Autoliv, Inc.

What they do

Autoliv designs, manufactures, and sells passive safety systems to the world's largest car manufacturers. Its products include frontal and side-impact airbag modules, seatbelts, steering wheels, inflators, and pedestrian protection systems. The company operates 62 production facilities in 23 countries and has one reportable segment. In 2025, approximately 68% of sales came from airbag and steering wheel products and 32% from seatbelts.

Revenue drivers

• Airbag and steering wheel products — Largest product category, accounting for approximately 68% of 2025 sales ($10.8 billion total). Includes modules, cushions, inflators, and steering wheels.
• Seatbelt products — Accounts for approximately 32% of 2025 sales. Includes seatbelts with advanced technologies like pretensioners and load limiters.
• Geographic regions — Business conducted in The Americas, Europe, China, and Asia (excluding China). China is a key growth area, with sales to Chinese OEMs growing over 40% in Q2 2026.
• Mobility Safety Solutions — Expanded product offerings for commercial vehicles, battery cut-off switches, and safety for motorcycle and bike riders. Smaller portion of revenue.

Recent performance

In Q2 2026, net sales were $2,803 million, up 3.3% year-over-year, with organic sales growth of 1.0% (outperforming global LVP by 1.3pp). Operating income fell 22% to $192 million due to restructuring costs in Turkey, while adjusted operating income rose 7.3% to $270 million. Adjusted operating margin was 9.6%, and diluted EPS decreased 38% to $1.35, though adjusted EPS rose 10% to $2.43. Operating cash flow improved 57% to $434 million, the best Q2 on record.

Strategy

Autoliv is focused on operational excellence, cost reduction, and productivity improvements to offset inflationary and tariff pressures. The company is optimizing its manufacturing footprint, including discontinuing operations in Turkey. It is investing in growth opportunities with Chinese OEMs, having signed strategic cooperation agreements with Great Wall Motor and XPENG. Management aims to pass on tariff and inflation costs to customers through compensation agreements. Shareholder returns remain a priority, with $200 million in share repurchases in Q2 2026 and a dividend of $0.87 per share.

Risks

• Tariffs and trade restrictions — New tariffs imposed in 2025 caused uncertainty; while the company recovered over 80% of tariff costs, future recovery levels are uncertain and could materially affect operations.
• Geopolitical uncertainties — Geopolitical developments and an evolving trade environment create a challenging and unpredictable operating landscape, potentially disrupting customer relationships and cost recovery.
• Labor cost inflation — Elevated labor costs, particularly in Europe and the Americas, continue to pressure profitability, though partially offset by customer compensation.
• Customer call-off volatility — Low demand visibility and short-notice changes to customer call-offs negatively impact production efficiency and profitability, with volatility increasing in Q4 2025.

Outlook

For full year 2026, management reiterated guidance of approximately unchanged organic sales growth, an adjusted operating margin of around 10.5-11%, and operating cash flow of approximately $1.2 billion. This assumes global LVP will decline by around 2.5%. Customer compensations are expected to have limited impact in Q3 but significantly greater contribution in Q4, leading to a stronger second half. The company plans share repurchases of $300-500 million in 2026.