Autoliv Inc. (NYSE:ALV) reported second-quarter results that fell short of profit expectations even as revenue exceeded Wall Street forecasts, with restructuring-related costs weighing on overall earnings.
The automotive safety supplier posted adjusted earnings of $2.43 per share, below analysts’ consensus estimate of $2.46.
Revenue rose to $2.8 billion, ahead of the expected $2.77 billion and up 3.3% from $2.71 billion in the same quarter last year.
Shares dropped around 5% in pre-market trading following the earnings announcement.
Asia drives growth despite weaker vehicle production
Organic sales increased 1.0% during the quarter, outperforming the 0.3% decline in global light vehicle production.
The company credited its performance to continued strength across Asia, particularly in China and India, where sales growth significantly outpaced vehicle production.
Operating margin declined to 6.8% from 9.1% a year earlier. However, adjusted operating margin improved to 9.6%, up from 9.3%, supported by savings in direct material costs despite pressure from foreign exchange movements and higher raw material prices.
“Through focused execution, we maintained the positive momentum from the first quarter,” said Mikael Bratt, President and CEO. “Globally, our sales grew organically more than 1pp faster than global LVP, outgrowing LVP significantly in Asia.”
Chinese OEM business continues to expand
Autoliv reported that sales to Chinese original equipment manufacturers increased by more than 40% during the quarter.
Chinese automakers now account for 55% of the company’s sales in China, compared with 40% in the same period last year.
The business also continued to deliver strong momentum in India, where sales increased by more than 35%.
Cash flow strengthens as guidance remains unchanged
Operating cash flow climbed to $434 million during the quarter, an increase of 57% from $277 million a year earlier and the strongest second-quarter cash flow performance in the company’s history.
Autoliv also repurchased approximately 1.65 million shares for $200 million during the period.
Looking ahead, the company reaffirmed its fiscal 2026 outlook, continuing to expect around 0% organic sales growth, an adjusted operating margin of approximately 10.5% to 11%, and operating cash flow of about $1.2 billion.
Management expects adjusted operating margin in the third quarter to remain broadly in line with first-half levels before improving significantly during the fourth quarter.
