This article first appeared on GuruFocus.
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Revenue: Approximately $2.7 billion, a 6% increase year-over-year.
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Gross Margin: Increased by 130 basis points to 19.3%.
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Operating Income: Adjusted operating income increased by 14% to $271 million.
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Operating Margin: Adjusted operating margin improved by 70 basis points to 10%.
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Earnings Per Share (EPS): Record EPS for the third quarter, increased by 26% or $0.48.
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Cash Flow: Operating cash flow was $258 million, a 46% increase from the previous year.
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Free Operating Cash Flow: $153 million, up from $32 million the prior year.
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Dividend: Increased quarterly dividend to $0.85 per share.
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Share Repurchases: $100 million spent on share repurchases, retiring 0.8 million shares.
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Debt Leverage Ratio: Remained low at 1.3 times.
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Sales Growth: Organic sales grew by 4%, with China accounting for 90% of group sales.
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Regional Sales Distribution: Americas 33%, Europe 28%, Asia including China 20%.
Release Date: October 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Autoliv Inc (NYSE:ALV) reported record-breaking third quarter sales and earnings, highlighting strong market position and customer relationships.
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Significant sales growth was driven by higher than expected light vehicle production, particularly in China and North America.
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The company successfully recovered approximately 75% of the tariff costs incurred during the third quarter.
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Autoliv Inc (NYSE:ALV) achieved record earnings per share for the third quarter, more than tripling over the past five years.
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The company announced strategic investments in China, including a second R&D center and a joint venture with HSAE to develop advanced safety electronics.
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The company faced a negative impact of approximately 20 basis points on operating margin due to unrecovered tariffs and the dilutive effects of the recovered portion.
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Despite strong performance, Autoliv Inc (NYSE:ALV) experienced an unfavorable regional and customer mix, impacting sales growth.
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The company noted delays in new product launches in China, affecting expected sales growth.
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There is an anticipated decline in light vehicle production in the fourth quarter, posing challenges for the automotive industry.
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Autoliv Inc (NYSE:ALV) faces headwinds from higher depreciation costs and temporary declines in engineering income due to timing of customer development projects.
Q: You raised your light vehicle production forecast from down 1.5% to up 1.5%, but organic sales didn’t change. Why aren’t you seeing any benefit from the stronger production environment on your organic sales? A: Fredrik Westin, CFO: The adjustments include past quarters where volumes were already recorded, leading to different underperformance in the first half. Additionally, there’s a larger negative market mix close to 2 percentage points, and some launches in China have been delayed, not aligning with our expectations from a quarter ago.
Q: The margin in the quarter was very strong. Is the $15 million of supplier compensation onetime in nature? A: Mikael Bratt, CEO: Yes, the $15 million is a onetime compensation from a supplier for historical costs. The strong margin was also due to slightly higher sales than expected and continued strong delivery of internal improvement work.
Q: On your implied guidance for Q4, should we extrapolate the Q4 trends looking into 2026? A: Mikael Bratt, CEO: We are confident in reaching our 12% target eventually. The Q3, Q4 movement is more about normalization. We expect slightly lower engineering income in Q4, which is temporary and should recover in 2026.
Q: Can you dimensionalize the three headwinds for Q4: less compensation on inflation, higher depreciation, and engineering income? A: Fredrik Westin, CFO: The largest headwind is the engineering income, followed by the absence of out-of-period compensation from last year, and then the increase in depreciation expense.
Q: Regarding the JV with Hancheng, were you purchasing these items from them before? A: Mikael Bratt, CEO: Hancheng has been an important supplier, and the JV allows us to develop and manufacture components together, enhancing our product offering and development capabilities.
Q: Do you expect the Chinese subsidies to be extended to 2026? A: Mikael Bratt, CEO: We are not speculating on that, but we remain positive about China, growing our share with Chinese OEMs, and investing in a second R&D center in Wuhan.
Q: How do you see the European auto market playing out for 2026? A: Mikael Bratt, CEO: We are cautious about the European market for the remainder of the year, mainly due to demand concerns rather than OEM reoffering or other factors.
Q: Can you explain why, despite outperforming with domestic OEMs in China, the overall China performance was negative? A: Mikael Bratt, CEO: The global OEMs still represent the majority of our sales, and some significant customers had a negative mix impact this quarter. However, the strong growth with Chinese OEMs positions us well for future development in China.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.