Autoliv, Inc.

Second-quarter net sales were $2.8 billion, up 3% year over year, with organic sales up $27 million or 1% excluding currency and tariff compensation effects. Adjusted operating income rose to $270 million from $251 million, and adjusted operating margin improved to 9.6% from 9.3%; adjusted EPS increased to $2.43 from $2.20, while operating cash flow was $434 million, up $157 million. Gross profit increased by $8 million, but gross margin declined 30 basis points to 18.2%, mainly due to a supplier compensation reversal and asset impairments tied to restructuring. For 2026, Autoliv reiterated flat organic sales, adjusted operating margin of around 10.5%-11%, operating cash flow around $1.2 billion, CapEx below 5% of sales, and a tax rate around 30%. Management also said global light vehicle production is expected to decline by around 2.5% and raw materials are expected to be a gross $110 million headwind.

Mikael Bratt emphasized that Autoliv delivered a record Q2 despite a challenging market, citing strong momentum in Asia, outperformance in China and India, and continued strength with Chinese OEMs. He framed the quarter as proof of resilience and execution, pointing to improved cash flow, leverage down to 1.2x, and a strong shareholder return profile. His tone was confident but pragmatic: he acknowledged geopolitical and raw-material pressure, but said the company has handled similar inflationary periods before and remains comfortable with full-year guidance.

Monika Grama focused on the quarter’s financial bridge and cash generation. She said gross profit rose $8 million while gross margin fell to 18.2%, with $13 million of supplier compensation reversal costs and $9 million of asset impairments related to restructuring offsetting other benefits; she also noted adjusted operating income increased to $270 million and reported operating income was $192 million due to higher capacity alignment activities. She highlighted strong cash conversion, with operating cash flow of $434 million, free operating cash flow of $340 million, net debt down about $75 million, leverage improved to 1.2x, and the last 12 months’ cash conversion at 119%.

Analysts focused on the revised margin cadence, especially why Q4 now appears to carry most of the recovery and self-help benefits; management said the majority of mitigating impact is expected in Q4, with engineering income and customer compensation weighted to the fourth quarter. Questions also centered on raw-material recovery, with management explaining that tariff/IEEPA-related recoveries are partially passed through to customers and that inflation compensation is a mix of supplier actions, internal cost-outs, and customer negotiations. Analysts asked about the lower production assumption and China/outperformance mix; management said the main change was a deeper weakening in China and that Autoliv’s growth remains supported by Chinese customers, India, and favorable mix. On the Turkey closure, management said it reflects ongoing global footprint optimization and consolidation into existing EMEA sites, including Tunisia and Romania.