[Management View]
Autoliv reported a record second quarter with significant improvements in adjusted operating income, gross margin, and cost structure. Management emphasized the company's resilience and strong market position, driven by customer relationships and continuous improvement initiatives.

[Outlook]
The company expects organic sales growth of around 3% for the full year 2025, with an adjusted operating margin targeted at 10%-10.5%. Full-year operating cash flow is forecasted at approximately $1.2 billion. Management anticipates a challenging second half due to lower light vehicle production and ongoing tariff uncertainties.

[Financial Performance]
Net sales: $2.7 billion, up 4% YoY
Gross margin: 18.5%, up 30 basis points YoY
Adjusted operating income: $251 million, up from $221 million YoY
Adjusted operating margin: 9.3%, up 80 basis points YoY
Operating cash flow: $277 million, down $63 million YoY
Free operating cash flow: $163 million, down from $194 million YoY

[Q&A Highlights]
Question 1: Just on tariff again, just a quick part of maybe housekeeping or clarification. It be your expectation that in the third quarter, you will therefore over recover cash. So, like, you'll have the 20% under recover from Q2 and then the full Q3 tariffs or that every single quarter will likely have a little bit of a lag and therefore you could also, you know, end the year not fully recovered.
Answer: Yeah. I think and as Fredrik already mentioned here, when it comes to full year here, that we expect, of course, there'll be some calendar effects there. That you have spillover, so to speak, from what is not in a timely fashion being able to conclude before you close the book. So, I mean, the size of it, I wouldn't like to speculate, but, for today, you had some calendar effect there as well.
Emmanuel Rosner: But I guess that's also true from a quarter point of view as well. You don't necessarily expect to overrecover.
Mikael Bratt: No. No. No. No. That's my point. So it's I mean, every closing in the quarter, I mean, be it Q3, Q2, or Q4, ultimately. Have this time effect. Yes. Understood.
Emmanuel Rosner: Thanks for the clarification. And then I guess longer term, so you had your capital markets Day recently, 12% margin is still very much the target. Holistically, you know, how much of the drivers to get there are things that are generally under your control?
Mikael Bratt: In terms of, you know, headcount reduction, efficiencies, automation, etcetera. And how much of it is really, you know, things that would require essentially a more stable market or industry conditions.
Mikael Bratt: Yeah. I think we have tried to frame it here, I mean, around stable and reasonable LVP level here and about 85 million here. And call-offs, the stability back to pre-pandemic here. So, I mean, that's still valid. For sure. But as you can see here in the quarter here, we are delivering well on what is in our control, and I think that's really our focus here to make sure that we have good traction on our different levers that identified for our within our own control switch.
Emmanuel Rosner: Got it. Thank you.

Question 2: Just to just to some clarification on China. How given the price competition with the larger domestic OEMs, has that in any way changed your pricing situation as it become tougher for you guys? In terms of negotiations? That's my first question. Second question is, is India if you maybe could update us on the situation in India. Maybe market share and also how much contribution of growth you had from India this year. Thank you.
Answer: Yeah. I can talk with China and then Fredrik can jump in on India there. But I mean, first, as you know, the automotive industry is very focused on cost and has always been. And I think we have shown that we have the capability to be price competitive wherever we are operating, also in China where we are the market leader in the China local market. What we have talked about here is the mix effect that we have been impacted by, but we're regaining that. So I would say my view here and feeling here is that we are able to meet the cost pressure that you have in the China market and also elsewhere here. So hence our focus here on continuing to drive efficiency and also cost out in the whole system.
Fredrik Westin: Yeah. And then answer your question regarding India. So we have significantly outperformed the underlying LVP growth in the first half of the year. And we have around 60% market share in India. The full year 2025, we expect that India will make up around 5% of our group sales. That's adding around $100 million top line.
Hampus Engellau: Super. Thank you very much.

Question 3: Just given the given the risk second half risk in LVP with the pull-ins and tariffs, you still expect the same seasonality in the December quarter? For orderly?
Answer: Yeah. I mean so we do expect that the second half will be weaker in relation to the first half. When you saw LVP in the first half was up 3.1% year over year, and S&P thinks it or says it will be down 2.3% year over year. So yeah, the impact on so the end consumer has been limited in the first half. And expectations of that will increase in the second half of the year. But then it's also and then in terms of, I'll say, that impact on us is then, as I explained before, that leads to a lower Q3 volume LVP by roughly one million sequentially quarter over quarter. And with that, we would expect the third quarter to be our weakest in the year in terms of profitability. And then the fourth quarter will have also due to seasonality, the highest LVP support, and then on top of that, the regular cadence of the higher engineering income in the fourth quarter.
Vijay Rakesh: Okay. Got it. I EV versus ICE, what's the content on EV vehicles versus ICE and I guess, what's the mix for you now? EV versus ICE overall for the group sales? Thanks.
Mikael Bratt: Yeah. I mean, it's not a large change. I mean, we are as you said, I mean, our market share is pretty similar on EVs as it is on the regular ICE vehicles. And then we did not see any change on that here in the second quarter.
Vijay Rakesh: Thank you.

Question 4: Just a kind of follow-up on tariffs, can you give us some context as to the competitive positioning some of the other safety providers in terms of production in the US?
Answer: No. I think we are well I would say, well positioned to navigate through this. I mean, first of all, we are very regionalized. So the different regions are taking care of its own value chain to a very large extent. Of course, America is one region here. So for us, it's then primarily a question about the US-Mexico tariffs that's just in place there. Also there, we have a very strong industrial footprint relative to our industry and competition here. With our five plants in Utah. And in all this, we're working with our customer support to see how we can leverage and optimize our footprint in the best possible way there in the short term. So, yeah, I think we're in a good position there.
Michael Jacks: Okay. And then I kinda it's kind of a related question. Outside of the discussions you're obviously having with your customers about recovering tariffs, and is there any kind of as a the conversation changed with your customers? Because I could imagine, you know, with that local footprint, I mean, they may be coming to you although they probably don't wanna pay the tariffs, and asking you to kinda help them with more volume, say. Example.
Mikael Bratt: Yeah. I think, I mean, of course, we are working with them, as I mentioned here, to find this solution both, and then activities short term that can limit the impact there. But, I mean, long term, we can do a lot of things here. But I think what we need to do and I have in order to take next steps here is to have clarity on how tariffs actually will play out here. I mean, at what level and that they are there for, you know, foreseeable future. I mean, nothing is forever here, but you need to have some until further notice at least in case sustainably in order to take any potential CapEx decisions and all that. But right now, it's that we are some time away from that point.
Michael Jacks: Okay. Thank you.

Question 5: Just a quick follow-up on the 10% to 10.5% margin guidance in the context of the 20 bps tariff dilution. Should we think of the underlying performance as absorbing this tariff headwind? In other words, there is some underlying improvement and that the tariff drag is what's effectively holding back, you know, what would be a very small upgrade.
Answer: No. I think I mean, you're absolutely right. The tariff impact that Fredrik mentioned before is included in our guidance, and we are working as I said, here very hard to improve and take out cost, etcetera, to manage the headwind that we see, and this is definitely a headwind that we have to absorb within the guidance here.
Mattias Holmberg: Oh, yeah. Thank you.

Question 6: Starting with the capital distribution, at the same day, you said that you have the ambition to return $300 to $500 million through buybacks, but now you're running at about $50 million buyback per quarter in the last two quarters. So can you tell us what is the reason behind the somewhat smaller buyback pace and also what should we expect for the remainder of the year?
Answer: I mean, first of all, we are fully committed to what we have stated there to have around $300 to $500 million in annual repurchase level. So that's correct. Then, of course, we can't guide on how and when that will be distributed and so on. But that still holds. And I think, I mean, why has it only been $50 per quarter so far? I would say, I mean, it's a discussion we have been hearing internally on what level to place ourselves. And, I mean, it has been quite a volatile first half year here, and I think some prudence is always good when you enter into to make period here. So nothing dramatic in that. It's just a part of the overall assessment from time to time, but our commitment still holds absolutely.
Agnieszka Vilela: Great. Thank you for the color. And then the second question, I guess, it's to Fredrik. Currency supported your EBIT in the quarter with $13 million. Assuming the current currency rates, could you help us to understand what impact could we expect for H2 when you look at the translation and transaction effects for you?
Fredrik Westin: So as we indicated, the main positive effect we had was revaluation effects from the balance sheet through the P&L. That was around $7 million. The transactional FX impact was around $3 million positive. And then the translation effect was around $2 million positive in the quarter. And the main currency pairs that impacted this were the Mexican peso versus the US dollar on a year-over-year basis. And also the euro against the Turkish lira. So those were the two most favorable currency pairings for us, the movements. Then this was offset on the negative side by the peso against the euro. As we import euro-denominated products into Mexico.
And then also the appreciation of the SEK against the US dollar was a negative hit for us. And the only thing I can say on the guidance is that we expect that the cessation effect for the full year will be around zero.
Agnieszka Vilela: Thank you.

Question 7: First question is just on the pricing dynamics. Because if we look at the bridge, you are still getting an implied positive year-over-year pricing. So wondering if you could talk to the ongoing trajectory of pricing and how that is if any way, impacted by your ongoing tariff negotiations?
Answer: I think, I mean, the pricing I mean, of course, we continue with our price negotiations when it comes to the tariffs. No doubt about that, and that's what we have talked a lot about today here. Of course, we still have some inflationary impacts even though it's significantly smaller than what we have seen in the past years, but it's still over and above what we have as normal. That's dynamic there. And then, of course, we get new price points when we have new products and new businesses there. But other than that, it's still the same dynamic here when it comes to expectation price down of the 2% to 4% that we have had historically here on running programs. So no change when it comes to, I would say, the model and the dynamics there.
Dan Levy: Okay. Thank you. I will then ask the question. Yeah.
Dan Levy: Yeah. Yeah. Yeah. Thank you. Second question is around the GOM dynamics. And specifically, I think we've seen strong GOM in Americas and Europe. But in America specifically, we do have tariffs. I think there is some question on launch activity going forward. There's clearly a question on EV uptake maybe you can remind us to what extent your GOM in America is has been impacted by has been driven by EVs and to what extent any slowdown in launch activity, EV uptake, could impact, GOM for you in the second half and into 2026.
Mikael Bratt: I would say in America, as the EV component has not been significant. It's very minor. So I don't see that impacting our position at all actually.
Dan Levy: And tariffs? Is any other launches that are at risk because of tariffs for you?
Mikael Bratt: Oh, I think, I mean, the tariffs as such, of course, it's a part of creating uncertainty about the outlooks here when it comes to people's willingness to invest and affordability and those kinds of questions. And, of course, I think you can see and we have seen that the activities for or queues for new models are put out in time. And as we indicated here, also, we've seen with lower numbers than expected and more in line with last year here. So I think in short, the uncertainty in general and of course, a highly important part of that is creating uncertainty on how where to invest with new models, etcetera. So we see more the existing models running longer and new models being put out in time. Yeah. Regardless if it's EV or not.
Dan Levy: Great. Thank you.

Question 8: Just a question on the comments regarding an expectation of getting into outperformance in China during the second half. I understand this is fully including, you know, both the effect of volume, but despite then negative mix headwinds. So the question is, if you expect this outperformance, how for how long do you think that the mix will still be a headwind?
Answer: I mean, that's very difficult to have a very clear answer on. I think so far, we have seen, of course, that you have the low-end vehicles, if we call them that, being the main driver of the volume in China. So far. I think it goes hand in hand also a little bit with the overall economic situation as such. But I think the important thing here is that we are gaining market share with that segment where we maybe have been a little bit underrepresented in the past, and that gap is closing and we expect to outperform going forward.
Can be discussed, but that depends on the more model mix effect, which is very hard to have a clear opinion about more speculation in that case.
Karl Bokfield: Understood. That was all from my side. Thank you.

[Sentiment Analysis]
Analysts expressed concerns about the impact of tariffs and the potential for under-recovery. Management maintained a cautious but confident tone, emphasizing their control over internal efficiencies and cost management.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|----------------------------|------------------|------------------|
| Net Sales | $2.7 billion | $2.6 billion |
| Gross Margin | 18.5% | 18.2% |
| Adjusted Operating Income | $251 million | $221 million |
| Adjusted Operating Margin | 9.3% | 8.5% |
| Operating Cash Flow | $277 million | $340 million |
| Free Operating Cash Flow | $163 million | $194 million |

[Risks and Concerns]
- Tariff recovery timing and its impact on margins
- Lower light vehicle production in the second half of 2025
- Macroeconomic uncertainties and geopolitical risks

[Final Takeaway]
Autoliv delivered a strong Q2 2025 performance with record net sales and significant improvements in margins and cost structure. However, the company faces challenges from tariff recovery timing and lower light vehicle production in the second half of the year. Management remains focused on efficiency initiatives and cost management to navigate these uncertainties. Investors should monitor the impact of tariffs and macroeconomic factors on future performance.