Autoliv slides after cost headwinds impact the bottom line

Autoliv (ALV) fell in early trading on Friday after the auto supplier missed consensus estimates with its third-quarter earnings report.

The company saw organic sales decline by 1.1% in the quarter. The regional and customer LVP mix was estimated to have impacted sales negatively by around 90 basis points. Organic sales outperformed LVP in Asia, while it underperformed in EMEA and was about in line with LVP in the Americas. Autoliv (ALV) noted that it outperformed in India during the quarter.

Adjusted operating income decreased by 3.4%, and operating cash flow was down 7.3%. Non-GAAP EPS was reported at $2.19, which missed the consensus estimate for $2.23. Autoliv (LV) highlighted that cost headwinds have increased materially during the year, mainly related to raw materials, logistics, the recent flooding in Thailand, and lower call-off accuracy since Q1. The company has been able to offset the majority of those cost headwinds mainly through labor efficiency, material savings through value engineering, and successful negotiations with customers and suppliers.

"We continued to successfully manage geopolitical developments during the quarter, limiting the effects of tariffs, supply chain challenges, and raw material price increases. Well-executed cost reduction initiatives and increased engineering income contributed to a third quarter adjusted operating margin of 9.7%," noted CEO Mikael Bratt. "Based on our full-year guidance, we continue to expect strong cash flow for the year, which supports our ambition to provide attractive shareholder returns through share repurchases and dividends," he added.

Looking ahead, Autoliv (ALV) expects total organic revenue growth guidance of 0% in FY26 and an adjusted operating margin of 10.5% vs. 10.75% prior.