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Autoliv Q2 Earnings Beat Estimates on Asia Growth and Cost Savings
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Key Takeaways
Autoliv beat Q2 earnings and revenue estimates, supported by Asia growth and material cost savings.
ALV reaffirmed 2026 guidance despite lower global vehicle production and raw material cost pressure.
Autoliv posted record Q2 operating cash flow and expects Trkiye restructuring savings from 2027 onward.
Autoliv, Inc. (ALV - Free Report) reported second-quarter 2026 adjusted earnings of $2.43 per share, which increased 10% year over year and came above the Zacks Consensus Estimate of $2.34 by 3.85%. Direct material cost savings and organic sales growth supported the result.
Net sales rose 3.3% to $2.80 billion, topping the consensus estimate of $2.76 billion by 1.45%. Organic sales increased 1% even as global light vehicle production declined 0.3%, reflecting strong performance in Asia.
Asia, excluding China, led regional growth with an 11.3% organic sales increase. China delivered 3.4% growth, while EMEA declined 2.2% and the Americas fell 3.3%.
The company outperformed light vehicle production by 7.3 percentage points in China and 5.9 percentage points in Asia, excluding China. Sales to Chinese automakers rose around 44%, while India posted 36% organic growth as safety content per vehicle continued to increase.
Chinese automakers accounted for 55% of Autoliv’s sales in China, up from 40% a year earlier. The company also signed strategic cooperation agreements with Great Wall Motor and XPENG.
Autoliv Product Mix Favors Airbag Growth
Airbags, Steering Wheels and Other sales increased 5.2% to $1.91 billion, including 3% organic growth. Side airbags and center airbags were the largest contributors, followed by driver airbags, inflatable curtains and knee airbags.
Seatbelt Products and Other sales slipped 0.5% to $897 million and declined 3% organically. Sales in this category decreased in the Americas, China and EMEA but increased in Asia, excluding China.
Product volumes showed similar divergence. Side airbag deliveries increased 11% year over year, frontal airbags rose 1%, and steering wheels grew 2%. Seatbelt volumes declined 2%.
ALV Adjusted Margin Rises as GAAP Profit Falls
Gross profit increased 1.5% to $509 million, while gross margin narrowed 0.3 percentage points to 18.2%. Positive foreign exchange effects and lower material costs were partly offset by supplier compensation reversal costs and an asset impairment tied to the Türkiye restructuring.
Adjusted operating income rose 7.3% to $270 million, and adjusted operating margin improved to 9.6% from 9.3%. Reported operating income fell 22% to $192 million, with operating margin declining to 6.8% from 9.1% because of capacity-alignment charges.
Autoliv Expenses Reflect Restructuring Effects
Selling, general and administrative expenses declined 4.9% to $138 million, helped by a revised credit-loss reserve and lower personnel costs. Research, development and engineering expenses, net, increased 14% to $122 million due to lower engineering income, wage inflation and unfavorable currency translation.
Other expenses, net, widened to $56 million from $1 million, mainly reflecting costs related to the planned closure of manufacturing operations in Türkiye. Net income decreased 40% to $101 million, while the tax rate rose to 34.5% from 24.1%.
Autoliv expects the Türkiye restructuring to generate around $40 million in annual pretax savings, beginning in 2027 and reaching the full run-rate benefit in 2028. The complete closure is anticipated in the first half of 2028.
ALV Cash Flow Rebounds on Working Capital
Operating cash flow climbed 57% to a second-quarter record of $434 million. The improvement reflected a $240 million positive working-capital contribution as temporary first-quarter effects normalized.
Capital expenditure, net, declined 17% to $95 million, lifting free operating cash flow to $340 million from $163 million. As of June 30, 2026, ALV’s cash & cash equivalents totaled $377 million and $1.70 billion in net debt.
The company repurchased $200 million of shares and paid $64 million in dividends. The quarterly dividend was 87 cents per share, up from 70 cents a year earlier.
Autoliv Reaffirms 2026 Outlook
Autoliv maintained its 2026 guidance for roughly flat organic sales, an adjusted operating margin of 10.5-11% and operating cash flow of around $1.2 billion. Capital expenditure, net, is expected to remain below 5% of sales.
The outlook assumes global light vehicle production will decline around 2.5%, with foreign exchange adding about 2.5% to net sales. The company expects third-quarter adjusted operating margin near the first-half level, followed by significant improvement in the fourth quarter as customer compensation, engineering income and mitigation benefits increase.
Autoliv expects roughly $110 million of gross raw material cost pressure for the year but aims to offset most of the impact. The company also expects full-year tariff-related margin dilution to be similar to the roughly 20 basis points recorded in 2025.
The Zacks Consensus Estimate for YMHAY’s 2026 sales and earnings implies year-over-year growth of 0.8% and 586.4%, respectively. The EPS estimate for 2026 and 2027 has fallen 2 cents each over the past 30 days.
The Zacks Consensus Estimate for GNTX’s 2026 sales and earnings implies year-over-year growth of 5.7% and 8.8%, respectively. The EPS estimate for 2026 and 2027 has improved by a penny each over the past 30 days.
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Autoliv Q2 Earnings Beat Estimates on Asia Growth and Cost Savings
Key Takeaways
Autoliv, Inc. (ALV - Free Report) reported second-quarter 2026 adjusted earnings of $2.43 per share, which increased 10% year over year and came above the Zacks Consensus Estimate of $2.34 by 3.85%. Direct material cost savings and organic sales growth supported the result.
Net sales rose 3.3% to $2.80 billion, topping the consensus estimate of $2.76 billion by 1.45%. Organic sales increased 1% even as global light vehicle production declined 0.3%, reflecting strong performance in Asia.
Autoliv, Inc. Price, Consensus and EPS Surprise
Autoliv, Inc. price-consensus-eps-surprise-chart | Autoliv, Inc. Quote
ALV Extends Asia Outperformance
Asia, excluding China, led regional growth with an 11.3% organic sales increase. China delivered 3.4% growth, while EMEA declined 2.2% and the Americas fell 3.3%.
The company outperformed light vehicle production by 7.3 percentage points in China and 5.9 percentage points in Asia, excluding China. Sales to Chinese automakers rose around 44%, while India posted 36% organic growth as safety content per vehicle continued to increase.
Chinese automakers accounted for 55% of Autoliv’s sales in China, up from 40% a year earlier. The company also signed strategic cooperation agreements with Great Wall Motor and XPENG.
Autoliv Product Mix Favors Airbag Growth
Airbags, Steering Wheels and Other sales increased 5.2% to $1.91 billion, including 3% organic growth. Side airbags and center airbags were the largest contributors, followed by driver airbags, inflatable curtains and knee airbags.
Seatbelt Products and Other sales slipped 0.5% to $897 million and declined 3% organically. Sales in this category decreased in the Americas, China and EMEA but increased in Asia, excluding China.
Product volumes showed similar divergence. Side airbag deliveries increased 11% year over year, frontal airbags rose 1%, and steering wheels grew 2%. Seatbelt volumes declined 2%.
ALV Adjusted Margin Rises as GAAP Profit Falls
Gross profit increased 1.5% to $509 million, while gross margin narrowed 0.3 percentage points to 18.2%. Positive foreign exchange effects and lower material costs were partly offset by supplier compensation reversal costs and an asset impairment tied to the Türkiye restructuring.
Adjusted operating income rose 7.3% to $270 million, and adjusted operating margin improved to 9.6% from 9.3%. Reported operating income fell 22% to $192 million, with operating margin declining to 6.8% from 9.1% because of capacity-alignment charges.
Autoliv Expenses Reflect Restructuring Effects
Selling, general and administrative expenses declined 4.9% to $138 million, helped by a revised credit-loss reserve and lower personnel costs. Research, development and engineering expenses, net, increased 14% to $122 million due to lower engineering income, wage inflation and unfavorable currency translation.
Other expenses, net, widened to $56 million from $1 million, mainly reflecting costs related to the planned closure of manufacturing operations in Türkiye. Net income decreased 40% to $101 million, while the tax rate rose to 34.5% from 24.1%.
Autoliv expects the Türkiye restructuring to generate around $40 million in annual pretax savings, beginning in 2027 and reaching the full run-rate benefit in 2028. The complete closure is anticipated in the first half of 2028.
ALV Cash Flow Rebounds on Working Capital
Operating cash flow climbed 57% to a second-quarter record of $434 million. The improvement reflected a $240 million positive working-capital contribution as temporary first-quarter effects normalized.
Capital expenditure, net, declined 17% to $95 million, lifting free operating cash flow to $340 million from $163 million. As of June 30, 2026, ALV’s cash & cash equivalents totaled $377 million and $1.70 billion in net debt.
The company repurchased $200 million of shares and paid $64 million in dividends. The quarterly dividend was 87 cents per share, up from 70 cents a year earlier.
Autoliv Reaffirms 2026 Outlook
Autoliv maintained its 2026 guidance for roughly flat organic sales, an adjusted operating margin of 10.5-11% and operating cash flow of around $1.2 billion. Capital expenditure, net, is expected to remain below 5% of sales.
The outlook assumes global light vehicle production will decline around 2.5%, with foreign exchange adding about 2.5% to net sales. The company expects third-quarter adjusted operating margin near the first-half level, followed by significant improvement in the fourth quarter as customer compensation, engineering income and mitigation benefits increase.
Autoliv expects roughly $110 million of gross raw material cost pressure for the year but aims to offset most of the impact. The company also expects full-year tariff-related margin dilution to be similar to the roughly 20 basis points recorded in 2025.
ALV’s Zacks Rank & Key Picks
Autoliv currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Yamaha Motor Co., Ltd. (YMHAY - Free Report) and Gentex Corporation (GNTX - Free Report) . While YMHAY sports a Zacks Rank #1 (Strong Buy) at present, GNTX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for YMHAY’s 2026 sales and earnings implies year-over-year growth of 0.8% and 586.4%, respectively. The EPS estimate for 2026 and 2027 has fallen 2 cents each over the past 30 days.
The Zacks Consensus Estimate for GNTX’s 2026 sales and earnings implies year-over-year growth of 5.7% and 8.8%, respectively. The EPS estimate for 2026 and 2027 has improved by a penny each over the past 30 days.