Autoliv(US:ALV)2023-07-20 16:00Financial Performance - Net sales for the three months ended June 30, 2023, increased to $2.635 billion, up 26.6% from $2.081 billion in the same period in 2022[9] - Gross profit for the three months ended June 30, 2023, rose to $447 million, a 37.1% increase from $326 million in the same period in 2022[9] - Net income attributable to controlling interest for the three months ended June 30, 2023, was $53 million, down 32.9% from $79 million in the same period in 2022[9] - Comprehensive income attributable to controlling interest for the three months ended June 30, 2023, was $12 million, compared to a loss of $40 million in the same period in 2022[13] - Net income for the six months ended June 30, 2023, was $127 million, compared to $163 million in the same period in 2022[19] - Net income for the three months ended March 31, 2023, was $74 million, and for the three months ended June 30, 2023, it was $53 million[20] - Net income attributable to controlling interest was $53 million and $127 million for the three and six months ended June 30, 2023, respectively, compared to $79 million and $162 million in 2022[66] - Basic and diluted earnings per share were $0.61 and $1.48 for the three and six months ended June 30, 2023, respectively, compared to $0.91 and $1.86 in 2022[66] Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2023, decreased to $475 million from $594 million as of December 31, 2022[16] - Net cash provided by operating activities for the six months ended June 30, 2023, was $334 million, a significant increase from $19 million in the same period in 2022[19] - Expenditures for property, plant, and equipment were $268 million for the six months ended June 30, 2023, compared to $254 million in the same period in 2022[19] - Proceeds from long-term debt were $556 million for the six months ended June 30, 2023, compared to $269 million in the same period in 2022[19] - Cash dividends declared for the three months ended June 30, 2023, were $56 million[20] - The company issued a five-year €500 million Eurobond in Q1 2023 and repaid the same amount in Q2 2023[34] Balance Sheet Items - Receivables, net as of June 30, 2023, increased to $2.189 billion from $1.907 billion as of December 31, 2022[16] - Total current assets as of June 30, 2023, increased to $3.898 billion from $3.714 billion as of December 31, 2022[16] - Total liabilities as of June 30, 2023, increased to $5.401 billion from $5.092 billion as of December 31, 2022[16] - Total equity as of June 30, 2023, was $2,557 million, compared to $2,558 million as of June 30, 2022[20] - Total inventories, net of reserve, as of June 30, 2023, were $947 million, compared to $969 million as of December 31, 2022[40] - The fair value of long-term debt as of June 30, 2023, was $1,268 million, compared to a carrying value of $1,290 million[35] Segment and Geographic Performance - The company has one reportable segment, which includes Autoliv's airbag and seatbelt products and components[22] - Total net sales for the three and six months ended June 30, 2023 were $2.635 billion and $5.127 billion, respectively, compared to $2.081 billion and $4.206 billion in 2022[69] - Net sales in China for the three and six months ended June 30, 2023 were $497 million and $950 million, respectively, compared to $363 million and $810 million in 2022[69] - Net sales in the Americas for the three and six months ended June 30, 2023 were $916 million and $1.747 billion, respectively, compared to $738 million and $1.431 billion in 2022[69] - Net sales in Europe for the three and six months ended June 30, 2023 were $751 million and $1.476 billion, respectively, compared to $611 million and $1.186 billion in 2022[69] Restructuring and Liabilities - Approximately $105 million out of the $127 million restructuring reserve balance as of June 30, 2023, is attributed to footprint optimization activities in Europe, expected to conclude by 2025[42] - Reserve for product-related liabilities increased to $178 million at the end of June 2023, up from $141 million at the beginning of the period, primarily due to warranty and recall issues[44][45] - Total insurance receivables for product-related liabilities stood at $169 million as of June 30, 2023[44] - The company accrued $14 million in Q4 2021 and an additional $5 million in Q3 2022 for a product liability lawsuit, with a final settlement resulting in an $8 million excess over insurance receivables[57] - The company faces a class action lawsuit related to ARC inflators, but no accrual has been made as the potential loss cannot be determined[58] - Product warranty and recall reserves are based on the company's best estimates, but actual costs could differ materially from recorded estimates[53] - The company maintains insurance programs for potential recall and product liability claims, although coverage may not be sufficient for all possible claims[55] - Vehicle manufacturers are increasingly requiring suppliers to bear warranty and recall costs, which could lead to material future expenses[53] - The Company accrued $27 million for the Honda Buckle Recall, reflecting self-insurance retention costs and deductibles, with potential losses possibly differing materially from the accrued amount[60] - Volvo recalled approximately 762,000 vehicles due to ZF Inflator malfunctions, with potential losses estimated between $0 to $43 million, though net losses are expected to be immaterial after insurance and claims against ZF[61] Shareholder and Stock Information - Weighted average number of shares outstanding, net of treasury shares, for the three months ended June 30, 2023, was 85.6 million, down from 87.2 million in the same period in 2022[10] - Cash dividend per share declared for the three months ended June 30, 2023, was $0.66, up from $0.64 in the same period in 2022[10] - Stock repurchased and retired for the three months ended June 30, 2023, amounted to $41 million[20] - Stock-based compensation expense for RSUs and PSUs was $5 million and $8 million for the three and six months ended June 30, 2023, respectively, compared to $3 million and $5 million for the same periods in 2022[63] - The Company utilized 20,000 and 112,000 shares of common stock from treasury stock for the Plan during the three and six months ended June 30, 2023, respectively, compared to 16,000 and 138,000 shares in 2022[64] Tax and Accounting - The effective tax rate for Q2 2023 was 35.8%, with discrete tax items having a favorable impact of 4.5%[38] - The company adopted ASU 2022-04 as of January 1, 2023, requiring disclosure of supplier finance program obligations, with payment terms ranging between 30 and 165 days, and a weighted average of 130 days[25] - Confirmed obligations outstanding at the end of the period as of June 30, 2023, were $333 million, with $680 million in invoices confirmed and $661 million paid during the period[26] - Gains recognized in other non-operating items for derivative instruments not designated as hedging instruments were $13 million for Q2 2023 and $8 million for the six months ended June 30, 2023[31] - The fair value of derivatives not designated as hedging instruments as of June 30, 2023, was $10 million for assets and $8 million for liabilities, with a nominal volume of $1,710 million[32] Retirement and Benefit Plans - Net periodic benefit cost for U.S. retirement plans was $0 million for the three months ended June 30, 2023, compared to $4 million in the same period of 2022[48] - Net periodic benefit cost for non-U.S. retirement plans was $6 million for the three months ended June 30, 2023, compared to a gain of $1 million in the same period of 2022[48] - The discount rate used to determine U.S. net periodic benefit cost increased from 5.09% to 5.32% in Q2 2023 due to settlement accounting[49]