Q3 2023 Autoliv Inc Earnings Call

October 20, 2023

Okay.

Speaker 1: Good day and thank you for standing by. Welcome to the AUSOLIS third quarter 2023 Financial Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised.

Operator: Good day and thank you for standing by. Welcome to the Autoliv Q3 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anders Trapp. Please go ahead.

Good day, and thank you for standing by welcome to the Ultra Leafs third quarter 'twenty to 'twenty three financial results Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone.

We'll then hear an automated message it flashing Johan displaced.

Speaker 1: To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anders Trapp. Please go ahead.

Do we still have your question. Please press star one on one again.

We advise you that today's conference is being recorded.

I'd now like to hand, the conference over to your speaker today on desktop. Please go ahead.

Anders Trapp: Thank you, Sandra. Welcome everyone to our Q3 2023 earnings call. On this call, we have our President and CEO, Mikael Bratt, and our Chief Financial Officer, Fredrik Westin, and me, Anders Trapp, VP, Investor Relations. During today's earnings call, Mikael and Fredrik will, among other things, provide an overview of the strong sales, earnings, and cash flow development we had in the third quarter, the structural cost reduction activities that we are doing to secure our long and medium-term competitiveness, and our updated full year indications, as well as provide an update on our general business and market conditions. We will then remain available to respond to your questions. As usual, the slides are available on autoliv.com. Turning to the next slide, we have the safe harbor statement, which is an integrated part of this presentation and includes a Q&A that follows.

Speaker 2: Thank you, Sandra. Welcome, everyone, to our third quarter 2023 earnings call. On this call, we have our president and CEO , Nikha Drath, and our chief financial officer, SridharISHB-Anger Forgotten, Kristine, and me, Anders

Thank you summed it up well.

Welcome everyone to our third quarter 2023 earnings call on this call, we have our president and CEO , Mr Eye drops and our Chief Financial Officer Christine.

On the top VP Investor Relations.

Speaker 2: During today's earnings call, Michael and Sredik will, among other things, provide an overview of the strong sales, earnings and cash flow development we had in the third quarter, the structural cost reduction activities that we are doing to secure our long and medium term competitiveness and our updated full year indications, as well as provide an update on our general business and market conditions.

During today's earnings call me, Karen will among other things provide an overview of the strong sales earnings and cash flow development. We had in the third quarter. The structural cost reduction activities that we're doing to secure our long and medium term competitiveness.

Our updated full year indications as well as provide an update on our general business and market conditions.

Speaker 2: We will then remain available to respond to your questions. And as usual, the slides are available on autoleave.com. Turning to the next.

We will then remain available to respond to your questions and as usual the slides are available on <unk> dot com.

Turning to the next slide.

Speaker 2: We have the safe harbor statement, which is an integrated part of this presentation and includes the Q&A that follows.

We have the safe Harbor statement, which is an integrated part of this presentation and include.

The Q&A that follows.

Speaker 2: During the presentation, we will reference a non-nuous gap Explain yourself

Anders Trapp: During the presentation, we will reference some non-US GAAP measures. The reconciliations of historical non-US GAAP measures are disclosed in our quarterly press release that is available on autoliv.com and in the Form 10-Q that will be filed with the SEC. Lastly, I should mention that this call is intended to conclude at 3:00PM Central European Time, so please follow limit of questions per person. I will now hand over to our CEO, Mikael Bratt.

During the presentation, we will reference some non us GAAP measures.

Speaker 2: The reconciliation of historical data with non-use GAAP measures are disclosed in our quarterly press release. That is available on atelier.com and in the 10Q that will be filed with the FCC. And lastly, I should mention that this call is intended to conclude at 3 p.m. Central European Time. So please follow limits, questions per person. I will now hand over to our CEO , Nikhil Brahm. Thanks.

The reconciliations of historical non us GAAP measures are disclosed in our quarterly press release, and it's available and I believe you're at home and in the 10-Q that will be filed with the SEC.

And lastly, I should mention that this call is intended to conclude at three P. M Central European time. So please follow a limit.

That person.

I will now hand over to our CEO .

Mikael Bratt: Thank you, Anders. Looking on the next slide. Our performance continued to improve substantially in Q3. First, I would like to thank our employees for their great contributions to the Q3 results and the efforts to further strengthen our near and medium-term competitiveness. Our organic sales grow double digits, outperforming light vehicle production significantly, especially in Asia. The strong growth was mainly a result of higher than expected light vehicle production, product launches, and customer compensations for inflationary pressure. The adjusted operating income was a new record for a Q3 since the Veoneer spin-off. We generated a broad-based improvement in key areas, including gross and operating margins, both year over year and sequentially. Our cash flow was strong, and the debt leverage remained well within our target range. While we maintained our dividend and almost tripled the number of shares repurchase compared to Q2.

Thank you Anders looking on the next slide.

Speaker 3: Our performance continues to improve substantially in the third quarter. First, I would like to thank our employees for their great contributions to the third quarter results and the efforts to further strengthen our near and medium term competitiveness.

Our performance continued to improve substantially in the third quarter.

First I would like to thank our employees for their great contributions to the third quarter results and the efforts to further strengthen our near and medium term competitiveness.

Speaker 3: Our organic sales grew bubble digits, outperforming light vehicle production significantly, especially in Asia. The strong growth was mainly a result of higher than expected light vehicle production, product launches and customer compensation for inflationary pressures.

Our organic sales grew double digits outperforming light vehicle production significantly, especially in Asia.

This strong growth was mainly a result of higher than expected light vehicle production.

Product launches and customer compensations for inflationary pressure.

Speaker 3: The adjusted operating income was a new record for a third quarter since the V&E spin-off.

The adjusted operating income was a new record for a third quarter seems to be an ear spinoffs.

Speaker 3: We generated a broad-based improvement in key areas, including gross and operating margins, both year-over-year and sequentially.

We generated a broad based improvement in key areas, including gross and operating margins both year over year and sequentially.

Speaker 3: Our cash flow was strong and the depth leverage remained well within our target range.

Our cash flow was strong and the depth leverage remained well within our target range.

Speaker 3: While we maintained our dividend and almost tripled the number of shares repurchased compared to the second.

While we maintained our dividend and almost tripled.

Shares repurchase rates compared to the second quarter.

Speaker 3: We are making progress towards our intention of reducing our indirect workforce by up to 2000.

Mikael Bratt: We are making progress towards our intention of reducing our indirect workforce by up to 2,000. We have now detailed a large part of our structural cost reduction actions, including optimization of the company's geographic footprint, and organization. The National Highway Traffic Safety Administration has issued initial decision to recall 52 million airbag inflators manufactured by our competitor, ARC. Autoliv estimates that less than 10% of the identified inflators were included in airbag modules that Autoliv supplied to customers after Autoliv acquired certain Delphi assets in 2009. Autoliv is not aware of any performance issues regarding the ARC inflators included with its airbags. At this stage, it is too early to talk about any replacement plan. We are, of course, prepared to support our customers with replacement products.

We are making progress towards our intention of reducing our indirect workforce by up to 2000.

Speaker 3: We have now detailed a large part of our structural cost reduction actions, including optimization of the company's geographic footprint and organization.

We have now detailed a large part of our structural cost reduction actions, including optimization of the companies you graphic footprint and organization.

Speaker 3: The National Highway Transportation Safety Administration has issued a new initial decision to recall 52 million airbag inflators identified by our competitor, ARC.

The National Highway Transportation Safety administration has issued.

Initial decision to recall 52 million airbag and factors.

Backed by our competitor.

Speaker 3: Autolive estimates that less than 10% of the identified inflators were included in airbag modules that Autolive supplied to customers after Autolive acquired certain Delphi assets in 29.

Our C.

After live estimate that less than 10% of the Indentified insulators were included in airbag modules that are supplied to customers after out delete acquired certain Delphi assets in 'twenty.

Speaker 3: Autoliv is not aware of any performance issues regarding the ARC inflators included with its airbags. At this stage it is too early to talk about any replacement plan. We are of course prepared to support our customers with replacement products.

2019.

I want to leave is not aware of any performance issues regarding the a our senior freighters.

No doubt it's airbags.

At this stage it is too early to talk about annual replacement plan.

We are of course prepared to support our customers with replacement products.

Mikael Bratt: The light vehicle production in 2023 is now expected to develop slightly better than expected, and we have therefore increased our full year organic sales indications in line with this. We expect Q4 adjusted operating margin to improve by 1.5 to 2 percentage points compared to last year, in line with the previously communicated improvement pattern. Additionally, we expect the ongoing reorganization of our global functions and European operations to lead to substantially lower tax rate for 2023 than previously anticipated. These changes are also expected to reduce our normalized tax rate from 2024 and onwards to a range of 25% to 30%. Now looking at the significant sequential cost improvements on the next slide. Year to date, we have generated a broad-based improvement in key areas, both year over year and sequentially. On this slide, we highlight the sequential improvements.

Speaker 3: The light vehicle production in 2023 is now expected to develop slightly better than expected and we have therefore increased our full year organic sales indications in line with the year.

The light vehicle production in 2023 is now expected developed slightly better than expected and we have therefore.

Increased our full year organic sales indications in line with this.

Speaker 3: We expect fourth quarter adjusted operating margin to improve by 1.5 to 2 percentage points compared to last year. In line with the previously communicated improvement pattern, we expect to see a higher increase in operating margin by 1.5 to 2 percentage points compared to last year.

Greg fourth quarter, adjusted operating margin to improve by one five to two percentage points compared to last year.

In line with the previously communicated improvement pattern.

Speaker 3: Additionally, we expect the ongoing reorganization of our global functions and European operations to lead to a lower tax rate for 2023 than previously anticipated.

Additionally, we expect the ongoing reorganization of our global functions and European operations to lead.

Our tax rate for 2023 than previously.

Previously anticipated.

Speaker 3: These changes are also expected to reduce our normalized tax rate from 2024 and onwards to a range of 25 to 30%.

These changes are also expected to reduce our normalized tax rate.

'twenty 'twenty four and onwards to range of.

25% to 30%.

Speaker 3: Now looking at the significant sequential cost improvements on the next slide.

Now looking at the significant sequential cost improvements on the next slide.

Speaker 3: Year to date we have made a general broad-based improvement in key areas. Both year over year and sequence.

Year to date, we have paid to generate a broad based improvement in key areas, both year over year and sequentially.

Speaker 3: On this slide, we highlight the sequential improvement.

On this slide we highlight the sequential improvements.

Mikael Bratt: In Q3, we continued to actively address our cost base while negotiating with our customers to secure pricing and other compensations that reflect the high inflation. Our labor efficiency continues to trend up, supported by the implementation of our strategic initiatives, including optimization, digitalization. Our gross margin improved by 270 basis points compared to Q1 and by 90 basis points from Q2. This is mainly a result of the higher labor efficiency and customer compensation. The positive trend for RD&E and SG&A in relation to sales have continued and have now declined by 130 basis points since Q1. Combined with a gross margin improvements, this lead to a substantial improvement in adjusted operating margin. Looking now on financials in more detail on the next slide.

Speaker 3: In the third quarter, we continued to actively address our cost base while negotiating with our customers to secure pricing and other conversations that reflect the high inflation.

In the third quarter, we continued to actively address our cost base, while negotiating with our customers to secure pricing and other compensations that reflect the hi, Jason.

Yeah.

Speaker 3: Our labour efficiency continues to trend up, supported by the implementation of our strategic initiatives, including automation and digitalisation.

Our labor efficiency continues to trend up supported by the implementation of our strategic initiatives, including <unk>.

Palace station.

Speaker 3: Our gross model improved by 270 basis points compared to the first quarters and by 90 basis points from the second quarter.

Our gross margin improved by 270 basis points compared to the first quarter and by 90 basis points from the second quarter.

Speaker 3: This is mainly the result of the higher labor efficiency and custom

This is mainly a result of the higher labor efficiency and customer business.

Speaker 3: The positive trend for RDNE and SDNA in relation to sales have continued and is now signed by 130 basis points since Q1.

The positive trend for <unk> and SG&A in relation to sales have continued.

And by 130 basis points since Q1.

Speaker 3: Combined with a gross model improvements, these lead to a substantially improvement in adjusted operating model.

Combined with the gross margin improvements this lead to a substantial improvement in adjusted operating margin.

Speaker 3: Look in now on financials in moditail on the next slide.

Looking now on financials in more detail on the next slide.

Speaker 3: States increased by 13%, mainly due to new productless, higher prices and favorable currency translation.

Mikael Bratt: Sales increased by 13%, mainly due to new programs, higher prices, and favorable currency translation effects. The strong sales increase and cost reduction activities led to a substantial improvement in adjusted operating income. Excluding effects of capacity alignment and antitrust related matters, adjusted operating income increased by more than 40% to $243 million from $103 million last year. The adjusted operating margin, 9.4% in the quarter, an increase by close to two percentage points from the same period last year and by over four percentage points from Q1. Operating cash flow was $202 million, which was $30 million lower than the same period last year.

Sales increased by 13%, mainly due to new product with higher prices and favorable currency translation effects.

Speaker 3: The strong sales increase and cost reduction activities led to a substantially improvement in adjusted operating income.

The strong sales increase and cost reduction activities led to a substantially to implement substantial improvement in adjusted operating income excluding.

Speaker 3: excluding effects of capacity alignment and antitrust related matters, adjusted operating income increased by more than 40% to 243 million from 103 million US dollar.

Excluding effects of capacity alignment and antitrust related matters adjusted operating income increased by more than 40% to $243 million.

<unk> hundred 3 million U S dollar last year.

Speaker 3: The adjusted operating model in 9.4% in the quarter and increased by close to two percentage points from the same period last year and by over four percentage points from the first course.

The adjusted operating more than one 4% in the quarter and increased by close to two percentage points from the same period last year and by over four percentage points from the first quarter.

Speaker 3: Operating cash flow was $202 million US dollars, which was $30 million US dollars lower than the same period last year. The main reason for the lower cash flow was the unusual strong cash flow last year, which was related to timing effects of customer recovery.

Operating cash flow was $202 million, which was $30 million lower than the same period last year. The main reason for the lower cash flow, what's the unusually strong cash flow last year, which was related to timing effects of customer recoveries.

Mikael Bratt: The main reason for the lower cash flow was the unusual strong cash flow last year, which was related to timing effects of customer recoveries. Looking now on the limited impact of the UAW strike in North America on the next slide. The UAW strike in North America is in its fifth week. The impact, I believe, in Q3 was very limited. Our North American employees are not represented by UAW, but we are indirectly impacted by lost sales and more unpredictable and volatile LVP. In H1 2023, under Detroit Three, North American accounted for around 30% of our global sales, or 36% of our sales in North America. We estimate that we lost less than $2 million in sales in the quarter. As per 19 October 2023, the per week revenue hit from the assembly plant strike is around $6 million.

Speaker 3: Looking now on the limit impact of the UAW strike in North America on the next slide.

Looking now on the climate impact of the UAW strike in North America on the next slide.

Speaker 3: The U.A.W. strike in North America is in its fifth week. The impact of the leave in Q3 was very limit.

The UAW strike in North America is in its fifth week.

The impact of go live in Q3, it was very limited.

Speaker 3: Our North American employees are funded by UAW, but we are indirectly impacted by lost sales and more unpredictable and volatile LVP.

Our North American I'm pleased on.

By UAW, but we are indirectly impacted by lost sales and more unpredictable and volatile.

Speaker 3: First half, 23 and the Detroit 3 North American accounted for around 30% of our global sales. All 36% of our sales are in a-

In.

First half 'twenty, three and the Detroit three North American accounted for around 30% of our global sales or 36% or a sale.

Speaker 3: We estimate that we lost less than 2 million in sales in third. As per of two.

We estimate that we lost less than 2 million in sales in fourth quarter.

As per October 19th.

Speaker 3: The per week revenue hit from the assembly plant strike is around 6 million.

The per week revenue hit from the Assembly plant strike is around 6 million.

Mikael Bratt: We have developed a response plan to the strike and built some inventory of components and finished products to support a quick ramp up when the strike is over. At this point, it's difficult to estimate the full impact of the UAW strike on our Q4 sales and profitability. There are many unknown factors, including scope, length of action, as well as potential recovery of lost volumes after the strike, but also possible sales increases for brands not affected by the strike actions. Our full year 2023 indications are based on the assumption that the UAW strike is not prolonged beyond what is included in the S&P Global October outlook. Looking now on the announced structural cost reductions initiatives on the next slide. To secure our medium and long competitiveness and to support our financial targets, we are accelerating our global structural cost reductions as previously communicated.

Speaker 3: We have developed bonds plan to destroy and build some inventory of components and finished products to support a quick ramp up when the strike is over.

We have the.

Bonds plan to the strike and build some inventory of components and finished products to support a quick ramp up when the strike is over.

Speaker 3: At this point, it's difficult to estimate the full impact of the UWAW strike on our fourth quarter sales and profitability.

At this point, it's difficult to estimate the full impact of the UAW strike on our fourth quarter sales and profitability.

Speaker 3: There are many unknown factors, including scope, length of action, as well as potential recovery of lost volumes of the strike, but also possible sales increases for brands not affected by the strike action.

There are many unknown factors, including scope lengths of action as well as potential recovery of lost volumes. After the strike, but also possible sales increases for brands not affected by the strike actions.

Speaker 3: A full year 2023 indications are based on the assumption that the U.S. double strike is not prolonged beyond what is included in the FMP Global October out.

Our full year 2023 indications are based on the assumption that the UAW strike is not prolong.

What is included in the S&P Global October outlook.

Speaker 3: Looking now on the announced structural cost reduction initiatives on the next slide.

Looking now on the announced structural cost reductions initiatives on the next slide.

Yeah.

Speaker 3: To secure our medium and long-contept competitiveness and to support our financial targets, we are accelerating our global structural cost reductions as previously communiqued.

To secure our medium long concept competitiveness and to support our financial targets, we are accelerating our global structural cost reductions as previously communicated.

Speaker 3: He includes a substantial reduction of our global workforce with a particular focus on our European operation.

Mikael Bratt: This includes a substantial reduction of our global workforce with a particular focus on our European operations. These initiatives will continue to optimize our geographic footprint for a more effective structure while reducing costs and driving margin improvement and cash flow. We intend to simplify and consolidate how we operate in all areas. The headcount reduction will affect people in our offices, technical centers and plants, including leadership positions at all levels. On 13 July, we announced the first step of our planned reductions of around 1,100 indirect and direct employees. On 5 October, we announced the reduction of 300 indirect employees in China, Japan, Sweden, the US, and the closure of an office in the Netherlands. These first steps are expected to reduce costs by around $35 million in 2024, $65 million in 2025, and $85 million when fully implemented.

This includes a substantial reduction of our global workforce with a particular focus on our European operations.

Speaker 3: These initiatives will continue to optimize our geographic footprint for a more effective structure while reducing costs and driving improvement volume and cash.

These initiatives will continue to optimize our geographic footprint for more effective structure, while reducing costs and driving it.

Volume and cash flow.

Speaker 3: We intend to simplify, and complete how we operate in all areas.

We intend to simplify how we operate in all areas.

Speaker 3: that head counter-duction will affect people to base our offices, technical centers, and plans including leadership positions at all levels.

The head count reduction will affect people base, our offices technical centers and plants, including leadership positions at all levels.

Speaker 3: On July 13th, we announced the first step of our planned reductions of around 1100 indirect and direct employees.

On July 13th we announced the first step of our.

Our planned reductions of around 1100 indirect and direct them. Please.

Speaker 3: On October 5th, we announced the reduction of 300 indirect employees in China, Japan, Sweden, and the state and the closure of an office in Nerala.

On October 5th we announced the reduction of 300 indirect employees in China, Japan, Sweden.

States and the closure of an office in Netherlands.

Speaker 3: These first steps are expected to reduce cost by around 35 million in 2024, I think I million in 2025 and 85 million one fully implement.

These first steps are expected to reduce costs by around $35 million in 2024.

Maybe in 2025 and $85 million when fully implemented.

Speaker 3: Looking now on our sales growth in more detail on the next slide.

Mikael Bratt: Looking now on our sales growth in more detail on the next slide. Our consolidated net sales increased to $2.6 billion, a record for Q3. This was close to $300 million or 13% higher than a year earlier, driven by price, volume, and currencies. Out-of-period cost compensations contributed with $6 million. Out-of-period compensations are retroactive price adjustments and other compensations that mainly relates to Q1 and Q2 but negotiated in Q3. Looking on the regional sales split, Asia accounted for 40%, Americas for 35%, and Europe for 25%. We outlined our organic sales growth compared to light vehicle production on the next slide.

Looking now on our sales growth in more detail on the next slide.

Speaker 3: Our consolidated net sales increased to $2.6 billion USD, a record for the third quarter.

Our consolidated net sales increased to $2 6 billion U S dollar a record for the third quarter.

Speaker 3: This was close to 300 million US dollars or 13% higher than the year earlier. Driven by price, volume and tolerance.

This was close to $300 million or 13% higher than a year earlier driven by price volume.

Speaker 3: Out of the period cost comparisons contributed with 6 minutes.

And currencies.

Out of the period cost compensations contributed with $6 million.

Speaker 3: out of period conversations are retroactive price adjustments and other conversations that mainly relate to first and second quarters. What go shaded in the third course.

Out of period compensations are retroactive price adjustments and other compensations that mainly relates to first and second quarters.

Gold shaded in the third quarter.

Speaker 3: Looking on the regional space, Asia accounted for 40%. America's for 35 and Europe for 25.

Looking on the regionals.

Asia accounted for 40% Americas 435 in Europe 425.

Speaker 3: We outline our organic sales growth compared to light vehicle production on the next.

We outlined our organic sales growth compared to light vehicle production on the next slide.

Speaker 3: I am very pleased that our organic sales growth significantly out-of-forn global light vehicle production growth in the third quarter. As we continue to execute...

Mikael Bratt: I am very pleased that our organic sales growth significantly outperformed global light vehicle production growth in Q3 as we continued to execute on our strong order book. According to S&P Global, Q3 light vehicle production increased by close to 4% year-over-year. This was 7 percentage points higher than expectations at the beginning of the quarter, with most of the higher than expected production coming from domestic OEMs in China, and OEMs in Eastern Europe. In the quarter, we outperformed global light vehicle production by around 7 percentage points. We outperformed in the rest of Asia by 15 percentage points, in Japan by 14 percentage points, and in China by 6 percentage points. The performance in China was mainly driven by increasing sales to the fast-growing domestic Chinese OEMs.

Yeah.

I am very pleased that our organic sales growth significantly outperformed global light vehicle production growth in the third quarter.

We continued to execute on our strong order book.

Speaker 3: According to S&P Global, third quarter, light vehicle production increased by close to 4% year over year. This was 7% this point higher than the expectations at the beginning of the quarter.

According to S&P global third quarter light vehicle production increased by close to 4% year over year. This was seven percentage points higher than our expectations at the beginning of the quarter.

Speaker 3: with most of the higher than expected production coming from thick oeums in China and oeums in Eastern Europe .

With most of the higher than expected production coming from the Oems in China and Oems in Eastern Europe .

Speaker 3: In the group, we have to vote globalized weekly production by around 7%

In the quarter outperformed global light vehicle production by around seven percentage points.

Speaker 3: We outperformed in the rest of Asia by 15% stitch points, in Japan by 14% stitch points, and in China by 6%.

We outperformed in the rest of Asia by 15 percentage points in Japan by 14 percentage points and in China by six percentage points.

Speaker 3: The performance in China was mainly driven by increasing sales to the fast growing domestic Chinese OEM.

The performance in China was mainly driven by increasing sales stupid the fast growing domestic Chinese Oems.

Speaker 3: Our sales to this group out-of-the-form line-to-beak production we close to 13th-inch points as we continue to deliver all the strong audible quenching.

Mikael Bratt: Our sales to this group outperformed light vehicle production with close to 30 percentage points as we continue to deliver on the strong order book in China. We expect the positive year-over-year sales growth trend to continue into Q4. On the next slide, we see some key model launches from Q3. In the quarter, we had a high number of product launches, especially in China and Europe. The trend towards electrification is clear, with 6 models being available as electric version. 6 of the models shown on this slide have an Autoliv content per vehicle of around $300 or higher, with the highest at over $750. In terms of Autoliv sales potential, the BMW i5 5 Series launch is the most significant.

Our sales to this group outperformed light vehicle production with close to 30 basis points as we continued to deliver on a strong order book in China.

Speaker 3: We expect the positive year of year sales growth trend to continue into the fourth quarter.

We expect the positive year over year sales growth trend to continue into the fourth quarter.

Speaker 3: On the next slide we see some key model launches from the third course.

On the next slide we see some key model launches from the third quarter.

Speaker 3: In the quarter, we had a high number of product launches, especially in China, Europe . The trend towards electrification.

In the quarter, we had a high number of product launches, especially in China and Europe .

The trend towards electrification is clear.

Speaker 3: with six models being available as electric version.

With six models being available as electric version.

Speaker 3: Six of the models shown on this slide have an out-to-live content for the vehicle of around $300 or higher, with the highest at over $750 US dollars.

Six of the models shown on this slide have an ultra live content per vehicle of around $300 or higher with the highest at over 750 U S dollars.

Speaker 3: In terms of how to let's say potential the BMW i5 5 series launch is the most significant.

In terms of outlet sales potential the B M. W. I five five series launch is the most significant.

Mikael Bratt: For the full year, we expect a record number of launches with high number in China, Europe, and South Korea. I will now hand it over to our CFO, Fredrik Westin, who will talk about the financials on the next few slides.

Speaker 3: For the full year, we expect a record number of launches with high number in China, Europe and South Korea.

For the full year, we expect a record number of launches with high number in China, Europe , and South Korea.

Speaker 3: I will now hand it over to our CFO , Frederic Kristine, who will talk about the financials on the next few slides.

I will now hand, it over to our CFO <unk>, who will talk about the financials on the next few slides.

Speaker 4: Thank you, Miguel. This night highlights our key figures for the third quarter of 2023 compared to the third quarter of 2022.

Fredrik Westin: Thank you, Mikael. This slide highlights our key figures for Q3 2023 compared to Q3 2022. Our net sales were $2.6 billion. This was a 13% increase. The gross profit increased by $82 million or by 21% to $465 million, while the gross margin increased by 1.3 percentage points to 17.9%. The gross profit increase was primarily driven by price increases, volume growth, lower cost for material, and premium freight. This was partly offset by increased costs for personnel related to volume growth and wage inflation. In the quarter, we made a total adjustment of $11 million to the operating income, of which $10 million was for capacity alignments.

Thank you Micha.

It highlights our key figures for the third quarter of 2023 compared to the third quarter of 2022.

Speaker 4: Our net sales were 2.6 billion. This was a 13% increase. The gross profit increased by 82 million, or by 21% to 465 million. While the gross margin increased by 1.3% to 17.9%.

Our net sales were $2 6 billion. This was a 13% increase the gross profit increased by 200, sorry by $82 million or by 21% to $465 million, while the gross margin increased by one three percentage points to 17, 9%.

Speaker 4: The growth profit increase was primarily driven by price increases, volume growth, lower cost for material and premium.

The gross profit increase was primarily driven by price increases volume growth lower costs for material and premium freight.

Speaker 4: This was partly offset by increased cost for personnel related to volume growth and weight gain.

This was partly offset by increased costs for personnel related to volume growth and wage inflation.

Speaker 4: In the quarter, we made a total adjustment of 11 million to the operating income of which 10 million was for capacity.

In the quarter, we made a total adjustment of $11 million to the operating income of which $10 million was for capacity alignments.

Speaker 4: The adjusted operating income increased from 173 million to 243 million. And the adjusted operating in large increased by 180 basis points to 9.4%. I will explain more when we-

Fredrik Westin: The adjusted operating income increased from $173 million to $243 million, and the adjusted operating margin increased by 180 basis points to 9.4%. I will explain more when we go through the operating income bridge. Adjusted earnings per share diluted increased by $0.04, where the main drivers were $0.57 from higher adjusted operating income, partly offset by $0.10 from financial items and $0.07 from taxes. Our adjusted return on capital employed and return on equity increased to 25% and 21% respectively. We paid a dividend of $0.66 per share in the quarter, and we repurchased and retired around 1.23 million shares for $120 million under our stock repurchase program. Looking now on the adjusted operating income bridge on the next slide.

The adjusted operating income increased from $173 million to $243 million and the adjusted operating margin increased by 180 basis points to nine 4%.

I will explain more when we go through the operating income bridge.

Speaker 4: Adjusted earnings per share, the looted increased by 4 cents, where the main drivers were 57 cents from higher adjusted operating incomes, hardly all set by 10 cents from financial items, and 7 cents from tax.

Adjusted earnings per share diluted increased by 40.

Were the main drivers were 57 <unk> from higher adjusted operating income.

Partly offset by <unk> from financial items and seven from Texas.

Speaker 4: are adjusted, return on capital and fluid and return on equity increased to 25% and 21% respect.

Our adjusted return on capital employed and return on equity increased to 25% and 21% respectively.

Speaker 4: We paid a dividend of 66 cents per share in the quarter and we repurchased and retired around 1.2 to $3 million shares for $120 million under our stock repurchased program.

We paid a dividend of $6 <unk> per share in the quarter.

We repurchased and retired around one point to two 3 million shares for $120 million under our stock repurchase program.

Speaker 4: Looking now on the adjusted operating in Cambridge on the next...

Looking now on the adjusted operating income bridge on the next slide.

Fredrik Westin: In Q3 2023, our adjusted operating income of $243 million was $70 million higher than the same quarter last year. Our operations were positively impacted by improved pricing and other customer compensations, higher volumes, lower costs for premium freight, as well as our strategic initiatives that were partly offset by the significant headwinds from general cost inflation. The impact from raw material prices was limited. Out of period cost compensation was approximately $6 million lower than during the same period last year. FX impacted the operating profit by -$8 million. This was mainly a result of negative translation effects. Costs for SG&A and RD&E net combined was $14 million higher, mainly due to higher personnel costs and projects. However, in relation to sales, it was down 50 basis points.

Speaker 4: In the third quarter of 2023, or adjusted operating income of 243 million, was 70 million higher than the same quarter last year.

In the third quarter of 2023, our adjusted operating income of $243 million was $70 million higher than the same quarter last year.

Speaker 4: Our operations were positively impacted by improved pricing and other customer compositions, higher volumes, lower cost for premium freight, as well as our strategic initiatives that were partly offset by the significant headwinds from general cost inflation. The impact from...

Our operations were positively impacted by improved pricing.

Other customer compensation higher volumes lower cost for premium freight as well as our strategic initiatives that were partly offset by the significant headwinds from general cost inflation.

The impact from raw material prices was limited.

Speaker 4: Out of period cost compensation was approximately 6 million lower than during the same period last.

Out of period cost compensation was approximately 6 million lower than during the same period last year.

Speaker 4: FX impacted the operating profit negatively by 18 million. This was mainly a result of negative cancellation.

FX impacted the operating profit negatively by $8 million. It was this was mainly a result of negative translation effects.

Speaker 4: Costs for SGNA and RD&E net combined was 14 million higher, mainly due to higher personnel costs and projects. However, in relation to sales,

Costs for SG&A and <unk> net combined was $14 million higher mainly due to higher personnel costs and projects.

However in relation to sales it was down 50 basis points.

Speaker 4: As a result, the leverage on the higher sales, excluding currency effects, was in the upper half of our typical 20 to 30% operational leverage.

Fredrik Westin: As a result, the leverage on the higher sales, excluding currency effects, was in the upper half of our typical 20% to 30% operational leverage range. This is despite not getting any leverage on the inflation compensation from our customers. Looking now on the cash flow on the next slide. For Q3 2023, our operating cash flow decreased by $30 million to $202 million compared to the same period last year, mainly as a result of less favorable working capital effects, partly offset by the higher net income. Year-to-date operating cash flow increased by $285 million compared to the same period last year to $535 million, mainly due to higher adjusted operating income and less negative working capital effects. During Q3, working capital grew by $36 million, driven by higher inventories.

As a result, the leverage on the higher sales excluding currency effects was in the upper half of our typical 20% to 30% operational leverage range. This is despite not getting any leverage on the inflation compensation from our customers.

Speaker 4: This is despite not getting any leverage on the inflation compensation from our customers.

Looking now on the cash flow on the next slide.

Yes.

Speaker 4: For the third quarter of 2023, or 13, decreased by 30 million to 202 million compared to the same period last year, mainly as a result of less favorable working capital effects, partly offset by the higher net.

For the third quarter of 2023.

Operating income decreased by $30 million to $202 million compared to the same period last year, mainly as a result of less favorable working capital effects, partly offset by the higher net income.

Speaker 4: Year-to-date operating cash flow increased by 285 million compared to the same period last year to 535 million, mainly due to higher adjusted operating income and less negative working capital.

Year to date operating cash flow increased by $285 million compared to the same period last year.

Two $535 million, mainly due to higher adjusted operating income and less negative working capital effects.

Speaker 4: During the third quarter, working capital grew by 36 million, driven by higher end.

During the third quarter working capital grew by $36 million driven by higher inventories.

Speaker 4: We will provide more information on trade working capital on a later

Fredrik Westin: We will provide more information on trade working capital on a later slide. Net capital expenditures decreased to $151 million from $164 million in the previous year. Net capital expenditures in relation to sales was 5.8% compared to 7.1% a year earlier. Free cash flow was $50 million in Q3, $18 million lower than a year earlier, and year-to-date, free cash flow has improved by $186 million to $107 million. Our full year indication of an operating cash flow of around $900 million is unchanged. Last twelve months, cash conversion, defined as free cash flow in relation to the net income, was 99%. Now looking on our trade working capital development on the next slide.

We will provide more information on trade working capital.

Speaker 4: Capital expenditure's net decreased to 151 million from 164 million in the previous

Later slide.

Capital expenditures net decreased to $151 million from $164 million in the previous year.

Speaker 4: Capital expenditure's net inflation to sales was 5.8% compared to 7.1% a year.

Capital expenditures net in relation to sales was five 8% compared to seven 1% a year earlier.

Speaker 4: Pre-Caselo was 50 million in Q3, 18 million lower than a year earlier. And here today, Pre-Caselo has improved by 186 million to 170.

Free cash flow was $50 million in Q3, 18 million lower than a year earlier and year to date free cash flow has improved by 186 million to $170.

Speaker 4: Our full year indication of an operating cash flow of around 900 million is unsh-

Our full year indication of an operating cash flow of around $900 million is unchanged.

Speaker 4: Last 12 months cash conversion defined as pre-cash low in relation to the net income was 99.

Last 12 month cash conversion defined as free cash flow in relation to the net income was 99%.

Speaker 4: Now looking on our trade works in capital developments on the next slide.

Now looking at our trade working capital development on the next slide.

Fredrik Westin: During Q3, trade working capital increased by $11 million, driven by $35 million higher inventories, partly offset by $14 million higher accounts payables, and by $10 million in lower receivables. The higher inventories was mainly due to the continued volatility and the UAW strikes. In 2019, we launched our capital efficiency program, aiming to improve working capital by $800 million. To date, we have achieved almost $350 million, all from payables so far. Receivables, and especially inventories, are lagging due to the high call-off volatility and hence planning challenges resulting in inefficiencies. We do expect this to improve significantly in tandem with a reduced call-off volatility. Now looking on our leverage ratio development on the next slide. Our debt leverage ratio at the end of September 2023 was 1.3 times, unchanged compared to the prior quarter.

Speaker 4: During the third quarter, trade working capital increased by 11 million, driven by 35 million higher inventories, partly offset by 14 million higher accounts payables, and by 10 million and lower receivables.

During the third quarter trade working capital increased.

<unk> increased by $11 million.

Driven by $35 million higher inventories, partly offset by $14 million higher accounts payables and by $10 million and lower receivables.

Speaker 4: The higher inventories was mainly due to the continued volatility and the UAW strike.

The higher inventories was mainly due to the continued volatility and the UAW strikes.

Speaker 4: In 2019, we launched our Capital Efficiency Program, aiming to improve working capital by 800 million. To date, we have achieved almost 350 million all from payables so far.

In 2019, we launched our capital efficiency program aiming to improve working capital by 800 million to date, we have achieved almost 350 million all from payables so far.

Speaker 4: Receivables and especially inventories are lagging due to the high-cola volatility and hence planning challenges resulting in inefficient

Receivables and especially inventories are lagging due to the high call a volatility enhanced planning challenges, resulting in inefficiencies.

Speaker 4: We do expect this to improve significantly and tan them with a reduced call of volatility. Now looking on our

We do expect this to improve significantly in tandem with our reduced call of volatility.

Now looking on our leverage ratio development on the next level.

Speaker 4: Our debt leverage ratio at the end of September 2023 was 1.3 times unchanged compared to the prior quarter.

Our debt leverage ratio at the end of September 2023 was one three times unchanged compared to the prior quarter.

Fredrik Westin: This was a result of $26 million higher net debt and $77 million higher twelve months trailing adjusted EBITDA. Now looking on shareholder returns on the next slide. Autoliv has shown in the past several years its ability to generate solid cash flow in periods with difficult market environments such as COVID lockdowns, the war in Ukraine, industry supply chain challenges, and related substantial decline in light vehicle production. It produced dividend payments and share repurchases to create shareholder value. Historically, the dividend has usually represented a yield of approximately 2% to 3% in relation to the average share price. Over the last five years, we have reduced the net debt significantly while returning $1.2 billion directly to shareholders. This includes stock repurchases of 3.6 million shares for a total of $317 million, part of our current stock repurchase program.

Speaker 4: This was a result of 36 million higher net depth and 77 million higher 12 months training adjusted even today. Now looking on.

This was a result.

$26 million higher net theft and $77 million higher.

<unk> months trailing adjusted EBITDA.

Now looking on shareholder returns on the next slide.

Speaker 4: I'll leave us shown in the past several years its abilities to generate solid cash flow and periods with difficult market environments such as COVID lockdowns, the war in Ukraine, industry supply chain challenges and related substantial decline in light vehicle production.

Yes.

Alterative is shown in the past several years its ability to generate solid cash flow in periods with difficult market environments, such as Covid lockdowns, the warrant Ukraine industry supply chain challenges and related a substantial decline in light vehicle production.

Speaker 4: both use dividend payments and share repurchases to create shareholder value.

Produce dividend payments and share repurchases to create shareholder value.

Speaker 4: Unfortunately, the dividend has usually represented a yield of approximately two to three percent in relation to the average ship.

The dividend is usually represented a yield of approximately 2% to 3% in relation to the average share price.

Speaker 4: Over the last five years, they have reduced the net debt significantly, while returning 1.2 billion directly to Cheryl.

Over the last five years, we have reduced the net debt significantly while returning $1 2 billion directly to shareholders.

Speaker 4: This includes stock repurchases of 3.6 million shares, per total of 317 million, part of our current stock repurchase program.

This includes stock repurchases of $3 6 million shares for a total of $317 million.

Part of our current stock repurchase program.

Fredrik Westin: We are considering several factors when executing the program, such as our balance sheet, the cash flow outlook, our credit rating, and the general business conditions, not only the debt leverage ratio. We always strive for the balance that is best for our shareholders, both long and short term. I now hand it back to Mikael Bratt.

Speaker 4: We are considering several factors when executing the program, such as our balance sheets, the cash flow outlook, our credit rating, and the general business conditions, not only the debt leverage rate.

We are considering several factors were executing the program such as our balance sheet, the cash flow outlook, our credit rating and the general business conditions, not only the debt leverage ratio.

Speaker 4: We always strive for the balance that is best for our shareholders both long and short term.

We strive for the balance that is best for our shareholders, both long and short term.

Speaker 3: I now had a make back to you. Thank you for a break. Looking at the next slide.

I'll now hand, it back to you.

Mikael Bratt: Thank you, Fredrik. Looking at the next slide. As supply chains have improved in many regions, vehicle demand, sales backlogs, and inventory restocking are now the main drivers of market development. S&P Global now expects that the Q4 global light vehicle production to increase by 3.6% compared to last year. Compared to the Q3, volumes are expected to increase by around 2%, mainly to normal seasonality from summer shutdowns in the Q3. Despite concerns surrounding elevated vehicle pricing in some markets and deteriorating trade conditions, global full year 2023 light vehicle production is projected to increase by over 7%. This is 250 basis points higher than their forecast from July.

Fredrik.

Looking at the next slide.

Speaker 3: As supply chains have improved in many regions, vehicle demand, sales backlogs and inventory stocking are now the main drivers of market development.

Our supply chains have improved in many regions vehicle demand sales backlogs and inventory restocking or now the main drivers of market development.

Speaker 3: S&P Global now expects that the fourth quarter global life-baker production to increase by 3.6% compared to last year

S&P global now expects that the fourth quarter global light vehicle production to increase by three 6% compared to last year.

Speaker 3: Compared to the third quarter, volumes are expected to increase by around 2%, mainly to normal sustainability, from summer shutdowns in the third.

Prior to the third quarter volumes are expected to increase by around 2% due mainly to normal seasonality from summer shutdowns in the third quarter.

Speaker 3: Despite concerns surrounding elevated vehicle pricing in some markets and deteriorating credit conditions, global full year 2023 light vehicle production is projected to increase by over 7%.

Yes.

Despite concerns surrounding elevated vehicle pricing in some markets and deteriorating credit conditions global full year 2023 light vehicle production is projected to increase by over 7%.

Speaker 3: This is 250 basis points higher than their forecast from July .

This is 250 basis points higher than their forecast from July .

Speaker 3: This increase is driven by lower content vehicle models in China and higher growth in Eastern Europe while production forecasts for higher content markets Western Europe and North America is lower.

Mikael Bratt: This increase is driven by lower content vehicle models in China and higher growth in Eastern Europe, while production forecasts for higher content markets, Western Europe, and North America, are lowered. For Autoliv, this change impacts average content per vehicle negatively by more than 800 points compared to S&P's July forecast. Light vehicle production in China continues to show relative strength, owing to both a strong EV demand and export activity, mainly benefiting the domestic OEMs. Near-term production, light vehicle production in North America continues to be impacted by the ongoing UAW strike. The latest S&P forecast for Q4 is revised down to -7%. This includes a continuation of the strike actions already announced through Thanksgiving.

This increase is driven by lower content vehicle models in China, and higher growth in eastern Europe , while production forecast for higher content markets.

Western Europe , and North America is lowered.

Speaker 3: For how to leave this change impact average content per vehicle negative.

For our delayed this change impacts average content per vehicle negatively.

Speaker 3: By more than 800 points compared to SMPs, July 4k.

By more than 800 points compared to S&P's July forecast.

Speaker 3: Life vehicle production in China continues to show relative strength, owing to both a strong EV demand and export activity. Mainly benefiting the

Light vehicle production in China continues to show relative strength.

Going to both a strong EBIT demand and export activity.

Mainly benefiting the domestic Oems.

Speaker 3: Near-term production, light vehicle production in North America continues, it will be impacted by the ongoing UAW strike.

Near term production light vehicle production in North America continues to be impacted.

The ongoing UAW strike.

Speaker 3: The latest S&P forecast for the fourth quarter is revised down to minus 7.7.

The latest S&P forecast for the fourth quarter is revised down to minus 7%.

This includes.

Speaker 3: continue variation of the strike actions all are announced through Thanksgiving.

So continue variation of the strike actions already announced through Thanksgiving.

Speaker 3: Production in Europe is to lower extent secured by OEM sales backlogs. However, we are set in to see the underlying demand has abated due to higher vehicle price, this tight-to-credit condition.

Mikael Bratt: Production in Europe is to a large extent secured by OEM sales backlogs. However, we are set to see the underlying demand has abated due to higher vehicle prices and tighter credit conditions, and the order backlogs at OEMs are shrinking going into 2024. We base our full year sales indication on global light vehicle production growth of around 7%. Now looking at the expected adjusted operating margin progression in the next slide. For the Q4, we expect substantial improvements of the adjusted operating margin. We anticipate further cost compensations from customers. The headcount reductions that we talked about previously should support operating leverage and profitability. We expect continued high year over year sales growth, supported by launches, higher light vehicle production, and higher prices. We have continued to see an improvement of supply chain stability throughout the year with reduced customer call off volatility.

Production in Europe is to large extent secured by Oems sales backlogs. However, we are and to see the underlying demand.

<unk> due to higher be comprised tight credit conditions and the order backlogs at the Oems are shrinking going into 2024.

Speaker 3: and the order backlogs at the WM's are shrinking going into 2024.

Speaker 3: We base our full year sales indication on global light vehicle production growth of around 7%.

We based our full year sales indication on global light vehicle product showing growth of around 7%.

Speaker 3: Now looking at the expected operating more in progression in the next slide.

Now looking at with respect adjusted operating margin progression in the next slide.

Speaker 3: For the fourth quarter, we expect substantial improvements of the adjusted operating model.

For the fourth quarter, we expect substantial improvement of the adjusted operating margin.

Speaker 3: We anticipate further cost compensations from customers. The headcount reductions that we talked about previously should support operating leverage and profitability.

We anticipate further cost compensation from customers the head count reductions that we talked about previously should support operating leverage and profitability.

Operator: Good day and thank you for standing by.

Operator: Welcome to the Autoliv's third quarter of 2023 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Speaker 3: We expect continued high-zero-veger sales growth supported by launches, higher-life vehicle production and higher price.

We expect continued high year over year sales growth supported by launches higher light vehicle production and higher prices.

Speaker 3: We have continued to see an improvement of supply strength stability throughout the year. We reduced customer call of volatility.

We have continued to see an improvement of supply chain stability throughout the year with reduced customer call off volatility.

Speaker 3: However, improvement is somewhat slower than we had expected, as it deteriorated somewhat in Europe in Q3.

Mikael Bratt: However, the improvement is somewhat slower than we had expected as it deteriorated somewhat in Europe in Q3. This, together with the higher sales and adverse FX development, means that we expect a Q4 adjusted operating margin improvement year-over-year of around 1.5 to 2 percentage points, in line with the previously communicated improvement pattern of around 2 percentage points each quarter throughout 2023. Looking at our full year 2023 financial indications on the next slide. This slide shows our updated full year 2023 indications. The indications exclude costs and gains from capacity alignment, antitrust-related matter, a litigation settlement, and other discrete items. Our full year indication is based on a light vehicle production growth assumption of around 7%, up from 4% in the previous indication.

However, the improvement is somewhat slower than we had expected as it deteriorated somewhat in Europe in Q3.

Speaker 3: These together with the higher sales and adverse effects development means that we expect the fourth quarter adjusted operating margin improvement year over year of around 1.5 to 2%.

Operator: I would now like to hand the conference over to your speaker today, Anders Trapp. Please go ahead. Thank you Sandra.

These together with the higher sales and adverse FX development means that we expect the fourth quarter adjusted operating margin improvement year over year over around one five to two percentage points in line with the previously communicated improvement pattern of around two percentage points.

Anders Trapp: Welcome everyone to our third quarter 2023 earnings call. On this call, we have our president and CEO, Mikael Bratt and our chief financial officer, Fredrik Westin and me, Anders Trapp, VP in West relations. During today's earnings call, Mikael and Fredrik will, among other things, provide an overview of the strong sales earnings and cash flow development we had in the third quarter, the structural cost reduction activities that we are doing to secure our long and medium-term competitiveness and our updated full-year indications as well as provide an update on our general and business and market conditions. We will then remain available to respond to your questions and as you show the slides are available on outtoleaf.com.

Speaker 3: In line with the previously communicated improvement pattern of around two percentage points each quarter throughout 2023.

Each quarter throughout 2023.

Speaker 3: Looking at our full year 2023 financial indications on the next.

Looking at our full year 2023 financial indications on the next slide.

Speaker 3: This slide shows our updated full year 2023 indicates.

This slide shows our updated full year 2023 indications the.

Speaker 3: The indications exclude costs and gains from capacity alignment and to trust related matter, a litigation settlement and other discrete items.

The indications exclude costs and gains from capacity alignment antitrust related matters and litigation settlement and other discrete items.

Speaker 3: Our full year indication is based on a light vehicle production growth assumption of around 7% up from 4% in the previous indication.

Our full year indication is based on the light vehicle production growth assumption of around 7%.

Anders Trapp: Turning to the next slide, we have the safe harbor statement which is an integrated part of this presentation and includes a Q&A that follows. During the presentation, we will reference some non-USGAP measures. The reconciliations of historical, non-USGAP measures are disclosed in our quarterly press release that is available on outtoleaf.com and in the 10Q that will be filed with the SEC.

Up from 4% in the previous indication.

Mikael Bratt: As a consequence, our organic sales is expected to increase organically by around 17% instead of the earlier indications of growth of around 15%. Currency translation effects are assumed to be around +1%. The range for the adjusted operating margin is unchanged around 8.5% to 9%. Operating cash flow is expected to be around $900 million. Our positive cash flow trend should allow for continued high shareholder return. Note that our full year 2023 indications are based on assumptions that the UAW strike is not prolonged beyond what is included in the S&P Global October outlook. I will now hand it over to Fredrik to briefly talk about 2024 and the improvements we see.

Speaker 3: As the consequence, our organic sales is expected to increase organically by around 17%. Instead of the earlier indications of growth of around 50%.

That's the cost accounts, our organic sales is expected to increase organically by around 17% instead of the earlier indications of growth of around 15%.

Speaker 3: Tarnancy translation effects are assumed to be around positive 1 to

Currency translation effects are assumed to be around positive 1%.

Speaker 3: The range for the adjusted operating model is unchanged around 8.5 to 9.5.

The range for the adjusted operating margin is unchanged around 8.5% to 9%.

Anders Trapp: And lastly, I should mention that this call is intended to conclude at 3 p.m. Central European time. So please follow limit to questions per person.

Speaker 3: Operating Casulo is expected to be around 900 million.

Operating cash flow is expected to be around $900 million.

Speaker 3: Our positive cash flow trend should allow for continued high share of the return.

Mikael Bratt: I will now hand over to our CEO, Mikael Bratt. Thank you Anders, looking on the next slide. Our performance continues to improve substantially in the third quarter. First, I would like to thank our employees for their great contributions to the third quarter results and the efforts to further strengthen our near and medium-term competitiveness. Our organic sales at our bubble did yet outperforming light vehicle production significantly, especially in Asia. The strong growth was mainly a result of higher than expected light vehicle production, product launches and customer compensations for inflationary pressure.

Our positive cash flow trend should allow for continued high shareholder return.

Speaker 3: Note that our full year 2023 indications are based on the sounds that the USW strike is not prolonged beyond what is included in the S&P Global October Outlook. I will now hand it over to Fredrick to briefly talk about 2024 and the improvements we see.

Note that our full year 2023 indications are based on assumptions that the USW strike is not prolong beyond what is included in the S&P Global October outlook.

I will now hand, it over to <unk> to briefly talk about 2024 and the improvements we see.

Fredrik Westin: Yeah, turning to the next slide. For 2024, we see some tailwinds and headwinds. The main tailwinds include call off stability leading to direct labor efficiency improvements, savings from the structural initiatives as outlined earlier, effects of continued operational improvements from automation, digitalization, but also favorable raw materials and executing on the strong order book. The main headwinds include operational headwinds from expected continued inflationary pressure, although smaller than this year, which we expect to lead to a customer compensation catch up later in the year, just as it was in 2022 and 2023. Considering these potential tailwinds and headwinds, we expect a year over year improvement in adjusted operating margin. We expect 2024 to be an important step towards our medium term target of 12% adjusted operating margin.

Turning to the next slide.

Speaker 4: For 2024, we see some tailwinds and headwinds.

For 2024, we see some tailwind and headwinds.

Speaker 4: The main tailwinds include call of stability, leading to direct labor efficiency improvements, savings from the structural initiatives, as outlined earlier, effects of continued operational improvements from automation, utilization, but also favorable raw materials and executing on the strong order.

The main tailwind include call it stability, leading to direct labor efficiency improvements savings from restructuring initiatives as outlined earlier.

Effects from FX of continued operational improvements from automation digitalization.

Mikael Bratt: The adjusted operating income was a new record for a third quarter since the VUNEAR spin-off. We generated a broad-based improvement in key areas, including growth and operating margins both year over year and sequentially. Our cash flow was strong, and the debt leverage remained well within our target range. While we maintained our dividend and almost tripled the consumers' repurchase compared to the second quarter. We are making progress towards our intention of reducing our indirect workforce by up to 2000.

Were also favorable raw materials and executing on the strong order book.

Speaker 4: The main headwinds include operational headwinds from expected continued inflationary pressure, although smaller than this year, which we expect to lead to a customer conversation catch up later in the year. Just as it was in 2022 and 2020.

The main headwinds include operational headwinds from expected continued inflationary pressure, although smaller than this year, which we expected to lead to a customer compensation catch up later in the year just as it was in 2022 and 2023.

Speaker 4: Considering these potential tailwinds and headwinds, we expect a year-over-year improvement in adjusted operating mode.

Considering these potential tailwind and headwinds we expect our year over year improvement in adjusted operating margin.

Speaker 4: We expect in 2024 to be an important step towards our medium-term target of 12% adjusted operating margin.

We expect 2024 to be an important step towards our medium term target of 12% adjusted operating margin.

Fredrik Westin: As we have communicated, the medium term target rests on a few key conditions, which are that global light vehicle production is at least 85 million, that the call off volatility is back to pre-pandemic levels, and that we have full compensation for inflationary pressure after 2021 for a full year. We intend, as usual, to come back with a 2024 full year indication in connection with our Q4 earnings release in January. I'll now hand it back to you, Mikael.

Speaker 4: As we have communicated, the median turn targets rest on a few key, or targets rest on a few key conditions, which are that global light vehicle production is at least 85 million. That the call of volatility is back to pre pandemic levels and that we have full compensation for inflationary pressure after 2021 for a full year.

As we have communicated the medium term targets rests on a few key target rests on a few key conditions, which are global light vehicle production is at least $85 million that.

Mikael Bratt: We have now detailed a large part of our structural cost reduction actions including optimization of the company's geographic footprint and organization. The National Highway Transportation Safe Administration has issued an initial decision to recall 52 million airbag inflators benefited by our competitor AORC. Autoliv estimates that less than 10% of the identified inflators were included in airbag modules that Autoliv supplied to customers after Autoliv acquired certain Delphi assets in 2009, 2009. Autoliv is not aware of any performance issues regarding the AORC inflators included with its airbags.

That the Cola volatility is back to pre pandemic levels and that we have full compensation for inflationary pressure after 2021 for a full year.

Speaker 4: We intend, as usual, to come back with a 2024 full year indication in connection with our fourth quarter earnings release in January . And I now hand it back to you, Miguel. Thank you, Ferric. On.

We intend as usual to come back with a 2020 for full year indication in connection with our fourth quarter earnings release in January .

Mikael Bratt: Thank you, Fredrik. On to the next slide. This concludes our formal comments for today's earnings call, and we would like to open the line for questions from analysts and investors. I will now hand it over back to our operator, Sandra.

I'll hand, it back to your makeup.

<unk> onto the next slide.

Speaker 3: This concludes our formal comments for today's earning school and we would like to open the line for questions from analyst and investor.

This conclude our formal comments for today's earnings call and we would like to open the line for questions from analysts and Investor.

Speaker 3: I will now hand it over back to our operation operator Sandra.

I will now hand, it over back to our operation operator Sandra.

Speaker 1: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the roster. Our first question comes from the line of Emmanuel Rosner from Deutsche Bank. Please go ahead.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Mikael Bratt: At this stage, it is too early to talk about any replacement plan. We are of course prepared to support our customers with replacement products. The life vehicle production in 2023 is now expected to develop slightly better than expected and we have therefore increased our full-year organic sales indications in line with this. We expect both quarter-adjusted operate the modern to improve by 1.5 to 2 percentage points compared to last year. In line with the previously communicated improvement pattern.

Speaker 1: Do we throw your question? Please press star one and one again.

So your question. Please press star one on one again.

Please standby, while we compile the roster.

Speaker 5: Our first question comes from the name of Emmanuel Rosner from Deutsche Bank. Please go ahead.

Yeah.

Our first question comes from the LLC Emmanuelle Rosner from Deutsche Bank. Please go ahead.

Speaker 6: Thank you so much. I have two questions around some of the factors you've highlighted going into 2024. The first one you're mentioning on the slide is the customer call-offs.

Emmanuel Rosner: Thank you so much. I had two questions around some of the factors you've highlighted going into 2024. The first one you're mentioning on the slide is the customer call offs as a positive. So just was curious if you can give a little bit more color of what you've actually seen in Europe this quarter, where you indicated that there may have been some, you know, sequential deterioration. What do you think drives this? And, you know, is that sort of like an ongoing issue? And then as we move essentially into 2024, how do we think about these savings? Is it just better incremental margin on the higher volume?

Alright, thank you so much.

Two questions around some of the factors you highlighted going into.

2020 for the first one you're mentioning on the slide is the.

Our customer call offs.

Speaker 6: as a positive. So just what's good if you give a little bit more color of what you've actually seen in Europe this quarter where you...

And as a positive. So just was curious if you could give a little bit more color of what you've actually seen in Europe . This quarter, where you indicated that they may have been some sequential deterioration. What are you seeing drive this and is that sort of an ongoing issue and then as we move essentially into two.

Mikael Bratt: Additionally, we expect the ongoing reorganization of our global functions and European operations to lead to a 3.5 lower tax rate for 2023 than previously anticipated. These changes are also expected to reduce our normalized tax rate from 2024 and onwards to range of 25 to 30%.

Speaker 6: indicated that they may have been some sequential de-scaration. What do you think drives this? And is that sort of an ongoing issue? And then as we move essentially into 2024, how do we think about these savings? Is it just...

124, how do we think about these savings is it just better incremental margin on the higher volume or is it like is there a discrete pockets of I don't know head count reduction that you can.

Speaker 6: better incremental margin on higher volume or is there a discrete packet of

Emmanuel Rosner: Is it like, is there a discrete bucket of, I don't know, headcount reduction that you can achieve as a result of more stable call-offs?

Speaker 6: I don't know, head count reduction that you can, but P as a result of more stable calloff.

Mikael Bratt: Now looking at the significant sequential cost improvements on the next slide. Year-to-date we have created a broad-based improvement in key areas, both year-over-year and sequentially. On this slide, we highlight the sequential improvements.

As a result of more stable call offs.

Mikael Bratt: Thank you, Emmanuel. Let me start with the call-offs then and hand over to Fredrik to take you through the second part of your question there. As we have talked about throughout, and not only this year but since some time back here, we have had a challenging situation when it have come to this volatility resulting in a stop and go in our operations here. That has throughout the year improved and gone in the right direction, including Europe. What we saw in Q3 here in Europe was that it turned to the worst again, and that is, I would say, purely related to supply issues in our customers' value chain here. Of course, the root cause for that could vary.

Speaker 3: Thank you, Manuel. Let me start with the call of staff and hand over to Fredrik to take it through the second part of your question there.

Thank you Amanda.

Let me start with the core loss down and hand over to Frederic to take you through to the second part of your question.

Speaker 3: As we have talked about throughout not only this year but some time back here, we have had a challenging situation where it has come to this volatility resulting in a stop and go in our operations here and that has throughout the year improved and gone in the right direction including Europe . But what we saw in Q3 here in Europe was that it

As we have talked about throughout.

Only this year, but <unk> seen some time back here.

Mikael Bratt: In the third quarter, we continued to actively address our cost base when negotiating with our customers to secure pricing and other conversations that reflect the high inflation. Our labour efficiency continues to trend up, supported by the implementation of our strategic initiatives, including automation and digitalization. Our gross margin improved by 270 basis points compared to the first quarter and by 90 basis points from the second quarter. This is mainly the result of the higher labour efficiency and customer service.

We have had a challenging situations.

Come to this volatility, resulting in a stop and go in.

Our operations here and that has.

Throughout the year improved in.

Going into right direction, including Europe , but what we saw in Q3 here in Europe was that it.

Speaker 3: turned to the worst again. And that is, I was very purely related to supply issues in our customers' value chain here. So of course, the root cause for that could vary. But for example, we still see that the the semiconductor situation is still a problem for some of our customers.

Turn to divorce again and that is I would say purely related to <unk>.

Supply issues in the in our customers' value chain here.

So of course, the root cause for us could virus, but but brooks.

Mikael Bratt: For example, we still see that the semiconductor situation is still a problem for some of our customers. We have no reason to believe that this deterioration in Europe comes from any end consumer deterioration or situation at all. I see it very much connected to the reasons we have had the last quarters and years here that unfortunately went in the wrong direction for Europe. Otherwise, I would say as an average, we are climbing up towards the 90% level. As you remember, pre-pandemic, we were basically at 100. We are still far from where we were before the pandemic when it comes to the stability altogether in the company, regardless of region there. Fredrik, maybe.

For example, we still see that.

The semi conductor situation is still a problem for some of our customers.

Mikael Bratt: The positive trend for RDNE and SDNA in relation to sales have continued and we have now signed by 130 basis points. This is one point since Q1. Combined with a gross modern improvement, these lead to a substantially improvement in adjusted operating modern.

Speaker 3: We have no reason to believe that this deterioration in Europe will come.

We have no reason to believe that this.

The deterioration in Europe , where it comes from Annie and consumer.

Speaker 3: from any end consumer deterioration or situation at the wall. So I see it very much connected to

Deterioration or situation of the world So I see it very much.

Speaker 3: The reasons we have had the last quarters and years here that unfortunately went in the wrong direction for.

<unk> two <unk> since we've had the last quarters and years here.

Mikael Bratt: Looking now on financials in more detail on the next slide, takes increased by 13%, mainly due to new productless, higher prices, and favourable currency translation effects. The strong sales, increased and cost reduction activities led to a substantially improvement in adjusted operating income, excluding effects of capacity alignment and antitrust related matters, adjusted operating income increased by more than 40% to 243 million from 103 million US dollar last year. The adjusted operating more than 9.4% in the quarter and increased by close to two percentage points from the same period last year and by over four percentage points from the first quarter.

Fortunately went in the wrong direction for <unk>.

Speaker 3: for Europe . But otherwise, I would say as an average, we are climbing up towards the 90% level. But as you remember, pre-pandemic, we were basically at 100. So we are still...

For Europe , but otherwise I would say as an average we are climbing up towards the.

90% level.

But as you remember pre pandemic, we were basically at 100, so we are still.

Speaker 3: far from where we were before the pandemic when it comes to the stability altogether in the camp and the regardless of reading there. So, Fredic, maybe. Yeah, let's go then.

Far from where we were before the pandemic when it comes to the stability altogether in the company regardless of region there.

Fredrik Westin: Yeah. For next year, I mean, it's, if you look at S&P Global, based on that, they will also, or the expectation is that we should also expect some even a bit limited volume growth. That should help the margin development. It is more importantly the further improvement on the call-offs stability. I mean, we do have significant inefficiencies in our operations due to the current significantly lower level of stability. The further this comes up to the 100% that Mikael mentioned, the more it will allow us to move back or operate back at the efficiency levels that we've been used to.

So fredrik maybe yes.

<unk>.

Yes for next year I mean, it's.

Speaker 4: If you look at S&P Global, based on that, they will also, the expectation is that we should also expect some even a bit limited volume growth.

If you look at S&P global.

Just on that they will also or the expectation is that we should also expect some.

Youre going to be limited volume growth.

Speaker 4: That should help the margin development, but then it is more importantly, the further improvement on the call of stability. And we do have significant inefficiencies in our operations due to the current.

So that should that should help the margin development, but then it is more importantly b.

Further improvement on the call offs.

Stability and we do have significant inefficiencies in our operations.

Mikael Bratt: Operating cashflow was $202 million, which was $30 million US dollar lower than the same period last year. The main reason for the lower cashflow was the unusual strong cashflow last year, which was related to timing effects of customer recoveries.

Due to the current.

Speaker 4: a significantly lower level of stability. And the further this comes up to the 100% that Mikael mentioned, the more it will allow us to move back or operate back at the efficiency levels that we've been using.

A significantly lower level of stability.

And the further this comes up to the 100% that Nick had mentioned.

The more it will allow us to move power operate back at the <unk>.

Patient to levels that we've been used to.

Speaker 4: But of course then the third component is the structure initiatives that we have added on to this and both on the indirect side and the direct side that is also supported by what we're doing on automation and digitalization.

Fredrik Westin: Of course, the third component is the structural initiatives that we have added on to this, and both on the indirect side and the direct side, that is also supported by what we're doing on automation and digitalization.

But of course, then the third component is destruction initiatives that we have added on to this and both on the indirect side and the direct side.

Mikael Bratt: Looking now on the limit impact of the UAW strike in North America on the next slide.

But it is also supported by what we're doing on automation and digitalization.

Mikael Bratt: The UAW strike in North America is in its fifth week. The impact of the live in Q3 was very limited. Our North American employees are surrounded by UAW, but we are indirectly impacted by lost sales and more unpredictable and volatile LVP. In first half, 23 and the Detroit 3 North American accounted for around 30% of our global sales, or 36% of our sales in the US. We estimate that we lost less than 2 million in sales in quarter.

Speaker 6: Thank you. And then my technical question is specifically by the structural initiatives. I think earlier in the year when you had first announced,

Emmanuel Rosner: Thank you. My second question is specifically about the structural initiatives. I think earlier in the year when you had first announced a plan for headcount reduction, I think you had mentioned at the time a potential total of 8,000 headcount reduction. I think so far, based on the plans announced, the first steps, I think you announced maybe about 1,400 or so of this 8,000. Obviously a lot more to go. My questions are, is 8,000 still, you know, the right number in the current environment? And then what could be the timing for not just announcement of additional steps, but can any of those still benefit 2024, or would that be beyond that?

Okay.

Thank you and then my second question is specifically about the structural initiatives.

I think earlier in the year when you had first announce.

Speaker 6: a plan for headcount reduction. I think you had mentioned at the time a potential total of 8,000 headcount reduction. I think so far, based on the plans announced, the first steps

Our plan for head Count reduction I think you had mentioned at the time.

<unk> total of.

8000 head count reduction I think so far based on the plan to announce the first steps I think you announced maybe about 1400 or so of these 8000, so obviously a lot more to go.

Speaker 6: I think you announced maybe about 1,400 or so of this 8,000. So obviously, a lot more to go. So my questions are, is 8,000 still the right number in the current environment? And then what could be the timing for?

So my questions are.

<unk> still the right number and in the current environment and then what could be the timing for now just announcements of additional steps, but again any of those still benefit 2024 or would that be beyond that.

Mikael Bratt: As per October 19th, the per week revenue hit from the assembly plant strike is around 6 million. We have developed bonds planned to the strike and build some inventory of components and finished products to support a quick ramp up when the strike is over.

Speaker 6: Not just announcements of additional steps, but can any of those still benefit 2024 or would that be beyond that?

Fredrik Westin: Yeah. We did announce 8,000, but we also split that into two groups. It was 2,000 of what we call indirect or salaried employees, and then 6,000 on the direct side. The direct side, the 6,000, is very much connected to what we just talked about before. It is also based on that we come back or that the stability levels on the call-offs also support that. We should be able to come back to the regular type of productivity achievements that we have been operating at, which would then allow us to take out 6,000 people with the volumes of end of March as the basis for that number. That is progressing.

Speaker 4: Yeah, so we did announce 8,000 but we also split that into two groups. It was 2,000 of what we call indirect or as a salary Employees and then 6,000 on the direct

Okay.

Yes, so we did announce a thousand but we also split it into two groups. It was 2000 of what we call indirect order salaried employees and then 6000 on the direct side.

Mikael Bratt: At this point, it's difficult to estimate the full impact of the UAW strike on our fourth quarter sales and profitability. There are many unknown factors, including scope, length of action, as well as potential recovery of lost volumes of the strike. But also possible sales increases for brands not affected by the strike actions. Our full year 2023 indications are based on the assumption that the UAW strike is not prolonged beyond what is included in the S&P Global October outlook.

Speaker 4: The direct side, the 6,000 is very much connected to what we just talked about before. So it is also based on that we come back or that the stability levels on the call-offs also support.

The direct side. The 6000 is very much connected to what we just talked about before so it is also.

Based on that we come back with that stability levels on the core loss.

Speaker 4: And then we should be able to come back to the regular type of productivity achievements that we have been operating at, which would then allow us to take out 6,000 people with the volumes of end of March as the basis for that number. And that is progress.

Also support that.

And then we should be able to come back to the regular type of productivity achievements that we have been operating at at which would then allow us to take out 6000 people.

With the volumes of end of March as the basis for that number and that is progressing.

Speaker 4: Then on the 2000, yeah, we have announced so far 1,400 of which 300 were direct. So of the 2000, we have announced 1,100. And also the savings associated with that. So there's more to come, but we have so far progressed on more than half of the 2000. And also cost wise of what we've taken also more than half.

Fredrik Westin: On the 2000, we have announced so far 1400, of which 300 were direct. Of the 2000, we have announced 1100. Also the savings associated with that. There's more to come, but we have so far progressed on more than half of the 2000. Also cost-wise of what we've taken, also more than half has been booked already. You can also see now in Q3 that our headcount is down by 400 employees on the indirect side. Yes, some of those activities are already in place.

And then on the 2000, yes, we have announced so far 1400.

Mikael Bratt: Looking now on the announced structural cost reductions initiatives on the next slide. To secure our medium and long-contept competitiveness and to support our financial targets, we are accelerating our global structural cost reductions as previously communicated. He includes a substantial reduction of our global workforce with a particular focus on our European operations. These initiatives will continue to optimize our geographic footprint for a more effective structure while reducing costs and driving improvement volume and cash flow.

Of which 300 more direct so of the 2000, we have announced 1100.

And.

Also the savings associated with that.

So theres more to come but we have so far progressed on more than half of the 2000.

And also cost wise of what we've taken.

Also more than half has been booked already.

Speaker 7: And you can also see now in the third quarter that our head count is down by 400 employees on the intellect side. So yes, some of those activities are already in place. Thank you very much.

And you can also see now in the in the third quarter that our head count is down four by 400 employees on their on the indirect side. So yes some of those.

Activities are already in place.

Emmanuel Rosner: Thank you very much.

Thank you very much.

Mikael Bratt: Thank you.

Mikael Bratt: We intend to simplify short and complete how we operate in all areas. The head-count reduction will affect people to base our offices, technical centers and plans including leadership positions at all levels. On July 13, we announced the first step of our planned reductions of around 1100 indirect and direct employees. On October 5, we announced the reduction of 300 indirect employees in China, Japan, Sweden, and the states, and the closure of an office in Netherlands. These first steps are expected to reduce costs by around 35 million in 2025 and 85 million when fully implemented.

Fredrik Westin: Thank you.

Operator: Thank you. We will now take the next question from the line of Colin Langan from Wells Fargo. Please go ahead.

Thank you. Thank you. Thank you.

We will now take the next question.

Speaker 5: from the line of calling, lung comes from Wells Fargo, please go ahead.

From the line of Colin Langan from Wells Fargo. Please go ahead.

Colin Langan: Oh, great. Thanks for taking my questions. You know, in the last slide, you noted inflationary pressure and the timing of customer compensation as sort of the big headwind into next year. I mean, what are the new inflationary costs that we should be thinking about into next year? Or is it that you're getting a little bit more pushback on getting recoveries? Is that the other part of the issue? In general, can you just remind us how much of what you've already gotten recovered is in the piece price versus what would actually need to get maybe renegotiated at the start of next year?

Oh, great. Thanks for taking my questions.

Speaker 8: In the last slide, you noted inflationary pressure and the timing of customer compensation is sort of the big headwind into next year. I mean, what are the new inflationary costs that we should be thinking about into next year?

And the last slide you noted inflationary pressure and the timing of customer compensation and sort of the big headwind into next year.

What are the new inflationary costs that we should be thinking about into next year.

Speaker 8: or is it that you're getting a little bit more pushback on getting recoveries? Is that the other part of the issue? And then in general, can you just remind us how much of what you already got recovered is in the peace price versus what would actually need to get maybe reneg-

Or is it that youre getting a little bit more pushback on getting recoveries is that.

Part of the issue and then in general can you just remind us how much of what you've already gotten recovered as in the piece price versus what actually going to get may be renegotiated at the start of next year.

Mikael Bratt: Looking now on our sales growth in more detail on the next slide, our consolidated net sales increased to $2.6 billion USD, a record for a third quarter. This was close to $300 million USD or 13% higher than a year earlier, driven by price, volume, and currencies. Out of the period cost of transactions contributed with six million.

Mikael Bratt: Yeah. On the first, I mean, we use the same macroeconomic forecast that you have at hand and available. We do expect that the inflation level should come down as they are right now, and they should be lower next year than this year. We do also expect that especially labor will have a higher inflation level next year than what it has had historically as historical averages, but most likely less than what we've had in this year. We'll come back to that when we talk more specifically on 2024. On the recovery side, I think we are, or we have progressed as expected.

Speaker 4: Yeah, so on the first, I mean, we use the same macro economic forecast that you have to your hand and available. So we do expect that inflation level should come down as they are right now and they should be lower next year than this year.

Yeah. So on the first I mean, we use the same macroeconomic forecast.

You have to her hand and available.

So we do expect that inflation level should come down as they are at now and they should be lower next year than this year.

Speaker 4: But we do also expect that special labor will have a higher inflation level next year than what it has had as historical averages. But most likely less than what we've had in this year. But we'll come back to that when we talk more specifically on 20-

But we do also expect that especially labor will have a higher inflation level next year than what it is has had.

Historical averages, but most likely less than what we've had in this year.

Mikael Bratt: Out of period compensations are retroactive price adjustments and other compensations that mainly relate to first and second quarters, what low-shaded in the third quarter. Looking on the regional states, Asia accounted for 40%, America's for 35, and Europe for 25.

We'll come back to that when we talk more specifically on 2024.

Speaker 4: Then on the recovery side, I think we are as, we have progressed as expected. When we did indicate after the second quarter's earnings or in the call that there might be a delay from Q3 and to Q4, but that has not really happened. So Q3 developed more or less as we had expected initially, meaning that is not as much back and loaded in this year as we had communicated back then.

Then on the recovery side I think we are.

We have progressed as expected when we did indicate after the second quarter's earnings or.

Mikael Bratt: When we did indicate after the Q2 earnings or in the call that there might be a delay from Q3 into Q4, but that has not really happened. Q3 developed more or less as we had expected initially, meaning that it's not as much back-end loaded in this year as we had communicated back then. It was more piece price recovery in the Q3 here now than lump sum than what we had communicated in the Q2.

Or in the call.

That there might be a delay from Q3 into Q4, but that has not really happened in Q3 develop develop more or less as we had expected initially.

Mikael Bratt: We outline our organic sales growth compared to light vehicle production on the next slide.

Meaning that it's not as much back end loaded in this year as we had communicated back down here.

Mikael Bratt: I am very pleased that our organic sales growth significantly outperformed global light vehicle production growth in the third quarter, as we continued to execute on our strong order book. According to S&P Global, third quarter light vehicle production increased by close to 4% year over the year. This was 7% this point higher than expectations at the beginning of the quarter, with most of the higher than expected production coming from domestic OEMs in China and OEMs in Eastern Europe.

Speaker 4: And it was also more peace price recovery in the third quarter here now than Lampson. Then what we had communicated in the second.

And it's also it was more.

Peace price recovery.

In the third quarter here now with a lump sum.

We had communicated in the second quarter.

Colin Langan: does that mean when you go into next year, you'll have to renegotiate those lump sums again? Is that a concern as you go into next year that you might get more pushback given the labor inflation the automakers are facing?

Speaker 8: But does that mean when you go into next year, you'll have to renegotiate those lump sum?

But does that mean when you go into next year.

You'll have to renegotiate those lump sum again.

Speaker 8: that a concern as you go into next year that you might get more pushback.

Our concern as you go into next year that you might get more pushback given the labor inflation the automakers are faster.

Speaker 3: I think, uh, all of the last year we also had lumped some stuff, that's really in all shades of this here. I think the important thing is that we, we, we have a, I would say, a process together with our customers how to get compensated for the inflationary, uh, components here. And, and we have,

Mikael Bratt: No, I think already last year we also had lump sums that we negotiated this year. I think the important thing is that we have, I would say, a process together with our customers how to get compensated for the inflationary components here. We have, I would say, an annual process here where we take that into account. I think the split of what is lump sum and what is more piece price related is connected to the type of inflation. You could say, I mean, if it's something of temporary nature, it should, of course, not need to be in the same level as we move forward. It's a very detailed negotiation with each customer.

I think.

Last year, we also had lump sums that we renegotiated this year I think the important thing is that.

Mikael Bratt: In the growth growth performance, global light vehicle production by around 7% this point. We outperformed in the rest of Asia by 15% this point, in Japan by 14% this point, and in China by 6% this point. The performance in China was mainly driven by increasing sales to the fast growing domestic Chinese OEMs. Our sales to this group outperformed light vehicle production with close to 13th this point, as we continue to deliver on the strong order book in China.

We have I would say.

Process together with our customers how to get compensated for inflationary components here and.

We have.

Speaker 3: I was in annual process here where we take that into account. So I think...

I would say an annual process here, where we take that into account. So I think the split of what is lump sum and what is more a piece price related is connected to the type of inflation.

Speaker 3: The split of what is lumped some and what is more pitch price related is connected to the type of inflation.

Speaker 3: I could say I mean if it's something of temporal nature it should of course not need to be in the same level as we move forward.

Say I mean, if it's something of temporary in nature.

Mikael Bratt: We expect the positive year of year sales growth trend to continue into the fourth quarter.

It should should of course not need to be in the same level.

Speaker 3: So it's a very detailed negotiation with each customer. But what you need to remember also is that this is mirroring what we have with our suppliers. So we have...

As we move forward so.

Mikael Bratt: On the next slide, we see some key model launches from the third quarter. In the quarter, we had a high number of product launches, especially in China, Europe.

Very detailed negotiation with each customer, but what you need to remember also that this is mirroring what we have with our suppliers. So we have.

Mikael Bratt: What you need to remember also is that this is mirroring what we have with our suppliers. We have a fair amount of lump sums paid to our supplier base as well. We balance these two sides of the business here against each other here to make sure that we have a good cost structure and a flexible cost structure to offset any changes there. For me, I feel very comfortable with the way we get compensated here. As long as we are in an inflation environment, this will be ordinary course of business to negotiate with our customers on an early basis for these type of costs.

Speaker 3: a fair amount of land sums paid to our supply base as well. So we balance these two sides of the business here, against the charger here to make sure that we have a good cost structure and a flexible cost.

A fair amount of lump sums paid to our supplier base as well. So we balance these two sides of a.

Mikael Bratt: The trend towards electrification is clear. With six models being available as electric version, six of the models shown on this slide have an Autoliv content per vehicle of around $300 or higher, with the highest at over $750. In terms of Autoliv sales potential, the BMW i5 5 series launch is the most significant. For the full year, we expect the record number of launches with high number in China, Europe, and South Korea.

All of the business here against the charter here to make sure that we have a good cost structure and a flexible cost structure.

Speaker 3: uh to to the Oxford. And a change is there, but uh

The offset and the changes there.

Speaker 8: For me, I feel very comfortable with the way we get compensated here. And as long as we are in inflation environment, this will be an ordinary course of business to negotiate with our customers on an hourly basis for this type of costs. Got it. All right. Thanks for taking my question.

So for me I feel very comfortable with the way, we get compensated here and as long as we are in an inflationary environment. This will be.

Ordinary course of business to negotiate with our customers on an annual basis for these type of costs.

Colin Langan: Got it. All right. Thanks for taking my questions.

Got it alright, thanks for taking my questions.

Mikael Bratt: Thank you.

Operator: Thank you. We will now take the next question. One moment, please. From the line of Mattias Holmberg from DNB Markets, please go ahead.

Thank you.

Fredrik Westin: I will now hand it over to our CFO, Fredrik Westin, who will talk about the financials on the next few slides. Thank you, Mikael.

We will now take the next question.

Speaker 5: one moment please. From the line of Matthias Holmberg from the MB market, please go ahead.

Fredrik Westin: This slide highlights our key figures for the third quarter of 2023, compared to the third quarter of 2022. Our net sales were 2.6 billion. This was a 13% increase. The gross profit increased by 82 million or by 21% to 465 million, while the gross margin increased by 1.3 percentage points to 17.9%. The gross profit increase was primarily driven by price increases, volume growth, lower cost from material, and premium freight. This was partly offset by increased cost for personnel related to volume growth and wage inflation.

One moment, please from the line of Mathias Hornbeck from Dnb markets. Please go ahead.

Mattias Holmberg: Great. Thank you. First, I would just like to clarify on the tax rate, given that it's likely to have quite material impact on the net profit going forward. In order to get to the 20% for the full year, given that you've had sort of a bit above 30% year to date, am I correct to assume that you're paying basically zero tax in Q4? Also on that topic, the 25% to 30% that you see sort of as a new normalized tax rate going forward, quite wide range and also significantly lower than the 32% you've had in the past. Could you specify it perhaps a little bit more than that? Or is there any reason why you've given such a wide range? Thank you.

Speaker 9: Great, thank you. First of all, would you like to clarify on the tax rate given that it's...

Great. Thank you.

First I would just like to clarify on the tax rate given that it.

Speaker 9: have quite material impact on the net profit going forward. So in order to get to the 20% for the full year, given that you've had sort of a bit above 30% here today.

I'd like to jump quite a material impact on the net profit going forward. So in order to get to 20% for the full year.

Given that you've had a bit above 30% year to date.

Speaker 9: Am I correct to assume that you're paying basically zero tax in Q4 and then also on that topic be 25 to 30% that you see New normalize tax rate going forward quite wide range and also significant to lower than a 32% And then the post could you specify it perhaps a little bit more than that or it's very reason why why you've given such a wide range

Am I correct to assume that Youre paying basically zero tax in Q4, and then also on that topic, the 25% to 30% that you see the rest of the new normalized tax rate going forward quite wide range and once the significantly lower than the 32% you had in the past could you specify it perhaps a little bit more than that or is there any reason why why are you <unk>.

Fredrik Westin: In the quarter, we made a total adjustment of 11 million to the operating income of which 10 million was for capacity alignments. The adjusted operating income increased from 173 million to 243 million, and the adjusted operating margin increased by 180 basis points to 9.4%. I will explain more when we go through the operating income range. Adjusted earnings per share that looted increased by 4 cents, where the main drivers were 57 cents from higher adjusted operating income, partly offset by 10 cents from financial items and 7 cents from taxes. Our adjusted return on capital employed and return on equity increased to 25% and 21% respectively.

Such a wide range. Thank you.

Speaker 4: Yeah, so yeah, you're right. I mean, we're taking down the guidance here for the tax from 32% to around 20%. This is due to the ongoing, very significant reorganization of those global functions and our European operation.

Mikael Bratt: Yeah. Yeah, you're right. I mean, we're taking down the guidance here for the tax from 32% to around 20%. This is due to the ongoing, I mean, very significant reorganization of both global functions and our European operations, which is expected to lead to a reduced tax rate in this year, which is also very much associated with the ongoing restructurings. It's also important, this is not cash effective in this year. It will not affect the taxes paid in this year. Going forward, we do expect, as we said, the normalized tax rates to be then around 25% to 30% from 2024 onwards. Yeah, I think using the midpoint of that range is not a bad assumption at the moment.

Yes, so yes, you're right I mean, we were taking down the guidance here for the taxes of 32% to around 20%.

This is due to the ongoing very significant reorganization of both global functions and our European operations, which is expected to lead to a reduced tax rate in this year, which is also very much associated with the ongoing restructuring.

Speaker 4: which is expected to lead to a reduced tax rate in this year, which is also very much associated with ongoing restructuring.

Speaker 4: But it's also important this is not cash effective in this year. So it will not affect the taxes paid in this year.

But it's also important this is not cash effective in this year.

So.

Will not affect the taxes paid in this year.

Speaker 4: Then going forward, we do expect, as we said, the normalized tax rates to be then around 25 to 30% from 2024 onwards.

Then going forward.

We expect as we said that the normalized tax rate to be around 25% to 30%.

Fredrik Westin: We paid a dividend of 66 cents per share in the quarter, and we repurchased and retired around 1.23 million shares for 120 million dollars under our stock repurchased program.

From 2024 onwards.

Speaker 4: using the midpoint of that range is not a bad assumption at the moment. And this would also be also impacting the taxes paid also from 2024 onwards.

Yes.

Using the midpoint of that range is not a bad assumption at the moment and this will then also be.

Mikael Bratt: This would then also be impacting the tax, taxes paid also from 2024 onwards.

Also impacting the tax taxes paid also from 'twenty to 'twenty four onwards.

Fredrik Westin: Looking now on the adjusted operating income bridge on the next item. In the third quarter of 2023, our adjusted operating income of 243 million was 70 million higher than the same quarter last year. Our operations were positively impacted by improved pricing and other customer conversations, higher volumes, lower cost for premium freight, as well as our strategic initiatives that were partly offset by the significant headwinds from general cost interest. The impact from raw material prices was limited.

Mattias Holmberg: Should we view this sort of as a permanent steady state, going forward in terms of tax rates?

Speaker 9: And should we view this sort of as a permanent study state going forward in terms of tax rates?

Mattias Holmberg: Should we view this sort of as a permanent steady state, going forward in terms of tax rates?

And should we view this sort of a permanent steady state going forward in terms of tax rate.

Mikael Bratt: Yes, you can. Yep.

Mattias Holmberg: Great. Thank you. Final question from me. You mentioned the potential recall here of the ARC inflators. I'm just curious, are you as a company liable for the inflators ARC has produced, or how would that work in a potential recall situation?

Yes, you can yes.

Speaker 9: Thank you. And a final question from me. You mentioned the potential recall here of the ARC inflators. I'm just curious.

Great. Thank you.

Final question from me you mentioned the <unk>.

Potential recall here of <unk>.

ERC insulators.

I'm just curious.

Speaker 9: Or you as a company liable for the inflators, or CS produced, or how would that work in a potential equals?

You asked the company liable for.

The <unk> produced or how would that work in a potential re concentration.

Speaker 3: I mean, ARC is, I mean, they are competitors to us. I mean, that's their exposure. Then of course, our part of that, as you mentioned here, is where we have purchased these components from them. So we are also a customer to them in this regard. And

Mikael Bratt: I mean, ARC is a competitor to us. I mean, that's their exposure. Of course, our part of that, as mentioned here, is where we have purchased these components from them. We are also a customer to them in this regard. The portion that is related to Autoliv modules, as far as we understand and see here, there has not been any cases connected to that volume here.

I mean.

Darcy.

Fredrik Westin: Out of period cost compensation was approximately 6 million lower than during the same period last year. FX impacted the operating profit negatively by 18 million. This was mainly a result of negative cancellation effects. Costs for SGNA and RDNA net combined was 14 million higher, mainly due to higher personnel costs and projects. However, in relation to sales, it was down 50 basis points. As a result, the leverage on the higher sales, excluding currency effects, was in the upper half of our typical 20 to 30 percent operational leverage range.

I mean, they are a competitor to us I mean, that's their exposure then of course our.

Part of that.

<unk>.

Is.

Yes.

We have.

Purchased these components from from them.

So we are also a customer to them in this regard.

Speaker 3: the portion that is related to out-to-live modules.

The the portion that is related to two hour to live more deals.

Speaker 3: As far as we understand them, the here that's not been any cases connected to that volume here. So we of course following this development here.

As far as we understand and see here, that's not been any cases connected to that volume here.

Mikael Bratt: We're of course following this development here very closely, but we see this also clearly as something we can support our customers with in case of a recall, but where they need to have replacement, but we are not there yet.

So we of course following this development here.

Fredrik Westin: This is despite not getting any leverage on the inflation compensation from our customers.

Speaker 3: very closely but we see this also clearly as something we can support our customers with in case of over-requel but where they need to have replacement but we are not there yet.

Very closely but.

Fredrik Westin: Looking now on the cash flow on the next slide. For the third quarter of 2023, a short rating decreased by 30 million to 202 million compared to the same period last year, mainly as a result of less favorable working capital effects partly offset by the higher net income. Year-to-date operating cash flow increased by 285 million compared to the same period last year to 535 million, mainly due to higher adjusted operating income and less negative working capital effects.

We see this also.

It clearly is something we can support our customers with in case of over recall, but what I need to have replacement, but we're not there yet.

Mattias Holmberg: Do you believe that you could get compensation in a potential recall from ARC, or would you have to sort of cover that cost yourself?

Speaker 9: And do you believe that you could get compensation in a potential recall from ARC or would you have to sort of cover that cost yourself?

Mattias Holmberg: Do you believe that you could get compensation in a potential recall from ARC, or would you have to sort of cover that cost yourself?

And do you believe that you could get compensation and a potential recall from <unk> or would you have to sort of cover that cost yourself.

Speaker 7: If there would be a such a situation, our expectations of horses that this is on ARC's account, for sure. Thank you. Thank you.

Mikael Bratt: If there would be such a situation, our expectations of course is that this is on ARC's account for sure.

If there would be such a situation and our expectations of course is that this is on <unk> accounts.

Mattias Holmberg: That's clear. Thank you.

That's clear thank you.

Operator: Thank you. We will now take the next question from the line of Jairam Nathan from Daiwa. Please go ahead.

Okay.

Thank you.

Fredrik Westin: During the third quarter, working capital grew by 36 million, driven by higher inventory. We will provide more information on trade working capital on a later slide. Capital expenditures net decreased to 161 million from 164 million in the previous year. Capital expenditures net in relation to sales was 5.8 percent compared to 7.1 percent a year earlier.

We will now take the next question.

Speaker 5: from the line of Jairam Nathan from Dive-out. Please go ahead.

Yes.

From the line of Jairam Nathan from Daiwa. Please go ahead.

Speaker 10: Hi, thanks, thanks for taking my question. I was just wanted to go to the...

Jairam Nathan: Hi. Thanks for taking my question. I was just wanted to go to the LVP outperformance slide. So it looks like the outperformance in North America and Europe have declined quite a bit from H1. What are the main reasons for that, and how should we think about the regional outperformance for next year?

Hi, Thanks, Thanks for taking my question I was just wanted to go to the.

Speaker 10: So it looks like the outperformance in North American Europe have declined quite a bit from the staff.

AAP ultra.

Outperformance light so it looks like the outperformance in North America, and Europe have declined quite a bit from the first half.

Fredrik Westin: Pre-cash flow was 50 million in Q3, 18 million lower than a year earlier, and year-to-date pre-cash flow has improved by 186 million to 107 million. Our full year indication of an operating cash flow of around 900 million is unchanged. Last 12 months cash conversion defined as pre-cash flow in relation to the net income was 99 percent.

And.

What are the main reasons for that and how should we think about the regional outperformance for next year.

Mikael Bratt: No, I think if you go back in time, you can see that this number is a little bit volatile, but the direction is clearly that we are continuing to grow our market share in respective regions you talk about here. Of course, in a single quarter, you can have certain mix effects. I shouldn't read too much into that. I think we are steadily moving towards the market share around 45% that we have communicated earlier on. Yeah, I think we have a good activity level also to backfill our order book here to support that.

Speaker 3: I think if you go back in time, you can see that this number is a little bit volatile, but the direction is clearly that we are continuing to grow our market share in respect to vegans you talked about here. And of course, in a single court, you can have certain mixed effects. So I shouldn't read in too much to that. I think we are

No I think if you go back in time, you can see that this number is a little bit volatile but.

The direction is clearly that we are continuing to grow our market share in respective <unk>.

Fredrik Westin: Now looking on our trade working capital developments on the next slide. During the third quarter, trade working capital increased by 11 million, driven by 35 million higher inventories, partly offset by 14 million higher accounts payables, and by 10 million lower receivables. The higher inventories was mainly due to the continued volatility and the UAW strikes.

You talked about here.

Of course, you're in a single quarter, you can have certain mix effects. So I shouldnt read in too much to that I think we are steadily moving towards the market share of around 45% that we have communicated earlier on.

Speaker 3: then moving towards the market share around 45% that we have communicated earlier on and I think we have a...

Speaker 3: good activity level also to backfill our order.

Yes, I think we have a good activity level also to backfill our order book.

Fredrik Westin: In 2019, we launched our capital efficiency program aiming to improve working capital by 800 million. To date, we have achieved almost 350 million all from payables so far. Receivables and especially inventories are lagging due to the high call of volatility and hence planning challenges resulting in inefficiencies. We do expect this to improve significantly in tandem with the reduced call of volatility.

Supporter.

Jairam Nathan: Okay, thanks. Just finally on the share buybacks and debt, too, on debt levels, given you know the higher interest rate environment and maybe for longer, does that change your thinking on the debt levels and the buyback funding? Thanks.

Speaker 10: Thanks. And just finally on the the share buybacks and debt to on that levels, given you know, the higher interest rate environment and maybe for longer, the that change you're thinking on on all of

Okay. Thanks, and just finally on the share buybacks and debt.

Debt levels, given the higher interest rate environment, and maybe for longer does that change your thinking on that.

Debt levels.

<unk>.

Buyback funding.

Speaker 11: I think we believe that with the good cash flow generating operations we have today, it supports well the buyback program that we are committed to here. And I don't see this being something that would affect our way forward here. Thank you. Thank you.

Mikael Bratt: I think we believe that with the good cash flow generating operations we have today, it supports well the buyback program that we are committed to here. I don't see this being something that would affect our way forward here.

I think we believe that with the good cash flow generating operations, we have today it support well the buyback program.

Fredrik Westin: Now looking on our leverage ratio development on the next our debt leverage ratio at the end of September 2023 was 1.3 times unchanged compared to the prior This was a result of 36 million higher net depth and a 77 million higher 12 months training at the FDA.

We are committed to here and I.

I don't see this being.

Something that would affect our our way forward here.

Jairam Nathan: Okay, great. Thank you.

Okay, great. Thank you.

Operator: Thank you. We will now take the next question from the line of Giulio Pescatore from BNPP Exane. Please go ahead.

Operator: Thank you. We will now take the next question from the line of Giulio Pescatore from BNP Exane. Please go ahead.

Fredrik Westin: Now looking on shareholder returns on the next slide. Autoliva has shown in the past several years its abilities to generate solid cash flow and periods with difficult market environments such as COVID lockdowns, the war in Ukraine, industry supply chain challenges and related substantial decline in light vehicle production. Both use dividend payments and share repurchases to create shareholder value. Historically, the dividend has usually represented a yield of approximately two to three percent in relation to the average share price.

Thank you.

Yeah.

We will now take the next question.

Speaker 5: from the line of Julia Pescatore from BMPP Exxon, please go ahead.

From the line of Giulio Pescatore from BNP Exane. Please go ahead.

Speaker 12: Thanks for picking my question. The first one on the guidance just quickly I just trying to understand exactly what assumptions are you

Giulio Pescatore: Hi, thanks for taking my question. The first one on the guidance, just quickly, just trying to understand exactly what assumptions are you incorporating with regards to the strike. You said you are in line with IHS. Does that mean that you expect the strike to continue till the end of November? I think that's what S&P is currently forecasting. Does that mean 6 million per week until the end of November? Is that what you are including in the 1.5% to 2% margin improvement in Q4? Maybe if you can give us also an indication of what operating leverage or drop-through on that lost revenue are you incorporating in the assumption? Thank you.

Hi, Thanks for taking my question. The first one on the guidance just quickly I'm just trying to understand exactly what assumptions are you.

Speaker 12: incorporating with regards to the strike. So you said you are in line with IHS, does that mean that you expect the strike to continue until the end of November ? I think that's what SMP is currently forecasting. And is that, does that mean six million per week until the end of November ? Is that what you are including in the 1.5 to 2 percent margin improvement? Thank you for and maybe if you can give us also an indication of what operating leverage or drop through on thatdz...

Incorporating with regards to the strike. So you said you are in line with IHS does that mean would you expect the strike to continue until the end of November I think thats, what S&P currently forecasting and is that does that mean $6 million per week until the end of November is that what you are including in the one 5% to 2% margin improvement in Q4.

Fredrik Westin: Over the last five years, they have reduced the net depth significantly while returning 1.2 billion directly to shareholders. This includes stock repurchases of 3.6 million shares, where total of 317 million is part of our current stock repurchase program. We are considering several factors when executing the program such as our balance sheets, the cash flow outlook, our credit rating and the general business conditions, not only the depth leverage ratio. We always strive for the balance that is best for our shareholder response long and short-term.

And maybe if you can give us an indication of what operating leverage or drop through on that lost revenue are you.

Incorporating in the assumption thank you.

Speaker 4: Yeah, so the short answer to your first question is yes. So it is until the end of November and from what we can tell right now, it is around six million per week that is the impact on our top line. Of course, this can change daily.

Mikael Bratt: Yeah. The short answer to your first question is yes. It is until the end of November, and from what we can tell right now, it is around $6 million per week that is the impact on our top line. Of course, this can change daily. On the drop through here, I mean, it remains to be seen what that will be at the end of the quarter. As Mikael mentioned here before, we do see that at the moment the volumes seem to be picked up also by some of the competitors that are not unionized by UAW. It's still a very fluid environment here that we need to monitor throughout the quarter.

Yes, so the short answer to your first question is yes. So it is until the end of November and from what we can tell right now it is around 6 million per week that is the impact on our top line of course this can change daily.

Speaker 4: And on the drop three here, I mean, it remains to be seen what that will be at the end of the quarter.

Fredrik Westin: And now, let me back to you. Thank you, Fredrik.

And on the dropped three year I mean, it remains to be seen what that will be at the end of the.

Mikael Bratt: Looking at the next slide. As supply chains have improved in many regions, vehicle demand, sales backlogs and inventory stocking are now the main drivers of market development. S&P Global now expects that the fourth quarter global life vehicle production to increase by 3.6 percent compared to last year. Compared to the third quarter, volumes are expected to increase by around 2 percent, mainly to normal seasonality from summer shutdowns in the third quarter. Despite concerns surrounding elevated vehicle pricing in some markets and deteriorating credit conditions, global full-year 2023 life vehicle production is projected to increase by over 7 percent.

For the quarter.

Speaker 4: As Mick mentioned here before, we do see that at the moment, the volumes seem to be picked up, also to find some of the competitors. They are not unionized by UAW, so it's still a very fluid environment here that we need to monitor throughout the court.

Sure.

Sneak in mentioned here before we do see that at the moment.

The volumes seem to be picked up positive by some of the competitors.

Not unionized by UAW, So it's still a very fluid ins.

Environment here that we need to monitor throughout the quarter.

Giulio Pescatore: Okay. Thank you. You're also not assuming a big pickup after the end of the strikes, a big pickup in volumes?

Speaker 12: Okay, thank you. And you're also not assuming a big pick up after the end of the strikes, a big pick up in volume.

Okay. Thank you and you're also not assuming a big pick up after the end of the strikes a big pickup in volumes.

Speaker 4: I mean, I think some pick up, if it goes through into basic things giving, and then pick up then to recover some with that volume in the fourth quarter, but again, it's very fluid and it remains to be seen here, how the overall volume source develops.

Mikael Bratt: Yeah. Could be. I think some pickup if it goes through into basically Thanksgiving, and then a pickup then to recover some of that volume in Q4. Again, it's very fluid and it remains to be seen how the overall volumes also develop.

Yeah, I think some some pickup.

Goes through into.

Basically Thanksgiving.

And then a pickup then to recover some of that volume in the fourth quarter, but again, it's very fluid and it remains to be seen how the overall volumes also develop.

Giulio Pescatore: Okay, thank you. The second question on the article. Is it fair to say that for you stand to benefit more than, way more than you stand to lose out of this recall? I mean, both in terms of the potential replacement impact and in terms of the long-term implication with regards to pricing if one of your competitors was to suffer. You know, that's the first part of the question. The second part is, can you maybe help us quantify the potential opportunity for you on the replacement side? Because it feels like it's very significant, right? It's over the course of 10 years, of course, but let's say that, you know, the 52 million recall does materialize.

Speaker 12: Okay, thank you. Then the second question on the article.

Okay. Thank you and then the second question on the on the article.

Speaker 12: Is it fair to say that you stand to benefit more than way more than you stand to lose out of this recall? I mean, both in terms of the potential replacement impact and in terms of the long-term implication where it has to pricing if one of your competitors was to suffer. And if that's the first question and the second part is, can you maybe help us?

Mikael Bratt: This is 250 basis points higher than their forecast from July. This increase is driven by lower content vehicle models in China and higher growth in eastern Europe, while production forecasts for higher content markets, western Europe and North America is lowered. For out-to-leave, this change impacts average content per vehicle negatively. By more than 100 points compared to S&P's July forecast. Life vehicle production in China continues to show relative strength, owing to both strong EV demand and export activity, mainly benefiting the domestic oil.

Is it fair to say that.

Tend to benefit more than the way more than you stand to lose out of this recall I mean, both in terms of the potential replacement impact in terms of the long term implication with regards to pricing at one of your competitors.

Suffer.

The first part of it.

And the second part is can you maybe help us.

Speaker 12: quantified a potential opportunity for you on the replacement side because it feels like it's very significant It's over the course of 10 years of course, but let's say that you know the 52 million recall does Materialize I mean is if I have to say that you might have your 50% share of that recall and you know Can you just help us understand the opportunity here if recall does go into effect?

Quantify the potential opportunity for you on the replacement side because it feels like it's very significantly over the course of 10 years of course, but let's say that.

$52 million recall does materialize.

Giulio Pescatore: I mean, is it fair to say that you might have, you know, 50% share of that recall? You know, can you just help us understand the opportunity here if the recall does go into effect?

Not to say that you might have 50% share of that recall and can you just help us understand the opportunity here if I recall does go into effect I.

Speaker 11: I think it's too premature to speculate in that. I mean, as we all know, it's not in that stage yet. And there is work with Nitsa and of course, ARC and the customer that is ongoing. So we are standing by and...

Mikael Bratt: I think it's too premature to speculate in that. I mean, as we all know, it's not in that stage yet, and there is work with NHTSA and, of course, ARC and the customers there that is ongoing. We are standing by and willing to support our customers if needed, but it's too early to start to talk about any numbers or potentials and so forth in this. We just have to wait and see here.

I think you said.

So pretty mature to.

Percolate in that I mean.

As we all know it's not in that stage yet in that.

Mikael Bratt: Near-term production, life vehicle production in North America continues, it will be impacted by the ongoing UAW strike. The latest S&P forecast for the fourth quarter is revised down to minus 7 percent, himself. This includes the continuation of the strike actions all are announced through thanksgiving. Production in Europe is to large extent secured by OEM sales backlogs. However, we are set in to see the underlying demand has abated due to higher vehicle prices and tight credit conditions. And the order backlogs at the OEMs are shrinking going into 2024. We base our full year sales indication on global light vehicle production growth of around 7%.

There is.

<unk>.

We need Sun and of course, <unk> and the customer side that is ongoing so.

We are standing by.

Speaker 7: willing to support our customers if needed, but it's too early to start to talk about any numbers so potential and so forth in this. We just have to wait and see here. Okay, I'm just good. Okay, thank you.

Willing to support our customers it if needed, but it's too early to.

So start to talk about any numbers, so potentials and so forth and this we just have to wait and see here.

Operator: Okay. Understood. Okay. Thank you. Thank you. We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead.

Giulio Pescatore: Okay. Understood. Okay. Thank you.

Okay understood. Okay. Thank you.

Operator: Thank you. We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead.

Thank you.

Yeah.

We will now take the next question.

Speaker 5: from the line of Agneska, Vilella, from Northeer, please go ahead.

From the line of Agnieszka <unk> from Nordea. Please go ahead.

Agnieszka Vilela: Perfect. Thank you. Starting with the EBIT bridge, I note that probably for the first time in nine quarters you reported positive impacts from raw materials. A moderate one, but still positive. Could you please maybe talk about some deflation that you see in your cost input and what it is related to? That's my first question.

Speaker 13: Perfect, thank you. So starting with the EBIT bridge, I noticed that probably for the first time in nine quarters you reported positive impacts from raw materials, a moderate one, but still positive. So could you please maybe talk about some deflation that you see in your cost input and what it is related to? That's my first question.

Perfect. Thank you so starting with the EBIT Bridge I know, that's probably for the first time in nine quarters <unk> reported positive impacts from raw materials.

Mikael Bratt: Now looking at the expected adjusted operating more in progression in the next slide.

A moderate one.

But that's still positive so could you. Please maybe talk about some deflation that you're seeing in your cost input.

Mikael Bratt: For the fourth quarter, we expect substantial improvements of the adjusted operating model. We anticipate further cost compensations from customers. The head count reductions that we talked about previously should support operating leverage and profitability. We expect continued high year-over-year sales growth supported by launches higher light vehicle production and higher prices. We have continued to see an improvement of supply chance stability throughout the year with reduced customer call of volatility. However, improvement is somewhat slower than we had expected as it deteriorated somewhat in Europe in Q3.

Is this related to that's my first question.

Speaker 4: Yeah, correct. It's the first time in a long time here that we see positive effect of raw materials. We have guided for a flat development for the full year, which means that we should see an even...

Mikael Bratt: Yeah, correct. It's the first time in a long time here that we see positive effect on raw materials. We have guided for a flat development for the full year, which means that we should see an even stronger positive development also in Q4. Yes, we do see that raw materials prices are coming or costs are coming down for us. So far it's been mainly driven by non-ferrous materials, especially magnesium that has come down from the peaks, but also steel has been favorable. But we have seen still some increases this year, especially on the textile side. But we also expect that this should be more favorable going forward.

Yes, correct. It's the first time in a long time here that we see a positive effect of raw materials, we have guided for a flat development for the full year, which means that we should see an even stronger positive development also in the fourth quarter.

Speaker 4: stronger positive development also in the fourth quarter. So yes, we do see that raw materials prices are coming, or costs are coming down for us.

Yes, we do see that raw materials prices are coming where costs are coming down for us.

Speaker 4: So far it's been mainly driven by non-ferrous materials, especially magnesium that has come down from the peaks, but also steel has been favorable.

So far it's been mainly driven by non ferrous materials, especially magnesium.

That has come down from the peaks, but also steel has been favorable.

Speaker 4: But we have seen still some increases this year, especially on the textile side. But we also expect that this should be more favorable going forward.

But we have seen still some increases this year, especially on the textile side, but we also expect that there should be more favorable going forward.

Mikael Bratt: This together with the higher sales and adverse effects development means that we expect the fourth quarter adjusted operating margin improvement year-over-year over around 1.5 to 2% points in line with a previously communicated improvement pattern around 2% points each quarter throughout 2023.

Mikael Bratt: On what this means for next year, I mean, as we said before, I mean, we have this six to nine months time lag between where spot prices or indices are moving until that manifests itself in our cost structure. We are monitoring very closely what that means, but we'll talk more specifically about that then with the guidance for next year.

Speaker 4: Then on what this means for next year, I mean, as we said before, we have this six to nine months time lag between where both prices or indices are moving until that manifests itself in our cost structure. So we are monitoring very closely what that means, but we'll talk more specifically about that than with the guidance for next year.

Then on.

This means for next year.

We've said before we have the six to nine months time lag between when.

There is a spot prices or indices are moving until that manifests itself in our cost structure.

So we are monitoring very closely what that means but we will talk more specifically about that but the guidance for next year.

Mikael Bratt: Looking at our full year 2023 financial indications on the next slide. This slide shows our updated full year 2023 indications. The indications exclude costs and gains from capacity alignment and the trust related matter, a litigation settlement and other discrete items. Our full year indication is based on a light vehicle production growth assumption of around 7% up from 4% in the previous indication. As a consequence, our organic sales is expected to increase organically by around 17% instead of the earlier indications of growth of around 15%. Current seed translation effects are assumed to be around positive 1%. The range for the adjusted operating margin is unchanged around 8.5 to 9%. Operating cash flow is expected to be around 900 million.

Speaker 13: Great, thank you. Just to understand the flow up on that.

Agnieszka Vilela: Great. Thank you. Just to understand the follow-up on that, will your customers require then price decreases because of lower input costs for you? Or, how should we think about it?

Okay, great. Thank you and just to understand a follow up on that.

Speaker 13: Will your customers require them price decreases because of lower input costs for you or how should we think about it?

Really our customers, who require then price decreases because of lower input costs for you or how should we think about it.

Speaker 4: Yeah, we do expect that we will then also give some of that. Those price decreases back to our customers. And then we have a higher level of pass through closest with the customers now. So yes, when the raw material costs come down, we then also adjust our prices accordingly. But I mean, that should have a favorable impact on the margin because it was margin dilutive on the way up. And then it should be somewhat a creative on the way down.

Mikael Bratt: Yeah, we do expect that we will then also give some of that those price decreases back to our customers. Then we have a higher level of pass through clauses with the customers now. Yes, when raw material costs come down, we then also adjust our prices accordingly. I mean, that should have a favorable impact on the margin because it was margin dilutive on the way up, and then it should be somewhat accretive on the way down.

Yes, we do expect that we will then also give some of that.

Price decreases back to our customers and then we have a higher level of pass through clauses, where the customers now so yes, when raw material costs come down. We then also adjust our prices accordingly.

But I mean that should have a favorable impact on the margin because it was margin dilutive on the way up and then it should be somewhat accretive on the way down.

Speaker 13: Perfect. Thank you. And then my second question, I think Mike you mentioned that the car production in Europe so far is secured by backlog, but you see demand abating abating also order backlog shrinking going into 2024 and if Colorie could provide to us when you speak to your customers in Europe in regards to their production planning

Agnieszka Vilela: Perfect. Thank you. Then my second question, I think, Mikael, you mentioned that the car production in Europe so far is secured by backlog, but you see demand abating and also order backlog shrinking going into 2024. If you could provide clarity to us when you speak to your customers in Europe in regards to their production planning?

Perfect. Thanks, and then my second question I think Michael you mentioned that.

The car production in Europe , So far is secured by backlog, but you see demand debating.

Abating also or their backlog shrinking going into 2024, and the color you could provide to us when you speak to your customers in Europe .

Mikael Bratt: Our positive cash flow trend should allow for continued high shareholder return.

In regards to their production planning.

Speaker 11: Yeah, I think, you know, I mean, the problem we have here is that the

Mikael Bratt: Yeah, I think, as you know, I mean, the problem we have here is that, even if we have visibility, the pickups is deteriorating. It's in the short-term perspective where we have the challenges here, I mean, within the week, here. Otherwise, I think when it comes to the overall production planning, there is nothing indicating that we are looking at the weaker European market. I think what is happening is, of course, that after all these, you know, years of backlog buildup, that is now normalizing. I would say from a consumer point of view, we have nothing indicating that we should have lower volume due to that.

Yes, I think.

Mikael Bratt: Note that our full year 2023 indications are based on the assumptions that the USW strike is not prolonged beyond what is included in the S&P Global October Outlook.

So no I mean, the problem we have here is that the.

Speaker 11: even if we have visibility, the pickups is deteriorating. So it's in the short.

Even if we have visibility.

The pickup Suez.

The deteriorating so you've seen the short.

Speaker 11: So our perspective where we have the challenges here, I mean within the week here. I think when it comes to the overall production planning, that is nothing indicating that we are looking at the weaker European market. I think what is happening is, of course, that after all these years of

Fredrik Westin: I will now hand it over to Fredic to briefly talk about 2024 and improvements Yeah, turning to the next slide. For 2024, we see some tailwinds and headwinds. The main tailwinds include call of stability, leading to direct labor efficiency improvements, savings from the structural initiatives, as outlined earlier, effects of continued operational improvements from automation, digitalization, but also favorable raw materials and executing on the strong order book.

So our perspective, where we have the challenges within the week or otherwise I think when it comes to the overall production planning there is nothing indicating that we are looking at the weak European market.

I think what is happening is of course that after all this.

Years of.

Speaker 7: backlog build up that is now normalizing. So I would say from a consumer point of view we have nothing indicating that we should have lower volume due to that. I think we are seeing more normalization of backlog and volatility coming from the supply and component issues that we talked about earlier. So that otherwise we don't see anything. Thank you.

Backlog build up that is now normalizing.

Yeah.

So I would say from a consumer point of view, we have nothing indicating that we should have lower volume due to that.

Mikael Bratt: I think we are seeing more normalization of backlog and volatility coming from the supply or component issues that we have talked about earlier. Otherwise, we don't see anything.

Fredrik Westin: The main headwinds include operational headwinds from expected continued inflationary pressure, although smaller than this year, which we expect to lead to a customer composition catch-up later in the year, just as it was in 2022 and 2023. Considering these potential tailwinds and headwinds, we expect a year-of-a-year improvement in adjusted operating margin. We expect 2024 to be an important step towards our medium-term target of 12% adjusted operating margin.

Mikael Bratt: I think we are seeing more normalization of backlog and volatility coming from the supply or component issues that we have talked about earlier. Otherwise, we don't see anything.

I think we are seeing.

More normalization of backlogs and volatility coming from the supply.

Component issues that we have talked about doing it.

To us we don't see any of them.

Agnieszka Vilela: Thank you.

Thank you.

Mikael Bratt: Thanks.

Operator: Thank you. We will now take the next question from the line of Hampus Engellau from Handelsbanken. Please go ahead.

Thanks.

Thank you.

Okay.

Fredrik Westin: As we have communicated, the medium-term target rests on a few key conditions, which are that global light vehicle production is at least 85 million, that the call of volatility is back to pre-pandemic levels and that we have full compensation for inflationary pressure after 2021 for a full year.

We will now take the next question.

Speaker 5: from the line of Hampus and Gelao from Handelswanken. Please go ahead.

From the line of Bruce <unk> from Handelsbanken. Please go ahead.

Speaker 14: Thank you very much for questions from me. First, Mike, you know, if you could maybe talk to about the development in China with the local Williams, quite as to growth there. How much is this driven by a battery-neclic car coming into the market and exports on how much is it driven by, I guess, more competition in China on being more safe?

Hampus Engellau: Thank you very much. Two questions from me. First, Mikael, if you could maybe talk a little bit about the development in China with the local OEMs, quite hefty growth there. How much is this driven by battery electric cars coming into the market and exports? And how much is it driven by, I guess, more competition in China on being more safe? Go ahead. I'll take the second question.

Thank you very much two questions from me.

First Mike and if you could maybe talk a little bit.

<unk> in China with local Oems.

Quite a hefty growth how much of it is driven by.

Battery electric cars coming into the market then.

And exports and how much is driven by I guess.

Fredrik Westin: We intend, as usual, to come back with the 2024 full year indication in connection with our fourth quarter earnings release in January.

More competition in China alone being more safe.

Speaker 14: do not go ahead and have the shift? compass..

Yes.

Okay.

Mikael Bratt: Yeah. Quickly on that note. I don't think I have a number for you to give you the breakdown, what is driven by what there. As you said, I mean, we see export growth for Chinese OEM increasing quite significantly to, yeah, mainly China, Asian countries, you could say, but also to Europe there. Also the overall ambition from the Chinese OEMs here to increase the safety content and I would say quite dynamic market here where their requests for new innovations together with us to improve content is a great growth opportunity for us here and good collaboration here with our Chinese OEMs here.

So I'll take the second.

Speaker 11: Oh yeah, quickly on the front. I don't think I have a number for it to give you the breakdown what is driven by water, but...

Mikael Bratt: And I now hand it back to you, Michael. Thank you, Fredic, on to the next slide.

Yes quickly on.

No.

I don't think I have a number for it to give you the breakdown what is driven by work there, but as I said I mean, we see.

Mikael Bratt: This concludes our formal comments for today's earnings call and we would like to open the line for questions from analysts and investors.

Speaker 11: As you said, I mean, we see export growth for Chinese OEM.

Export growth.

Operator: I will now hand it over back to our operation, Operator Sandra. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by, we will compile the roster.

Chinese OEM.

Speaker 11: increasing quite significantly to mainly shine Asian countries, you could say, but also to Europe there.

Increasing quite quite significantly.

So mainly China.

Asian countries, you could say, but also to Europe there.

Speaker 11: And also the overall ambition from the Chinese OEMs here to increase the safety content. And I would say quite dynamic market here where there are requests for new innovations to get it with us to improve.

And also the.

The overall ambition from the Chinese Oems here to increase the safety content and I would say quite dynamic dynamic market here, where we're there.

Emmanuel Rosner: Our first question, Emmanuel Rosner from Deutsche Bank. Please go ahead. Thank you so much.

Requests for new innovations.

I would ask two two to improve.

Mikael Bratt: I have two questions around some of the factors you've highlighted going into 2024. The first one you're mentioning on the slide is the customer call-offs as a positive. So just what's curious if you can give a little bit more color of what you've actually seen in Europe this quarter where you indicated that they may have been some sequential deterioration. What do you think drives this and is that sort of an ongoing issue?

Content is.

Speaker 11: is a great opportunity for us here and good collaboration here with our Chinese OEMs here. So a strong position for us in China.

<unk>.

Sure.

A great top of growth opportunity for us here and good.

Good collaboration here with our Chinese Oems here, so well.

Mikael Bratt: Strong position for us in China altogether there.

Long position for us in China altogether.

Speaker 14: for a turn up. Maybe a logical segment of me for me is in this process of the optimization and digitalization of the production, would it be possible for you to maybe share some back on where you are in that process? How far have you come in how much?

Hampus Engellau: Fair enough. Maybe a last question from me is, in this process of the optimization and digitalization of the production, would it be possible for you to maybe shed some light on where you are in that process? How far have you come, and how much is left?

Fair enough.

And last question for me.

In this process.

My question on the utilization of the production would it be possible for you to.

Maybe I should ask him back on where you are in that process, how much how far have you come and how much is left.

Speaker 11: I think we invested in here in June . We had the picture or slide there showing, I don't have anything from them here now, but there you saw that we have come in sort of our product families here, but still a lot of opportunities left.

Mikael Bratt: And then as we move essentially into 2024, how do we think about these savings? Is it just better incremental margin on higher volume or is it like, is there a discrete bucket of, I don't know, head count reduction that you can give as a result of more stable call-offs? Thank you, Emmanuel. Let me start with the call of Sternen. I hand over to Fredrick to take it through the second part of your question there.

Mikael Bratt: Yeah, I think. In the investor day here in June, we had a picture slide there showing. I don't have it in front of me here now, but there you saw that we have come a fair amount in certain of our product families here, but still lot of opportunities left. I mean, we have plenty of opportunities to continue this journey. I think in some of the product families, maybe we are on a 30 to 40% of the potential. Yeah, plenty of room to capitalize on optimization and digitalization going forward. I can refer to that slide in the presentation deck from the investor day that you can see more details.

And I think we're in.

In the Investor day here in Indiana.

Slide.

Showing I don't have it in front of me here now but.

You saw that we have come.

The amount.

And certain of our product families here, but still.

Lots of opportunities left.

Speaker 11: So, I mean, we have plenty of opportunities to continue this year. And I think in some of the product families, maybe we are 30%, 40% of the potential. So, yeah, plenty of room to capitalize on optimization and digitalization.

So I mean, we have plenty of opportunities to continue this journey I think in some of the.

Mikael Bratt: As we have talked about throughout not only this year, but since some time back here, we have had a challenging situation where it has come to this volatility resulting in a stop-and-go in our operations here. And that has throughout the year improved and gone in the right direction, including Europe. But what we saw in Q3 here in Europe was Turned to the worst again. And that is, I was very purely related to supply issues in our customers' value chain here.

Families. Maybe we are in a 30 or 40%.

The potential so plenty of room to two.

<unk>.

Capitalize on on optimization of utilization going forward.

Speaker 7: But I can refer to that slide in the presentation. That's one of the methods that I can see more details. Thank you.

You can refer to that.

A slide in the presentation deck today that we can see more detailed.

Hampus Engellau: Thanks. Fair enough. Thank you.

Thanks.

Thank you.

Mikael Bratt: Thank you.

Operator: Thank you. We will now take the next question from the line of Rod Lache from Wolfe Research. Please go ahead.

Thank you.

Okay.

We will now take the next question.

Speaker 5: from the line of road, large from world research, please go ahead.

From the line of Rod Lache from Wolfe Research. Please go ahead.

Mikael Bratt: So of course the root cause for that could vary. But for example, we still see that the semiconductor situation is still a problem for some of our customers. We have no reason to believe that this deterioration in Europe will come from any end-consumer deterioration or situation at the wall. So I see it's very much connected to the reasons we have had the last quarters and years here that all of the ones in the wrong direction for Europe.

Speaker 15: Hi everybody. I'd like to understand what your Q4 implied margin, your guidance of 11 and a half to 12% suggests for the run rate of margin if we adjusted for seasonality. We know that Q4 is typically, I think at least a hundred basis points above average due to seasonality of recovery. Maybe a few other factors. Is that the case? Is that roughly the magnitude?

Rod Lache: Hi, everybody. I'd like to understand what your Q4 implied margin, your guidance of 11.5% to 12%, suggests for the run rate of margin if we adjust it for seasonality, 'cause we know that Q4 is typically, I think, at least 100 basis points above average due to seasonality of recoveries, maybe a few other factors. Is that the case? Is that roughly the magnitude that we should be thinking about it if we're thinking about a run rate? And then, you also reiterated the 12% margin objective at an 85 million unit LVP, as long as it's stable. So S&P is already there. Could you quantify what the magnitude is of the inefficiency due to instability that you're experiencing right now?

Hi, everybody.

I'd like to understand.

What your Q4 implied margin.

<unk> at 11, 5% to 12% suggests.

The run rate of margin if we adjusted for seasonality because we know that Q4 is typically I think at least 100 basis points above average due to seasonality for recoveries, maybe a few other factors is that the case is that roughly the magnitude that.

Speaker 15: that we should be thinking about it, and if we're thinking about a run rate. And then you also, you reiterated the 12% margin objective at an 85 million unit, LVP as long as it's stable. So S&P is already there.

That we should be thinking about it if we're thinking about a run rate and then you also.

Mikael Bratt: But otherwise, I would say, as an average, we are climbing up towards the 90% level. But as you remember pre-pandemic, we were basically at 100. So we are still far from where we were before the pandemic when it comes to the stability altogether in the company regardless of region there. So, Frederick, maybe. Yeah, so then, yeah, for next year, I mean, if you look at S&P Global based on that, there will also, or the expectations is that we should also expect some even a bit limited volume growth.

Reiterated this 12% margin objective at an 85 million unit MVP as long as it's stable. So S&P has already there could you quantify what the magnitude is of that inefficiency.

Speaker 15: would you quantify what the magnitude is of the inefficient?

Speaker 15: due to instability that you're experiencing right.

Due to instability that you're.

You are experiencing right now.

Speaker 4: Yeah, Rod, so the seasonality in Q4 is not different this year than in other years. So it's around 110 basis points that we also expect this year, and then most of that is related to the engineering income, but it's seasonally higher in the fourth quarter. The rest of the margining to increase is from the structural cost initiatives of putting in place and then the further development on the commercial recoveries with our customers.

Mikael Bratt: Yeah, Rod. The seasonality in the Q4 is not different this year than in other years. It's yeah, around 110 basis points that we also expect this year, and then most of that is related to the engineering income that is seasonally higher in the Q4. The rest of the margin increase is from the structural cost initiatives we're putting in place and then the further development on the commercial recoveries with our customers. And then on the margin walk up, yeah, I think we have to come back on that. Nothing has changed from what we have said earlier at the investor day or in other discussions.

Yeah Rod.

The seasonality in the Q4 is not different this year than other years.

It's around 100 110 basis points that we also expect this year and then most of that is related to the engineering income.

Seasonally higher in the fourth quarter.

The rest of the margin increases from the structural cost initiatives, we're putting in place and then the further.

Mikael Bratt: So that should help the margin development, but then it is more importantly, the further improvement on the call of stability. And we do have significant inefficiencies in our operations due to the current significantly lower level of stability. And the further this comes up to the 100% that Nikhil mentioned, the more it will allow us to move back or operate back at the efficiency levels that we've been used to. But of course, then the third component is the structure initiatives that we have added on to this and both on the indirect side and the direct side that is also supported by what we're doing on automation and digitalization. Thank you.

Development on the commercial the calculation with our customers.

Speaker 4: And then on to the margin walk up, I think we have to come back on that. Nothing has changed from what we have said earlier at the investor day or in other discussions. It is the same logic that still applies to what we've said.

And then on <unk>.

Yes.

The margin walk up.

I think we have to come back on that.

Nothing has changed from what we have said earlier.

The Investor day or.

Mikael Bratt: It is the same logic that still applies to what we've said before.

In other discussions it is.

This is the same logic that still applies to what we've said before.

Rod Lache: Yeah. I understand. I was just hoping you might just give us a sense of the burden that Autoliv is incurring right now from that inefficiency.

Speaker 15: Yeah, I understand. I was just hoping you might just give us a sense of the burden that auto leave is is incurring right now from that inefficient.

Yeah, I understand I was just hoping you might just give us a sense of the burden that auto leave us.

Is incurring right now from that inefficiency.

Speaker 4: I don't think we've given a number before and I don't want to do that either now, but as I was making said before is here is that we actually saw that in some parts of the world, especially Europe , the call of reliability went backwards in Q3. It was in a good track throughout the year and in say all other regions it continued to improve but unfortunately Europe it went backwards.

Mikael Bratt: I don't think we've given a number before, and I don't wanna do that even now. As Mikael said before, here is that we actually saw that in some parts of the world, especially Europe, the call for reliability went backwards in Q3.

I don't think we've given a number before and I don't want to do that even now.

Mikael Bratt: And then my technical question is specifically by the structural initiatives. I think earlier in the year when you had first announced a plan for headcount reduction. I think you had mentioned at the time a potential total of 8,000 headcount reduction. I think so far based on the the plans announced the first steps. I think you announced maybe about 1400 or so of this 8,000. So obviously, a lot more to go. So my questions are 8,000 still in the right number in the current environment.

<unk> said before is here is that we actually saw that in some parts of the world, especially in Europe .

Colorful liability went backwards in Q3, yes.

Rod Lache: Yeah. Yeah.

Mikael Bratt: It was on a good track throughout the year. In, say, all other regions, it continued to improve. Unfortunately, Europe, it went backwards. It's, and then, it has very, very different types of how that manifests itself in our inefficiency. It's very difficult to give a number. That's why I would like to refrain from it.

And a good track throughout the year.

All other readjusted it continues to improve.

But unfortunately, Europe , we went backwards.

Speaker 4: And then it has very, very different types of how that manifests itself in order in efficiency. So it's very difficult to give a number, that's why I want to like to refrain.

Yes.

And then it has very very different types of how that manifests itself in our inefficiency. So it's very difficult to give a number that's why I want to I would like to refrain from it.

Rod Lache: Okay. Just lastly, if the recall happens as NHTSA is suggesting, it obviously makes sense that Autoliv would participate in some way supporting your customers with replacement modules. Could you just, at a very high level, talk about what typically happens in advance of something like that? Do your customers ask for engineering work kind of ahead of time? If this were to happen, what would you guess would be the earliest that you could accommodate the industry? How long would the process of supporting the industry to do something of that magnitude take?

Speaker 15: And just lastly, if the recall happens as NITSA is suggesting, it obviously makes sense that AutoLeave would participate in some way supporting your customers with replacement modules. Could you just, at a very high level, talk about what typically happens?

Okay, and just lastly, if the recall happens as knits are suggesting it obviously makes sense that that.

Mikael Bratt: And then what could be the timing for not just announcements of additional steps, but can any of those still benefit 2024 or would that be beyond that? Yeah, so we did announce 8,000, but we also split that into two groups. It was 2000 of what we call indirect or as a salaried employees and then 6000 on the direct side, the direct side, the 6000 is very much connected to what we just talked about before.

Auto leaf wood.

Participate in some way supporting your customers with replacement.

Modules.

Could you just at a very high level talk about what.

Typically happens in advance of something like that do your customers ask for engineering work kind of ahead of time.

Speaker 15: in advance of something like that. Do your customers ask for engineering work kind of ahead of time? If this were to happen, what would you guess would be the earliest that you could accommodate the industry and how long would the process of supporting the industry to do something of that magnitude take? to come?

If this were to happen.

Would you guess would be the earliest that you could accommodate the industry and how long would the process of supporting the industry to do something of that magnitude take.

Mikael Bratt: So it is also based on that we come back or that the stability levels on the call also support. That. And then we should be able to come back to the regular type of productivity achievements that we have been operating at, which would then allow us to take out 6,000 people with the volumes of end of March as the basis for that number. And that is progressing. Then on the 2000. Yeah, we have announced so far 1,400 of which 300 were direct.

Mikael Bratt: I think it's. I mean, to start with, I mean, the process would be that the customer engaged in a request to us to quote for such an activity and of course then work with any engineering adjustment needed from our side. I mean, the specific details there is difficult to answer because it's unique by customer, and it's depending on our own product portfolio here and what needs to be done there. That's a unique case. I think we have shown in the past that we are capable of supporting our customers in quite significant recall situations there.

I think it's.

Speaker 11: I mean, the process would be that the customer engaged in request us to quote for such an activity and for some work with any engineering management needed from our side. I mean, the specific details are difficult to answer because it's unique by customer and it's depending on our own.

To start with I mean, the process would be that we are engaged in.

I request us to.

Four four.

As such disruption activity in Boston work with any engineering adjustment needed from our side.

Mikael Bratt: So of the 2000 we have announced 1100. And also the savings associated with that. So there's more to come, but we have so far progressed on more than half of the 2000. And also cost wise of what we've taken also more than half has been booked to already. And you can also see now in the in the third quarter that our headcount is down for half by 400 employees on the on the indirect side. So yes, some of those activities are already in place. Thank you very much. Thank you.

I mean did the specific details there is it's difficult to answer because it is unique by by customer and its depending on on our own.

Speaker 11: product portfolio here and what we've done there. So that's a unique case. But I think we have shown in the past that we are capable of supporting our customers in quite significant request situations there. So ...

Port full product portfolio here on what needs to be done there. So so that's a unique case, but I think we have shown in the past that we are capable of supporting our customers seeing quite significant recall situations there. So.

Mikael Bratt: I expect us to be able to do that fairly quickly, if this would happen, here as well.

Speaker 11: I expect us to be able to do that fairly quick here. If this would happen

I expect us to be able to do that fairly quickly.

If this would happen.

Rod Lache: Okay. Thank you.

Here as well.

Thank you.

Operator: Thank you. I would now like to turn the conference back to Mikael Bratt for closing remarks.

Speaker 5: Thank you. I will now like to turn the conference back to Michael Bradford Posing remark.

Thank you I would now like to turn the conference back to Michael Bradshaw for closing remarks.

Mikael Bratt: Thank you, Sandra.

Speaker 3: Thank you, Sandra. I'm confident that we will deliver a substantial increase in sales operating cash flow and adjusted operating income in fourth quarter. We continue to advance of our structural cost reductions initiatives and we see an improving position with fast growing OEMs as well as continued gradual stabilization of supply chains.

Mikael Bratt: I'm confident that we will deliver a substantial increase in sales, operating cash flow, and adjusted operating income in Q4. We continue to advance on our structural cost reduction initiatives, and we see an improving position with fast-growing OEMs as well as continued gradual stabilization of supply chains. This forms a strong foundation for continued strong development in the years to come that'll support our midterm targets. Autoliv continues to focus on our vision of saving more lives, which is our most important direct contribution to a sustainable society. Our Q4 earnings call is scheduled for Friday, 26 January 2024. Thank you everyone for participating in today's call. We sincerely appreciate your continued interest in Autoliv. Until next time. Stay safe.

Thank you Sandra.

I am confident that we will deliver a substantial increase in sales operating cash flow and adjusted operating income in fourth quarter.

Mikael Bratt: We will now take the next question. From the line of calling Langan from Wells Fargo, please go ahead. Great. Thanks for taking my questions. You know, in the last slide, you noted inflationary pressure and the timing of customer compensation is sort of the big headwind into next year. I mean, what are the new inflationary costs that we should be thinking about into next year? Or is it that you're getting a little bit more pushback on getting recoveries?

We continue to advance all of our structural cost reduction initiatives and we see an improving position with fast growing Oems as well as continued gradual stabilization of supply chain.

Speaker 3: This forms a strong foundation for continued strong development in the years to come.

This forms a strong foundation for continued strong development in the years to come.

Speaker 3: That the support our midterm targets. How to lead continues to focus on our vision of saving more lives, which is our most important direct contribution to sustainable society.

That's the support our mid term targets ultimately continues to focus on our vision of saving more lives, which is our most important direct contribution to a sustainable society.

Mikael Bratt: Is that the other part of the issue? And then in general, can you just remind us how much of what you already gotten recovered is in the peace price versus what would actually need to get maybe renegotiated at the start and next year? Yeah, so on the first, I mean, we use the same macro economic forecast that you have to our hand and available. So we do expect that inflation level should come down as they are right now and they should be lower next year than this year.

Speaker 3: Our fourth quarter earnings call is scheduled for Friday, January 26th, 2024.

Our fourth quarter earnings call is scheduled for Friday January 26 2024.

Speaker 3: Thank you everyone for participating in today's call. We sincerely appreciate your continued interest in Outilage. Until next time, stay safe.

Everyone for participating in today's call. We sincerely appreciate your continued interest in ultimate until next time.

Mikael Bratt: But we do also expect that special labor will have a higher inflation level next year than what it has had has had in as historical averages, but most likely less than what we've had in this year.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker 5: This concludes the dice conference call. Thank you for participating. You may know this connect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Mikael Bratt: But we'll come back to that when we talk more specifically on 2024. Then on the recovery side, I think we are as we have progressed as expected when we did indicate after the second quarter's earnings or in the call that there might be a delay from Q3 into Q4, but that has not really happened. So Q3 developed more or less as we had expected initially, meaning that is not as much back and loaded in this year as we had communicated back then.

Okay.

[music].

Mikael Bratt: And it's also it was more peace price recovery in the third quarter here now than lump sum than what we had communicated in the second quarter. But does that mean when you go into next year, you'll have to renegotiate those lump sum again and is that a concern as you go into next year that you might get more push back, given the labor inflation, the automakers are facing. I think, already last year we also had lumped some steps, we're in negotiated this year.

Mikael Bratt: I think the important thing is that we have a process together with our customers how to get compensated for the inflationary components here and we have, I would say, an annual process here where we take that into account. So I think the split of what is lumped some and what is more a peace price related is connected to the type of inflation. You could say, I mean, if it's something of temper nature, it should of course not need to be in the same level as we move forward.

Mikael Bratt: So it's a very detailed negotiation with each customer. But what you need to remember also is that this is mirroring what we have with our suppliers. So we have a fair amount of lumped sums paid to our supplier base as well. So we balance these two sides of the business here against the shudder here to make sure that we have a good cost structure and a flexible cost structure to offset any changes there.

Mikael Bratt: But for me, I feel very comfortable with the way we get compensated here and as long as we are in the inflation environment, this will be an ordinary cost of business to negotiate with our customers on an hourly basis for this type of cost. Got it. All right. Thanks for taking my questions.

Operator: Thank you.

Mattias Holmberg: We will now take the next question. One moment, please. From the line of Matthias Holmberg from DMB Market, please go ahead. Great. Thank you. First of all, we would just like to clarify on the tax rate given that it might have quite a material impact on the net profit going forward. So in order to get to the 20% for the full year, given that you've had a bit above 30% here to date, am I correct to assume that you're paying basically zero tax in Q4?

Mattias Holmberg: And then also on that topic, the 25 to 30% that you see as a new normalised tax rate going forward, quite wide range and also significant to lower than the 32% you've had in the past. Could you specify it perhaps a little bit more than that, or is there any reason why you're given such a wide range? Thank you. Yeah. So, yeah, you're right.

Fredrik Westin: We're taking down the guidance here for the tax from 32% to around 20%. This is due to the ongoing, very significant reorganisation of both global functions and our European operations, which is expected to lead to a reduced tax rate in this year, which is also very much associated with the ongoing restructuring. But it's also important this is not cash effective in this year. So it will not affect the taxes paid in this year.

Fredrik Westin: Then going forward, we do expect, as we said, the normalised tax rates to be then around 25 to 30% from 20 to 24 onward. Yeah. I think using the midpoint of that range is not a bad assumption at the moment. And this would then also be also impacting the taxes paid also from 2024 onwards. And should we view this sort of as a permanent steady state going forward in terms of tax rates? Yes, you can.

Mattias Holmberg: Great. Thank you.

Mattias Holmberg: And a final question from me. You mentioned the potential recall here of the ARC inflators.

Mikael Bratt: I'm just curious, are you as a company liable for the inflators ARC has produced or how would that work in a potential recall situation? I mean, ARC is, I mean, they are competitors to us. I mean, that's their exposure. Then of course, our part of that, as you mentioned here, is where we have purchased these components from them. So we are also a customer to them in this regard. And the portion that is related to Autolive modules, as far as we understand them here, there's not been any cases connected to that volume here.

Mikael Bratt: And so we are of course following this development here very closely, but we see this also clearly as something we can support our customers with in case of overrequel, but what I need to have replacement, but we are not there yet.

Mikael Bratt: And do you believe that you could get compensation in a potential recall from ARC or would you have to sort of cover that cost yourself? If that would be as such a situation, our expectations of course is that this is on ARC's account, for sure. That's true.

Operator: Thank you.

Jairam Nathan: We will now take the next question. From the line of Jairam Nathan from Diveau, please go ahead. Hi, thanks. Thanks for taking my question. I was just wanted to go to the LAP out for performance slide. So it looks like the out performance in North American Europe have declined quite a bit from the staff. And what are the main reasons for that? And how should we think about the regional outperformance for next year?

Mikael Bratt: No, I think if you go back in time, you can see that this number is a little bit volatile, but the direction is clearly that we are continuing to grow our market general respective vegans you talked about here. And of course, in a single quarter you can have certain mixed effects. So I shouldn't read in too much to that. I think we are steadily moving towards the market share around 45% that we have communicated earlier on. And yeah, I think we have a good activity level also to backfill our order book here to support.

Operator: Thank you.

Rod Lache: Finally, on the shared buybacks and debt levels, given the higher interest rate environment and maybe for longer, does that change what you're thinking on the debt levels and buyback funding? Thanks. I think we believe that with the good cash flow-generating operations we have today, it supports well the buyback program that we are committed to here, and I don't see this being something that would affect our way forward here.

Rod Lache: Okay, great. Thank you.

Giulio Pescatore: We will now take the next question. From the line of Giulio Pescatore from BMPP Exxan, please go ahead. Hi, thanks for taking my question. The first one on the guidance, just quickly, I just trying to understand exactly what assumptions are you incorporating with regards to the strike. So you said you are in line with IHS, does that mean that you expect the strike to continue until the end of November? I think that's what SMP is currently forecasting.

Giulio Pescatore: And is that, does that mean six million per week until the end of November? Is that what you are including in the 1.5 to 2% margin improvement? Thank you for. And maybe if you can give us also an indication of what operating leverage or drop through on that lost revenue, are you incorporating in the assumption? Thank you. Yeah, so the short answer to your first question is yes. So it is until the end of November, and from what we can tell right now, it is around six million per week that is the impact on our top line.

Giulio Pescatore: And of course, this can change daily. And on the drop through here, I mean, it remains to be seen what that will be at the end of the of the quarter. As Mika mentioned here before, we do see that at the moment, the volumes seem to be picked up, also to fly some of the competitors. They are not unionized by you at W, so it's still a very fluid environment here that we need to monitor throughout the quarter.

Giulio Pescatore: Okay, thank you. And you're also not assuming a big pick up after the end of the strikes, a big pick up in volumes. Yeah, I mean, I think some pick up if it goes through into basic things, giving, and then pick up then to recover some with that volume in the fourth quarter. But again, it's very fluid and it remains to be seen here how the overall volumes also develop. Okay, thank you.

Giulio Pescatore: Then the second question on the article. Is it fair to say that you tend to benefit more than the way more than is tend to lose out of this recall? I mean, both in terms of the potential replacement impact and in terms of the long term implication, where regards to pricing, if one of your competitors. What was the sufferer? And that's the first question. And the second part is, can you maybe help us quantify the potential opportunity for you on the replacement side?

Giulio Pescatore: Because it feels like it's very significant, right? It's over the course of 10 years, of course, but let's say that, you know, the 52 million recall does materialize. I mean, is the fact to say that you might have your 50% share of that recall and, you know, can you just help us understand the opportunity here if recall does go into effect. I think it's too premature to speculate in that. I mean, as we all know, it's not in that stage yet.

Giulio Pescatore: And there is work with, we need some, and of course, ARC and the customer said that it's ongoing. So we are standing by and willing to support our customers if needed, but it's too early to start to talk about any numbers or potential and so forth in this. We just have to wait. Thank you.

Agnieszka Vilela: We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead. Perfect. Thank you. So starting with the EBIT bridge, I know that probably for the first time in nine quarters you reported positive impacts from raw material. A moderate one, but still positive. So could you please maybe talk about some deflation that you see in your cost input and what it is related to? That's my first question.

Agnieszka Vilela: Yeah, correct. It's the first time in a long time here that we see positive effect of raw materials. We have guided for a flat development for the full year, which means that we should see an even stronger positive development was in the fourth quarter. So yes, we do see that raw materials prices are coming or costs are coming down for us. So far, it's been mainly driven by non-ferrous materials, especially magnesium that has come down from the peaks, but also steel has been favorable.

Agnieszka Vilela: But we have seen still some increases this year, especially on the textile side, but we also expect that this should be more favorable going forward. Then on what this means for next year, we, as we said before, we have this six to nine months time lag between where it's both prices or indices are moving until that manifests itself in our cost structure. So we are monitoring very closely what that means, but we'll talk more specifically about that then with the guidance for next year.

Agnieszka Vilela: Great. Thank you. Just to understand the flow up on that. Will your customers require then price decreases because of lower input costs for you or how should we think about it? Yeah, we do expect that we will then also give some of that those price decreases back to our customers. I mean, we have a higher level of path through closest with the customers now. So yes, when we want to cost come down, we then also just are prices accordingly.

Agnieszka Vilela: But I mean, that should have a favorable impact on the margin because it was margin diluted on the way up, and then it should be somewhat a creative on the way down. Perfect. Thank you. And then my second question, I think Mike, you mentioned that the car production in Europe so far is secured by backlog, but you see demand abating also order backlog shrinking going into 2024. And if the color you could provide to us when you speak to your customers in Europe in regards to their production planning.

Agnieszka Vilela: Yeah, I think, you know, I mean, the problem we have here is that even if we have visibility, the pickups is deteriorating. So it's in a short term perspective where we have the challenges. I mean, within the week here, otherwise, I think when it comes to overall production planning, that is nothing indicating that we are looking at the weaker European model. I think both what is happening is of course that of the role is, you know, years of of Backlog build up, that is now normalizing.

Agnieszka Vilela: So I would say from a consumer point of view we have nothing indicating that we should have lower volume due to that. I think we are seeing more normalization of backlog and volatility coming from the supply and component issues that we have talked about earlier so that otherwise we don't see anything. Thank you.

Hampus Engellau: We will now take the next question. From the line of Hampus Engellau from Handels Wanken, please go ahead. Thank you very much to questions from me. First, Michael actually could maybe talk a bit about the development in China with the local Williams. Of course, it has to grow there. How much is this driven by battery and electric cars coming into the market and exports on how much is driven by I guess, more competition in China on being more safe.

Mikael Bratt: Second question. I will go ahead and see what is driven by what there. As I said, we see export growth for Chinese OEM increasing quite significantly to mainly China, Asian countries you could say, but also to Europe and also the overall ambition from the Chinese OEMs here to increase the safety content that was a quite dynamic market here where there are requests for new innovations to get it with us to improve content is a great growth opportunity for us here and good collaboration here with our Chinese OEMs here. So strong position for us in China all together there.

Mikael Bratt: Maybe a lot of questions from me. In this process of automation and digitalization of the production, would it be possible for you to maybe check from where you are in that process? How far have you come and how much is left? I think we invested in the end of the picture or slide there showing I don't have anything from them here now, but there you saw that we have come far amount in certain of our product families here, but still a lot of opportunities left.

Mikael Bratt: So I mean we have planted opportunities to continue this year and I think in some of the product families maybe we are 30-40 percent of the potential. So yeah, plant the over room to capitalize on on automation and digitalization over for. But I can refer to that slide in the presentation that's from the yesterday that I can see more detail. Thank you.

Rod Lache: We will now take the next question from the line of Rod Lache from World Research. Please go ahead. Hi, everybody. I'd like to understand what your Q4 implied margin, your guidance of 11 and a half to 12 percent suggests for the run rate of margin if we adjusted for seasonality, because we know that Q4 is typically, I think at least a hundred basis points above average due to seasonality of recoveries, maybe a few other factors.

Rod Lache: Is that the case? Is that roughly the magnitude that we should be thinking about? If we're thinking about a run rate, and then you also reiterated the 12 percent margin objective at an 85 million unit, LVP as long as it's stable. So S&P is already there. Could you quantify what the magnitude is of the inefficiency due to instability that you're experiencing right now? Yeah, Rod. So the seasonality on the Q4 is not different this year than in other years.

Rod Lache: So it's around 110 basis points that we also expect this year. And then most of that is related to the engineering income that is seasonally higher in the fourth quarter. The rest of the margining to increase is from the structural cost and issues of putting in place and then the further development on the commercial recoveries with our customers. And then on to the margin walk up, I think we have to come back on that.

Rod Lache: Nothing has changed from what we have said earlier at the investor day or or in other discussions. It is the same logic that still applies to what we've said before. Yeah, I understand. I was just hoping you might just give us a sense of the burden that Otterleave is incurring right now from that inefficiency. I don't think we've given a number before. And I don't want to do that either now. But as I said before, here is that we actually saw that in some parts of the world, especially Europe, the call of reliability went backwards in Q3.

Rod Lache: Yeah, it was a good track throughout the year. And then say all other regions, it continued to improve. But unfortunately, Europe went backwards. And then it has very, very different types of how that manifests itself in our inefficiency. So it's very difficult to give a number. That's why I want to like to refrain from it. Okay. And just lastly, if the recall happens as Nitz is suggesting, it obviously makes sense that Otterleave would participate in some way supporting your customers with replacement modules.

Rod Lache: Could you just at a very high level talk about what typically happens in advance of something like that? Do your customers ask for engineering work kind of ahead of time? If this were to happen, what would you guess would be the earliest that you could accommodate the industry? And how long would the process of supporting the industry to do something of that magnitude? I think it's, I mean, to start with, I mean, the process would be that we, the customer engaged in request us to quote for such an activity and post-unwork with any engineering management needed from our side.

Rod Lache: I mean, the specific details there is difficult to answer because it's unique by customer and it's depending on our own product portfolio here and what needs to be done there. So, that's a unique case. But I think we have shown in the past that we are capable of supporting our customers in quite significant recall situations there. So, I expect us to be able to do that fairly quickly. If this would happen here as well.

Mikael Bratt: Thank you.

Mikael Bratt: I would now like to turn the conference back to Michael Bratt for posting remarks. Thank you, Sandra. I'm confident that we will deliver a substantial increase in sales, operating cash flow and adjusted operating income in fourth quarter. We continue to advance of our structural cost reductions initiatives and we see an improving position with fast growing OEMs as well as continued gradual stabilization of supply chains. This forms a strong foundation for continued strong development in the years to come. That's the support our midterm targets.

Mikael Bratt: How to live continues to focus on our vision of saving more lives, which is our most important direct contribution to a sustainable society.

Mikael Bratt: Our fourth quarter earnings call is scheduled for Friday, January 26, 2024. Thank you, everyone, for participating in today's call. We sincerely appreciate your continued interest in outreach. Until next time, stay safe.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.

Q3 2023 Autoliv Inc Earnings Call

Request a DemoDemo

ALV

Autoliv

Earnings