Autoliv (ALIV) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 sales of $2,803 million, with 1.0% organic growth, driven by strong performance in Asia, especially China and India, and outperformance versus global light vehicle production declines.

• Adjusted operating margin improved to 9.6%, supported by cost reductions, while reported operating margin was 6.8% due to $142 million in restructuring charges from the Türkiye plant closure.

• Adjusted EPS (diluted) increased to $2.43, while reported EPS dropped 38% to $1.35 due to restructuring; record Q2 operating cash flow reached $434 million, with leverage ratio improving to 1.2x.

• Strategic cooperation agreements signed with leading Chinese OEMs, including Great Wall Motor and XPENG, strengthening long-term growth prospects.

• Announced closure of Türkiye manufacturing operations, impacting 2,200 employees, with production shifting to other EMEA facilities and expected annual pre-tax savings of $40 million by 2028.

Financial highlights

• Net sales for Q2 2026 were $2,803 million, up 3.3% year-over-year; adjusted operating income rose 7.3% to $270 million; gross profit increased by $8 million to $509 million, though gross margin declined by 0.3pp to 18.2%.

• Adjusted EPS (diluted) rose to $2.43; adjusted ROCE and ROE were 24.9% and 27.6%, respectively.

• Operating cash flow hit $434 million, up 57%; free operating cash flow more than doubled to $340 million, with cash conversion at 338%.

• Share repurchases totaled $200 million (1.65 million shares); dividends paid were $64 million.

• Net debt at June 30, 2026 was $1,695 million, down $57 million year-over-year; leverage ratio at 1.2x.

Outlook and guidance

• Full-year 2026 guidance reiterated: organic sales growth around 0%, adjusted operating margin 10.5–11%, operating cash flow around $1.2 billion, and capex below 5% of sales.

• LVP expected to decline by 2.5% for the year; Q3 margin expected to be similar to H1, with significant improvement in Q4 due to customer compensation, engineering income, and litigation initiatives.

• Share repurchases for 2026 expected to total $300–500 million.

• Tax rate assumption increased to around 30%.