Autoliv, Inc. ALV reported second-quarter 2026 adjusted earnings of $2.43 per share, which increased 10% year over year and came above the Zacks Consensus Estimate of $2.34 by 3.85%. Direct material cost savings and organic sales growth supported the result.
Net sales rose 3.3% to $2.80 billion, topping the consensus estimate of $2.76 billion by 1.45%. Organic sales increased 1% even as global light vehicle production declined 0.3%, reflecting strong performance in Asia.
Autoliv, Inc. Price, Consensus and EPS Surprise
Autoliv, Inc. price-consensus-eps-surprise-chart | Autoliv, Inc. Quote
ALV Extends Asia Outperformance
Asia, excluding China, led regional growth with an 11.3% organic sales increase. China delivered 3.4% growth, while EMEA declined 2.2% and the Americas fell 3.3%.
The company outperformed light vehicle production by 7.3 percentage points in China and 5.9 percentage points in Asia, excluding China. Sales to Chinese automakers rose around 44%, while India posted 36% organic growth as safety content per vehicle continued to increase.
Chinese automakers accounted for 55% of Autoliv’s sales in China, up from 40% a year earlier. The company also signed strategic cooperation agreements with Great Wall Motor and XPENG.
Autoliv Product Mix Favors Airbag Growth
Airbags, Steering Wheels and Other sales increased 5.2% to $1.91 billion, including 3% organic growth. Side airbags and center airbags were the largest contributors, followed by driver airbags, inflatable curtains and knee airbags.
Seatbelt Products and Other sales slipped 0.5% to $897 million and declined 3% organically. Sales in this category decreased in the Americas, China and EMEA but increased in Asia, excluding China.
Product volumes showed similar divergence. Side airbag deliveries increased 11% year over year, frontal airbags rose 1%, and steering wheels grew 2%. Seatbelt volumes declined 2%.
ALV Adjusted Margin Rises as GAAP Profit Falls
Gross profit increased 1.5% to $509 million, while gross margin narrowed 0.3 percentage points to 18.2%. Positive foreign exchange effects and lower material costs were partly offset by supplier compensation reversal costs and an asset impairment tied to the Türkiye restructuring.
Adjusted operating income rose 7.3% to $270 million, and adjusted operating margin improved to 9.6% from 9.3%. Reported operating income fell 22% to $192 million, with operating margin declining to 6.8% from 9.1% because of capacity-alignment charges.
Autoliv Expenses Reflect Restructuring Effects
Selling, general and administrative expenses declined 4.9% to $138 million, helped by a revised credit-loss reserve and lower personnel costs. Research, development and engineering expenses, net, increased 14% to $122 million due to lower engineering income, wage inflation and unfavorable currency translation.
Other expenses, net, widened to $56 million from $1 million, mainly reflecting costs related to the planned closure of manufacturing operations in Türkiye. Net income decreased 40% to $101 million, while the tax rate rose to 34.5% from 24.1%.
Autoliv expects the Türkiye restructuring to generate around $40 million in annual pretax savings, beginning in 2027 and reaching the full run-rate benefit in 2028. The complete closure is anticipated in the first half of 2028.
ALV Cash Flow Rebounds on Working Capital
Operating cash flow climbed 57% to a second-quarter record of $434 million. The improvement reflected a $240 million positive working-capital contribution as temporary first-quarter effects normalized.
Capital expenditure, net, declined 17% to $95 million, lifting free operating cash flow to $340 million from $163 million. As of June 30, 2026, ALV’s cash & cash equivalents totaled $377 million and $1.70 billion in net debt.
The company repurchased $200 million of shares and paid $64 million in dividends. The quarterly dividend was 87 cents per share, up from 70 cents a year earlier.
Autoliv Reaffirms 2026 Outlook
Autoliv maintained its 2026 guidance for roughly flat organic sales, an adjusted operating margin of 10.5-11% and operating cash flow of around $1.2 billion. Capital expenditure, net, is expected to remain below 5% of sales.
The outlook assumes global light vehicle production will decline around 2.5%, with foreign exchange adding about 2.5% to net sales. The company expects third-quarter adjusted operating margin near the first-half level, followed by significant improvement in the fourth quarter as customer compensation, engineering income and mitigation benefits increase.
Autoliv expects roughly $110 million of gross raw material cost pressure for the year but aims to offset most of the impact. The company also expects full-year tariff-related margin dilution to be similar to the roughly 20 basis points recorded in 2025.
ALV’s Zacks Rank & Key Picks
Autoliv currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Yamaha Motor Co., Ltd. YMHAY and Gentex Corporation GNTX. While YMHAY sports a Zacks Rank #1 (Strong Buy) at present, GNTX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for YMHAY’s 2026 sales and earnings implies year-over-year growth of 0.8% and 586.4%, respectively. The EPS estimate for 2026 and 2027 has fallen 2 cents each over the past 30 days.
The Zacks Consensus Estimate for GNTX’s 2026 sales and earnings implies year-over-year growth of 5.7% and 8.8%, respectively. The EPS estimate for 2026 and 2027 has improved by a penny each over the past 30 days.
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This article originally published on Zacks Investment Research (zacks.com).