Autoliv updates long-term targets, outlines global growth strategy

Stockholm, May 14, 2013: Automotive safety systems major Autoliv Inc has updated its long-term targets and outlined its strategy for growth, along with its business plan, the financial effects of the plan and the long-term targets. In addition, it has presented plans for the key areas of growth markets, innovation and active safety at its Capital Market Day today.

“The long-term targets we are communicating today should allow us to further strengthen our number one position in the automotive safety industry, while providing competitive returns to our shareholders,” said Jan Carlson, president & CEO of Autoliv Inc. “Our growth strategy focuses on increasing our active safety market share and strengthening our passive safety leadership position. To achieve this we are investing in technical development in passive and active safety while actively pursuing acquisition opportunities, primarily in active safety. At the same time we are operating in an environment of change and uncertainty. Our industry is undergoing fundamental changes, as the majority of the world's vehicle production moves to growth markets, and the economic uncertainty in Europe continues,” he concluded.

The company's updated long-term targets are to:

• Grow organic sales at least in line with its market.

• Have a debt policy with a net debt to EBITDA ratio of around 1x.

• Have an operating margin of 8-9% over the business cycles.

• EPS growth faster than organic sales growth (excluding effects of currency).

The long-term leverage target is an operating financial leverage ratio of around 1x within a range of 0.5x to 1.5x. This revised debt policy should allow Autoliv to allocate up to $1.3 billion/Rs 7,133 crore (including its current net cash position of close to $400 million/Rs 2,194 crore) for acquisitions to support growth, to return funds to shareholders and be prepared for costs associated with the on-going antitrust investigations. The company intends to start adjusting towards the new policy this year, and plan to be within its target range during 2014. Autoliv has predicted that its current market should grow by approximately 5 percent annually to more than $27 billion/Rs 148,149 crore) until 2015, and that the same level of growth is not unlikely to continue until 2017.

This forecast is based on existing vehicle production plans and current penetration rate trends for automotive passive and active safety systems. The company long-term target is to grow its organic sales at least in line with its market. The company believes that capital expenditure of 4-5 percent of sales is needed to support this level of continued growth of the company.

Autoliv has outlined how it intends to grow its market share in the rapidly growing active safety segment to be approaching 25 percent by 2015 from today's 20 percent, by organically growing its sales in the active safety technologies it offers. The safety technologies leader has also reiterated its previously communicated organic sales target for active safety of half a billion dollars in 2015, up from $218 million/Rs 1,196 crore in 2012. Autoliv already offers an array of products in active safety, covering radar, vision and night vision technologies, and is continuing to look for acquisition opportunities to strengthen its product offering even more and advance its market presence in active safety. In 2012, Autoliv's market share in the growth markets increased to 34 percent, up from less than 30 percent five years ago. The company says it aims to further strengthen this position, as seen by its expected continued market share growth for airbags and seatbelts in China from 35 percent in 2012 to 37 percent in 2015. A strong position in frontal and side airbags where the penetration in some growth markets should increase by up to 20 percentage points between 2013 and 2017, should also support the future sales growth. Autoliv has also outlined how it intends to continue to deliver among the industry's leading operating margins of 8-9 percent over the business cycles. This should be achieved through new value-added products, RD&E for innovation, capacity alignments and savings in direct material and labor.

New active safety system announced

Autoliv has also announced that it will be introducing a new active safety system. A Stereo Vision System (SVS) that will help vehicle manufacturers meet the new EuroNCAP test criteria for Autonomous Emergency Braking (AEB), Intelligent Speed Assist (ISA) and Pedestrian Protection. The company estimates that these recently announced stricter test criteria from EuroNCAP could increase the average safety content per five star rated vehicle in Europe by at least $60 in 2015.

Autoliv, Inc develops and manufactures automotive safety systems for all major automotive manufacturers in the world. Together with its joint ventures, Autoliv has more than 80 facilities with nearly 50,000 employees in 29 countries. In addition, it has 10 technical centres in nine countries around the world, with 21 test tracks, more than any other automotive safety supplier.