At its Capital Markets Day, October 1-2, Autoliv, Inc. (NYSE: ALV and SSE: ALIVsdb), the worldwide leader in automotive safety systems, outlines its strategy for further growth, demonstrates real life safety and sets end of decade targets. The Company also reiterates its existing long-term targets.
“Our mission is to be the leading supplier of safety systems for the future car, well integrated with autonomous driving. Today, at our capital markets day, we bring our mission to life by demonstrating world leading automotive safety solutions designed to save hundreds of thousands of lives in the years to come”, said Jan Carlson, Chairman, President and CEO of Autoliv.
“We further outline targets for the end of the decade, which will drive our Company to deliver strong growth and improved margins”, he continued.
The Company’s end of decade targets are:
– To reach $12 billion in sales, indicating an annual growth rate of around 7%. Of the $12 billion in sales, around $9 billion are expected to come from the passive safety business segment and around $3 billion from the electronics business segment.
– To expand its current passive safety market share from 39%.
– To improve margins in the electronics segment to reach the long-term corporate margin target range, while at least maintaining the current margin level in the passive safety segment.
– To grow Earnings Per Share (EPS) faster than the targeted sales growth.
The end of decade targets include the effects from the recent acquisition of MACOM’s automotive business and planned joint venture in brake control systems with Nissin Kogyo, which is expected to close in early 2016.
Autoliv’s end of decade sales target is $12 billion. The Company further has an ambition to potentially reach up to $15 billion in sales by the end of the decade, if it is successful in taking advantage of potential additional market and acquisition opportunities.
The Company expects that its current combined passive safety and electronics market should grow by approximately 6% annually to around $31 billion in 2019. Through its planned joint venture with Nissin Kogyo, Autoliv is also entering the market for brake control systems, which is estimated to be worth more than $13 billion at the end of 2019. In the same period the global light vehicle production (LVP) is predicted by IHS to grow around 3% annually.
Autoliv’s long-term financial targets remain unchanged:
– To grow organic sales at least in line with its market,
– To have an operating margin* of 8-9% over the business cycles,
– To grow EPS* faster than organic sales growth, and
– To have a debt policy with a net debt to EBITDA ratio of around 1x and to be within a range of 0.5 – 1.5x
*excluding antitrust related costs
The Company further expects its restructuring costs to return to a normalized level averaging around 30 bps of sales from 2016 onward, down significantly from the 2015 estimate of more than $90 million.
In support of continued growth and technological leadership in its rapidly growing active safety business the Company expects its RD&E (net) expense in the near-term to remain at the level of 6 – 6.5% of sales. The long term expectation continues to be for RD&E (net) to be in the range of 5 – 6% of sales.
For the period from 2015 to the end of the decade Autoliv expects to grow its earnings per share faster than the targeted sales growth. The faster EPS growth will be achieved through improved margins and repurchases of the Company’s own shares or mergers and acquisitions.
At the event Autoliv demonstrates its world leading active safety portfolio including mono and stereovision solutions based on its own software platforms and algorithms, various radar solutions, an industry first ADAS domain controller and infrared solutions for night vision. On display is also brake control systems from the planned joint venture with Nissin Kogyo, GPS based products from the recently acquired automotive business from MACOM and the sensing ZForce steering wheel produced in cooperation with Neonode. All together the broad and deep portfolio shows how Autoliv goes beyond ratings and regulations to achieve real life safety which helps car manufacturers to produce vehicles that deliver real functionality on the road.
“Increasingly, active safety is becoming a systems business. Our strategy is to be the leading system supplier in active safety, delivering the hardware and software needed to build the world’s safest cars. Together with our expanding market leadership in passive safety we are the leader in providing the total safety solutions for the future”, said Mr. Carlson.
