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Autoliv Inc. — Download JP Morgan Industrial Conference - Post Q4'17 Result, New York (company IR deck)
Autoliv Inc. (ALV) · 62 slides · Filed Mar 15, 2018
Every slide of this earnings presentation, with the text as published. Open the original deck ↗ · All ALV deck slides
Slide 1 — Investor Meetings
Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved March 15, 2018 1 1st Investor Meetings Ray Pekar – VP IR Americas & Corp. Bus. Development NYC – March 15, 2018 Q1'18 NYC Investor Meetings
Slide 2 — Safe Harbor Statement*
Copyright Autoliv Inc., All Rights Reserved Safe Harbor Statement* This presentation contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc. or its management believes or anticipates may occur in the future. All forward- looking statements, including without limitation, management’s examination of historical operating trends and data, as well as estimates of future sales, operating margin, cash flow, effective tax rate or other future operating statements related to the completion and timing of the proposed spin-off, the estimated project costs and tax costs associated with the separation and spin-off, the future performance of the Passive Safety and Electronics businesses on a stand-alone basis if the spin-off is completed, the outlook for Passive Safety and Electronics as separate businesses if the spin-off is completed, the expected strategic, operational and competitive benefits of the proposed spin-off and the effect of the separation on Autoliv and its stakeholders, or financial results, are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “estimates”, “expects”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “may”, “likely”, “might”, “would”, “should”, “could”, or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words. Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation, changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier, changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment, restructuring and cost reduction initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations, or restructurings; divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; (including the resolution of the Toyota recall); higher expenses for our pension and other postretirement benefits, including higher funding requirements for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q and any amendments thereto. For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law. March 15, 2018 Q1'18 NYC Investor Meetings 2 (*) Non-US GAAP reconciliations are disclosed in our regulatory filings available at www.sec.gov or www.autoliv.com
Slide 3 — Industry Pioneer with Strong Heritage
Copyright Autoliv Inc., All Rights Reserved More than 60 years of innovation in Automotive Safety 3 Industry Pioneer with Strong Heritage MECHANICAL PYROTECHNICAL ELECTRONICS DIGITAL 1950s 1980s 1990s 2000s 2010s PROTECT PREVENT March 15, 2018 Q1'18 NYC Investor Meetings
Slide 4 — FY’17 Recap
Copyright Autoliv Inc., All Rights Reserved 4 Since 2010 RD&E, net cost has more than doubled and has increased by more than 200 bps to support organic sales** growth targets March 15, 2018 Q1'18 NYC Investor Meetings ~50% Order intake win rate for three years (2015-2017) Life-time Sales ~$13B for the 2017 order intake Passive Safety ~37 % ~50 % ~50 % ~37 % 0 0,5 1 1,5 2 2,5 3 2014 2015 2016 2017 ~50% >50% ~50% Order Intake* US$ Billions ~50% ~37% ~50% of the Electronics orders over last four years (2014-2017) is in ACTIVE SAFETY Life-time Sales ~$4B for the 2017 order intake Electronics 0 200 400 600 800 1 000 2014 2015 2016 2017 Order Intake* US$ Millions (*) $ value represents expected average annualized sales from respective years order intake, disclosure of orders will not be made regularly, based on when the orders were awarded, (**) Non-US GAAP measure. RD&E 7.1% of sales in 2017 Passive Safety RD&E% of sales peak FY’17 while Electronics requires further increases to support organic sales growth targets RD&E 0,0% 2,0% 4,0% 6,0% 8,0% 0 200 400 600 800 1 000 RD&E US$ Millions RD&E, net RD&E, net % of Sales Strong order intake in both segments FY’17 Recap
Slide 5 — FY’17 Recap - Strategic Review Process Concluded
Copyright Autoliv Inc., All Rights Reserved Prepare for next steps for “Tax-free Spin-off” of Electronics Business during Q3’18 5 FY’17 Recap - Strategic Review Process Concluded March 15, 2018 Q1'18 NYC Investor Meetings (*) Headquarters (HQ), (**) percentage points includes additional costs related to standalone entities. Both entities will be US companies with HQ* in Stockholm −Dual listings on the stock market in the US (primary listing) and Sweden RemainCo (Passive Safety) to retain the name Autoliv SpinCo (Electronics) to be named Veoneer Cost summary −Separation costs are expected to be up to $70M (excluded from adjusted operating income) −Tax related costs resulting from the separation of the legal entities in preparation for the spin-off are estimated to be up to $80M during H1’18 −For Autoliv (Passive Safety), as a standalone company, the re-allocation of costs will positively impact its operating margin by less than one pp** −For Veoneer (Electronics), as a stand-alone company, the re-allocation of costs including additional costs as a standalone entity will negatively impact the operating margin by a few pp’s** The underlying objective is to provide greater value to stakeholders by allowing the two entities to maximize their long-term potential on their own
Slide 6 — FY’18 - Looking ahead
Copyright Autoliv Inc., All Rights Reserved March 15, 2018 Q1'18 NYC Investor Meetings 6 FY’18 - Looking ahead The Spin next steps −H1’18 Disclose recast historical figures (2015, 2016, 2017) for new standalone entities, Form 10 filing, Host Analyst Days and Deal Roadshows in the US and Europe for standalone entities ahead of the spin-off −Q3’18 Standalone entities commence trading Electronics −Organic sales decline ~3% where of AS** organic sales growth similar to 2017, currency translation tailwind ~3% −Underlying profitability to decline from 2017 mainly due to increased RD&E costs net −Focus on readiness for new launches in 2019 and securing 2022 sales targets Passive Safety −Organic sales* growth >10%, ~5 times better than LVP**, currency translation tailwind ~4% −Underlying profitability to improve from 2017 due to organic sales operating leverage −Flawless execution of launches while maintaining flexibility to adapt to underlying market fluctuations and uncertainties Executing towards the targets of the standalone businesses (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters and separation of our business segments, (**) Light Vehicle Production (LVP) according to IHS @ January 16, 2018, Active Safety (AS). Autoliv group FY’18 indication is for organic sales growth of >7%, consolidated sales, net growth >11% and an operating margin* of ~9%
Slide 7 — Targets Stand Alone Passive Safety and Electronics
Copyright Autoliv Inc., All Rights Reserved Targets Stand Alone Passive Safety and Electronics 7 Autoliv Passive Safety CMD 2017 – Target Update (*) Non-US GAAP measure excludes costs related to Antitrust matters and capacity alignment, (**) Active Safety, (***) Compound Annual Growth Rate 2017 to 2020 and 2017 to 2022 assuming 2017 LTM as of Q2’17. . Autoliv Electronics 2020 Target Sales >$10B Sales CAGR*** ~8% Adj. Operating Margin* ~13% Sales ~$3B with AS** >$1B Sales CAGR*** ~10% where AS is >10% CAGR Adj. Operating Margin* 0-5% 2022 Target Sales – at least hold market share and at least grow LVP plus 1% Sales CAGR*** ~6% Adj. Operating Margin* – at least maintain margins from 2020 levels Sales ~$4B with AS** ~$2B Sales CAGR*** ~12% where AS is ~23% CAGR Adj. Operating Margin* improve vs. 2020 March 15, 2018 Q1'18 NYC Investor Meetings
Slide 8 — position
Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved 8 Passive Safety never in a better position March 15, 2018 Q1'18 NYC Investor Meetings
Slide 9 — Serving 1,300 models and
Copyright Autoliv Inc., All Rights Reserved 0% 5% 10% 15% 20% 25% 30% 35% 40% A Winning Business Formula 9 Today the global leader in passive safety Serving 1,300 models and 100 car brands 39% global market share* 32% 21% 15% 12% 8% 5% 7% Frontal Airbags 39% 24% 16% 7% 3% 11% Seatbelts 32% 20% 15% 10% 9% 4% 10% Steering Wheels 49% 14% 13% 7% 7% 5%5% Side Airbags March 15, 2018 Q1'18 NYC Investor Meetings (*) Estimated 2016 Market shares. .
Slide 10 — Passive Safety –
Copyright Autoliv Inc., All Rights Reserved 10 Passive Safety – Installation Rates show long term upside potential Continued market potential beyond 2020 from increasing installation rates* (*) Market installation rates for selected products based on Autoliv internal data in constant currency 2017, CAGR (Compound Annual Growth Rate). (**) Frontal Airbags includes Driver, Passenger and Knee, Side Airbags includes Inflatable Curtains and Thorax. 0% 20% 40% 60% 80% 100% 2010 2012 2014 2016 2018 2020 Driver and passenger airbags Triad China India 0% 20% 40% 60% 80% 100% 2010 2012 2014 2016 2018 2020 Side airbags Triad China India Continued market potential beyond 2020 from increasing installation rates* 0% 20% 40% 60% 80% 100% 2010 2012 2014 2016 2018 2020 Pretensioners (front & rear) Triad China India 0% 20% 40% 60% 80% 100% 2010 2012 2014 2016 2018 2020 Active Seatbelt Triad China India March 15, 2018 Q1'18 NYC Investor Meetings
Slide 11 — Passive Safety a ~$25B Market in 2025
Copyright Autoliv Inc., All Rights Reserved 11,5 12,9 13,1 4,4 5,3 6,5 0,3 0,5 0,7 3,8 4,3 4,7 10 12 14 16 18 20 22 24 26 2017 2020 2025 RoW India China Triad ~$23B ~$25B 11 Passive Safety a ~$25B Market in 2025 ~$20B Market is expected to grow 1 pp faster than the underlying LVP Content Per Vehicle CAGR: ~3% US$ (Billions) *Company market estimates. Includes seatbelts, airbags, steering wheels. CAGR = Compound Annual Growth Rate, TAM = Total Addressable Market. ** Growth Markets : China, Eastern Europe, India, Southeast Asia, South America and Middle East & Africa. Triad: North America, Western Europe & Japan LVP CAGR: ~2% CPV ($) ** ** 0 50 100 150 200 250 300 Growth Markets Triad March 15, 2018 Q1'18 NYC Investor Meetings
Slide 12 — The Veoneer brand will be a
Copyright Autoliv Inc., All Rights Reserved Heading Text March 15, 2018 Q1'18 NYC Investor Meetings 12 The Veoneer brand will be a visionary pioneer in automotive electronics, ADAS, automation and new mobility
Slide 13 — Customer Trust
Copyright Autoliv Inc., All Rights Reserved Customer Trust Scope: Japan, Canada, US, China, South Korea, Australian, EU, UK, DE / AB, SB, Electronics for the period 2010-01-01 to 2017-06-31. 13 ~ 170M recalled since 2010 ~ 32M recalled since 2010 All Safety Products Electronics Autoliv 2% Autoliv Electronics <1% Our Passive Safety quality journey extends really well into Electronics March 15, 2018 Q1'18 NYC Investor Meetings
Slide 14 — One of the World’s broadest Safety Electronics Product Portfolios
Copyright Autoliv Inc., All Rights Reserved 14 One of the World’s broadest Safety Electronics Product Portfolios Restraint Control Systems Active Safety Brake Systems March 15, 2018 Q1'18 NYC Investor Meetings
Slide 15 — FY’17 Recap
Copyright Autoliv Inc., All Rights Reserved 15 Active Safety −Strong order intake in FY’17, estimated market share in the “high teens” −Order intake includes a 4th vision customer and our 1st LiDAR and ROADSCAPE customers −Temporary lower growth in FY’17-18 due to lower order intake in FY’14-15 −8 major new program launches planned in FY’19 Zenuity −FY’17 ~500 employees and consultants −ALV net cost $31M for FY’17, current quarterly run rate ~$15M −Autoliv’s ADAS** system, with Zenuity software stack, field testing in progress ahead of 2019 launch −Level 4 vehicles running daily tests with AD** highway pilot capabilities −Discussions underway with 6 OEM’s Active Safety and Zenuity Update FY’17 Recap Active Safety order intake during the last two years has increased substantially due to the expansion of our product portfolio in 2015 March 15, 2018 Q1'18 NYC Investor Meetings 0 100 200 300 400 500 2012 2013 2014 2015 2016 2017 Active Safety Order Intake* US$ Millions (*) $ value represents expected average annualized sales from respective years order intake, disclosure of orders will not be made regularly, Vision based on Autoliv developed algorithms, (**) Customers representing >90% of the light vehicle production, Advanced Driver Assist Systems (ADAS), Autonomous Driving (AD). Customer** Snapshot – Dec’17
Slide 16 — The Developing Eco-System
Copyright Autoliv Inc., All Rights Reserved Partner Cloud System Sensor Fusion Decision & Control Sensors Actuators Partner Partners Partners 16 Zenuity provides Sensor Fusion, Decision and Control The Developing Eco-System March 15, 2018 Q1'18 NYC Investor Meetings
Slide 17 — Electronics Active Safety – Building for the long-term
Copyright Autoliv Inc., All Rights Reserved 17 Electronics Active Safety – Building for the long-term 2013 Recent JVs and M&A Partners In-house Automated Highway Driving Automated City Driving Automated Valet Parking Evasive Maneuvers Automated Route (Trained) Automated Route (Destination) Autonomous Driving AEB – City AEB – Urban AEB – Ped./Cyclist Intersection Assist Overtaking Assist Cross-Traffic Assist Real-Collision Mitigation Auto Parallel Parking Navigation Electric Power Steering Blind Spot Monitoring Ped./Cyclist Detection Parking Aid Lane Departure Warning Forward Collision Warning HMI Surround / Rear View Steering Controls Propulsion Controls Radar Cameras LIDAR Ultrasonic Sensors Inertia Sensors V2X ACC / Queue Assist Lane Centering & Keeping Electronic Horizon Anti-Lock Brakes Stability Control GPS Brake Controls MAPS Driver Monitoring Traffic Sign Recognition OUR FOOTPRINT WITHIN THE PYRAMID March 15, 2018 Q1'18 NYC Investor Meetings
Slide 18 — Electronics Active Safety – Building for the long-term
Copyright Autoliv Inc., All Rights Reserved Electronics Active Safety – Building for the long-term 18 TODAY Recent JVs and M&A Partners In-house Automated Highway Driving Automated City Driving Automated Valet Parking Evasive Maneuvers Automated Route (Trained) Automated Route (Destination) Autonomous Driving AEB – City AEB – Urban AEB – Ped./Cyclist Intersection Assist Overtaking Assist Cross-Traffic Assist Real-Collision Mitigation Auto Parallel Parking Navigation Electric Power Steering Blind Spot Monitoring Ped./Cyclist Detection Parking Aid Lane Departure Warning Forward Collision Warning HMI Surround / Rear View Steering Controls Propulsion Controls Radar Cameras LIDAR Ultrasonic Sensors Inertia Sensors V2X ACC / Queue Assist Lane Centering & Keeping Electronic Horizon Anti-Lock Brakes Stability Control GPS Brake Controls MAPS Driver Monitoring Traffic Sign Recognition OUR FOOTPRINT WITHIN THE PYRAMID March 15, 2018 Q1'18 NYC Investor Meetings
Slide 19 — Technology Collaborations and Acquisition
Copyright Autoliv Inc., All Rights Reserved Recently announced March 15, 2018 Q1'18 NYC Investor Meetings 19 Technology Collaborations and Acquisition Expanding our capabilities in secular growth trends through a blend of collaborations and acquisition (*) Artificial Intelligence (AI), (**) the acquisition is pending and subject to customary closing conditions. DRIVER MONITORING Collaboration to develop driver monitoring systems LiDAR Volume production of automotive grade LiDAR systems SEATING EXPERTISE Collaboration in the areas of safety, comfort and convenience of future cars HD MAPPING Collaboration with Zenuity to develop Path Planning CLOUD SOLUTIONS Collaboration with Zenuity to develop Connected Cloud INNOVATION CONSORTIUM Collaborating with start-ups to develop and demonstrate safer and more efficient transportation for tomorrow’s world HUMAN CENTERED AI* EXPERTISE Collaboration to support LIV “Learning Intelligent Vehicle” OPTICS EXPERTISE** Acquisition in the product area of LiDAR and Time of Flight Cameras COMPUTING PLATFORM Collaborate on AI computing platform
Slide 20 — Active Safety – Customer snapshot
Copyright Autoliv Inc., All Rights Reserved Active Safety – Customer snapshot 20 2013 Customer RADAR VISION* ADAS ECU LIDAR Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 Customer 11 Customer 12 Customer 13 Customer 14 Customer 15 Customer 16 Customer 17 Total 5 5 5 3 1 1 1 1 1 0 0 0 *Vision based on Autoliv developed algorithms, Awarded business Technical Qualification Bid List Represents >90% of global light vehicle production March 15, 2018 Q1'18 NYC Investor Meetings
Slide 21 — Active Safety – Customer* snapshot
Copyright Autoliv Inc., All Rights Reserved Active Safety – Customer* snapshot 21 Today (*) Represents >90% of global light vehicle production, (**) Vision based on Autoliv developed algorithms. Awarded business Technical Qualification Bid List March 15, 2018 Q1'18 NYC Investor Meetings Customer RADAR VISION* ADAS ECU LIDAR Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 Customer 11 Customer 12 Customer 13 Customer 14 Customer 15 Customer 16 Customer 17 Total 14 12 7 13 8 4 10 8 2 11 3 1
Slide 22 — for the future
Copyright Autoliv Inc., All Rights Reserved Copyright Autoliv Inc., All Rights Reserved Electronics - built for the future 22 March 15, 2018 Q1'18 NYC Investor Meetings
Slide 23 — Electronics ~$43B Market in 2025
Copyright Autoliv Inc., All Rights Reserved 0 5 10 15 20 25 30 35 40 45 50 2017 2020 2022 2025 ~$32 ~10% CAGR 2017 to 2025 23 Electronics ~$43B Market in 2025 ~$20 ~$28 ~$43 CAGR: ~10% Electronics TAM* US$ (Billions) *) TAM (Total Addressable Market), CAGR (Compound Annual Growth Rate), **) Active Safety Market includes Radar (Front/side/rear), Forward looking Cameras (Mono/Stereo/Night Vision), Other (Advanced Driver Assist Electronic Control Unit, LiDAR). March 15, 2018 Q1'18 NYC Investor Meetings
Slide 24 — Active Safety Sensor Market
Copyright Autoliv Inc., All Rights Reserved 0 5 000 10 000 15 000 20 000 25 000 2017 2018 2019 2020 2025 Night Vision ADAS ECU LiDAR Radar Systems Vision Systems CAGR: 23% Active Safety* US$ (millions) *) Active Safety Market includes Radar (Front/side/rear), Forward looking Cameras (Mono/Stereo/Night Vision), Other (Advanced Driver Assist Electronic Control Unit, LiDAR). 24 Active Safety Sensor Market Q1'18 NYC Investor Meetings March 15, 2018
Slide 25 — Autoliv Electronics – Market Shares 2016
Copyright Autoliv Inc., All Rights Reserved Autoliv Electronics – Market Shares 2016 26% RESTRAINT CONTROL SENSING 25 Autoliv 18% ACTIVE SAFETY 5% BRAKE CONTROL Others Autoliv Autoliv March 15, 2018 Q1'18 NYC Investor Meetings
Slide 26 — Active Safety Revenue* by OEM group
Copyright Autoliv Inc., All Rights Reserved 26 Active Safety Revenue* by OEM group ~$2 B $0.75 B >$1 B LTM Sales 2020 Sales 2022 Sales March 15, 2018 Q1'18 NYC Investor Meetings (*) Non-US GAAP measure excludes costs related to Antitrust matters and capacity alignment, (**) Active Safety, (***) Compound Annual Growth Rate 2017 to 2020 and 2017 to 2022 assuming 2017 LTM as of Q2’17. .
Slide 27 — Active Safety - Selected Customer Launches
Copyright Autoliv Inc., All Rights Reserved 27 Active Safety - Selected Customer Launches Vision Europe (SOP 2018) Europe (SOP 2019) Asia (SOP 2018) ADAS ECU Europe (SOP 2019) Night Vision North America (SOP 2020) Advanced ADAS Software Europe (SOP 2019) Radar 24 GHz NB Europe (SOP 2020) Asia (SOP 2019) North America (SOP 2019) Radar 77GHz Europe (SOP 2019) Asia (SOP 2019) North America (SOP 2019) March 15, 2018 Q1'18 NYC Investor Meetings
Slide 28 — Zenuity – the technology
Copyright Autoliv Inc., All Rights Reserved World-class driver-assistance Concrete ADAS offer in production now More than 200 designed customer features Self-driving technologies Complete, from raw sensor data to vehicle actuators Volvo Drive-Me as development platform Deep learning integration demonstrated Automotive graded commercialization Connected safety in cloud Establishing an eco-system Tier1, OEM, Chipset AI, Cloud, Off-shore engineering, Map provider, Urban robotics, … March 15, 2018 Q1'18 NYC Investor Meetings 28 Zenuity – the technology
Slide 29 — Zenuity - Where are we now?
Copyright Autoliv Inc., All Rights Reserved 29 Zenuity - Where are we now? Products March 15, 2018 Q1'18 NYC Investor Meetings
Slide 30 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Autoliv develops leading 24GHz and 77GHz Radar sensor systems. Using unique Radar Signal Processing methods and very high bandwidth allow best in market performance. 30 Safety Electronics Technology Leading radar sensors to cover complex real life driving scenarios March 15, 2018 Q1'18 NYC Investor Meetings
Slide 31 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Autoliv Vision Systems 2017 Mono Vision AEB (3rd Generation) Mono Camera with Autoliv Vision based AEB Cost effective solution to meet NCAP 2018 (Lane, AEB, TSR) 2019 Mono and Stereo Vision (4th Generation) Next generation Stereo and Mono cameras Support Automated Driving and NCAP 2020 Conquered two more customers, accepting Autoliv algorithm solution 2022+ Next generation Vision systems (5th Generation) High resolution imagers Advanced algorithms and processing Multiple camera support 31 NCAP Driver Assist Automated Driving support Safety Electronics Technology New Vision Systems and Algorithms March 15, 2018 Q1'18 NYC Investor Meetings
Slide 32 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Safety Electronics Technology Far Infrared was introduced into automotive market in late 1990’s and has grown to over 30 vehicle lines by 2017 Termed “Night Vision” but has many other benefits to handle challenging situations enhancing highly autonomous driving performance. 2013 Night Vision (3rd Generation) Single FIR Camera design Animal and Vehicle Detections 2020 Night Vision (4rd Generation) Improved Field of View and detection distances Reduction in Size, Weight and Cost Enhanced algorithms for Animal and Vehicle Detections Highly Autonomous Driving applications 32 Autoliv Autoliv Vision Systems Generation 3 FIR Camera SOP 2015 Generation 4 FIR Camera SOP 2020 Far Infrared Technology (Night Vision) March 15, 2018 Q1'18 NYC Investor Meetings
Slide 33 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Autoliv develops customized ADAS/AD ECU technology and provides outstanding functional safety integration capability Cyber Security Deep Learning Acceleration Multi SoC integration Connectivity Safety Electronics Technology Higher performing computing platforms 33 March 15, 2018 Q1'18 NYC Investor Meetings
Slide 34 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Forward Looking, 200m, Complement to Radar + Vision Complement or Competitor? to Vision and/or Radar Success of Mass Market LiDAR Dependent on Cost/Performance Evolution vs. Vision and Radar Velodyne and Autoliv working together to develop a consumer vehicle LiDAR WAVE 1 WAVE 2 WAVE 3 AUTONOMOUS (L4/5) PREMIUM OEMs (L3/4) MASS MARKET (L3/4) 2018 2021 2024 2027 Highway Pilot (L3/L4) Vehicle Launches for Traditional Automotive OEM Business 34 360° Surround Scan 200m range Mobility as Service Drives Market led by New Entrants Safety Electronics Technology LiDAR Sensing to Complement Vision and Radar March 15, 2018 Q1'18 NYC Investor Meetings
Slide 35 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved 6th Gen Positioning Module Best in Class Accuracy V2V DSRC + Horizon Module Secure, Small Footprint Digital Mapping & Horizon Module SD + HD + Sensor Maps Real-time Updates Map Streaming 35 Safety Electronics Technology Roadscape – Positioning, Mapping and V2X Connectivity… March 15, 2018 Q1'18 NYC Investor Meetings
Slide 36 — Safety Electronics Technology
Copyright Autoliv Inc., All Rights Reserved Driver Monitoring Systems Innovation for growing interior safety market and autonomous driving Synergies with partner, Seeing Machines, to improve speed to market Focus to provide best in class accuracy and reliability in driver attention state Reduce distracted driver accidents Safe Hand-off wheel operation Safety Electronics Technology Monitor driver behavior to improve comfort, safety and automated driving 36 March 15, 2018 Q1'18 NYC Investor Meetings
Slide 37 — Enhancing our Growth and System Capability
Copyright Autoliv Inc., All Rights Reserved Enhancing our Growth and System Capability Autoliv and Nissin Kogyo form a Joint Venture 37 Overview • Closed March 31, 2016 • Strengthens our product portfolio towards autonomous driving - technology and knowledge in brake control and brake apply • Manufacturing footprint in Japan, China and US - includes a workforce ~1,800 associates • Reported in the Electronics business segment - as a 3rd product category Autoliv Financial Impact • Purchase Price JPY 29.7 billion (~$265M) for 51% ownership - subject to post-closing adjustments • Consolidation 100% of the Balance Sheet and P&L • Eliminate 49% of the net earnings (minority interest) • Included in the FY’16 Indication (as of April 29, 2016) • Sales between $400 to $450M • Integration and Purchase accounting related costs combined $20 to $30M The ANBS JV provides additional building blocks towards Automated Driving March 15, 2018 Q1'18 NYC Investor Meetings
Slide 38 — ANBS – Autoliv Nissin Brake Systems
Copyright Autoliv Inc., All Rights Reserved * e.g no add’l engine component to support, start/stop, coasting w/ engine off, … 38 March 15, 2018 Q1'18 NYC Investor Meetings ANBS – Autoliv Nissin Brake Systems
Slide 39 — ANBS – Autoliv Nissin Brake Systems
Copyright Autoliv Inc., All Rights Reserved 39 March 15, 2018 Q1'18 NYC Investor Meetings System & Product Roadmap – ANBS Chassis Controls ANBS – Autoliv Nissin Brake Systems
Slide 40 — ANBA Building – Findlay, Ohio
Copyright Autoliv Inc., All Rights Reserved ANBA Building – Findlay, Ohio 40 Lease signed on 10-12-17 VT will close on property by 10-24-17 Earthwork will start week of Nov. 6th Filter pit will be ready for Henry Filter install Apr. 2018 Building ready for Grob machines on 8-20-18 & Xigent equipment on 9-15-18 Full occupancy by 10-15-18 Elevation Views March 15, 2018 Q1'18 NYC Investor Meetings
Slide 41 — Restraint Control Trends
Copyright Autoliv Inc., All Rights Reserved 41 (Group of various impactors) G-based Pressure Hybrid Hybrid + Pre-crash Better field performance by pre-setting crash algorithms before impact - fewer false positives - consumer-desired deployments In Production Better positioned occupants by restraining or moving them before impact - motorized seatbelts(EPT) - seat-mounted pre-crash airbags In Production Tailored Restraints For highly automated vehicles using vision-based occupant classification - Highly adaptive restraints - Multiple seating positions - Complex crash scenarios Concept phase ! Safer automated driving by sharing sensor data and processing power - Advanced IMU - Horizon - Safe stop - Basic ADAS Concept phase Automated Driving aware Anticipate occupant movement due to crash avoidance technologies. For real-life and future NCAP with pre- crash deployment Under development Opportunities to leverage Active Safety Restraint Control Trends March 15, 2018 Q1'18 NYC Investor Meetings
Slide 42 — Integrated Safety towards a Safety Domain Controller
Copyright Autoliv Inc., All Rights Reserved Backbone ADAS Gateway IMU Backbone ADAS Backbone ADAS Smart Pyro Actuator Evolution? • Incremental increase in computing power • Independent function • Stable specifications • Incremental improvements using available active safety data e.g. AEB Expansion? • Increased computing power • Shared responsibility with ADAS controller • Complex crash and pre-crash management • Redundancy for HAD Integration? • Reduced computing power • Crash management hosted by ADAS controller • Restraint ECU becomes a smart pyrotechnical actuator Restraint control for the Future Car is tightly coupled to Automated Driving. There are 3 possible trends: Impact Objects & Free-space Objects & Free-space & Impact Objects & Free-space Critical Objects & Impact 42 As a leader in Restraint Controls and ADAS Autoliv is prepared to support all three paths Future of Restraint Control as ADAS moves mainstream Integrated Safety towards a Safety Domain Controller March 15, 2018 Q1'18 NYC Investor Meetings
Slide 43 — 30,000 lives
Copyright Autoliv Inc., All Rights Reserved autoliv.com Each year, Autoliv’s products save over 30,000 lives March 15, 2018 Q1'18 NYC Investor Meetings 43
Slide 44 — FY’17 Recap
Copyright Autoliv Inc., All Rights Reserved 44 FY’17 Recap Strong performance even with increased RD&E investments for long-term growth Growth and Margins −Record sales as a result of consolidated sales growth of ~3% where of organic sales* growth ~1.5% −Record gross profit resulting in an 8.6% adjusted operating margin* where RD&E was 7.1% of sales −Record order intake in both segments supports organic sales targets −Adjusted EPS* $6.58 Capital Structure −Operating cash flow ~$936M, RoCE* ~19% and RoE* ~14% −Shareholder returns ~$366M with a leverage ratio* of 0.5 times Company transformation continues −Improving operating efficiencies and operating leverage on organics sales growth and vertical integration in Passive Safety −Closed “Zenuity” software Joint Venture with VCC** in April’17, one LiDAR acquisition and eight new technology collaborations −Announced the intention to spin-off the Electronics business as a standalone entity during Q3’18 (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters, separation of our business segments and Goodwill impairment, Return on Capital Employed (RoCE), Return on Equity (RoE), Earnings per Share (EPS), (**) Volvo Car Corporation (VCC). Several technology collaborations established during 2017 improved our underlying market position in both segments for the long-term March 15, 2018 Q1'18 NYC Investor Meetings
Slide 45 — Q4’17 Highlights
Copyright Autoliv Inc., All Rights Reserved Strengthening our market position and preparing for our step-up in growth March 15, 2018 Q1'18 NYC Investor Meetings 45 Q4’17 Highlights Financial Performance −Organic Sales* growth 1.1%, slightly better than guidance and LVP** −Adjusted Operating Margin* 9.6%, better than guidance −Adjusted EPS* $2.03, ~19% increase YoY Capital Structure −Operating cash flow $389M, returned $52M in dividends to shareholders −Leverage ratio* 0.5 times, RoCE* ~21%, RoE* ~16% Positioning for Long-Term Growth −Improving operating leverage on gross margin while investing in RD&E for growth opportunities −FY’17 Gross Margin 20.7% and RD&E, net 7.1% of sales −Product Portfolio: −New Technology collaborations (Zenuity and TomTom), vision, LiDAR and ROADSCAPE orders with new customers Exceeded our adjusted Operating Margin and Organic Sales growth guidance resulting in a strong adjusted EPS (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters, separation of our business segments and Goodwill impairment, Earnings per share (EPS), Return on Capital Employed (RoCE), Return on Equity (RoE), (**) Global Light Vehicle Production (LVP) according to IHS @ January 16, 2018.
Slide 46 — Q4 Financial Overview
Copyright Autoliv Inc., All Rights Reserved March 15, 2018 Q1'18 NYC Investor Meetings 46 Q4 Financial Overview (US $ Millions unless specified) 2017 2016 Sales $2,729 $2,604 Gross Profit $567 20.8% $534 20.5% Operating Income* $263 9.6% $243 9.3% EPS* (assuming dilution) $2.03 $1.71 RoCE* 21% 23% RoE* 14% 15% Operating cash flow $389 $294 Dividend per share $0.60 $0.58 LVP** (Global annual run rate) ~98M ~97M Sales and adjusted Operating Margin both exceeded our guidance (*) Non-US GAAP measures exclude costs for capacity alignments and antitrust related matters, Earnings per share (EPS), Return on Capital Employed (RoCE) and Return on Equity (RoE), (**) Light Vehicle Production (LVP) according to IHS @ January 16, 2018. Record sales, gross profit and operating cash flow for any quarter
Slide 47 — Operating Income* and Margin* Bridge
Copyright Autoliv Inc., All Rights Reserved Q4’17 vs. Prior Year March 15, 2018 Q1'18 NYC Investor Meetings 47 Operating Income* and Margin* Bridge Q4’17 vs. Prior Year (30 bps better) Operating Margin* of 9.6% includes ~60 bps increase in RD&E, net vs. Prior Year $243 $263 9.3% 9.6% MUS$ (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters, separation of our business segments and Goodwill impairment.
Slide 48 — Q4’17 Strong Performing Models
Copyright Autoliv Inc., All Rights Reserved Contributing to our overall Organic Sales* growth March 15, 2018 Q1'18 NYC Investor Meetings 48 Q4’17 Strong Performing Models Ford Mustang Nissan Qashqai / Rogue Sport Volvo S90 / V90 Mercedes E-Class Great Wall WEY VV7 Toyota C-HR Honda CR-V Jeep Compass Strong Organic Sales* growth on these models were mitigated by lower inflator replacements and unfavorable model mix on certain platforms. Honda Accord (*) Non-US GAAP measure.
Slide 49 — Currency Effects*
Copyright Autoliv Inc., All Rights Reserved Non US$ US$ 24% Sell US$ buy MXN 10% Sell US$ buy CNY 10% Sell KRW buy US$ 8% Sell TRY buy EUR 7% Other 65% FY’17 Translation Exposure ~76% FY’17 Transaction Exposure, Net ~$2.5 B Translation could have a margin impact due to our mix, as margins may not be evenly distributed across countries Transaction exposure, net for FY’17 accounts for approximately 24% of sales and directly impacts on margin Revaluation of balance sheet from local currency to US$ March 15, 2018 49 Currency Effects* Translation, Transaction and Revaluation (*) Since 2004 Autoliv has adopted a Natural Hedging policy however from time to time the company may enter into forward hedging contracts on certain components, Earnings before Interest & taxes (EBIT), Bps (Basis points), Earnings per Share (EPS). YoY change Q4’17 FY’17 Sales % / $ (translation only) 3.7% /~97$M 0.4% / ~$36M EBIT reported *(translation + transaction & revaluation) ~$11M ~$2M Bps (EBIT reported) *(translation + transaction & revaluation) ~10 ~0 EPS* ((translation + transaction & revaluation) ~$0.09 ~$(0.22) Indication for FY’18 is a negative transaction effect of ~20 bps which is expected to be offset by positive translation effect on earnings Q1'18 NYC Investor Meetings
Slide 50 — Commodity Price Trends
Copyright Autoliv Inc., All Rights Reserved FY’17 Direct Material ~54% of sales or ~$5.6B 32% 28% 20% 8% 12% Commodity Price Trends Raw material cost development Autoliv avoids forward hedging contracts against commodity cost changes Consequently, Autoliv manages the risk between suppliers and customers Lead time effect of changes in commodity costs is generally 3 to 6 months Commodity (Positive) / Negative YoY Cost Change in US$ Millions Commodity FY’10 FY’11 FY’12 FY’13 FY’14 FY’15 FY’16 FY’17 Steel (4) 35 2 (8) (9) (17) (12) 18 Non-Ferrous 18 8 (2) 0 (1) 0 0 16 Plastic & Yarn 4 47 7 (11) (14) (31) (19) (4) Other 0 5 (1) (4) 5 8 (2) 0 TOTAL 18 95 6 (23) (19) (40) (33) 30 March 15, 2018 Q1'18 NYC Investor Meetings 50 16% 14% 10% 4% 6% 50% Steel Petroleum based Electronics Non Ferrous Other 50% Raw Materials ~$2.8B 50% Value add in Supply Chain ~$2.8B
Slide 51 — China Update
Copyright Autoliv Inc., All Rights Reserved Q4’17 light vehicle production reached ~31.8 million annual run-rate 0 1 2 3 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Light Vehicle Inventory Index - China 2016 2017 1.5 March 15, 2018 Q1'18 NYC Investor Meetings 51 China Update Market −Q4’17 LVP** decrease YoY ~1% − Driven by domestic OEMs** −Monthly fluctuations remain erratic −LV Inventories** decreased during Q4’17 NCAP** Ratings −Implementation from 1st of July, 2018 − Improved rear-seat, side and Pedestrian protection − Adding a new level with a +5-star rating − Active safety and AEB is required for a rating of 4-stars or higher Autoliv −Organic sales* growth in Q4’17 ~4%, mainly due to global OEMs −FY’17 Organic sales growth ~4% driven is mainly driven by global OEMs (*) Non US GAAP measure, (**) Light vehicle production (LVP) according to IHS @ January 16, 2018, Original Equipment Manufacturer’s (OEMs), According to CAAM/CADA, New Car Assessment program (NCAP), Automated Emergency Braking (AEB). We remain confident in our long-term growth prospects for China due to Content per Vehicle opportunities in both Active and Passive Safety 0 1 2 3 Millions Light Vehicle Production - China Monthly LTM Monthly
Slide 52 — FY Financial Overview
Copyright Autoliv Inc., All Rights Reserved Record sales, gross profit and operating cash flow March 15, 2018 Q1'18 NYC Investor Meetings 52 FY Financial Overview (*) Non-US GAAP measures exclude costs for capacity alignments and antitrust related matters, Earnings per share (EPS), Return on Capital Employed (RoCE) and Return on Equity (RoE), (**) Global Light Vehicle Production (GLVP) according to IHS @ January 16, 2018. (US $ Millions unless specified) 2017 2016 Sales $10,383 $10,074 Gross Profit $2,149 20.7% $2,057 20.4% Operating Income* $892 8.6% $885 8.8% EPS* (assuming dilution) $6.58 $6.75 RoCE* 19% 21% RoE* 13% 15% Operating cash flow $936 $868 Dividend per share $2.38 $2.30 GLVP** (annual run rate) ~92M ~90M
Slide 53 — FY Segment Reporting
Copyright Autoliv Inc., All Rights Reserved March 15, 2018 Q1'18 NYC Investor Meetings 53 FY Segment Reporting Organic Sales* Growth (%) Sales (US$ Millions) Operating Margin (%) CapEx (%) D&A (%) Headcount 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Passive Safety *** 2.2% 8,135 7,919 10.2 10.3 5.7 5.0 3.7 3.5 64,111 63,134 Airbags (incl. Steering Wheels) 1.3% Seatbelts 4.0% Electronics *** (0.5)% 2,322 2,216 (7.8) 2.8 4.7 4.6 4.8 4.3 7,484 6,778 Restraint Control Systems (3.4)% Active Safety 5.1% Brake Systems (6.2)% Autoliv 1.5% 10,383 10,074 5.8 8.4 5.6 5.0 4.1 3.8 72,034 70,293 LVP ** (Global) 2.2% Non-cash, one time Goodwill impairment charge of ~$100M to net income (~$234M operating income) related to ANBS* during Q4’17 Strong operational performance in Passive Safety driving group profitability (*) Non-US GAAP measure, (**) Light Vehicle Production (LVP) according to IHS @ January 16, 2018, Autoliv Nissin Brake Systems (ANBS), (***) Segment reporting, organic growth refers to net sales for the segments and external sales for product groups.
Slide 54 — Cash Flow
Copyright Autoliv Inc., All Rights Reserved (US $ Millions unless specified) Q4’17 Q4’16 2017 2016 2015 2014 2013 2012 Net Income (56) 144 303 562 458 469 490 486 Depreciation & Amortization*** 341 104 660 383 319 305 286 273 Other, net (4) (16) (27) 1 0 42 43 10 Change in operating WC* 108 62 (0) (78) (26) (103) 19 (80) Operating cash flow 389 294 936 868 751 713 838 689 Capital Expenditures, net (168) (159) (570) (499) (450) (453) (379) (360) Free cash flow** 221 135 366 369 301 260 459 329 Acquisitions, net 14 0 124 227 128 (1) 2 (3) Dividends paid 52 51 209 203 196 195 191 178 Shares repurchased 0 0 157 0 104 616 148 0 Investments for growth and shareholder returns March 15, 2018 Q1'18 NYC Investor Meetings 54 Cash Flow Acquisitions and CapEx for growth along with Shareholder returns are ~$1.1B during FY’17 (*) Non-US GAAP measure, (**) Non-US GAAP measure, before acquisitions, reconciliation of free cash flow is provided above. (***) Includes Goodwill impairment related to the ANBS JV in Q4’17 and 2017.
Slide 55 — Capital Structure
Copyright Autoliv Inc., All Rights Reserved 0 200 400 600 800 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 US $ Millions Dividend Share Repurchase Free Cash flow 0.5 leverage ratio in FY‘17 Free cash hampered by anti-trust settlements in 2014-15 March 15, 2018 55 Capital Structure Debt limitation policy and shareholder returns (*) Cash flow before financing 0,0 0,5 1,0 1,5 2,0 2,5 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Times Leverage Ratio * Long-term Range Long-term Target More than two-thirds of our Free Cash flow has been returned to shareholders since 1997 Q1'18 NYC Investor Meetings
Slide 56 — FY’18 - Key Models in Passive Safety
Copyright Autoliv Inc., All Rights Reserved March 15, 2018 Q1'18 NYC Investor Meetings 56 These models are anticipated to contribute ~$500M towards the expected Passive Safety Organic Sales* growth of >10% in FY’18 FY’18 - Key Models in Passive Safety Contributing to the ramp-up of our expected organic sales* growth D3 EU OEM D3 D3 JOEM JOEM Honda Accord Tesla Model 3 VW Polo Honda Odyssey Honda CR-V (*) Non-US GAAP measure. Nissan Qashqai / Rogue Hyundai Genesis G70
Slide 57 — Overall Market Conditions
Copyright Autoliv Inc., All Rights Reserved Major light vehicle markets remain mixed and uncertain March 15, 2018 Q1'18 NYC Investor Meetings 57 Overall Market Conditions FY 2018 LVP* Region Millions of Vehicles YoY Chg. @ Jan 16 China 26.8 1% Japan 8.7 (3)% RoA* 13.1 4% North America 16.3 2% South America 3.7 13% Europe 22.6 2% Global 94.0 2.0% Asia −China inventories** declined during FY17 to relatively low levels −The Q1’18 LVP* is expected to decline YoY* in China ~4% while the LVP in Japan and RoA is expected to increase ~2% and 1% respectively Americas −US SAAR** remains relatively high while inventories declined during Q4’17 to ~3.7M vehicles (~61 days) −US consumer confidence remains strong −Q1’18 LVP in North America is expected to increase ~1% YoY while South America continues to recover and is expected to increase ~15% YoY Europe −EU27** FY’17 vehicle registrations approaching “pre-crisis” levels while LVP set a new record −Q1’18 LVP in Europe is expected to increase ~2% YoY whereof WEU* is expected to increase ~2% and EEU* is expected to increase ~3% In Q1’18 the global LVP* is expected to increase ~0.5% YoY*, however decline sequentially by ~3% from Q4’17 (*) Light Vehicle Production (LVP) according to IHS @ January 16, 2018, Year over Year (YoY), Rest of Asia (RoA), Western Europe (WEU), Eastern Europe (EEU), Last Twelve Months (LTM), (**) Source: ACEA, Ward’s Auto, CAAM.
Slide 58 — Q1 Light Vehicle Production
Copyright Autoliv Inc., All Rights Reserved Vehicles in millions 2018 2017 2018 vs. 2017 (%) ALV Organic** Sales Growth (%) @ Jan 16th @ Oct 17th Americas 5.1 4.9 3 4 North America 4.3 4.2 1 2 South America 0.8 0.7 15 13 Europe 6.0 5.8 2 2 WEU 4.0 3.9 2 4 EEU 2.0 1.9 2 0 Asia 12.0 12.2 (1) (1) Japan 2.4 2.4 2 0 China 6.3 6.6 (4) (3) RoA 3.3 3.2 1 2 Other* 0.6 0.7 2 (1) Total Global 23.7M 23.6M 0.4% 0.7% <1% March 15, 2018 Q1'18 NYC Investor Meetings 58 Q1 Light Vehicle Production Source: IHS Light Vehicle Production (LVP) @ January 16, 2018 and October 17, 2017, (*) Middle East/ Africa, (**) Non US GAAP, as of January 30, 2018.
Slide 59 — FY’18 Light Vehicle Production
Copyright Autoliv Inc., All Rights Reserved Vehicles in millions 2018 2017 2018 vs. 2017 (%) ALV Organic** Sales Growth (%) @ Jan 16th @ Oct 17th Americas 20.0 19.2 4 4 North America 16.3 15.9 2 3 South America 3.7 3.3 13 11 Europe 22.6 22.2 2 2 WEU 15.0 14.8 1 2 EEU 7.6 7.4 3 1 Asia 48.6 48.2 1 0 Japan 8.7 9.0 (3) (4) China 26.8 26.6 1 1 RoA 13.1 12.6 4 3 Other* 2.8 2.5 10 6 Total Global 94.0M 92.1M 2.0% 1.7% >7% March 15, 2018 Q1'18 NYC Investor Meetings 59 FY’18 Light Vehicle Production Source: IHS Light Vehicle Production (LVP) @ January 16, 2018 and October 17, 2017, (*) Middle East/ Africa, (**) Non US GAAP, as of January 30, 2018.
Slide 60 — Looking Ahead
Copyright Autoliv Inc., All Rights Reserved Sales −Organic Sales* growth <1% YoY** −Strong growth in Thailand and India, South America and Japan is partially offset by a decline in Europe, South Korea and China −Currency translation >6% YoY −Mainly due to the weakening of the US$ during 2017 Operating Margin* ~9% −YoY −Improved operating efficiencies on gross margin are partially offset by higher RD&E and the negative impact from currencies −Sequential −Higher consolidated sales considering normal seasonality effects more than offset by higher RD&E Q1’18 Guidance March 15, 2018 Q1'18 NYC Investor Meetings 60 Looking Ahead Q1’17 Organic Sales growth in Passive Safety is partially offset by Organic Sales decline in Electronics (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters and separation of our business segments, as of January 30, 2018, (**) Year over Year (YoY).
Slide 61 — Looking Ahead
Copyright Autoliv Inc., All Rights Reserved Sales −Organic Sales* growth >7% YoY** −Mainly related to strong growth in all major regions including Active Safety which is partially offset by South Korea and lower Restraint Controls and Brake Systems −Currency translation ~4% YoY −Mainly due to the continued weakening of the US$ Operating Margin* ~9% −YoY −Positive effect from organic sales growth in Passive Safety and improved operating efficiencies are partially offset by the negative impact from higher RD&E in Electronics and currencies March 15, 2018 Q1'18 NYC Investor Meetings 61 Looking Ahead Initial indication for FY’18 is strong Organic Sales growth to resume due to Passive and Active Safety with an improving Operating Margin FY’18 Indication (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters and separation of our business segments, as of January 30, 2018, (**) Year over Year (YoY).
Slide 62 — Financial Outlook
Copyright Autoliv Inc., All Rights Reserved Financial Outlook March 15, 2018 Q1'18 NYC Investor Meetings 62 ALV Group Q1’18 FY’18 Sales Organic* <1% >7% Acquisitions - - Fx** >6% ~4% Consolidated Sales, net >7% >11% Operating Margin* ~9% ~9% Consolidated sales, net and operating margin* initial FY indication Exchange rates** Q1’18 FY’18 EUR / US$ 1.2152 1.2199 US$ / JPY 111.22 110.84 US$ / KRW 1,063 1,063 US$ / MXN 19.03 18.94 US$ / CNY 6.46 6.45 For FY’18 strong Organic Sales* growth of >7% drives improvement in Operating Margin* to ~9% despite RD&E increases in Electronics Segments FY’18 Passive Safety Electronics Sales Organic* >10% ~(3)% Acquisitions - - Fx** ~4% ~3% Consolidated Sales, net >14% ~0% Underlying Profitability Increase YoY Decline YoY (*) Non-US GAAP measures exclude costs for capacity alignments, antitrust related matters and separation of our business segments, as of January 30, 2018, (**) Mid-January 2018 exchange rates.