Autoliv, Inc. · NYSE:ALV
Autoliv — Morgan Stanley Global Automotive Conference 2007
56 slides from Autoliv's conference presentation, Apr 4, 2007
Slide 1: Global Automotive Conference Morgan Stanley
Global Automotive Conference Morgan Stanley Ray Pekar – Director, IR & Business Development April 4-5, 2007 The Worldwide leader in Automotive Safety Systems COMPANY PRIVATE
Slide 2: Agenda
Agenda • Company Overview • Market trends & Growth • Cost Management • Creating Shareholder Value • 2007 Outlook AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 2 COMPANY PRIVATE
Slide 3: Autoliv in Brief
Overview Autoliv in Brief • Sales and technology leader • Sales: US $6.2 billion Japan North • Fortune 500 company America 9% RoW • Sales to all major vehicle 27% 12% manufacturers • 80 subsidiaries and joint ventures in 28 vehicle producing countries • 13 Development Centers in 12 countries and 20
Slide 4: Net Sales Development
Overview Net Sales Development MUS$ 7,000 6,000 5,000 4,000 3,000 ** 2,000 1,000 * 0 94 95 96 97 98 99 00 01 02 03 04 05 06 19 19 19 19 19 19 20 20 20 20 20 20 20 *Autoliv’s estimates. ** DIR estimate AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 4 COMPANY PRIVATE
Slide 5: Market Shares 2006
Overview Market Shares 2006 Other 24% 33% 20% 23% AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 5 COMPANY PRIVATE 1
Slide 6: Sales Mix by Product 2006
Overview Sales Mix by Product 2006 Other 10% Electronics 9% Seatbelts 34% 25% 22% Side airbags Frontal airbags AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 6 COMPANY PRIVATE 2
Slide 7: Innovation and Technology Leader
Overview Innovation and 2006 Safety Vent Bag Technology Leader ECU Integration • 8% of all automotive industry 2005 Night vision system Pedestrian hood safety patents 2004 Steering Wheel Asymmetric airbag 2002 Anti-sliding bag Adaptive load limiter 2000 Telematics 1998 Curtain airbag Anti-whiplash s
Slide 8: Acquisitions
Overview Acquisitions 2004/5/6 - Asia Pacific 100 2003 - NSI 90 80 70 2002 - VRE 60 2000 50 2001 - Mando JV 40 30 2000 - Izumi, NSK, OEA, 20 1995 Norma, Inflator JV 10 0 1 2 3 4 5 6 7 8 9 1998 - Van Oerle,Sagem,Nokia 1997- Merger of equals Morton ASP 1996 - Livbag, NCS 1995 - Iso Delta 1992 - Autofl
Slide 9: Superior Global Presence
Overview Superior Global Presence – local production North Europe Japan Asia South America America SB AB SW EL SB AB SW EL SB AB SW EL SB AB SW EL SB AB SW EL SB=Seatbelts AB=Airbags SW=Steering wheels EL=Electronics AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 9 COMPANY PRIVATE
Slide 10: Sales by Customer 2006
Overview Sales by Customer 2006 Other PAG 7% NA 6% 8% 4% 20% Mazda 2% RoW EU 4% 7% 1% 6% 12% 5% 7% 8% 5% Other 2% 8% 10% NA 6% EU 4% AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 10 COMPANY PRIVATE
Slide 11: Diversified Customer Mix
Overview Diversified Customer Mix % 18 16 14 12 10 8 6 4 2 0 1) rd a lvo i t ta n DC er M W A VW da ul nd sa PS Fo yo G th na BM Vo un Ho s O To Re Ni Share of global vehicle Share of global vehicle Hy Share of Autoliv’s sales: production 2002 production 2006 2002 2006 1) Excluding Volvo Cars with 6
Slide 12: Improving Platform Mix
Overview Improving Platform Mix VW PQ35 Audi A3 + TT, BMW PL1 Golf, Touran, Leon, Skoda GM Delta Top 5 Platforms ~ 15% of ALV sales 5,6,7 Series Astra, Cobalt, G5, HHR, Zafira Renault Megane Peugeot 207 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 12 COMPANY PRIVATE 3
Slide 13: Sales Trend by Region
Overview Sales Trend by Region MUS$ 6,500 6,000 Rest of 5,500 World Japan 5,000 4,500 North 4,000 America 3,500 3,000 2,500 Europe 2,000 1,500 1,000 500 2001 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 13 COMPANY PRIVATE
Slide 14: Sales Trend By Customer
Overview Sales Trend By Customer 29 % 22 % 24 % 27 % 19 % Asian OEMs 61 % 62 % 61 % 58 % 55 % Other 20 % “Big 3” 16 % 15 % 15 % 16 % 2003 2004 2005 2006 2008F AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 14 COMPANY PRIVATE
Slide 15: VW Golf
Market Trends VW Golf Example of increasing supply value EUR/car 350 300 Electronics 250 Head airbag 200 Chest airbag 150 Passenger airbag 100 Driver airbag 50 Seatbelt 0 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 AUTOLIV – Global Auto Conference NY, April 4-
Slide 16: Pricing Trends
Market Trends Pricing Trends Average selling price (index) Index 100 Electronics Side, head 80 60 Driver Side, chest 40 Passenger 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 16 COMPANY PRIVATE
Slide 17: What Consumers Want on Their Next Vehicle
Market Trends What Consumers Want on Their Next Vehicle Definitely (%) Probably (%) Market price 1 (1) Side Airbags 42 47 89% $600 4 (18) Night Vision 18 52 70% $1,500 5 (13) Blind Spot Detection 15 52 67% $500 16 (8) Auto Emergency Phone 12 37 49% $150 19 (19) Lane Departure Warning 6 37 43% $500 A
Slide 18: Regulation Update
Market Trends Regulation Update Europe 1. Pedestrian head impact protection Phase 2 (2010) N. America 2. E Call/EMS notification (E Safety Forum 2010 ?) 1. “Stars on Cars” Crash ratings (09/07 - 100%) Japan 2. Occupant Classification (09/07 - 100%) 3. Stability Control (09/12 - 100%) 1. JNCAP to add
Slide 19: The Global O/R-Market Per Product
Market Trends The Global O/R-Market Per Product 25.0 20.0 El. 15.0 BUS$ S A/B F A/B 10.0 S/B 5.0 0.0 2006 2007 2008 2009 2010 2011 2012 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 19 COMPANY PRIVATE 5
Slide 20: The Global O/R-Market by Region
Market Trends The Global O/R-Market by Region 25.0 20.0 15.0 RoW BUS$ Japan N. America 10.0 Europe 5.0 0.0 2006 2007 2008 2009 2010 2011 2012 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 20 COMPANY PRIVATE 5
Slide 21: Global Light Vehicle Production
Market Trends Global Light Vehicle Production In million units 28 RoW (CAGR 9%) 26 24 Europe 22 20 18 16 North America 14 12 Japan 10 8 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * Source CSM AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 21 COMPANY PRIVATE
Slide 22: European Light Vehicle Production
Market Trends European Light Vehicle Production In million units 18 Western Europe 16 14 12 10 8 Eastern Europe (CAGR 10.9%) 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * Source J.D Power - LMC AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 22 COMPANY PRIVATE
Slide 23: China Passenger Vehicle Production
Market Trends China Passenger Vehicle Production 2012 7,800 2011 7,050 2010 6,450 2009 5,890 2008 5,442 2007 4,696 2006 4,044 20% CAGR 2005 3,140 2004 2,510 2003 2,190 2002 1,230 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 ('000 Units) Source: CSM AUTOLIV – Global Auto Conference NY, Apr
Slide 24: Supply Value per Vehicle by Region
Market Trends Supply Value per Vehicle by Region USD N. America 350 Europe 300 Global avg. 250 Japan 200 RoW 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 24 COMPANY PRIVATE 6
Slide 25: Side Curtain Airbag Penetration
Market Growth Side Curtain Airbag Penetration Penetration Europe N. America Japan RoW rates % 70 N.A. - Voluntary Commitment 60 50% by 2008MY & 100% by 20010MY 50 N.A.- NPRM Final rule expected in H1’07, 40 ~ 2 years after voluntary 30 20 10 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 A
Slide 26: Sales RoW excluding Japan
Market Position Sales RoW excluding Japan MUS$ 1,000 900 800 700 Korea 600 500 400 China 300 Australia 200 100 Others 0 2000 2001 2002 2003 2004 2005 2006F AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 26 COMPANY PRIVATE
Slide 27: Autoliv in China
Market Growth Autoliv in China Changchun • Seatbelts • Airbags & SB Nanjing • Seatbelts Shanghai • Seatbelts • Airbags • Steering Wheel • Electronics • Inflators • Webbing Guangzhou Seatbelts AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 27 COMPANY PRIVATE
Slide 28: ALV Sales to Japanese OEMs
Market Position ALV Sales to Japanese OEMs Toyota, Nissan, Mazda, MMC, Suzuki & Subaru MUS$ 1,400 Total 1,200 1,000 800 N. America 600 Japan 400 200 AAP Europe 0 2002 2003 2004 2005 2006 2007 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 28 COMPANY PRIVATE 7
Slide 29: Passive Safety Products in Focus
Market Growth Passive Safety Products in Focus Cost savings potential ~ $75 Curtain Airbag Safety Vent Air Bag Rear Seat Airbag Pedestrian Protection AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 29 COMPANY PRIVATE
Slide 30: Other Safety Products in Focus
Market Growth Other Safety Products in Focus Night Vision On-call systems Cost savings: $20- 40 New Classified Design ECU Integration Pro-Active Seatbelts AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 30 COMPANY PRIVATE
Slide 31: Integrated Safety
Market Position Integrated Safety ACTIVE SAFETY PASSIVE SAFETY CONVENIENCE WARNING EMERGENCY Point of PRE-CRASH IN-CRASH POST-CRASH no return, one third of a Night vision Pedestrian Crash mitigation second Early triggering Pedestrian Crash detection by braking protection notification A
Slide 32: Current Active Safety Focus
Integrated Safety Current Active Safety Focus ESC and Electronic Integration + Night Vision with FIR ACC, LDW, Stop&Go, Pre-Protect Enhanced Occupant Protection Fusion of Radar and Stereo Vision Blind Spot, Side Impact Precrash Radar Automatic May Day Safety Telematics AUTOLIV – Global Auto Conferen
Slide 33: Cost Breakdown
Cost Management Cost Breakdown 100% 7.3 8.1 8.4 8.3 8.4 15.8 15.1 16.4 16.3 16.2 80% 16.2 16.4 15.5 15.8 16.2 60% 10.4 10.7 10.5 10.2 9.6 40% 50.3 49.7 49.2 49.4 49.6 20% 0% 2002 2003 2004 2005 2006 Direct Material Direct Labor Indirect Labor Other Costs EBIT AUTOLIV – Global Auto Conference NY, Apr
Slide 34: Raw Materials Costs 2006
Cost Management Raw Materials Costs 2006 39% Raw material content: Steel 38% Petroleum based 32% Electronics 14% 61% Upstream added value Other 16% in Supply Chain AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 34 COMPANY PRIVATE
Slide 35: Savings on Direct Material Costs
Cost Management Savings on Direct Material Costs Direct Material Cost Index Year-on-Year; 2000= Index 100 100 100 95 91 90 87 85 84 81 80 70 2000 2001 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 35 COMPANY PRIVATE
Slide 36: Cost Management Programs
Cost Management Cost Management Programs 2006 100% 90% 2002 80% High cost 55 50 70% 65 60% 76 91 87 85 1998 50% 40% 26% 30% 30% 20% 35 45 50 24 10% 9 13 15 Low cost 3.3 kg 0% 2003 2004 2005 2006 2007 2008 2009 Product/System Re-Designs Purchasing in LLC 3,000 35,000 Consolidation for current program
Slide 37: Stable Gross Margin
Shareholder Value Stable Gross Margin % 25 20 20.5 19.2** 19.7 19.6 17.6 18.2 15 10 5 * Excluding Unusual Items in Q3, 2001. ** Including one-time charges in Q4, 2003 which reduced gross margin by 0.5 pp. 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 2001* 2002 2003 2004
Slide 38: Stable Operating Margin
Shareholder Value Stable Operating Margin % 12 10 9.2** 9.3 8.6 8.5 7.8 7.6 8 6 4 * Excluding Unusual Items in Q3, 2001 2 ** Including special items in Q4, 2003 which boosted the margin by 1.2 pp 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 2001* 2002 2003 2004 2005 2006
Slide 39: Stable Return on Capital Employed
Shareholder Value Stable Return on Capital Employed % 20 18.5 17.5** 17.1 18 16.2 16 14 12.3 12 10.3 10 8 6 4 * Excl. Unusual Items in Q3 and adjusted for new accounting principle 2 ** Including special items in Q4 with a net effect of 2.2 pp 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 40: Return on Equity
Shareholder Value Return on Equity % 22 20.6 20 Reported 18 15.8 17.2 16 14.7 14 13.6** 12 Adjusted 9.4 11.8 10 8.6 9.6** 8 6 4 * Excl. Unusual Items in Q3 and adjusted for new accounting principle 2 ** Adjusted excludes discrete tax items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 41: 85% of Cash Flows 2002-2006 Returned to Shareholders
Shareholder Value 85% of Cash Flows 2002-2006 Returned to Shareholders MUS$ Share buy-back Dividends paid Cash flow after Capex 500 450 400 350 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 41 COMPANY PRIVATE
Slide 42: Quarterly Dividends
Shareholder Value Quarterly Dividends Cents/Share 40 35 31% : 30 A GR C 25 20 15 10 5 0 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 2002 2003 2004 2005 2006 2007 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 42 COMPANY PRIVATE
Slide 43: Share Buy-Backs (MUS$)
Shareholder Value Share Buy-Backs (MUS$) 221 Q1’07 ~ $40.2M 670,300 shares @ Avg. cost $57.86 378 Total: 24.0 million 920 shares Avg. cost: $38.36 144 43 30 103 2000 2001 2002 2003 2004 2005 2006 Tot. Share cost US$ 22.64 19.52 20.92 41.88 44.79 55.61 38.36 AUTOLIV – Global Auto Conference NY, April
Slide 44: Net Debt to Capital
Shareholder Value Net Debt to Capital % 45 Estimated cap given current credit rating of A- 40 35 30 25 20 Leverage Ratio (< 3 times) ¾ 1.3 times Net Debt to EBITDA 15 10 Interest Coverage Ratio (> 2.75 times) ¾ 14.0 times EBITDA to Interest 5 0 1999 2000 2001 2002 2003 2004 2005 2006 AUTOLIV – Globa
Slide 45: Organic Growth vs. Vehicle Production
’06 Highlights Organic Growth vs. % Vehicle Production 20 Change in Autoliv’s organic sales vs same quarter previous year 15 Change in Light Vehicle Production in the Triad vs same quarter previous year (the years 2000-2003 only include W. Europe) 10 5 0 -5 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 46: Major Launches in 2006
’06 Highlights Major Launches in 2006 BMW X5 Volvo S80 Ford SMAX Mini Cooper Peugeot 207 Ford Galaxy AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 46 COMPANY PRIVATE
Slide 47: Sales Outlook
’07 Guidance Sales Outlook Full Year 2007 Organic Sales +3-4% First Quarter 2007 Organic Sales +1% FX +3% Consolidated Sales +4% AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 47 COMPANY PRIVATE
Slide 48: Earnings Outlook
’07 Guidance Earnings Outlook Full Year Q1 ‘07 Organic sales increase 3-4% 1% Start-up costs ($ million) -25 -6 ”Mando acquisition” ($ million) -12 -3 -37 -9 Direct materials ($ million) -20 -8 Expected EBIT margin >8.0% >7.5% AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 48 COMPANY PRIVATE
Slide 49: Autoliv in Summary
Autoliv in Summary • Continued long-term organic growth • Stable margins despite relentless pricing pressure • Stable returns & improved balance sheet efficiency • Strong Free Cash flow provides steady returns Basis for a sound investment AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 49 COMP
Slide 50: Earnings per Share
Appendix Earnings per Share US$ 5 Incl. Discrete 4 Tax Items 3 2 Excl. Discrete 1 Tax Items 0 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 50 COMPANY PRIVATE
Slide 51: Sales Trend
Appendix Sales Trend US$ million 1,600 Moving 12 month average 1,400 1,200 1,000 800 600 400 200 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 Q1 Q2 Q3 Q4 2000 2001 2002 2003 2004 2005 2006 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 51 COMPANY PRIVATE
Slide 52: Light Vehicle Production
Appendix Light Vehicle Production North America + Europe Millions -2.7% -3.1% +3.0% +3.7% 10 9 8 7 6 Total 5 2003 35.4M 4 2004 36.1M 3 2005 36.0M 2 2006 36.0M 1 2007 36.0M 0 Q1 Q2 Q3 Q4 Source: CSM and JD Power LMC forecast January, 2007 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 52 COMPA
Slide 53: Light Vehicle Production
Appendix Light Vehicle Production Japan Millions +4.4% -0.4% -1.0% -1.1% 3 2.5 2 Total 2003 9.5M 1.5 2004 9.6M 1 2005 10.0M 2006 10.6M 0.5 2007 10.7M 0 Q1 Q2 Q3 Q4 Source: CSM, forecast January, 2007 AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 53 COMPANY PRIVATE 14
Slide 54: US Light Vehicle Inventory
Appendix US Light Vehicle Inventory Domestically Manufactured and Imported Vehicles Days 2006 2005 2004 10-year average 100 December 2006, 67 days 90 80 70 60 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec AUTOLIV – Global Auto Conference NY, April 4-5 2007 - 54 COMPANY PRIVATE
Slide 55: 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 56: Driven for Life
Driven for Life Every year, Autoliv’s products save 20,000 lives and prevent more than ten times as many severe injuries. COMPANY PRIVATE 16
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