Maruti, Hyundai and Tata help drive Autoliv business in Q1 FY2018

Autoliv, the global leader in automotive safety systems, has reported marginal sales growth of 0.2 percent in Q1 FY2018. India, Japan, China and South America are the key markets that grew organically. For Autoliv, sales in India are being driven by leading carmakers like Maruti Suzuki, Hyundai Motor India and Tata Motors.

For the three-month period ended June 30, 2017, Autoliv posted consolidated sales of $2,545 million (Rs 16,076 crore). While operating margin was 8.5 percent, the adjusted operating margin was 8.4 percent.

The expectation at the beginning of the quarter was for quarterly organic sales to increase by "around 2 percent" and an adjusted operating margin of "around 8.5 percent". The lower-than- expected organic sales growth reflects lower customer call-offs due to lower than expected light vehicle production in China and North America.

As per the company, airbag sales saw solid organic growth in the first six months in Asia, especially in Japan, China and India. While sales of restraint control and sensing (mainly airbag control modules and remote sensing units) saw a decline in Japan and North America, it increased in China, South Korea and India.

Future outlook
For the third quarter of 2017, Autoliv expects organic sales to increase in the range of 0-2 percent and an adjusted operating margin in the 7.5-8.0 percent. The indication for the full year remains unchanged for adjusted operating margin at around 8.5 percent and consolidated sales growth at around 3 percent while it expects an organic sales growth of around 2 percent.

Commenting on the Q1 results, Jan Carlson, chairman, president and CEO, Autoliv, said: "I am pleased that we continue to execute well in passive safety and that proactive adjustments to a weaker market in China and North America helped the segment generate another quarter of double-digit operating margin, despite continued elevated investments for growth. We managed another quarter with good operating efficiency, and our strong gross margin performance enabled us to meet our adjusted operating margin expectation although the organic sales growth was slightly below our expectation due to lower light vehicle production in China and North America. Order intake continued on a high level in passive safety in the quarter.”

Partnership with Nvidia and expansion
Speaking on the company’s partnership with Nvidia, Carlson said, “We accelerated our efforts to strengthen our foundation in electronics to capture growth opportunities through the strategic agreements we announced in June and July. The agreements with Nvidia and Velodyne further improve our capabilities in developing next-generation, self-driving technologies by accessing Nvidia's AI car computing platform and Velodyne's LiDAR sensing technology while our investment in Autotech provides effective scouting of new technologies in autonomous driving. Electronics booked a handful of smaller orders in active safety in the quarter, including one new customer and one vision order.”

“To meet the strong momentum in passive safety and electronics, we continue to invest in competence and capacity, and in the ongoing competition for engineering talent, we have been able to exceed our target of recruiting 1,000 engineers between July 2016 and June 2017. Combined with the formation of the Zenuity joint venture in April and the strategic agreements announced since then, we are continuously strengthening our ability to win new business,” said, Carlson, commenting on the company’s recruitment drive.