Autoliv Inc. (NYSE:ALV) stock fell in Friday premarket trading after the automotive safety supplier reported second-quarter 2026 results that topped earnings and revenue expectations but were weighed down by weaker GAAP profit and restructuring costs.

Adjusted earnings came in at $2.43 per diluted share, narrowly beating the analyst consensus estimate of $2.42. Net sales increased 3.3% year over year to $2.80 billion, ahead of the $2.77 billion consensus estimate, according to Benzinga Pro.

Adjusted Results Improve Despite GAAP Pressure

Organic sales rose 1%, outperforming the 0.3% decline in global light-vehicle production by 1.3 percentage points.

GAAP diluted earnings per share fell 38% to $1.35, while net income declined 40% to $101 million, largely due to restructuring costs tied to the company’s planned exit from manufacturing in Türkiye.

Adjusted operating income increased 7.3% to $270 million, lifting the adjusted operating margin to 9.6% from 9.3% a year earlier. However, GAAP operating margin declined to 6.8% from 9.1%.

Gross profit rose 1.5% to $509 million, while gross margin narrowed to 18.2%. Results included a $13 million supplier compensation reversal and a $9 million impairment charge.

Autoliv CEO Mikael Bratt said the company carried its first-quarter momentum into the second quarter, with organic sales growth outpacing global light-vehicle production, led by strong performance in Asia.

Sales to Chinese automakers rose more than 40%, increasing their share of the company’s China revenue to 55% from 40% a year earlier.

Bratt added that new strategic agreements with Great Wall Motor and XPeng Inc. (NYSE:XPEV) strengthened Autoliv’s position in China, while sales in India increased more than 35%.

He added that Autoliv continued to manage tariffs, supply chain disruptions and raw material inflation effectively. As part of its manufacturing footprint optimization, the company announced plans to exit production operations in Türkiye.

China Strength Offsets Regional Weakness

Sales in the Airbags, Steering Wheels and Other segment rose 5.2% to $1.91 billion, while Seatbelt sales slipped 0.5% to $897 million.

Organic sales increased 11.3% in Asia excluding China and 3.4% in China. However, they fell 3.3% in the Americas and 2.2% in Europe, the Middle East and Africa.

Sales to domestic Chinese automakers surged about 44%, increasing their share of the company’s China revenue to 55%.

Raw-material inflation reduced profitability by about $21 million, while tariffs had a net negative impact of roughly $7 million after customer compensation.

Cash Flow Hits Record as Outlook Holds

Operating cash flow rose 57% to a record second-quarter $434 million. Free operating cash flow more than doubled to $340 million.

Autoliv ended June with $377 million in cash, $2.04 billion in gross debt and $1.70 billion in net debt. Its leverage ratio improved to 1.2x from 1.3x.

During the quarter, the company repurchased 1.65 million shares for about $200 million and paid $64 million in dividends.

Autoliv also confirmed plans to close its manufacturing operations in Türkiye by the first half of 2028, affecting about 2,200 employees. The company expects to record $142 million in restructuring charges and about $129 million in cash outflows. It expects the move to generate approximately $40 million in annual pretax savings by 2028.

The company maintained its full-year outlook for roughly flat organic sales, an adjusted operating margin of 10.5% to 11%, and operating cash flow of about $1.2 billion.

The forecast assumes a 2.5% decline in global vehicle production, a 2.5% positive currency impact and about $110 million in gross raw-material headwinds.

Management said the third-quarter adjusted operating margin should remain near first-half levels before improving in the fourth quarter as customer compensation and engineering income increase.

Price Action

ALV Price Action: Autoliv shares were down 5.95% at $117.55 during premarket trading on Friday, according to Benzinga Pro data.

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