Autoliv(ALV) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Autoliv achieved record Q3 2025 financial results, driven by strong sales and cost reductions, while reaffirming positive full-year guidance and strategic investments Q3 2025 Financial Highlights Autoliv reported a record-breaking third quarter in 2025, achieving significant increases in net sales, operating income, and diluted EPS. The company's adjusted operating margin also saw a notable improvement, reflecting strong financial performance | Key Figures (Dollars in millions, except per share data) | Q3 2025 | Q3 2024 | Change | 9M 2025 | 9M 2024 | Change | | :------------------------------------------------ | :------ | :------ | :----- | :------ | :------ | :----- | | Net sales | $2,706 | $2,555 | 5.9% | $7,998 | $7,774 | 2.9% | | Operating income | 267 | 226 | 18% | 769 | 626 | 23% | | Adjusted operating income | 271 | 237 | 14% | 777 | 657 | 18% | | Operating margin | 9.9% | 8.9% | 1.0pp | 9.6% | 8.1% | 1.6pp | | Adjusted operating margin | 10.0% | 9.3% | 0.7pp | 9.7% | 8.5% | 1.3pp | | Earnings per share - diluted | 2.28 | 1.74 | 31% | 6.59 | 4.98 | 32% | | Adjusted earnings per share - diluted | 2.32 | 1.84 | 26% | 6.67 | 5.30 | 26% | | Operating cash flow | 258 | 177 | 46% | 613 | 639 | (4.1)% | | Return on capital employed | 25.1% | 22.9% | 2.2pp | 24.9% | 21.2% | 3.8pp | | Adjusted return on capital employed | 25.5% | 23.9% | 1.6pp | 25.2% | 22.1% | 3.0pp | CEO's Comments Mikael Bratt, President & CEO, highlighted Q3 2025 as a record-breaking quarter for sales, operating income, and EPS, driven by strong sales in Americas and Europe, cost reductions, and tariff compensation. The company saw solid outperformance with domestic Chinese OEMs and continued high growth in India. Strategic investments in China, including a new R&D center and a joint venture for advanced safety electronics, are underway to support future growth - Q3 2025 was a record-breaking quarter for sales, operating income, and EPS, driven by better-than-expected sales in Americas and Europe, successful cost reduction, and tariff compensation[8] - The company achieved solid outperformance with domestic Chinese OEMs and expects increased outperformance in China in Q4[8] - High growth in India continued, accounting for approximately one-third of global organic growth in Q3, driven by increased penetration of automotive safety[9] - Autoliv is investing for continued success in China, including building a second R&D Center and forming a joint venture with HSAE for advanced safety electronics[9] - Around 75% of tariff costs were recovered in Q3, with expectations to recover most of the remainder in Q4[10] - Operating cash flow increased by 46%, and free cash flow improved substantially due to strong balance sheet control and lower capital expenditure, net[11] Key Business Developments in Q3 2025 In Q3 2025, Autoliv's organic sales grew by 3.9%, slightly below global LVP increase, impacted by regional LVP mix but boosted by tariff compensations. Profitability significantly improved due to organic sales growth, cost reductions, and supplier settlements. Operating cash flow increased substantially, and the company maintained a healthy leverage ratio while increasing dividends and repurchasing shares - Net sales increased organically by 3.9%, which was 0.7 percentage points lower than the global Light Vehicle Production (LVP) increase of 4.6%. Regional and customer LVP mix negatively impacted sales by about 1 percentage point, while tariff compensations added around 0.5 percentage points[13] - Profitability improved significantly, with operating income increasing by 18% to $267 million and adjusted operating income increasing by 14% to $271 million. This was mainly due to organic sales growth, successful cost reductions, and positive effects from supplier settlement and compensation[13] - Operating cash flow increased by 46%, reflecting improved profit and working capital. Capital expenditure, net, was significantly reduced, leading to a substantial increase in free operating cash flow[13] - The leverage ratio stood at 1.3x, below the target limit of 1.5x. In the quarter, a dividend of $0.85 per share (21% increase from Q2 '25) was paid, and 0.84 million shares were repurchased and retired[13] Full Year 2025 Guidance Autoliv reaffirmed its full-year 2025 guidance, expecting around 3% organic sales growth and an adjusted operating margin of 10-10.5%, with operating cash flow around $1.2 billion. The guidance is based on customer call-offs, targeted cost compensation adjustments, and no significant changes in macro-economic conditions or trade restrictions | Full year 2025 Guidance | | | :------------------------ | :---------- | | Organic sales growth | Around 3% | | Adjusted operating margin | Around 10-10.5% | | Operating cash flow | Around $1.2 billion | | Capex, net, % of sales | Around 4.5% | | Full year 2025 Assumptions | | | :------------------------- | :---------- | | LVP growth | Around 1.5% | | FX impact on net sales | Around 1% | | Tax rate | Around 28% | - The guidance assumes achievement of targeted cost compensation adjustments with customers, including for new tariffs, and no further material changes to tariffs or trade restrictions as of October 15, 2025[14] - No significant changes in the macro-economic environment, customer call-off volatility, or significant supply chain disruptions are assumed[14] Business and Market Conditions Autoliv manages supply chain volatility, inflation, and geopolitical risks, actively mitigating costs and tariff impacts Supply Chain Global Light Vehicle Production (LVP) increased by 4.6% year-over-year in Q3 2025. While call-off volatility improved slightly compared to the previous year, it remains higher than pre-pandemic levels, impacting production efficiency and profitability. The company anticipates slightly lower call-off volatility for the full year 2025 compared to 2024, but continued uncertainty regarding tariffs and trade restrictions could worsen the environment - Global LVP increased by 4.6% year-over-year in Q3 2025[17] - Call-off volatility improved slightly but remains higher than pre-pandemic levels, negatively impacting production efficiency and profitability[17] - Full year 2025 call-off volatility is expected to be slightly lower than 2024 but still above pre-pandemic levels, with tariff uncertainty posing a risk[17] Inflation Cost pressure from labor and other items negatively impacted profitability in Q3, though less severely than in Q3 2024. Most inflationary costs were offset by price increases and customer compensations. Raw material prices had no significant impact, but ongoing tariff and trade restriction uncertainties could lead to a more adverse inflation environment. Autoliv continues to implement productivity and cost reduction initiatives - Cost pressure from labor and other items negatively impacted profitability in Q3 2025, but to a lesser degree than Q3 2024[18] - Most inflationary cost pressure was offset by price increases and customer compensations[18] - Raw material price changes did not have a meaningful impact on profitability during the quarter[18] - Uncertainty regarding tariffs and trade restrictions may lead to a more adverse inflation environment[18] Geopolitical Risks and Tariffs New tariffs in the first nine months of 2025 did not materially impact Q3 profitability, as Autoliv secured customer compensations for most costs, recovering about 75% in the quarter. The unrecovered tariff impact on operating income was around $5 million negative, with a 20bps negative impact on operating margin. The company expects to recover most remaining tariffs later in the year and anticipates a full-year tariff dilution of around 20 bps on operating margin, while closely monitoring the evolving geopolitical and trade policy environment - New tariffs did not materially impact Q3 profitability due to customer compensations, with around 75% of tariff costs recovered[19] - The impact of unrecovered tariffs on operating income was approximately $5 million negative in Q3, and operating margin was negatively impacted by around 20bps[19] - For the full year 2025, tariff dilution on operating margin is expected to be around 20 bps[19] - Geopolitical uncertainties continue to create a challenging operating environment, and the company remains agile in responding to trade policy developments[19] Sales Performance Autoliv's Q3 and 9M 2025 organic sales grew across segments and regions, supported by new product launches despite China LVP mix Q3 2025 Consolidated Sales Development Autoliv's consolidated sales in Q3 2025 increased by 5.9% to $2,706 million, with organic sales growth of 3.9%. Growth was observed across both product segments and all regions, with China showing strong organic growth despite overall LVP underperformance | Consolidated sales (Dollars in millions) | Q3 2025 | Q3 2024 | Reported change (U.S. GAAP) | Currency effects | Organic change* | | :--------------------------------------- | :------ | :------ | :-------------------------- | :--------------- | :-------------- | | Airbags, Steering Wheels and Other | $1,830 | $1,736 | 5.4% | 1.8% | 3.6% | | Seatbelt Products and Other | 875 | 819 | 6.9% | 2.4% | 4.5% | | Total | $2,706 | $2,555 | 5.9% | 2.0% | 3.9% | | Consolidated sales by region (Dollars in millions) | Q3 2025 | Q3 2024 | Reported change (U.S. GAAP) | Currency effects | Organic change* | | :------------------------------------------------- | :------ | :------ | :-------------------------- | :--------------- | :-------------- | | Americas | $897 | $851 | 5.3% | 0.6% | 4.7% | | Europe | 745 | 700 | 6.4% | 6.3% | 0.1% | | China | 526 | 495 | 6.3% | 0.1% | 6.2% | | Asia excl. China | 538 | 508 | 5.8% | 0.3% | 5.5% | | Total | $2,706 | $2,555 | 5.9% | 2.0% | 3.9% | Sales by Product (Airbags, Steering Wheels and Other) Organic sales for Airbags, Steering Wheels and Other grew by 3.6% in Q3 2025, primarily driven by inflatable curtains, side airbags, driver airbags, and center airbags, partially offset by a decline in steering wheels - Organic sales for Airbags, Steering Wheels and Other grew by 3.6% in Q3 2025[35] - Largest contributors to the increase were inflatable curtains, side airbags, driver airbags, and center airbags[35] - This growth was partly offset by a decline in steering wheels[35] Sales by Product (Seatbelt Products and Other) Organic sales for Seatbelt Products and Other increased by 4.5% in Q3 2025, with growth observed across all regions, led by strong performance in Europe and Americas - Organic sales for Seatbelt Products and Other grew by 4.5% in Q3 2025[36] - Sales increased organically in all regions, with strong growth in Europe and Americas[36] Sales by Region Global organic sales increased by 3.9%, underperforming the global LVP increase of 4.6% due to negative regional and model LVP mix, particularly in China. However, Autoliv's sales growth with domestic Chinese OEMs significantly outpaced their LVP growth, indicating improved performance in this segment - Global organic sales increased by 3.9%, underperforming global LVP growth of 4.6% by 0.7 percentage points[37] - Outperformed LVP growth in Asia ex. China (4.2pp) and Americas (0.5pp), but underperformed in China (3.5pp) and Europe (1.2pp)[37] - Autoliv's sales growth with domestic Chinese OEMs was 23%, significantly higher than their LVP growth of 15%[38] | Q3 2025 organic growth* | Americas | Europe | China | Asia excl. China | Global | | :---------------------- | :------- | :----- | :---- | :--------------- | :----- | | Autoliv | 4.7% | 0.1% | 6.2% | 5.5% | 3.9% | | LVP (Oct 2025) | 4.2% | 1.3% | 9.7% | 1.3% | 4.6% | First Nine Months 2025 Consolidated Sales Development For the first nine months of 2025, total net sales grew by 2.9% to $7,998 million, with organic sales growth of 3.1%. Both product segments and most regions contributed to this growth, although China showed a significant underperformance relative to its LVP growth, primarily due to the mix towards domestic OEMs with lower safety content | Consolidated sales (Dollars in millions) | 9M 2025 | 9M 2024 | Reported change (U.S. GAAP) | Currency effects | Organic change* | | :--------------------------------------- | :------ | :------ | :-------------------------- | :--------------- | :-------------- | | Airbags, Steering Wheels and Other | $5,395 | $5,264 | 2.5% | (0.3)% | 2.8% | | Seatbelt Products and Other | 2,603 | 2,511 | 3.7% | (0.2)% | 3.9% | | Total | $7,998 | $7,774 | 2.9% | (0.3)% | 3.1% | | Consolidated sales by region (Dollars in millions) | 9M 2025 | 9M 2024 | Reported change (U.S. GAAP) | Currency effects | Organic change* | | :------------------------------------------------- | :------ | :------ | :-------------------------- | :--------------- | :-------------- | | Americas | $2,639 | $2,637 | 0.1% | (3.3)% | 3.4% | | Europe | 2,337 | 2,231 | 4.7% | 2.9% | 1.8% | | China | 1,450 | 1,423 | 1.9% | (0.3)% | 2.2% | | Asia excl. China | 1,572 | 1,483 | 6.0% | 0.3% | 5.7% | | Total | $7,998 | $7,774 | 2.9% | (0.3)% | 3.1% | Sales by Product (Airbags, Steering Wheels and Other) 9M Organic sales for Airbags, Steering Wheels and Other grew by 2.8% in the first nine months of 2025, primarily driven by inflatable curtains, side airbags, center airbags, steering wheels, and driver airbags - Organic sales for Airbags, Steering Wheels and Other grew by 2.8% in the first nine months of 2025[42] - Key contributors to the increase were inflatable curtains, side airbags, center airbags, steering wheels, and driver airbags[42] Sales by Product (Seatbelt Products and Other) 9M Organic sales for Seatbelt Products and Other increased by 3.9% in the first nine months of 2025, mainly driven by Americas and Asia excluding China - Organic sales for Seatbelt Products and Other grew by 3.9% in the first nine months of 2025[43] - Sales growth was mainly driven by Americas and Asia excluding China[43] Sales by Region 9M Global organic sales increased by 3.1% in the first nine months, underperforming global LVP growth of 3.9% due to negative regional and model LVP mix, particularly in China. Autoliv's sales to domestic Chinese OEMs increased by 16%, while sales to global OEMs in China decreased by 5.7% - Global organic sales increased by 3.1%, underperforming global LVP growth of 3.9% by 0.8 percentage points[44] - Outperformed LVP growth in Americas (3.5pp), Europe (3.4pp), and Asia excluding China (3.0pp), but underperformed by 9.3pp in China[44] - Autoliv's sales to domestic Chinese OEMs increased by 16%, while sales to global OEMs in China decreased by 5.7%[45] | 9M 2025 organic growth* | Americas | Europe | China | Asia excl. China | Global | | :---------------------- | :------- | :----- | :---- | :--------------- | :----- | | Autoliv | 3.4% | 1.8% | 2.2% | 5.7% | 3.1% | | LVP (Oct 2025) | (0.1)% | (1.6)% | 11.5% | 2.7% | 3.9% | Key Product Launches in Q3 2025 Autoliv launched safety products for several new vehicle models in Q3 2025, including the Onvo L90, Kia PV5, Volvo XC70, Subaru Outback, Jeep Compass, Renault Clio, Geely Galaxy M9, and Nissan Sentra, covering a range of airbags, seatbelts, and other safety components - Key launches in Q3 2025 included safety systems for Onvo L90, Kia PV5, Volvo XC70, Subaru Outback, Jeep Compass, Renault Clio, Geely Galaxy M9, and Nissan Sentra[49] - Products launched included Driver/Passenger Airbags, Seatbelts, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel, Knee Airbag, Front Center Airbag, Bag-in-Belt, Pyrotechnical Safety Switch, Pedestrian Airbag, and Hood Lifter[49] Financial Performance Autoliv's Q3 and 9M 2025 financial performance was strong, with significant income and cash flow growth, a healthy balance sheet, and reduced headcount Condensed Income Statement Analysis Autoliv's income statement showed strong growth in Q3 and the first nine months of 2025. Gross profit and operating income increased significantly, driven by higher sales, improved operational efficiency, and lower costs. Diluted EPS also saw substantial increases for both periods | Condensed Income Statement (Dollars in millions, except per share data) | Q3 2025 | Q3 2024 | Change | 9M 2025 | 9M 2024 | Change | | :-------------------------------------------------------------------- | :------ | :------ | :----- | :------ | :------ | :----- | | Net sales | $2,706 | $2,555 | 5.9% | $7,998 | $7,774 | 2.9% | | Gross profit | 522 | 459 | 14% | 1,502 | 1,377 | 9.1% | | Operating income | 267 | 226 | 18% | 769 | 626 | 23% | | Adjusted operating income | 271 | 237 | 14% | 777 | 657 | 18% | | Net income | $175 | $139 | 26% | $510 | $404 | 26% | | Earnings per share - diluted | $2.28 | $1.74 | 31% | $6.59 | $4.98 | 32% | | Adjusted earnings per share - diluted | $2.32 | $1.84 | 26% | $6.67 | $5.30 | 26% | | Gross margin | 19.3% | 18.0% | 1.3pp | 18.8% | 17.7% | 1.1pp | | Operating margin | 9.9% | 8.9% | 1.0pp | 9.6% | 8.1% | 1.6pp | | Tax Rate | 26.9% | 29.6% | (2.6)pp| 26.4% | 27.0% | (0.6)pp| Third Quarter 2025 Development In Q3 2025, gross profit increased by $63 million (14%) and gross margin by 1.3pp, driven by higher sales, improved operational efficiency, and supplier compensations. Operating income rose by $41 million (18%), and diluted EPS increased by $0.54 (31%), benefiting from higher operating income, tax effects, and fewer outstanding shares - Gross profit increased by $63 million (14%) and gross margin by 1.3pp, mainly due to higher sales, improved operational efficiency, and supplier compensations[51] - Operating income increased by $41 million (18%) compared to the prior year[54] - Diluted EPS increased by $0.54 (31%), driven by higher operating income ($0.36), taxes ($0.09), and lower outstanding shares ($0.08)[56] - R,D&E, net costs increased by $22 million (23%), primarily due to lower engineering income[52] First Nine Months 2025 Development For the first nine months of 2025, gross profit increased by $125 million (9.1%) and gross margin by 1.1pp, attributed to improved operational efficiency, organic sales growth, and lower material costs. Operating income rose by $143 million (23%), and diluted EPS increased by $1.61 (32%), primarily from higher operating income and fewer outstanding shares - Gross profit increased by $125 million (9.1%) and gross margin by 1.1pp, driven by improved operational efficiency, organic sales growth, and lower material costs[57] - Operating income increased by $143 million (23%) compared to the prior year[61] - Diluted EPS increased by $1.61 (32%), mainly from higher operating income ($1.28) and lower outstanding shares ($0.29)[63] - R,D&E, net costs decreased by $5 million (1.6%), benefiting from positive FX translation effects and lower professional service costs[59] Selected Cash Flow and Balance Sheet Items Analysis Autoliv demonstrated strong cash flow generation in Q3 2025, with operating cash flow increasing by 46% and free operating cash flow by 378%. For the first nine months, free operating cash flow also saw a significant increase of 44%, despite a slight decrease in operating cash flow. The company maintained a healthy balance sheet with a leverage ratio of 1.3x, below its target limit | Selected Cash Flow items (Dollars in millions) | Q3 2025 | Q3 2024 | Change | 9M 2025 | 9M 2024 | Change | | :--------------------------------------------- | :------ | :------ | :----- | :------ | :------ | :----- | | Net income | $175 | $139 | 26% | $510 | $404 | 26% | | Operating cash flow | 258 | 177 | 46% | 613 | 639 | (4.1)% | | Capital expenditure, net | (106) | (145) | (27)% | (313) | (431) | (27)% | | Free operating cash flow | $153 | $32 | 378% | $300 | $208 | 44% | | Cash conversion | 87% | 23% | 64pp | 59% | 52% | 7pp | | Dividends paid | (65) | (54) | 21% | (173) | (164) | 5.3% | | Share repurchases | (100) | (130) | (23)% | (201) | (450) | (55)% | | Selected Balance Sheet items (Dollars in millions) | Q3 2025 | Q3 2024 | Change | | :------------------------------------------------- | :------ | :------ | :----- | | Trade working capital | $1,504 | $1,307 | 15% | | Trade working capital in relation to sales | 13.9% | 12.8% | 1.1pp | | Cash & cash equivalents | 225 | 415 | (46)% | | Gross Debt | 2,027 | 2,210 | (8.3)% | | Net Debt | 1,772 | 1,787 | (0.8)% | | Capital employed | 4,331 | 4,085 | 6.0% | | Total equity | 2,559 | 2,298 | 11% | | Leverage ratio | 1.3 | 1.4 | (0.1) | Third Quarter 2025 Development Cash Flow Operating cash flow increased by $81 million (46%) to $258 million in Q3 2025, driven by higher net income and more positive non-cash items. Capital expenditure, net, decreased by $40 million (27%), leading to a substantial increase in free operating cash flow to $153 million (378%). Cash conversion improved significantly to 87% - Operating cash flow increased by $81 million (46%) to $258 million in Q3 2025[66] - Capital expenditure, net, decreased by $40 million (27%), with the ratio to sales declining to 3.9% from 5.7%[67] - Free operating cash flow was positive $153 million, a 378% increase from $32 million in the prior year[68] - Cash conversion was 87% in Q3, up from 23% a year earlier[68] First Nine Months 2025 Development Cash Flow For the first nine months of 2025, operating cash flow decreased by $27 million (4.1%) to $613 million, primarily due to a larger increase in operating working capital. However, capital expenditure, net, decreased by $118 million (27%), resulting in a 44% increase in free operating cash flow to $300 million. The leverage ratio improved to 1.3x from 1.4x - Operating cash flow decreased by $27 million (4.1%) to $613 million for the first nine months of 2025[71] - Capital expenditure, net, decreased by $118 million (27%), with the ratio to sales declining to 3.9% from 5.5%[72] - Free operating cash flow was positive $300 million, a 44% increase from $208 million in the prior year[74] - The leverage ratio improved to 1.3x as of September 30, 2025, from 1.4x a year earlier[74] Headcount As of September 30, 2025, total headcount decreased by 3.0% year-over-year to 65,200, despite a 3.9% organic sales increase and some in-sourcing. This reduction was primarily in the direct workforce, supported by improved customer call-off accuracy and operational efficiency initiatives | Headcount | Sep 30 2025 | Jun 30 2025 | Sep 30 2024 | | :----------------------------- | :---------- | :---------- | :---------- | | Total headcount | 65,200 | 65,100 | 67,200 | | Direct headcount in manufacturing | 47,900 | 48,000 | 49,800 | | Indirect headcount | 17,300 | 17,100 | 17,400 | | Temporary personnel | 9% | 9% | 9% | - Total headcount decreased by approximately 2,000 (3.0%) year-over-year, despite a 3.9% organic sales increase and in-sourcing of about 250 FTEs[76] - The direct workforce decreased by approximately 1,900 (3.8%), supported by improved customer call-off accuracy and operational efficiency improvements[76] Non-U.S. GAAP Reconciliations and Definitions This section provides reconciliations and definitions for non-U.S. GAAP financial measures, enhancing comparability and transparency Components in Sales Increase/Decrease Autoliv analyzes sales trends using organic sales growth to provide a comparable basis, separating the impact of acquisitions/divestitures and exchange rates, as approximately 75% of sales are generated in non-U.S. dollar currencies - Organic sales growth is used to analyze sales trends on a comparable basis, isolating the impact of acquisitions/divestitures and exchange rates[90] - Approximately 75% of the company's sales are generated in currencies other than the U.S. dollar[90] Trade Working Capital Reconciliation Trade working capital, a non-U.S. GAAP measure, is used by management to assess operational efficiency and its impact on cash generation. It is defined as outstanding receivables and inventory less outstanding payables, and its relationship to annualized sales is a key indicator - Trade working capital is a non-U.S. GAAP measure used to assess operational efficiency and its impact on cash generation[91] | (Dollars in millions) | Sep 30 2025 | Jun 30 2025 | Mar 31 2025 | Dec 31 2024 | Sep 30 2024 | | :-------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Receivables, net | $2,357 | $2,341 | $2,205 | $1,993 | $2,192 | | Inventories, net | 1,036 | 957 | 913 | 921 | 997 | | Accounts payable | (1,889) | (1,945) | (1,839) | (1,799) | (1,881) | | Trade working capital | $1,504 | $1,354 | $1,279 | $1,115 | $1,307 | | Annualized quarterly sales | $10,822 | $10,857 | $10,312 | $10,463 | $10,218 | | Trade working capital in relation to annualized quarterly sales | 13.9% | 12.5% | 12.4% | 10.7% | 12.8% | Net Debt Reconciliation Net debt, a non-U.S. GAAP measure, is used to analyze the company's debt position, adjusted for debt-related derivatives to reflect the total financial liability without currency or interest fair values. This metric is crucial for creditors and credit rating agencies - Net debt is a non-U.S. GAAP measure used to analyze the company's debt, adjusted for debt-related derivatives to show total financial liability[94] | (Dollars in millions) | Sep 30 2025 | Jun 30 2025 | Mar 31 2025 | Dec 31 2024 | Sep 30 2024 | | :-------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Short-term debt | $654 | $679 | $540 | $387 | $624 | | Long-term debt | 1,374 | 1,372 | 1,565 | 1,522 | 1,586 | | Total debt | 2,027 | 2,051 | 2,105 | 1,909 | 2,210 | | Cash & cash equivalents | (225) | (237) | (322) | (330) | (415) | | Debt issuance cost/Debt-related derivatives, net | (30) | (62) | 4 | (24) | (9) | | Net debt | $1,772 | $1,752 | $1,787 | $1,554 | $1,787 | Leverage Ratio Reconciliation The leverage ratio, a non-U.S. GAAP measure, is used to analyze the company's debt capacity under its policy, aiming for a strong investment grade credit rating with a long-term target of 1.5x or below. It is calculated as net debt adjusted for pension liabilities in relation to adjusted EBITDA - The leverage ratio is a non-U.S. GAAP measure used to analyze debt capacity, aiming for a strong investment grade credit rating and a long-term target of 1.5x or below[96] - It is measured as net debt adjusted for pension liabilities in relation to adjusted EBITDA[96] | (Dollars in millions) | Sep 30 2025 | Jun 30 2025 | Sep 30 2024 | | :-------------------- | :---------- | :---------- | :---------- | | Net debt | $1,772 | $1,752 | $1,787 | | Pension liabilities | 167 | 167 | 147 | | Net debt per the Policy | $1,939 | $1,919 | $1,934 | | EBITDA per the Policy (Adjusted EBITDA) | $1,524 | $1,483 | $1,376 | | Leverage ratio | 1.3 | 1.3 | 1.4 | Free Operating Cash Flow and Cash Conversion Reconciliation Free operating cash flow, a non-U.S. GAAP measure, indicates cash generated after capital expenditures, enabling strategic value creation. Cash conversion, also non-U.S. GAAP, evaluates the efficiency of converting net income into free operating cash flow - Free operating cash flow is a non-U.S. GAAP measure used to analyze cash flow generated after capital expenditure, net, indicating strategic value creation capacity[98] - Cash conversion is a non-U.S. GAAP measure used to analyze the proportion of net income converted into free operating cash flow, evaluating resource utilization efficiency[98] | (Dollars in millions) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | Latest 12 months | Full Year 2024 | | :-------------------- | :------ | :------ | :------ | :------ | :--------------- | :------------- | | Operating cash flow | 258 | 177 | $613 | $639 | 1,033 | 1,059 | | Capital expenditure, net | (106) | (145) | (313) | (431) | (445) | (563) | | Free operating cash flow | $153 | $32 | $300 | $208 | $588 | $497 | | Cash conversion | 87% | 23% | 59% | 52% | 78% | 77% | Items Affecting Comparability (ROCE, ROE) Autoliv provides adjusted non-U.S. GAAP measures for Return on Capital Employed (ROCE) and Return on Total Equity (ROE) to improve comparability between periods by excluding certain non-recurring items like capacity alignments and antitrust matters. These adjusted metrics help investors and analysts evaluate long-term performance and management's value creation - Adjusted non-U.S. GAAP measures for ROCE and ROE are provided to improve comparability between periods by excluding specific non-recurring items[100][101] - ROCE and adjusted ROCE are indicators of long-term performance and profitability of capital employed, while ROE indicates management's value creation for shareholders[102][103] | (Dollars in millions) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Operating income (GAAP) | $267 | $226 | $769 | $626 | | Adjusted Operating income (Non-GAAP) | $271 | $237 | $777 | $657 | | Operating margin (GAAP) | 9.9% | 8.9% | 9.6% | 8.1% | | Adjusted Operating margin (Non-GAAP) | 10.0% | 9.3% | 9.7% | 8.5% | | Return on capital employed (GAAP) | 25.1% | 22.9% | 24.9% | 21.2% | | Adjusted Return on capital employed (Non-GAAP) | 25.5% | 23.9% | 25.2% | 22.1% | | Return on total equity (GAAP) | 27.9% | 24.1% | 28.1% | 22.4% | | Adjusted Return on total equity (Non-GAAP) | 28.3% | 25.3% | 28.4% | 23.7% | Consolidated Financial Statements This section presents Autoliv's official consolidated statements of income, balance sheets, and cash flow, detailing financial position and performance Consolidated Statements of Income The Consolidated Statements of Income for Q3 and the first nine months of 2025 show significant year-over-year growth in net sales, gross profit, operating income, and net income, reflecting strong operational performance | (Dollars in millions, except per share data, unaudited) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | Latest 12 months | Full Year 2024 | | :---------------------------------------------------- | :------ | :------ | :------ | :------ | :--------------- | :------------- | | Total net sales | 2,706 | 2,555 | 7,998 | 7,774 | 10,614 | 10,390 | | Gross profit | 522 | 459 | 1,502 | 1,377 | 2,052 | 1,927 | | Operating income | 267 | 226 | 769 | 626 | 1,122 | 979 | | Income before income taxes | 240 | 197 | 693 | 554 | 1,015 | 875 | | Net income | 175 | 139 | 510 | 404 | 754 | 648 | | Earnings per share - diluted | $2.28 | $1.74 | $6.59 | $4.98 | $9.70 | $8.04 | Consolidated Balance Sheets The Consolidated Balance Sheets as of September 30, 2025, show an increase in total assets and total equity compared to the prior year, indicating a strengthening financial position. Current assets and liabilities also saw changes, with cash and cash equivalents decreasing | (Dollars in millions, unaudited) | Sep 30 2025 | Jun 30 2025 | Mar 31 2025 | Dec 31 2024 | Sep 30 2024 | | :------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Cash & cash equivalents | $225 | $237 | $322 | $330 | $415 | | Total current assets | 3,946 | 3,929 | 3,699 | 3,483 | 3,865 | | Total assets | 8,463 | 8,476 | 8,114 | 7,804 | 8,306 | | Total current liabilities | 4,141 | 4,235 | 3,800 | 3,633 | 4,034 | | Total equity | 2,559 | 2,480 | 2,361 | 2,285 | 2,298 | Consolidated Statements of Cash Flow The Consolidated Statements of Cash Flow highlight strong operating cash flow generation in Q3 2025, with a significant increase year-over-year. For the first nine months, operating cash flow saw a slight decrease, but investing activities showed reduced cash usage, contributing to overall cash management | (Dollars in millions, unaudited) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | Latest 12 months | Full Year 2024 | | :------------------------------- | :------ | :------ | :------ | :------ | :--------------- | :------------- | | Net cash provided by operating activities | 258 | 177 | 613 | 639 | 1,033 | 1,059 | | Net cash used in investing activities | (106) | (145) | (313) | (431) | (445) | (563) | | Net cash (used in) provided by financing activities | (146) | 11 | (316) | (259) | (738) | (680) | | (Decrease) increase in cash and cash equivalents | (12) | 6 | (105) | (84) | (190) | (168) | | Cash and cash equivalents at period-end | $225 | $415 | $225 | $415 | $225 | $330 | Other Information This section covers recent strategic initiatives, future reporting, essential definitions, SEC filings, and the company's safe harbor statement Recent Strategic Developments Autoliv announced several strategic initiatives in October 2025, including a partnership with CATARC to advance automotive safety standards in China, a joint venture with HSAE for advanced safety electronics development and manufacturing, and the groundbreaking of a new R&D center in Wuhan, China. The company also continued its share repurchase program in Q3 2025 - On October 14, 2025, Autoliv signed a strategic agreement with CATARC to jointly advance automotive safety standards and innovation in China, providing technical support for Chinese OEMs' R&D and global expansion[84] - On October 9, 2025, Autoliv announced intent to form a new joint venture with HSAE to develop and manufacture advanced safety electronics for the Chinese automotive market, focusing on products like Hands-On Detection (HOD) and Pre-Pretensioner Mechatronic Integration (PPMI)[84] - On July 27, 2025, Autoliv China held the groundbreaking ceremony for its new R&D center in Wuhan, China, scheduled to begin operations in Q3 2026, to support the global growth of Chinese OEMs[84] - In Q3 2025, Autoliv repurchased and retired 0.84 million shares of common stock for $100 million under the 2029 stock repurchase program[84] Next Report & Inquiries Autoliv plans to release its Q4 2025 earnings report on January 30, 2026. Contact information for investor relations and media inquiries is provided - Autoliv intends to publish the quarterly earnings report for the fourth quarter of 2025 on Friday, January 30, 2026[79] - Inquiries can be directed to Anders Trapp (VP Investor Relations), Henrik Kaar (Director Investor Relations), or Gabriella Etemad (SVP Communications)[80] Definitions and SEC Filings Definitions of terms used in the report are available on Autoliv's website or in its Annual Report. The company's SEC filings, including 10-K, 10-Q, and 8-K reports, are accessible free of charge from Autoliv and on the SEC's website - Definitions of terms used in this report are available on www.autoliv.com or in the Annual Report[82] - Autoliv's SEC filings (10-K, 10-Q, 8-K, etc.) can be obtained free of charge from Autoliv or at www.sec.gov and www.autoliv.com[82](index=82&type=chunk) Safe Harbor Statement This report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual future results to differ materially from expectations. Autoliv claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and assumes no obligation to update these statements, except as required by law - The report contains forward-looking statements based on current expectations, assumptions, and third-party data, which are subject to known and unknown risks and uncertainties[85] - Actual future results, performance, or achievements may differ materially due to various factors, including general economic conditions, changes in LVP, supply chain disruptions, geopolitical instability, and regulatory changes[85] - Autoliv claims the protection of the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 and does not assume any obligation to update or revise these statements, except as legally required[85] Historical Financial Data This section provides a five-year historical overview of Autoliv's key financial metrics from 2020 to 2024, offering performance context Full Year Financial Summary (2020-2024) This section provides a five-year historical overview of Autoliv's key financial metrics from 2020 to 2024, covering sales, income, balance sheet items, and cash flow. It highlights trends in net sales, operating income, net income, and various ratios, offering context for the company's performance | (Dollars in millions, except per share data, unaudited) | 2024 | 2023 | 2022 | 2021 | 2020 | | :---------------------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net sales | $10,390 | $10,475 | $8,842 | $8,230 | $7,447 | | Operating income | 979 | 690 | 659 | 675 | 382 | | Net income attributable to controlling interest | 646 | 488 | 423 | 435 | 187 | | Earnings per share – diluted | 8.04 | 5.72 | 4.85 | 4.96 | 2.14 | | Gross margin | 18.5% | 17.4% | 15.8% | 18.4% | 16.7% | | Operating margin | 9.4% | 6.6% | 7.5% | 8.2% | 5.1% | | Adjusted operating margin | 9.7% | 8.8% | 6.8% | 8.3% | 6.5% | | Trade working capital | 1,115 | 1,232 | 1,183 | 1,332 | 1,366 | | Total equity | 2,285 | 2,570 | 2,626 | 2,648 | 2,423 | | Net debt | 1,554 | 1,367 | 1,184 | 1,052 | 1,214 | | Operating cash flow | 1,059 | 982 | 713 | 754 | 849 | | Free operating cash flow | 497 | 414 | 228 | 300 | 509 | | Cash conversion | 77% | 85% | 54% | 69% | 270% |