Autoliv, Inc. · NYSE:ALV
Autoliv — Q4 2005 Earnings Presentation
29 slides from Autoliv's earnings presentation, 2006
Slide 1: Autoliv Teleconference Concerning the 4th Quarter Financial Earnings 2005
Autoliv Teleconference Concerning the 4th Quarter Financial Earnings 2005
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements that are not statements of historical facts, but instead are forward-looking statements. All forward-looking statements involve risks and uncertainties. Actual results could differ materially from those contained in forward-looking statemen
Slide 3: Sales by Customer 2005
Sales by Customer 2005 Ford split-up Hyundai Other PAG Ford 6% N.A BMW 4% 6% Ford 4% 7% 21% 5% Honda 2% 1% 6% Ford Mazda Ford E.U Toyota RoW 7% Renault 9% Daimler/Chrysler 7% Nissan 5% Peugeot/Citroen 9% GM GM split-up 13% GM other 2% Volkswagen 9% GM N.A 6% GM E.U 5% AUTOLIV-AHO/IR/Power/Status Rep
Slide 4: Market Shares
Market Shares 2001 2005 % 100 80 60 40 20 0 Airbag Seatbelts Airbag Seatbelts Airbag Seatbelts modules modules modules North America Europe Japan AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 4
Slide 5: Sales Trend
Sales Trend US$ million 1600 Moving 12 month average 1400 1200 1000 800 600 400 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2000 2001 2002 2003 2004 2005 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 5
Slide 6: Organic Growth vs Vehicle Production
Organic Growth vs Vehicle Production % 20 15 10 5 0 -5 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2000 2001 2002 2003 2004 2005 Change in Autoliv’s organic sales vs same quarter previous year Change in Light Vehicle Production in the Triad vs same quarter previous ye
Slide 7: Light Vehicle Production
Light Vehicle Production Actual units* Q4 ´05 Q4 ´04 Change N. America 3,934 3,801 3.5% - Big 3 2,707 2,735 -1.0% - New Domestic 1,228 1,065 15.3% Europe 5,025 5,070 -0.9% - W. Europe 3,904 4,098 -4.7% - E. Europe 1,121 972 15.3% Japan 2,543 2,382 6.8% Total in the Triad 11,502 11,253 2.2% *In thous
Slide 8: Autoliv's Production FY 2005 vs FY 2004
Autoliv’s Production FY 2005 vs FY 2004 Units in thousands Change Seat belts 94,502 4% Pretensioners 44,553 0% Frontal airbag 26,770 -4% Side airbag: Chest 20,375 10% Head 15,424 20% Steering wheels 8,958 11% L.V. production in the Triad 45,928 0.6% Airbags 66% (66%) Seat Belts 34% (34%) (Incl. Stee
Slide 9: Improving Gross Margin Despite Tough Market
Improving Gross Margin % Despite Tough Market 25 20 20.5 19.2** 19.7 17.6 18.2 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001* 2002 2003 2004 2005 * Excluding Unusual Items in Q3, 2001. ** Including one-time charges in Q4, 2003 which reduced gross margin by 0.5 pp. AUTOLI
Slide 10: Long-term Improvement in Operating Margin
Long-term Improvement in Operating Margin % 12 10 9.3 9.2** 8.6 8 7.6 7.8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001* 2002 2003 2004 2005 * Excluding Unusual Items in Q3, 2001 ** Including special items in Q4, 2003 which boosted the margin by 1.2 pp AUTOLIV-AHO/IR/Power
Slide 11: Income Statement
Income Statement % of sales (US$ million) Q4 ‘05 Q4 ‘04 % change Q4 ‘05 Q4 ‘04 Airbags $964.3 $1,103.9 (13) 65.8 65.1 Seat belts 500.7 590.9 (15) 34.2 34.9 Total Sales 1,465.0 1,694.8 (14) 100.0 100.0 COGS (1,164.8) (1,360.1) (14) (79.5) (80.3) Gross profit 300.2 334.7 (10) 20.5 19.7 SG&A (81.9) (89
Slide 12: Return on Equity
Return on Equity % 18 16 15.8** 14.7 13.6*** 14 12 9.4 11.8 10 8.6 8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001* 2002 2003 2004 2005 *) Excl. Unusual Items in Q3 and adjusted for new accounting principle **) Including special items in Q4 which boosted the return by 2.9
Slide 13: Continued Positive ROCE-Trend
Continued Positive ROCE*-Trend % 20 17.5*** 18.5 18 17.1 16 14 12.3 12 10.3 10 8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001** 2002 2003 2004 2005 *) Return on capital employed **) Excl. Unusual Items in Q3 and adjusted for new accounting principle ***) Including special
Slide 14: Key Figures
Key Figures Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Earnings/share (US$) $.81 $.66 $.94 $.84 $1.01 Return on - equity (%) 11.8 9.6 13.4 11.9 14.7 - capital employed (%) 17.1 13.0 17.9 16.1 18.5 Working capital (US$ million) 518 587 576 537 481 - in % of LTM sales 8.3 9.1 9.0 8.5 7.8 Capital employed
Slide 15: Strong Long-Term Cash Flow
Strong Long-Term Cash Flow US$ million 2001 2002 20031) 2004 2005 Q4’ 05 Net income 53 176 268 326 293 70 Depreciation & amortization 280 249 279 298 309 74 Other non-cash items 712) 38 12 (12) 63) (29)3) Change in WC (138) 46 (30) 68 (129) 40 Cash from operations 266 509 529 680 4793) 1553) Capex,
Slide 16: Record Shareholder Returns
Record Shareholder Returns Stock buy-back Dividends paid U.S $ Cash flow after Capex million 500 450 400 350 300 250 200 150 100 50 0 2001 2002 2003 2004 2005 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 16
Slide 17: Stock Buy-Backs (MUSD)
Stock Buy-Backs (MUSD) 377.8 Total: 20.0 million 143.9 shares Average price: $34.85 43.0 30.4 103.0 2000 2001 2002 2003 2004 2005 Share price US$ 22.64 19.52 20.92 41.88 44.79 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 17
Slide 18: Accumulated Raw Materials
Accumulated Raw Materials Price Increase (gross) per Quarter Confirmed changes Carry-over from 2004 US$ million 30 30 3 28 27 26 20 4 15 10 12 5 7 2 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 Raw material will cost Autoliv about $90 million more in 2005 than in 2004 before compensation from customers. AUTO
Slide 19: Cost Breakdown
Cost Breakdown 100% 7.5 7.3 8.1 8.4 8.3 14.7 15.7 15.1 16.4 16.3 80% 16.8 16.2 16.4 15.5 15.8 60% 10.8 10.4 10.7 10.5 10.2 40% 50.4 50.31) 49.7 49.2 49.4 20% 0% 20011) 2002 2003 2004 2005 Direct Material Direct Labor Indirect Labor Other Costs EBIT 1) Adjusted for unusual items AUTOLIV-AHO/IR/Power/
Slide 20: Estimated Reductions in Direct Material Costs
Estimated Reductions in Direct Material Costs Direct Material Savings Index Year-on-Year, 2000=100 100 95 91 87 Trend resumed 85 84 2000 2001 2002 2003 2004 2005 2006 F AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 20
Slide 21: Move to Low Cost Countries
Move to Low Cost Countries Net Sales USD Headcount 40000 7000 35000 6000 30000 40% LLCC 25000 5000 20000 4000 15000 HLCC 60% 10000 3000 5000 0 2000 1999 2000 2001 2002 2003 2004 2005 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 21
Slide 22: Major Headcount Changes 2005 vs 2004
Major Headcount Changes 2005 vs 2004 Headcount 500 400 300 -2,400 200 100 0 ~ ~ Net -1,000 Canada Turkey China Australia Romania U.K. France Sweden Mexico Poland Philippines Korea USA -100 -200 -300 -400 -500 +1,400 -600 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 22
Slide 23: Jobs Creation Act
Jobs Creation Act • Tax deduction of 85% of earnings repatriated to the U.S. before 2006 • Autoliv distributed $855 million of which $810 million qualifies under the Act • “Will” opinion from independent tax advisors • Incremental tax expense of $17 million in 2005 • Interest expense savings of $7 m
Slide 24: Effect of Jobs Act Transactions Q4 05
Effect of Jobs Act Transactions Q4 05 Excluding Effect Reported U.S$ million EBIT 137 -1 136 Interest expense, net -13 +6 -7 Earnings before taxes 126 +5 131 Net income 81 -11 70 Earnings per share 0.94 -0.13 0.81 Return on equity 13.6% -1.8% 11.8% AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 24
Slide 25: US Light Vehicle Inventory
US Light Vehicle Inventory Domestically Manufactured and Imported Vehicles Days 2004 2005 10-year average 100 90 December 2005, 65 days 80 70 60 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 25
Slide 26: Light Vehicle Production: North America
Light Vehicle Production North America Millions -0.9% +0.4% -1.7% 5 +1.9% 4 Total 3 2001 15.5M 2002 16.4M 2 2003 15.9M 2004 15.8M 1 2005 15.8M 2006 15.8M 0 Q1 Q2 Q3 Q4 Source: CSM, forecast Jan. 2006 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 26
Slide 27: Light Vehicle Production: Europe
Light Vehicle Production Europe Millions +2.2% -1.5% -0.5% +3.4% 6 5 4 Total 2001 16.8M 3 2002 16.4M 2 2003 16.3M 2004 20.3M 1 2005 20.1M 0 2006 20.3M Q1 Q2 Q3 Q4 Source: JD Power LMC, forecast Jan. 2006 Note: The years 2000-2003 only include Western Europe AUTOLIV-AHO/IR/Power/Status Report/2005/4Q
Slide 28: Light Vehicle Production: Japan
Light Vehicle Production Japan Millions +3.7% 3 +1.5% +3.8% +3.7% 2.5 Total 2 2001 9.1M 1.5 2002 9.5M 2003 9.5M 1 2004 9.6M 0.5 2005 10.0M 2006 10.3M 0 Q1 Q2 Q3 Q4 Source: CSM, forecast Jan. 2006 AUTOLIV-AHO/IR/Power/Status Report/2005/4Q05 - 28
Slide 29: Outlook for Q1, 2006
Outlook for Q1, 2006* Change Quarter over Quarter • Consolidated Sales: -8% due to currency changes of -5% and negative European customer mix • Operating margin to exceed same quarter 2005 • Operating income to exceed same quarter 2005 * Based on the assumptions provided in the quarterly report AUTO