Pole Position: UBS European & US Autos Daily

Research evidence excerpt

Pole Position: UBS European & US Autos Daily

Autoliv Q2 earnings feedback

Autoliv’s Q2 call reinforced two key themes: continued market share gains, particularly

with Chinese OEMs and in India, and a more back-end loaded earnings profile. Sales to

Chinese OEMs grew more than 40% in Q2 and now represent 55% of Autoliv’s China

revenues, supporting the company’s ability to outperform underlying vehicle production

despite a softer industry backdrop. However, management increased its FY26 gross raw

material headwind assumption to $110mn (from $90mn previously) and now expects

only limited support from customer compensations and other mitigation measures in

Q3, with a much larger contribution in Q4. As a result, Q3 margins are expected to

remain broadly in line with 1H levels, with a significant profit step-up required in Q4.

Management remains confident in recovering inflation through pricing actions, cost

improvements and commercial negotiations, while continuing footprint optimisation

efforts. The group also announced a restructuring programme involving $142mn of

charges, expected to generate c.$40mn of annual pre-tax savings from 2027, with the

full benefit realised by 2028.

Our view: The key takeaway from the call is not a change in Autoliv’s medium-term

positioning, but rather a shift in the timing of earnings delivery. Growth trends in China

and India remain robust, market share gains continue, and management remains

confident in its ability to offset inflation through pricing actions and self-help measures.

However, the earnings profile is now materially more back-end loaded than previously

anticipated, increasing reliance on a strong Q4 delivery. Based on management’s

comments that Q3 margins are likely to remain broadly in line with the 1H level of 9.3%,