards the necessary optimization of our cost structure to the market environment. This first step is expected to reduce costs by around $25 million in 2024, increasing to around $55 million in 2025 and to reach around $75 million when fully completed. Further actions will be announced as plans materialize.

We generated an organic growth of 27%, growing 11pp faster than LVP due to successful product launches and price compensation achievements. The strong volume growth combined with price compensations, cost saving activities and lower premium freight costs enabled us to improve adjusted operating income by 71%, despite substantial inflationary pressure and FX headwinds.

I am pleased that we delivered an adjusted RoCE of more than 20%. We delivered strong operating and free cash flow in the quarter, driven by an improved adjusted operating income and reversal of the negative working capital effects from the first quarter, in line with our previous indication. This contributed to an improved leverage ratio which supports our share repurchase ambitions.

We saw continued improvement in call-off volatility in the quarter but still higher volatility than pre-pandemic levels. We believe this reflects an improving global supply chain environment for both our customers and suppliers. Except for two isolated supply chain disruptions in Europe and Americas in the quarter, Autoliv's supply chain showed sequential improvement.

We reiterate our full year indications. Looking to the second half of the year, we expect the adjusted operating margin to be back-end loaded due to normal seasonality between the third and fourth quarters and the expected closing of price negotiations. The steps we took in the second quarter support our confidence in sequentially improving adjusted operating margin which should allow us to deliver a substantial full year increase in operating cash flow and adjusted operating income.

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 21, 2023.

The following files are available for download:

https://mb.cision.com/Main/751/3808240/2200636.pdf

The full report (PDF)

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SOURCE Autoliv

Autoliv: Financial Report April - June 2023