Q2 2024 Autoliv Inc Earnings Call

July 19, 2024

And Chief Executive Officer Niko Bill.

Pete installations.

Speaker Change: During today's earnings call me column free ethic will among other things provide an overview of our sales earnings and cash flow development in the quarter.

Speaker Change: Chief Financial Officer, three adequacy and me on the shop VP Investor.

<unk>.

Speaker Change: During today's earnings call nickel and three ethic will among other things provide an overview of our sales earnings and cash flow development in the quarter.

Speaker Change: Our strong balance sheet and asset return rates support a continued high level of shareholder returns.

Speaker Change: They will outline the expected sequential margin improvement in the second half of 2024 towards our targets.

Speaker Change: Outline the expected sequential margin improvement in the second half of 2024 towards our targets.

Speaker Change: And the continued improvement of our business with domestic Chinese Oems.

Speaker Change: And we will also as usual will provide an update on our general business and market conditions.

Speaker Change: And the continued improvement of our business with domestic Chinese Oems.

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

Speaker Change: And we will also as usual will provide an update on our general business and market conditions.

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

Speaker Change: Turning to the next slide.

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

Speaker Change: Turning to the next slide.

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

Speaker Change: During the presentation, we will reference some non us GAAP measures the reconciliations of historical U S. GAAP to non us GAAP measures are disclosed in our quarterly earnings release.

Speaker Change: Well on <unk> Dot com and in the 10-Q that will be filed with the SEC.

Speaker Change: Lastly, I should mention that this call is intended to conclude at three P. M. Central European time. So please follow a limit of two questions per person.

Speaker Change: Well on <unk> Dot com and in the 10-Q that will be filed with the SEC.

Lastly, I should mention that this call is intended to conclude at three P. M. Central European time. So please follow a limit of two questions per person.

Speaker Change: I now hand over to our CEO Mikael Bratt.

Mikael Bratt: Thank you Anders looking on the next slide.

Speaker Change: I now hand over to our CEO Mikael Bratt.

Mikael Bratt: I would like to thank all our employees for managing through a challenging quarter with lower and more volatile light vehicle production in expected.

Mikael Bratt: Thank you Anders looking on the next slide.

Mikael Bratt: I would like to thank all our employees for managing through a challenging quarter with lower and more volatile light vehicle production than expected.

Mikael Bratt: Profitability improved both year over year and sequentially. Despite lower net sales driven by successful execution of cost reductions and pricing.

Speaker Change: Profitability improved both year over year and sequentially, despite lower net sales driven by successful execution of cost reductions.

Speaker Change: I am pleased that we have been able to setup cost compensation claims with the minority of our customers on target to close most of the remaining claims in Q3.

Mikael Bratt: Pricing.

Speaker Change: I am pleased that we have been able to setup cost compensation claims with the minority of our customers on target to close most of the remaining claims in Q3.

Speaker Change: We are making good progress towards our previously announced intention of reducing our indirect workforce by up to 2000 and related savings of 50 million U S dollars in 2024.

Speaker Change: We are making good progress towards our previously announced intention of reducing our indirect workforce by up to 2000 and related savings of $50 million U S dollars in 2024.

Sales in all regions in the second quarter developed less favorably than what we had expected, especially in June this was due to lower light vehicle production with certain key customers following weaker sales and inventory adjustments.

Speaker Change: Sales in all regions in the second quarter developed less favorably than what we had expected, especially in June this was due to lower light vehicle production with certain key customers following weaker sales from inventory adjustments.

Speaker Change: We saw no improvement in call of volatility compared to first quarter 2024.

Speaker Change: We saw no improvement in call off volatility compared to first quarter 2024.

Speaker Change: However, it is encouraging that customer production plans for the third quarter are stronger, indicating that the June weakness should be temporary.

Speaker Change: The lower than expected sales impacted our adjusted operating margin in the quarter with an operating leverage at the higher end of our normal 20% to 30% range.

Speaker Change: Cash flow continued to be strong supporting both a high level of shareholder returns and an improvement of the leverage ratio to one two times.

Speaker Change: Cash flow continued to be strong supporting both a high level of shareholder returns and an improvement of the leverage ratio to one two times, even with shareholder returns of 250 million U S dollars in the quarter.

Speaker Change: Even with shareholder returns of 250 million U S.

Speaker Change: In the quarter.

Speaker Change: I am also pleased with the high return on capital employed.

Speaker Change: In addition to the credit ratings from S&P, we have now added a second credit rating at Moody's on July 17th assigned a long term credit rating of AA, one with stable outlook.

Speaker Change: I am also pleased with the high return on capital employed.

Speaker Change: In addition to the credit ratings from S&P, we have now added a second credit rating at Moody's on July 17th assigned a long term credit rating of AA, one with stable outlook.

Speaker Change: Although we have adjusted our full year 2024 guidance down mirroring softer global light vehicle production, we remain focused on delivering on our around 12% adjusted operating margin target while.

While the positive development of our cash flow and balance sheet supports our continued commitment to high level of shareholder returns.

Speaker Change: While the positive development of our cash flow and balance sheet supports our continued commitment to a high level of shareholder returns.

Speaker Change: Illustrating our close cooperation with innovative and fast growing Chinese Oems, we have signed a strategic cooperation agreement with Champagne Arrow Chinese leading flying core innovator to pioneer safety solutions for future mobility.

Speaker Change: Looking now on the market development in the second quarter on the next slide.

The global light vehicle production for the second quarter came in more than three percentage point lower than expected in the beginning of the quarter. According to S&P global.

Speaker Change: Looking now on the market development in the second quarter on the next slide.

Speaker Change: The global light vehicle production for the second quarter came in more than three percentage points lower than expected in the beginning of the quarter. According to S&P global.

Speaker Change: The largest reductions we're in Europe, Japan and in China.

Speaker Change: In part the reductions reflect a focus from Oems on inventory management due to recent sales weakness in China, and increasing headwinds for certain Oems.

The largest reductions we're in Europe, Japan and in China.

Speaker Change: In part the reduction reflects a focus from Oems on inventory management due to recent sales weakness in China, and increasing headwinds for certain Oems.

Speaker Change: As a result, we continued to experience higher call of volatility throughout the quarter, especially in June.

Speaker Change: As a result, we continue to experience high call of volatility throughout the quarter, especially in June.

Speaker Change: The lower volumes and higher volatility together with a negative customer mix had a substantial impact on our top line and earnings, especially in June when our sales was 12% lower than expected at the beginning of the quarter.

Speaker Change: The lower volumes and the higher volatility together with a negative customer mix had a substantial impact on our top line and earnings, especially in June when our sales was 12% lower than expected at the beginning of the quarter.

Speaker Change: However, we expect this to be a temporary headwind as customer production plans are developing better so far in the third quarter.

Speaker Change: We will talk about the market development in more detail in the presentation.

Speaker Change: Looking now on our cost improvements on the next slide.

Speaker Change: We will talk about the market development more in detail in the presentation.

Speaker Change: We continue to generate broad based improvement in key areas.

Speaker Change: Looking now on our cost improvements on the next slide.

Speaker Change: Our direct labor productivity continues to trend up.

Speaker Change: We continue to generate broad based improvement in key areas.

Speaker Change: Ported by the implementation of our strategic initiatives, including optimization and the utilization year over year, we have reduced our direct production personnel by 1400.

Speaker Change: Our direct labor productivity continues to trend up.

Speaker Change: Supported by the implementation of our strategic initiatives, including optimization and the utilization.

Speaker Change: Year over year, we have reduced our direct production personnel by 1400.

Speaker Change: Our gross margin improved by 130 basis points from the first quarter and a year over year and year over year.

Our gross margin improved by 130 basis points from the fourth quarter and year over year and year over year.

Speaker Change: The improvement was mainly the result of the higher direct labor efficiency reductions within the indirect workforce and customer compensations.

Speaker Change: As a consequence of the lower than expected sales <unk> and SG&A in relation to sales increased by 30 basis points versus Q2 2023.

As a consequence of the lower than expected sales.

Speaker Change: <unk> and SG&A in relation to sales increased by 30 basis points versus Q2 2023.

Speaker Change: Now looking on financials in more detail on the next slide.

Speaker Change: Sales in the second quarter decreased by 1% year over year.

Speaker Change: Now looking on financials in more detail on the next slide.

Speaker Change: Unfavorable currency translation effects.

Speaker Change: Sales in the second quarter decreased by 1% year over year.

Speaker Change: Lower light vehicle production and a negative regional and customer light vehicle production mix.

Speaker Change: Unfavorable currency translation effects.

Speaker Change: Lower light vehicle production and a negative regional and customer light vehicle production mix.

Speaker Change: The adjusted operating income for Q2 increased by 4% to $221 million from $212 million last year.

Speaker Change: The adjusted operating margin increased by 50 basis points to eight 5% despite lower sales.

Speaker Change: Operating cash flow was $340 million, which was $39 million lower compared to the unusually strong second quarter last year.

Speaker Change: Q2 last year was positively affected by a reversal of.

Speaker Change: The negative working capital effects.

Speaker Change: Q2 last year was positively affected by a reversal of.

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

Speaker Change: The negative working capital effects.

Speaker Change: Yeah.

Speaker Change: Our consolidated net sales was two $6 billion.

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

Speaker Change: Yeah.

Speaker Change: This was approximately $30 million lower than a year earlier, driven by negative currency translation effects of $49 million.

Speaker Change: Our consolidated net sales was $2 6 billion U S dollars.

Speaker Change: This was approximately $30 million lower than a year earlier, driven by negative currency translation effects of 49 million.

Speaker Change: Lower light vehicle production and lower.

Speaker Change: The level of out of period cost compensation, partly offset by a positive price positive price volume and product mix.

Speaker Change: Lower light vehicle production and lower <unk>.

Speaker Change: The level of out of period costs compensation, partly offset by a positive price positive price volume and product mix.

Speaker Change: The negative currency translation effect reduced sales by almost 2% in the quarter.

Speaker Change: Out of period cost compensation contributed with approximately 6 million U S dollar in the quarter.

Speaker Change: This was $24 million lower than in the same period last year.

Speaker Change: This was 24 million U S dollar lower than in the same period last year.

Speaker Change: Reflecting the lower level of inflation this year.

Speaker Change: Out of period compensations are retroactive price adjustments and other compensations that mainly related to our first quarter, but were negotiated in the second quarter.

Speaker Change: Reflecting the lower level of inflation this year.

Speaker Change: Out of period compensations are retroactive price adjustments and other compensations that mainly related to our first quarter, but were negotiated in the second quarter.

Speaker Change: Looking on the regional sales split.

Speaker Change: They're counted for 37% Americas for 34, and Europe was 29%.

Speaker Change: Looking on the regional sales split.

Speaker Change: <unk> counted for 37% Americas for 34, and Europe was 29%.

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

Our sales in the quarter came in lower than expected as light vehicle production in all major regions was lower than predicted.

According to S&P global light vehicle production declined by 1% year over year in the quarter.

Speaker Change: According to S&P global light vehicle production declined by 1% year over year in the quarter.

Speaker Change: This was more than three percentage points worse than expected at the beginning of the quarter.

Speaker Change: We estimate that the graphical light vehicle production mix had 190 basis points negative impact on our outperformance.

Speaker Change: We estimate that the graphical light vehicle production mix had 190 basis points negative impact on our outperformance despite.

Speaker Change: Despite this.

Speaker Change: Some key customer we're adjusting inventories our organic sales growth outperformed global light vehicle production by 140 basis points.

Speaker Change: Despite this.

Speaker Change: Some key customer we're adjusting inventories our organic sales growth outperformed global light vehicle production by 140 basis points.

Speaker Change: We continued to outperform light vehicle production significantly in Japan rest of Asia and in Europe.

Speaker Change: Fuelled by product launches and pricing.

Speaker Change: The outperformance in rest of Asia was driven by South Korea and India.

Speaker Change: Fuelled by product launches and pricing.

Speaker Change: For India, we expect the strong outperformance in the second half of the year from a number of launches earlier in the third quarter early in the third quarter.

Speaker Change: The outperformance in rest of Asia was driven by South Korea and India.

Speaker Change: For India, we expect the strong outperformance in the second half of the year from a number of launches earlier in the third quarter early in the third quarter.

Speaker Change: In Americas we.

Speaker Change: Underperformed slightly as some key customers reduced production.

Speaker Change: In Americas we.

Speaker Change: In China, the market develop unfavorably with certain brands and models with low hour to live content growing strongly while some of our key global customers production declined significantly leading to seven percentage points underperformance in China.

Speaker Change: Underperformed slightly as some key customers reduce production.

Speaker Change: On the next slide we look a bit closer on the Chinese market and our development there.

Speaker Change: We are rapidly strengthening our position with fast growing domestic Chinese Oems.

Speaker Change: Okay.

Speaker Change: We are rapidly strengthening our position with fast growing domestic Chinese Oems.

Speaker Change: It has been a long road for China's domestic producers to really rival global vehicle manufacturers.

Speaker Change: It has been a long road for China's domestic producers.

Speaker Change: With China, taking the lead in the in the production of electric vehicles and with the high rate of new domestic Chinese car models coming to market, we have seen a major pivot towards domestic brands in the Chinese market.

Speaker Change: Really rival global vehicle manufacturers.

With China, taking the lead in the in the production of electric vehicles and with the high rate of new domestic Chinese car models coming to market, we have seen a major pivot towards domestic brands in the Chinese market.

Speaker Change: As a result, China Chinese Oems have grown their share of the Chinese light vehicle production from around 40% in the beginning of 2022 to close to 55% in the second quarter of this year.

Speaker Change: As a result of our strong order intake in recent years, we have continued to expand our business with domestic Chinese Oems.

Speaker Change: They accounted for 38% of our Chinese sales in Q2 2024 up from 20% in the beginning of 2022.

Speaker Change: <unk> accounted for 38% of our Chinese sales in Q2 2024 up from 20% in the beginning of 2022.

Speaker Change: In Q2, 24 hour sales to this group increased by 39% versus a year ago and by 25% versus Q1 2024.

Speaker Change: The safety content per vehicle CTV is on track to grow by around 10% from 2022 to 2024 for both global and domestic Chinese Oems.

Speaker Change: The safety content per vehicle CTV is on track to grow by around 10% from 2022 to 2024.

Speaker Change: Due to the large difference in CTV between the two groups and the fast growing market share for Chinese Oems.

Speaker Change: We are both global and domestic Chinese Oems.

Speaker Change: Due to the large difference in CTV between the two groups and the fast growing market share for Chinese Oems.

Speaker Change: Average CPB is expected to grow by only 5% during the same period.

Speaker Change: As a negative impact on our ability to outperform light vehicle production in China currently.

Speaker Change: This has a negative impact on our ability to outperform nicely can production in China currently.

Speaker Change: Although incentive program such as subsidies for ice vehicles replacement and vehicle financing programs have been implemented to support nice vehicle sales demand remains stagnant and China.

Speaker Change: Due to steep competitions between Oems are wide ranging crisis price war is taking plans since last year. Therefore.

Due to steep competitions between Oems are wide ranging crisis price war.

Speaker Change: Therefore, many end consumers have become hesitant to purchase a new vehicle on expectations for further price reductions.

Speaker Change: Taking plans since last year therefore.

Speaker Change: Therefore, many end consumers have become hesitant to purchase a new vehicle on expectations for further price reductions.

Speaker Change: However, lately, we have seen signs of moderation of the price War.

Speaker Change: However, lately, we have seen signs of a moderation of the price war.

Speaker Change: The potential impact of the new EU tariffs on Chinese exports remains difficult to assess.

Speaker Change: In this context context, it is important to understand that a large minority of the Chinese exports on conventional ice cars to Asia, the middle East and Africa.

Speaker Change: However, we see global Oems relocating production from China to Europe, and Chinese Oems accelerating efforts to add production capacity outside of China.

Speaker Change: Looking at our recent model launches on the next slide.

Speaker Change: Yeah.

Speaker Change: Although we see some changes to our customers' plans for model launches. We continue to expect a record number of product launches for 2024.

Speaker Change: Looking at our recent model launches on the next slide.

Speaker Change: Although we see some changes to our customers' plans for model launches. We continue to expect a record number of product launches for 2024.

Speaker Change: As can be seen from this slide six of these models are produced in China.

Speaker Change: Flexing, our strong position with Chinese Oems as well as with global Oems producing in China.

Speaker Change: As can be seen from this slide six of these models are produced in China.

Speaker Change: Flexing, our strong position with Chinese Oems as well as with global Oems producing in China.

Speaker Change: The trend towards electrification continues especially in China.

On this slide all models, but one are being made available as electric versions.

Speaker Change: The trend towards electrification continues especially in China.

Speaker Change: On this slide all models, but one are being made available as electric versions.

Speaker Change: The models shown here have an hour to live content per vehicle from around $130 to over $500.

Speaker Change: In terms of outlet sales potential.

Speaker Change: And kicks launch is the most significant followed by the Stellato S. Nine which is the collaboration between Huawei and bike.

Speaker Change: In terms of after the sales potential.

Speaker Change: Kicked launch is the most significant followed by the philosopher F.

Speaker Change: The long term trend to higher CPB and supported by front center airbags on five of these models.

Speaker Change: <unk> nine which is the collaboration between Huawei and bike.

Speaker Change: The long term trend to higher CPB and supported by front center airbags on five of these models.

Speaker Change: More advanced seatbelts and pedestrian protection who'd lifters.

Speaker Change: Now looking at the sustainability highlights on the next slide.

Speaker Change: More advanced seatbelts and pedestrian protection who'd lifters.

Guided by our vision of saving more lives, we are taking significant steps towards our sustainability commitments for.

Speaker Change: Now looking at the sustainability highlights on the next slide.

Speaker Change: Yeah.

Speaker Change: Guided by our vision of saving more lives, we are taking significant steps towards our sustainability commitments for.

Speaker Change: For example, our belief and the <unk> Road safety fund are collaborating to enhance motorcycle safety.

The collaboration supports the UN sustainable development goal, three six which aims to reduce road traffic fatalities and injuries and our <unk> goal of saving 100000 lives annually.

Speaker Change: The collaboration supports the UN sustainable development goal, three six which aims to reduce road traffic fatalities and injuries and our <unk> goal of saving 100000 lives annually.

Speaker Change: We are also completely phased out sulfur hexafluoride sub six that was used in steering wheel production.

Speaker Change: <unk> was our largest source of fugitive emissions.

Speaker Change: It was responsible for around 6% of our to lift total scope, one and two emissions in 2023.

Speaker Change: <unk> was our largest source of fugitive emissions.

Speaker Change: It was responsible for around 6% of our total scope, one and two emissions in 2023.

Speaker Change: We have continued to increase the use of renewable electricity.

Additional renewable electricity instrument and further increasing on site solar energy generation capacity.

Speaker Change: We have continued to increase the use of renewable electricity.

Speaker Change: No additional renewable electricity instruments and further increasing on site solar energy generation capacity.

Speaker Change: In collaboration with key supply chain partners, we have developed airbag cushions made from 100% recycled polyester user.

Speaker Change: Using recycled materials is a crucial step towards alkermes commitment to reduce emissions across its product range and will contribute to our to this ambition to achieve net zero greenhouse gas emissions across the supply chain by 2014.

Speaker Change: Using recycled materials.

Speaker Change: Is a crucial step towards alkermes commitment to reduce emissions across its product range and will contribute to our to this ambition to achieve net zero greenhouse gas emissions across the supply chain by 2014.

Speaker Change: I will now hand over to our CFO <unk>, who will talk you through the financials on the next slide.

<unk>: I will now hand over to our CFO <unk>, who will talk you through the financials on the next slide.

Mikael Bratt: Thank you Mikael.

Speaker Change: This slide highlights our key figures for the second quarter of 2024 compared to the second quarter of 2023.

<unk>: Thank you Mikael.

<unk>: This slide highlights our key figures for the second quarter of 2024 compared to the second quarter of 2023.

Speaker Change: Our net sales were $2 6 billion. This was a 1% decrease.

Mikael Bratt: Gross profit increased by $28 million or by 6% to $475 million, while the gross margin increased by one three percentage points to 18, 2%.

<unk>: Our net sales were $2 6 billion. This was a 1% decrease.

Mikael Bratt: Gross profit increased by $28 million or by 6% to $475 million, while the gross margin increased by one three percentage points to 18, 2%.

Mikael Bratt: The adjusted operating income increased from $212 million to $221 million and the adjusted operating margin increased by 50 basis points to eight 5%.

Mikael Bratt: The adjusted operating income increased from 212 million to $221 million and the adjusted operating margin increased by 50 basis points to eight 5%.

Mikael Bratt: non-GAAP adjustments amounted to $15 million from capacity alignments and antitrust related matters.

Mikael Bratt: non-GAAP adjustments amounted to $15 million from capacity alignment antitrust related matters.

Mikael Bratt: Adjusted earnings per share diluted decreased by <unk> were.

Were the main drivers were 13 from higher income taxes, and nine <unk> from the financial net nonoperating items, partly offset by <unk> <unk> from higher operating income and <unk> from the lower number of shares.

Mikael Bratt: Adjusted earnings per share diluted decreased by five.

Speaker Change: Were the main drivers were 13 from higher income taxes, and nine <unk> from the financial net and non operating items, partly offset by <unk> <unk> from higher operating income and <unk> from the lower number of shares.

Mikael Bratt: Our adjusted return on capital employed and return on equity were a solid 22% and 26% respectively.

Speaker Change: Our adjusted return on capital employed and return on equity were a solid 22% and 26% respectively.

Mikael Bratt: We paid a dividend of six to eight per share in the quarter and repurchased and retired one 3 million shares for around $160 million U S dollars.

Speaker Change: We paid a dividend of <unk> 68 per share in the quarter and repurchased and retired one 3 million shares for around $160 million U S dollars.

Mikael Bratt: Looking now on the adjusted operating income bridge on the next slide.

Mikael Bratt: In the second quarter of 2024, we managed to increase our adjusted operating income despite cost inflation and volume growth.

Speaker Change: Looking now on the adjusted operating income bridge on the next slide.

Speaker Change: In the second quarter of 2024, we managed to increase our adjusted operating income despite cost inflation and volume growth.

Mikael Bratt: This was due to successful execution of cost reductions and cost compensations.

Mikael Bratt: The net currency effect was $3 million positive driven by the Turkish lira, partly offset by the negative effect from the Mexican peso and the Japanese yen.

Speaker Change: This was due to successful execution of cost reductions and cost compensations.

Speaker Change: The net currency effect was $3 million positive driven by the Turkish lira, partly offset by the negative effect from the Mexican peso and the Japanese yen.

Mikael Bratt: The impact the impact from raw materials was negligible.

Mikael Bratt: Out of period cost compensation of $6 million was 24 million lower than last year, reflecting the lower level of level of inflation.

Speaker Change: The impact the impact from raw materials was negligible.

Speaker Change: Out of period cost compensation of $6 million or 74 million lower than last year, reflecting the lower level level of inflation.

Mikael Bratt: Cost for SG&A, and <unk> combined was $4 million higher.

Speaker Change: This was driven by higher SG&A due to several smaller cost items of predominantly temporary in nature, such as the U N Road safety fund contribution and higher legal fees.

Cost for SG&A and <unk> combined was 4 million higher.

Speaker Change: This was driven by higher SG&A due to several smaller cost items of predominantly temporary nature.

Speaker Change: As a result of our cost saving activities.

Speaker Change: Such as the U N Road safety fund contribution and higher legal fees.

Speaker Change: <unk> leverage excluding currency effects on the organic sales increase was.

Speaker Change: As a result of our cost saving activities the operating leverage excluding currency effects on the organic sales increase was substantially above our normal 20% to 30% range.

Speaker Change: Essentially above our normal 20% to 30% range.

Speaker Change: Looking now on the cash flow more in detail on the next slide.

Speaker Change: For the second quarter of 2020 for operating cash flow declined by 13 minutes 39 million to $340 million compared to the unusually strong second quarter last year, which was affected by the reversal of the negative working capital effects from the first quarter last year.

Speaker Change: Looking now on the cash flow more in detail on the next slide.

Speaker Change: For the second quarter of 2020 for operating cash flow declined by 13, Mips $39 million to $340 million compared to the unusually strong second quarter last year, which was affected by the reversal of the negative working capital effects from the first quarter last year.

Speaker Change: Capital expenditures net increased to $146 million from $124 million last year.

Speaker Change: In relation to sales it was five 6% this year up from four 7% last year.

Speaker Change: Free cash flow declined by $61 million compared to the same period the prior year, mainly due to the lower operating cash flow.

Speaker Change: The last 12 months cash cash conversion defined as free cash flow in relation to the net income was 84%.

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

Speaker Change: During the second quarter trade working capital decreased by $167 million driven.

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

Speaker Change: Driven by $104 million, and lower receivables $61 million, lower inventory and $3 million lower accounts payables and lower inventories and receivables were partly due to lower sales towards the end of the quarter.

Speaker Change: During the second quarter trade working capital decreased by $167 million driven.

Speaker Change: Driven by $104 million, and lower receivables $61 million, lower inventory and $3 million lower accounts payables and.

Speaker Change: Compared to the same period last year trade working capital decreased from 12, 3% to 11, 2% in relation to sales.

Speaker Change: The lower inventories and receivables were partly due to lower sales towards the end of the quarter.

Speaker Change: Compared to the same period last year trade working capital decreased from 12, 3%.

Speaker Change: Our capital efficiency program aims to improve working capital by 800 million to date, we have achieved around $640 million.

Speaker Change: To 11, 2% in relation to sales.

Speaker Change: Our capital efficiency program aims to improve working capital by 800 million to date, we have achieved around $640 million.

Speaker Change: Improvements in inventories are lagging due to the high call of volatility and health planning challenges that caused inefficiencies over the coming years, we expect inventories to improve significantly in tandem with the reduced call of volatility.

Improvements in inventories are lagging due to the high call it volatility and health planning challenges at cost inefficiencies.

Speaker Change: Over the coming years, we expect inventories to improve significantly in tandem with the reduced call of volatility.

Speaker Change: Now looking on our debt leverage ratio development on the next slide.

Speaker Change: Okay.

Speaker Change: Our continued focus on balance sheet efficiency and supporting our strong performance for cash flow cash conversion and return on capital employed.

Speaker Change: Now looking on our debt leverage ratio development on the next slide.

Speaker Change: Okay.

Speaker Change: Our continued focus on balance sheet efficiency and supporting our strong performance for cash flow cash conversion and return on capital employed.

Speaker Change: Our leverage ratio improved compared to the same quarter a year ago, despite investing in our footprint and returning over $810 million to shareholders.

Speaker Change: The debt leverage ratio at the end of June 2024 improved by 0.11 times from the end of the first quarter.

Speaker Change: Compared to the first quarter of 2024, our net debt increased by $9 million, while 12 months trailing adjusted EBITDA improved by $11 million.

Speaker Change: We expect that our debt leverage and cost of cash flow trend will allow for continued high shareholder returns going forward.

Speaker Change: We expect that our debt leverage and positive cash flow trend will allow for continued high shareholder returns going forward.

Speaker Change: <unk> has entered into an additional revolving credit facility agreement with standard chartered bank that can be used for general corporate purposes.

Speaker Change: The agreement provides for a $125 million revolving credit facility that matures in 2029 and does not contain any financial covenants.

Speaker Change: Now looking at shareholder returns over the past five years on the next slide.

Speaker Change: Over the years <unk> has shown its ability to generate solid cash flow and periods with varying market environments.

Speaker Change: Now looking at shareholder returns over the past five years on the next slide.

Speaker Change: Over the years <unk> has shown its ability to generate solid cash flow and periods with varying market environments.

Speaker Change: We have used both dividend payments and share repurchases to create shareholder value.

Speaker Change: Historically, the dividend has usually represented a yield of approximately 2% to 3% in relation to the average share price.

Speaker Change: We have used both dividend payments and share repurchases to create shareholder value.

Speaker Change: Historically, the dividend has usually represented a yield of approximately 2% to 3% in relation to the average share price.

Speaker Change: During the last 12 months, we have returned around $810 million to shareholders through dividend and share buybacks, a new record for the company.

During the last 12 months, we have returned around $810 million to shareholders through dividend and share buybacks, a new record for the company.

Speaker Change: Over the last five years, we have reduced the net debt significantly while returning $1 7 billion directly to shareholders.

Speaker Change: This include stock repurchases and cancellations of seven 8 million shares for a total of close to $800 million U S dollars as part of the current stock repurchase program.

Speaker Change: This includes stock repurchases and cancellations of seven 8 million shares for a total of close to $800 million U S dollars as part of the current stock repurchase program.

Speaker Change: Since we initiated the current stock repurchase program in 2022, we have reduced the number of outstanding shares by close to 9%.

Speaker Change: We consider several factors when executing the program such as our balance sheet, our cash flow outlook, our credit rating and a general business conditions not only the debt leverage ratio will always strive to balance what is best for our shareholders, both short and long term.

We consider several factors when executing the program such as our balance sheet, our cash flow outlook, our credit rating and the general business conditions, not only the debt leverage ratio will always strive to balance what is best for our shareholders, both short and long term.

Speaker Change: Now looking at our efficient balance sheet that supports our shareholder return from the next slide.

Speaker Change: Our strong balance sheet and good return on capital employed is fundamental for long term shareholder value creation.

Speaker Change: Now looking at our efficient balance sheet that supports our shareholder return from the next slide.

Speaker Change: Despite an operating margin impacted by the challenging market environment for the past five years.

Speaker Change: Our strong balance sheet and good return on capital employed is fundamental for long term shareholder value creation.

Speaker Change: Return on capital employed has remained strong averaging around 17%.

Speaker Change: Spice and operating margin impacted by the challenging market environment for the past five years, our return on capital employed has remained strong averaging around 17%.

Speaker Change: Our capital turnover rate, meaning our sales in relation to average capital employed has improved substantially over the past three years and is now significantly above our five year average.

Speaker Change: With that I'll hand, it back to you Michelle.

Fredrik: Thank you fredrik onto the next slide.

Speaker Change: Yes.

Speaker Change: As we enter the second half of 2020 for the outlook for the global light vehicle production has been reduced by two percentage points since April.

Speaker Change: With that I'll hand, it back to you Michelle.

Michelle: Thank you predict onto the next slide.

Speaker Change: Yeah.

Speaker Change: As we enter the second half of 2020 for the outlook for the global light vehicle production has been reduced by two percentage points since April.

Speaker Change: And two INR two 2% by S&P.

Speaker Change: The light vehicle.

And two INR two 2% by S&P.

Speaker Change: Production update is factoring in region specific influences, particularly recent light vehicle sales weakness in China persistent headwinds in Europe vehicle obligation issues in Japan, and growing vehicle inventories in North America.

Speaker Change: The light vehicle.

Speaker Change: Production update is factoring in region specific influences, particularly recent light vehicle sales weakness in China with system headwinds in Europe vehicle obligation issues in Japan, and growing vehicle inventories in North America.

Speaker Change: The updated forecast indicates a light vehicle production decline of 4% for the second half of the year with the third quarter falling five 5%.

Speaker Change: The updated forecast indicates and light vehicle production decline of 4% for the second half of the year with the third quarter falling five 5%.

Speaker Change: Light vehicle production in China is expected to decline, 7% in the third quarter on a very strong.

Speaker Change: On the very strong third quarter last year and the weak domestic demand.

Speaker Change: The outlook for North America is.

Speaker Change: On the very strong third quarter last year and the weak domestic demand.

Speaker Change: Light vehicle production has been revised down three 4% over the short term horizon.

Speaker Change: The outlook for North America is.

Speaker Change: Need for a greater inventory correction.

Speaker Change: Light vehicle production has been revised down three 4% over the short term horizon on the need for a greater inventory correction.

Speaker Change: The light vehicle production forecast with Europe as decreased to minus 5% in the third quarter, mainly due to higher for long.

Speaker Change: Higher for longer interest rates effects.

Speaker Change: And consumer demand and continued inventory reductions at some Oems base.

Speaker Change: For longer interest rates effects and end consumer demand and continued inventory reductions at some Oems.

Speaker Change: Based on S&P, globals forecast and our own analysis, our 'twenty to 'twenty four guidance is built on a global light vehicle production decline of around 3% for the full year.

Speaker Change: Now looking on the business outlook on the next slide.

We.

Speaker Change: <unk> a significant increase in profitability in the second half of the year, we did an adjusted operating margin of around 11% to 12% compared to the first half years, 8%.

Speaker Change: Now looking on the business outlook on the next slide.

Speaker Change: We expect a significant increase in profitability in the second half of the year, we didnt adjusted operating margin of around 11% to 12% compared to the first half years, 8%.

Speaker Change: This is supported mainly by a more stable and slightly higher light vehicle production.

Speaker Change: Structural and strategic initiatives.

Speaker Change: Cost control.

Speaker Change: And customer compensations.

Speaker Change: Structural and strategic initiatives.

This is expected to be partly offset by higher costs for raw materials, driven mainly by steel and nylon.

Speaker Change: Cost control.

Speaker Change: And customer compensations.

Speaker Change: This is expected to be partly offset by higher costs for raw materials, driven mainly by steel and nylon.

Looking at our 2024 financial guidance on the next slide.

Speaker Change: Yeah.

Speaker Change: Looking at our 2024 financial guidance on the next slide.

Speaker Change: This slide shows our full year, 2024 guidance, which excludes effects from capacity alignment antitrust related matters and other discrete items.

Speaker Change: Yeah.

Speaker Change: This slide shows our full year 2020 for guidance.

Speaker Change: Each excludes effects from capacity alignment antitrust related matters and other discrete items.

Speaker Change: Our updated full year guidance is based on our global light vehicle production decline of around 3% instead of 1%.

Speaker Change: The lower light vehicle production assumptions.

Speaker Change: Yes.

Speaker Change: Negative impact on our sales adjusted operating margin and operating cash flow.

Speaker Change: The lower light vehicle production assumptions.

Speaker Change: Yes.

Speaker Change: A negative impact on our sales adjusted operating margin and operating cash flow.

Speaker Change: Our organic sense is now expected to increase by around 2% net.

Speaker Change: Net currency translation effects are now expected to be minus 1% on sales.

Speaker Change: Our organic sense is now expected to increase by around 2% net.

The guidance for adjusted operating margin is around $9, 5% to 10%.

Speaker Change: Net currency translation effects are now expected to be minus 1% on sales.

Speaker Change: The guidance for adjusted operating margin is around $9, 5% to 10%.

Speaker Change: Operating cash flow is expected to be around one 1 billion U S dollars.

Speaker Change: Our positive cash flow trend should allow for continued high shareholder returns.

Speaker Change: Operating cash flow is expected to be around one 1 billion U S dollars.

We foresee a tax rate of around 28%.

Speaker Change: Our positive cash flow trend should allow for continued high shareholder returns.

Speaker Change: Looking on the next slide.

Speaker Change: We foresee a tax rate of around 28%.

Yeah.

Speaker Change: 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 Change: Looking on the next slide.

Speaker Change: Okay.

Speaker Change: 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 Change: I now hand, it back to not yet.

Speaker Change: Thank you so much yeah participants as a reminder, if you wish to ask a question. Please press star one boss Calvin keypad and late finance to be announced three drove a question. Please press star one again.

Speaker Change: I now hand, it back to not yet.

Speaker Change: Thank you so much yeah participants as a reminder, if you wish to ask a question. Please press star one on your telephone keypad and late finance will be announced to redraw a question. Please press star one again.

Speaker Change: Pavel composite K narrows parties will take a few moments.

Yes.

Speaker Change: Uh huh.

Speaker Change: Bob will compile the Q&A now those parties will take a few moments.

Speaker Change: And now we're going to take our first question and it comes from the line of Colin Langan from Wells Fargo. Your line is open. Please ask your question.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: And now we're going to take our first question and it comes from the line of Colin Langan from Wells Fargo. Your line is open. Please ask your question.

Colin Langan: Oh, great. Thanks for taking my questions.

Speaker Change: Just to start if I look at the mid point of your guidance cut it looks like close to a 30% decremental on lower sales was a little bit higher than normal.

Oh, great. Thanks for taking my questions.

Colin Langan: Just to start if I look at the mid point of your guidance cut it looks like close to a 30% decremental on lower sales, which is a little bit higher than normal.

Speaker Change: Any thoughts on why is that toward the higher end in particular with the peso because I thought there was a big headwind last year and the pace of same store now maybe help so when that actually helped the decremental is actually improve into the second half and how you're thinking about that.

Colin Langan: Any thoughts on why is that towards the higher end in particular with the peso because I thought there was a big headwind last year in the past it seems to now maybe help so when that actually have helped the decremental is actually improve into the second half and how you're thinking about that.

Yeah sure. Thanks for the question.

Speaker Change: We always said if it's basically LDP that is driving the sales.

Speaker Change: Yes sure. Thanks for the question.

Speaker Change: Development, then we would expect that the decremental margin would be at the higher end of the 20% to 30% range.

Speaker Change: We always said if it's basically LDP that is driving the sales.

Speaker Change: Development, then we would expect that the decremental margin would be at the higher end of the 20% to 30% range.

Speaker Change: That's basically what you are also then calculating area on top of that we also have is a set of slightly a slight headwind also from raw materials versus what we had expected.

Speaker Change: Thats basically what you are also then calculating area on top of that we also have as I said, a slightly a slight headwind also from raw materials versus what we had expected.

Speaker Change: <unk>.

Speaker Change: So those are the main things that are on the peso. We have included here what we.

Speaker Change: However, based our guidance for.

Speaker Change: <unk>.

Speaker Change: So those are the main things that on the peso. We have included here, what we have based our guidance for.

Speaker Change: So that's a payout rate of around 17 to the $1.

Speaker Change: Depending on how that moves here in the second half of the year that that could be.

Speaker Change: So thats a peso rate of around 17 to $1.

Speaker Change: A different sense of what we're assuming at the moment.

Speaker Change: Yes, depending on how that moves here in the second half of the year that that could be a.

Speaker Change: Okay. So authorities at the higher end.

Speaker Change: A different sense of what we're assuming at the moment.

Speaker Change: So help areas are washed out by the raw material headwinds.

Speaker Change: Okay. So authorities at the higher end.

Speaker Change: When you think about it.

Speaker Change: Yeah.

Speaker Change: Somehow areas washed out by the raw material headwinds.

Speaker Change: Potentially yes.

Speaker Change: Okay.

Speaker Change: And then just overall guidance came down from 5% to two.

Speaker Change: When I think about it.

Speaker Change: Yeah.

Speaker Change: Potentially.

Speaker Change: Okay.

Speaker Change: I think with rounding it's light vehicle production is down just to you talked a lot about mix headwinds, particularly in this quarter I thought you said it was 12% worse than you expected versus production being 3% worse for Q2, how much of a mixed headwind.

And then just overall guidance came down from 5% to two.

Speaker Change: I think with rounding it's light vehicle production was down just two you talked a lot about mix headwinds, particularly in this quarter I thought you said it was 12% worse than you expected versus production being 3% worse for Q2, how much of a mixed headwind.

Speaker Change: It's baked in for the second half of the year, that's expected to persist.

Speaker Change: Or is most of that sort of I guess, 1% extra customer mix headwind already occurred in Q2.

Speaker Change: It's baked in for the second half of the year is that expected to persist.

Or is most of that sort of I guess, 1% extra customer mix headwind already occurred in Q2.

Speaker Change: The 12% that we are referring to was.

Speaker Change: How the volumes in June developed.

Speaker Change: Compared to our expectations at the beginning of the quarter.

Speaker Change: The 12% that we were referring to was.

Speaker Change: How the volumes in June developed.

Speaker Change: So basically the whole aviation for the quarter was in June, whereas April and May were more or less in line with our expectations.

Speaker Change: Compared to our expectations at the beginning of the quarter.

Speaker Change: So basically the whole aviation for the quarter was in June, whereas April and May were more or less in line with expectations.

Speaker Change: That's what we were saying.

And then on the the mix in the quarter had a negative two percentage point of close to two percentage point effect.

Speaker Change: That's what we were foreseeing.

Speaker Change: And then on the <unk>.

We expect that for the full year to be around negative 1%.

Speaker Change: Mix in the quarter had a negative two percentage point of close to two percentage points.

Speaker Change: And that is mainly based on let's say that the sales mix in China.

Speaker Change: And we expect that for the full year to be around negative 1%.

Would improve in the second half for us versus the first half.

Speaker Change: And that is mainly based on let's say that the.

Speaker Change: Sales mix in China.

Speaker Change: If you look at how the Chinese Oems developed in the second quarter.

Speaker Change: Would improve in the second half for us versus the first half.

Speaker Change: They were up 20% year over year, whereas the global Oems were down 10%.

Speaker Change: And if you look at how the Chinese Oems developed in the second quarter.

Speaker Change: And this number for the full year is expected to be plus 10 minus talent. So it means that this negative trend we had in Q2 should reverse in the second half.

Speaker Change: They were up 20% year over year, whereas the global Oems were down 10%.

Speaker Change: And this number for the full year is expected to be plus and minus patents. So it means that this negative trend we had in Q2 should reverse in the second half.

Speaker Change: But again, that's what we're basing it all remains to be seen how that plays out but based on loss assumption. It's a negative one percentage points mix effect for the full year.

Speaker Change: But again, that's what we're basing it all remains to be seen how that plays out but based on those assumptions. It's a negative one percentage points mix effect for the full year.

Speaker Change: Got it that's very helpful. Thank you for taking my questions.

Speaker Change: Thank you.

Speaker Change: Now we're going to take our next question.

Speaker Change: Got it that's very helpful. Thank you for taking my questions.

Speaker Change: And the question comes from the line of <unk> <unk> from Handelsbanken. Your line is open. Please ask your question.

Speaker Change: Thank you.

Speaker Change: Now I will go and take our next question.

Speaker Change: And the question comes from the line of <unk> from Handelsbanken. Your line is open. Please ask your question.

Speaker Change: Thank you very much two questions for me.

Firstly, if you could maybe talk a little bit about your view on the light vehicle production.

Thank you very much two questions for me.

Speaker Change: The central this year.

<unk>: Firstly, if you could maybe talk a little bit about your view on the light vehicle production.

Speaker Change: Slightly more than two.

Speaker Change: Okay.

Speaker Change: To sum true this year.

David: David This is Europe.

Speaker Change: Slightly more than that.

I'm more cautious on.

Speaker Change: It sounds like second licensee.

Speaker Change: Second question is more on your own.

Speaker Change: I mean, the way you Devin this is Europe.

David: Sure.

Speaker Change: Price compensation with customers.

Speaker Change: Youre more cautious on.

Speaker Change: Second question is more on your.

Speaker Change: That will start to become tougher now than it was the same adjustments on production and inventory actions also.

Speaker Change: Sure.

Speaker Change: Price compensation with customers.

Speaker Change: That will start to become tougher now than it was in industrial production.

Speaker Change: That's my two questions. Thank you.

Speaker Change: Thank you thank you Anders.

Speaker Change: The important actions also.

Speaker Change: On the first.

Speaker Change: That's my two questions. Thank you.

Speaker Change: Regarding our slightly more negative view on the full year, then S&P here.

Speaker Change: Thank you thank you amperes.

Speaker Change: Yes.

Speaker Change: On the first.

Speaker Change: Points are.

Speaker Change: As you said correctly connected to.

Speaker Change: Regarding our slightly more negative view on the full year then than S&P here.

Speaker Change: A more cautious view on on Europe.

Speaker Change: As you said correctly connected to.

Speaker Change: We of course also see effects.

Speaker Change: More cautious view on on Europe.

Speaker Change: Coming from the overall business cycle.

Speaker Change: Consumer.

Speaker Change: But we of course also see effects.

Speaker Change: Demand here.

Speaker Change: Or slightly weakening as a result of.

Coming from the overall business cycle.

Speaker Change: High cost of living and higher interest rates et cetera. So there are some.

Speaker Change: <unk>.

Speaker Change: Demand here.

Speaker Change: Or a slightly weaker as a result of.

Speaker Change: More economic related topics, there and then maybe see in other parts of the world.

Speaker Change: High cost of living and higher interest rates et cetera. So there are some.

Speaker Change: I'll say more economic related topics there.

So we are slightly more conservative there.

Speaker Change: Underpriced compensation I think we are making good progress there as we have reported here we have the <unk>.

Speaker Change: You may be see in other parts of the world.

Speaker Change: So we are slightly more conservative there.

Speaker Change: Underpriced compensation I think we are making good progress there as we have reported here we have.

Speaker Change: Most with the minority of our our customers here.

Speaker Change: Is it easier or harder I would say it is.

Speaker Change: Close with the minority of our our customers here.

Speaker Change: It has always been.

Speaker Change: Is it easier or harder I would say it is.

Speaker Change: Detailed negotiation and I think in terms of.

Speaker Change: As it has always been.

Speaker Change: Evidence here I mean, it's an evidenced driven negotiations and it's all about you know.

Detailed negotiation and I think in terms of.

Speaker Change: External inflationary impacts on our value chain and is well documented.

Evidence here I mean, it's an evidence driven negotiations and it's all about.

Speaker Change: We have found a way to work with our customers on this.

Speaker Change: External inflationary impacts on our value chain and is well documented.

Speaker Change: This is the third year that we have an extensive negotiation related to inflation and so I think we are finding good ways to.

Speaker Change: We have found a way to work with our customers on this.

This is the third year that we have an extensive negotiation related to inflation and so I think we have found a good way to.

Speaker Change: Manage this process here.

Speaker Change: I think we have good setup, but it's never easy and it requires a lot of.

Speaker Change: Manage this process here.

Speaker Change: Details in those negotiations and as we have said before here, it's really component by component plant by plant so sort of continuous.

Speaker Change: I think we have good set up but it's never easy and it requires a lot of.

Speaker Change: Details in those negotiations and as we have said before here, it's really component by component and plant by plant so sort of continuous.

Speaker Change: Thank you.

Speaker Change: Now we're going to take our next question.

Speaker Change: Thank you.

Speaker Change: And the question comes from the line of Michael <unk> from Bank of America. Your line is open. Please ask your question.

Speaker Change: Thank you.

Now ill go and take our next question.

Speaker Change: Hi, Good afternoon. Thank you for the presentation. My first question is on this headwind reported from out of period compensation is this just a timing issue or is there perhaps some inflation in the system that you are unable to recover.

Speaker Change: And the question comes from the line of Michael Check from Bank of America. Your line is open. Please ask your question.

Hi, Good afternoon. Thank you for the presentation. My first question is on this headwind reported from out of period compensation is this just a timing issue or is there perhaps some inflation in the system that you're unable to recover.

Speaker Change: Will this headwind repeat again in Q3 and Q4 and then maybe just more broadly speaking.

Speaker Change: On the topic of retroactive pricing.

Speaker Change: Will this headwind repeat again in Q3 and Q4 and then maybe just more broadly speaking.

Is the idea that suppliers are going to continue leading this retroactive I think per prior year's wage increases not becoming somewhat tenuous, especially as the cumulative effect continues to roll up is there a risk here that we.

Speaker Change: On the topic of retroactive pricing.

Is the idea that suppliers are going to continue meeting this retroactive I think per prior year's wage increases not becoming somewhat tenuous, especially as the cumulative effect continues to roll up is there a risk here that Oems Oems, perhaps start to draw the line.

Speaker Change: Oems, perhaps start to draw the line.

Speaker Change: In terms of how far back they're willing to go on this thank you.

I think the.

Speaker Change: Yes.

Speaker Change: In terms of how far back they're willing to go on this thank you.

Speaker Change: The retroactive NES, we referred to here was really that last year in comparison, we got the higher portion connected to our top period in their results.

Speaker Change: I think the.

Speaker Change: The retroactive to estimate referred to here was really the last year and compares so we got the higher portion connected to our top period in the result in Q2 2023, then we got this year. So so you could say that.

Speaker Change: Q2, 2023, then we got this year. So so you could say that.

Speaker Change: It's not I wouldn't say a headwind this year in comparison here you need to make that that adjustment. So it doesn't indicate anything that those back further in time more more or less that's been before so you can say that of course is the inflation comes down and.

Speaker Change: Uh huh.

Speaker Change: It's not I wouldn't say a headwind this year in comparison here you need to make that adjustment. So it doesn't indicate anything that those back further in time more and more or less that's been before so you could say that of course is the inflation comes down and the negotiations is being concluded of course the alpha.

Speaker Change: Negotiation is being concluded of course, the outer period become less when you talked about the less of an impact.

Speaker Change: The.

Speaker Change: Real question here I think on the.

Speaker Change: Period become less when you talk about the less of an impact.

Speaker Change: Yeah.

Speaker Change: Our supplier base here is really this year that we are negotiating so so.

Speaker Change: The.

Speaker Change: My question here I think on the.

Speaker Change: Our supplier base here is really this year that we are negotiating so so.

Speaker Change: If not the 2023 overhang or anything like that it's really between the quarters in the current year that we have this out of period impact so to speak.

Speaker Change: If not the 'twenty to 'twenty, three overhang or anything like that it's really between the quarters in the current year.

Speaker Change: Thank you.

Speaker Change: Sorry, if I just to be clear on this out of cleared compensation I mean, what we're simply reporting there is work to be negotiated in the second quarter of this year that is done retractive. Okay from a reporting point of view should have been reported in the first quarter of this year and Thats simply the magnitude of the past compensations, we got last year that.

Speaker Change: Alpha period impact so to speak.

Speaker Change: Thank you and then Mike sorry.

Speaker Change: Alright, just to be clear on this out of cleared compensation I mean, what we're simply reporting there is work to be negotiated in the second quarter of this year that is then retracting.

Speaker Change: On a reporting point of view should have been reported in the first quarter of this year.

Speaker Change: Ended up being $30 million.

Speaker Change: And thats simply the magnitude of the past compensations, we got last year that ended up being $30 million.

Speaker Change: That belongs to the because of the attractive components in the first quarter. So it was not related run rate run rate related for the second quarter, whereas that number. This year was only $6 million. So you get a mathematical.

Hey effect here of the $24 million.

Speaker Change: I think you said, maybe just to clarify that on the second part.

Speaker Change: So the effect here of the $24 million.

How much competition is required on.

Speaker Change: Thank you Fred maybe just to clarify that on the second part.

Speaker Change: Places that were affected.

Speaker Change: 23.

Fred: How much competition is required on.

And given that some of these I guess it'd be settled by customers via lump sum payments.

Speaker Change: Places that were affected.

Speaker Change: 23.

Speaker Change: Does this affect not just continue to rollout over the years.

Speaker Change: And given that some of these I guess are being sampled by customers via lump sum payments.

Speaker Change: No I mean, as I said before here I mean right now in 2024, we only negotiated impacts arriving in 2024.

Speaker Change: Does this affect not just continue to roll up over the years.

Speaker Change: No I mean, as I said before here I mean.

Speaker Change: Right now in 2024, we only negotiated impacts arriving in 2024.

Speaker Change: So so that's no no 2023 impacting that then of course, if there was a lump sum payment in 2003 for 'twenty three of course, when we go to our customers.

Speaker Change: So so.

Speaker Change: No no 2023 impact and then of course, if there was a lump sum payment in 2003 for 'twenty three of course, when we go to our customers.

Speaker Change: And we got the lump sum last year that lump sum needs to be included of course in this year's compensation, but that has nothing to do with the out of period because the out of period is as we said before here.

Speaker Change: And we got the lump sum last year that needs to be included of course in this year's compensation, but that has nothing to do with the outer period because the out of period is as we said before here.

Speaker Change: Yes, we reported here is between the quarters in the current year.

Speaker Change: So.

Speaker Change: It's nothing to do with 2023 and as I said here I mean, it was a higher number last year because it was a higher base with we were negotiating this year it was lower.

Speaker Change: Yes, we reported here is between the quarters in the current year.

Speaker Change: So.

Speaker Change: It has nothing to do with 2023 and as I said here I mean, it was a higher number last year because it was a higher base with we will negotiate and this year it was a lower b.

Speaker Change: Cost inflation has come down on the lower number that we are needed to negotiate this year than it was last year and in comparison of course between Q2 and Q2, if you had the big bigger out of period last year.

Speaker Change: Cost inflation has come down and there is a low number that we needed to negotiate this.

Speaker Change: This year than it was last year and in comparison of course between Q2 and Q2, if you had the big bigger out of period last year.

Speaker Change: Shows up as a headwind here, but it's not headwinds in comparison mathematically.

Speaker Change: Understood. Thank you for that.

Speaker Change: It shows up with it and win here, but we saw headwinds in comparison mathematics.

Speaker Change: Thank you.

We're going to take our next question.

Speaker Change: Understood. Thank you for that.

Speaker Change: And the question comes from the line of ever go wrong from Seb. Your line is open. Please ask your question.

Speaker Change: Thank you.

Speaker Change: We're going to take our next question.

Speaker Change: And the question comes from the line of Eric go wrong from Seb. Your line is open. Please ask your question.

Speaker Change: Thank you Evan.

Speaker Change: First question is on the call of volatility.

Speaker Change: Straight to the development there on the slide and I was just.

Speaker Change: Thank you Evan first of all the cities on the call of volatility.

There hasn't really been an improvement over the past year in fact sort of deterioration.

Speaker Change: Illustrated the development there on the slide and I was just.

Speaker Change: Towards the end, what's the main reason for why you expect that to improve ahead.

Speaker Change: There hasn't really been any improvement over the past year in fact show deterioration.

Speaker Change: And then the second question related to that.

Towards the end, what's the main reason for why you expect that to improve ahead.

Speaker Change: So the new margin target to 75 bps or so.

Speaker Change: And then the second question related to that.

Speaker Change: The more distance from the 12% target how much of that is just the unexpectedly high quarter volatility and how much is volume I E. What comes back if you only get to more stable.

Speaker Change: So the new margin target to 75 bps or so.

Speaker Change: The more distance from the 12% target how much of that is just that the unexpectedly high quarter volatility and how much is volume I E. What comes back if you want to get the most stable.

Speaker Change: Market. Thank you.

Speaker Change: Thank you for the question there.

Speaker Change: Of course.

Speaker Change: I mean, we aren't expecting that call of volatility eventually should come back to normal I think the automotive industry is definitely used to work effectively with.

Speaker Change: Market. Thank you.

Speaker Change: Thank you for the question there.

Speaker Change: Course, we exit.

Speaker Change: I mean, we aren't expecting that call out volatility eventually should come back to normal I think the automotive industry is definitely used to work effectively with.

Speaker Change: The call of the.

Speaker Change: Towards the supplier base.

Speaker Change: And I have no reason to believe that that shouldn't be the case going forward. I think this is a reflection that we still are in.

Yes.

Speaker Change: The call outs.

Speaker Change: Towards the supplier base.

Speaker Change: I have no reason to believe that that shouldn't be the case going forward. I think this is a reflection that we still are in.

Very uncertain economic environment.

Speaker Change: The world here in that we went through the different regions here before we can see that our there of course different.

Speaker Change: It's very uncertain economic environment.

The world here.

Speaker Change: Reasons and this is not an average across all our customer base I mean, some customers are definitely very close or on pre pandemic targets.

Speaker Change: We went through the different regions here before we can see that our there are of course different.

Speaker Change: Reasons and this is not an average across all our customer base some customers all definitely.

Speaker Change: So further away and of course, if you are an OEM out there that.

Clothes or on pre pandemic targets. There. So further away and of course, if you are an OEM out there that.

Speaker Change: Maybe losing market share you might be losing some and.

Speaker Change: Some specific plot.

Speaker Change: Platform sales out ingredients you need to do.

Speaker Change: Maybe losing market share you might be losing some.

Speaker Change: So just adjust your inventories and Thats, maybe with some short notice upgrade speeds.

Speaker Change: Some specific plot.

Speaker Change: Platform sales out ingredients you need to do.

Speaker Change: Excuse me.

Speaker Change: So just adjust your inventories and Thats, maybe with some short notice upgrades.

Speaker Change: There are of course, a barrier variant of reasons for it but it's all reflecting the.

Speaker Change: Excuse me.

Speaker Change: Uncertainty in the end.

Speaker Change: They are of course, a barrier variant of reasons for it but it's all reflecting them now.

Speaker Change: And in the industry as such.

Speaker Change: The uncertainty is.

Speaker Change: So I mean, you can say why do we believe it on it is because we see many customers are returning to that level.

Speaker Change: <unk>.

And in.

In the industry as such.

Speaker Change: So I mean, you can say why do we believe it on it is because we see many customers are returning to that level.

Speaker Change: And then the impact here on a reduction I would say, it's more connected to the absolute light vehicle production levels.

Speaker Change: Then the.

Speaker Change: Back to you on a reduction I would say, it's more connected to the absolute light vehicle production levels.

So we are not discounting so much on the on the volatility side here, but maybe Frank you can develop the business.

Speaker Change: So we are not discounting so much on the on the volatility side here, but maybe Frank you can develop something.

Speaker Change: Alright.

Speaker Change: Basically what we have said previously that from the.

Speaker Change: Eight 8%, where we were last year, then the bridge up to the 12% margin targets that we expect one percentage point of that.

Speaker Change: Alright.

Frank: Basically what we have said previously that from the.

Eight 8%, where we were last year, then the bridge up to the 12% margin targets.

Speaker Change: <unk> three percentage point gap.

Speaker Change: To be closed by the improved call of volatility and with that also our ability then to operate with better direct labor efficiency.

Frank: <unk>, one percentage point of that.

Frank: <unk> three percentage point gap.

Frank: To be closed by the improved call of volatility and with that also our ability to operate with better direct labor efficiency.

Speaker Change: So theres nothing unchanged on that suggest as Mikkel said that the underlying MVP.

Speaker Change: Developing a bit differently than what we had expected a quarter ago.

Frank: So theres nothing unchanged on that suggest as Miguel said that the underlying <unk>.

Speaker Change: Very good. Thank you and just a follow up then on Mikkelsen answer is there a particular regional group of Oems that we should focus onto to find that.

Miguel: Developing a bit differently than what we had expected a quarter ago.

Okay. Good. Thank you and just a follow up then on Mikkelsen I'm sorry is there particular regional group of Oems that we should focus on to find that.

Speaker Change: The positive delta in that.

Speaker Change: And cole of stability.

Speaker Change: No.

Speaker Change: [laughter].

Miguel: The positive delta in that.

Speaker Change: When it comes to the regions I think is more Europe.

Carlos: And Carlos stability.

Carlos: No.

Carlos: [laughter].

Speaker Change: Americas situation.

Carlos: When it comes to the regions I think it's more Europe.

Speaker Change: I wouldn't like to go into specific Oems, there but of course the.

Carlos: Americas situation.

Speaker Change: Depending on there.

Carlos: I wouldn't like to go into specific Oems, there but of course.

Speaker Change: Unique situation.

Speaker Change: Chris between them.

Thank you.

Carlos: Depending on there.

Speaker Change: Thank you.

Carlos: Unique situation.

Speaker Change #100: Now we're going to take our next question.

Chris: Chris between them.

Speaker Change: Thank you.

Speaker Change #101: And the question comes from the line of Dan Levy from Barclays. Your line is open. Please ask your question.

Speaker Change: Thank you.

Speaker Change: Now we're going to take our next question.

Speaker Change: And the question comes from the line of Dan Levy from Barclays. Your line is open. Please ask your question.

Speaker Change #102: Excuse me Bank your line is open.

Speaker Change #102: Ill start with Amit. Thank you hi, good afternoon. Thank you for taking the question I wanted to just go back to the question on customer mix and you mentioned that you're only assuming.

Speaker Change: Excuse me Bank your line is open.

Ill start with Amit Thank you.

Dan Levy: Good afternoon. Thank you for taking the question wanted to could you go back to the question on customer mix and you mentioned that you're only assuming.

Gown down 1%, but if we just do some rough back of the envelope math one of your key customers.

Dan Levy: Down 1%, but if we just do some some rough back of the envelope math one of your key customers.

Speaker Change #103: Large European OEM with a heavy North America exposure, they've revised negatively another customer.

Dan Levy: Large European OEM with a heavy North America exposure, they've revised negatively another customer.

Speaker Change #104: We've seen some negative revisions there and then the China piece, we're well aware of the revisions there so.

Speaker Change #106: 1% negative mix seems a bit light in the context of that maybe you could just provide a little more context on that assumption of a 1% negative mixing the GLM. Thank you.

Dan Levy: We've seen some negative revisions there and then the China piece, we're well aware of the revisions there so.

Dan Levy: A 1% negative mixing.

Speaker Change: Bit light in the context of that maybe you could just provide a little more context on that assumption of 1% negative mix in the GLM. Thank you.

Speaker Change #104: As I said I can't comment on specific OEM here, but.

Speaker Change #104: In General you can say that this of course does it maybe have some bigger impacts here.

Speaker Change: So sorry, I can't comment specific OEM here, but.

Speaker Change: In General you can say that this of course does it maybe hudson's bigger impacts here.

Speaker Change #104: You're alluding to is of course, because we are very well.

Speaker Change #104: <unk> positioned across the universe here I mean, we are well represented with older.

You're alluding to is of course, because we are very well.

Speaker Change #105: All the different Oems, we have the regional mix that is also well represented across the board and as we alluded to here also we are growing significantly with the Chinese Oems here.

Positioned across the universe here I mean, we are well represented.

Speaker Change: And all the different Oems, we have regional mix that is also well represented across the board and as we alluded to here also we are growing significantly with the Chinese Oems here.

Speaker Change #105: Supported by our growth in.

Speaker Change #105: In the region. So that is offsetting up also lot of.

Speaker Change: Yes.

Speaker Change #105: The.

Speaker Change: Supported by our growth in the region. So that is offsetting up also dropped off.

Speaker Change #105: The comment related to the comments you had here. So so we have them.

Good portfolio to offset that.

Speaker Change: The comment related to the comments Johan here. So so we have.

Speaker Change #105: In fact in.

Speaker Change #105: And maybe on the one percentage point.

Johan: Good portfolio to offset that.

Speaker Change #105: And what we're talking about there is the negative regional mix that we're expecting and then also the customer mix within China.

Speaker Change: Thanks.

Johan: And maybe it's on the one percentage point.

Speaker Change: And what we're talking about there is the negative regional mix that we're expecting and then also the customer mix within China.

Speaker Change #105: That's the negative 1%.

Speaker Change #105: Understood. Thank you and then and then as a follow up I'm wondering if you could just discuss the competitive dynamics a bit in China I believe at one point.

Speaker Change: The negative 1%.

Speaker Change: Understood. Thank you and then and then as a follow up I'm wondering if you could just discuss the competitive dynamics a bit in China I believe at one point.

Speaker Change #105: Said that you were aiming for 40% market share in China and improvements from from there but.

You said that you were aiming for 40% market share in China and improvements from from there but.

Speaker Change #105: But maybe you could provide as to the extent possible any color on your.

Speaker Change #105: Your share within the domestic versus the multinationals how much of that total 40% market share is domestic versus multinational.

But maybe you could provide as to the extent possible any color on your.

Your share within the domestic versus the multinational and how much of that total 40% market share is domestic versus multinational.

Speaker Change #105: And then as a follow up to that.

Speaker Change #105: How you view.

Speaker Change #105: Competition from some of the other local Chinese suppliers in China, and then also outside of China as well.

And then as a follow up to that.

Speaker Change: How you view.

Speaker Change: Competition from some of the other local Chinese suppliers in China, and then also outside of China as well. Thank you.

Speaker Change #105: No I think I mean first of all we don't have a market share target either globally or regionally more than we want to defend our strong position.

Speaker Change: No I think I mean first of all we don't have a market share target.

Speaker Change #105: And as.

Speaker Change: Either globally or regionally more than we want to defend our strong position and.

We said in the Q2 here I mean, the Chinese Oems stands for 38% of our sales in India and.

Speaker Change: As we said in the Q2 here I mean, the Chinese Oems stands for 38% of our sales in it.

Speaker Change #105: China and that has grown significantly and we expect to continue to grow here.

Speaker Change: In China and that has grown significantly and we expect to continue to grow here, so well positioned there.

So well positioned there.

Speaker Change #105: And I mean, we have also had these regional strategy for Elong in China. Obviously, we are in China for China, and we are a market leader in China.

And I mean, we have also had these regional strategy along in China, obviously.

Speaker Change #105: So I think we have also a good position here too.

Speaker Change: In China for China, and we are a market leader in China.

Speaker Change #105: To work.

Speaker Change #105: Towards.

Speaker Change: So I think we have also a good position here too.

Speaker Change #105: How would you say is in competition with our peers in the industry also in China. So we will.

Speaker Change: <unk> work.

Speaker Change: With towards.

Speaker Change: How would you say is in competition with our peers in the industry also in China. So we will.

Prepared and well set up for that to continue that.

Speaker Change #105: But there <unk> I think it's very much the same in the sense that you have you know three you could say three global players.

Speaker Change: Prepared and well set up for that to continue that.

Speaker Change: But there <unk> I think it's very much the same in the sense that you have three you could say three global players.

Speaker Change #105: Similar portfolio, then you have more of a regional.

Speaker Change #105:

Speaker Change #105: Players and also.

Speaker Change: With a similar portfolio then you have more of a regional.

Speaker Change #105: Place with.

Speaker Change #105: Smaller.

Speaker Change #105: No more narrower product offering and it also is operating here, but I think.

Speaker Change:

Speaker Change: Players and also place.

Speaker Change: Place with it.

Speaker Change: Smaller.

Speaker Change #105: There is no dramatic change to the landscape that we have seen here for quite some time. It is a competitive industry and we are well prepared and we have a very strong offering here to be able to continue to defend our market share leadership position.

Speaker Change: No more narrower product offering and that also is operating here, but I think.

Speaker Change: Theres no dramatic change to the landscape that we have seen here for quite some time. It is a competitive industry and we are well prepared and we have a very strong offering here to be able to continue to defend our market share position.

Speaker Change #105: Okay. Thank you.

Thank you.

Speaker Change: Position.

Speaker Change #105: We'll take our next question.

Speaker Change: Okay. Thank you.

Speaker Change #107: And the question comes from the line of Agnieszka <unk> from Nordea. Your line is open. Please ask your question.

Speaker Change: Thank you.

Speaker Change: I will go and take our next question.

Agnieszka <unk>: Perfect. Thank you I have a question on your margin guidance for <unk> to 'twenty to 'twenty four you expect 11% to 12% margin and just look at 2002, and three where underlying I think 11, 1%.

Agnieszka <unk>: And the question comes from the line of Agnieszka <unk> from Nomura. Your line is open. Please ask your question.

Speaker Change: Perfect. Thank you I have a question on your margin guidance for <unk> to 'twenty to 'twenty four you expect 11%, 12% margin and just look at H 'twenty, three where the underlying I think 11, 1%.

Agnieszka <unk>: With a quite good finish to car production in 2023. So the question really is difficult.

Agnieszka <unk>: If I can quantify it.

Speaker Change: With a quite good finish to car production in 2023. So the question really is if you could maybe.

Agnieszka <unk>: What buckets will be driving this margin improvement.

Agnieszka <unk>: It's too, especially in the light with some raw material headwinds.

Speaker Change #100: Specify or quantify what.

Speaker Change #101: What buckets will be driving this margin improvement in <unk>, especially in the light with some raw material headwinds.

Agnieszka <unk>: Production had.

Headwinds.

Agnieszka <unk>: Our increasing until H two.

Speaker Change #102: Card production.

Agnieszka <unk>: Sure.

Speaker Change #101: Headwinds.

Agnieszka <unk>: So, yes, youre right for let's say a.

Speaker Change #103: Our increasing until H two.

11% to 12% is what we're what we're saying here.

Speaker Change #103: Sure.

Agnieszka <unk>: Compared to 8% for the first half.

Speaker Change #104: So yeah, youre right to say it.

Agnieszka <unk>: And as already pointed out in the presentation, we expect a slightly higher <unk> in the second half than in the first half and also more stable development.

Speaker Change #105: 11% to 12% is what we're what we're saying here.

Speaker Change #106: Compared to 8% for the first half.

Speaker Change #107: And as already pointed out in the presentation, we expect a slightly higher <unk> in the second half than in the first half.

Agnieszka <unk>: Then we also expect continued impact from our structural and strategic initiatives.

Speaker Change #107: And also more stable development.

Agnieszka <unk>: Cost control, especially on the SG&A side, and then increased customer compensations.

Speaker Change #107: Then we also expect continued impact from our structural and strategic initiatives.

Agnieszka <unk>: Those are the positives and then a slight headwind.

Speaker Change #107: Cost control, especially on the SG&A side, and then increased customer compensations.

Agnieszka <unk>: A bit more headwind than we expected at the beginning of the year from raw materials.

Speaker Change #107: Those are the positives and then a slight headwind.

Agnieszka <unk>: So when you sum it up it is really.

Speaker Change #107: A bit more headwind than we expected at the beginning of the year from raw materials.

Speaker Change #109: I would say good developments here when it comes to all the initiatives and activities that we are driving it to improve our results towards the around 12% target. So we are making progress it's giving the intended results.

Speaker Change #107: So when you sum it up it is really.

Speaker Change #107: Yeah.

Speaker Change #107: I would say good developments here when it comes to all the initiatives and activities that we are driving it to improve our results towards the end.

Speaker Change #109: And that of course in combination with good progress on the price negotiations so.

Speaker Change #107: Around 12% target. So we are making progress is giving the intended result.

Speaker Change #109: So the challenges here is very much around.

Speaker Change #107: And that's of course in combination with good progress on the price negotiation. So so so the challenges here is very much around.

The absolute light vehicle production.

Speaker Change #109: Volume.

Speaker Change #109: Of course also the the volatility <unk> seen here.

Speaker Change #107: The absolute light vehicle production.

Speaker Change #109: It's just the gap seems quite big from say, 8% margin.

Speaker Change #107: Volume and of course also the volatility.

Speaker Change #109: So to 11.

Speaker Change #108: It's just the gap seems a quite big from say, 8% margin.

Speaker Change #109: Presenting on H two.

Speaker Change #109: So probably I mean, we would appreciate a bit more.

Speaker Change #108: Okay.

Speaker Change #108: 11.

Speaker Change #109: Presenting on H two.

Speaker Change #109: A detailed quantification of what would be driving that.

Speaker Change #109: So probably I mean, we would appreciate a bit more.

Speaker Change #110: It is the elements that I just mentioned I mean, I cannot so the largest one will of course be the customer compensation Tonight.

Speaker Change #109: Detailed.

Speaker Change #109: <unk>.

Speaker Change #109: Timing nuts.

Speaker Change #109: It is the elements that I just mentioned I mean, I cannot tell the largest bond will of course be the case.

Speaker Change #110: We've never talked about what we're targeting.

Speaker Change #111: What the effect of that but that is one important part of <unk>. Then we also I mean as you know we always have a seasonality effect that Q4 is traditionally always stronger than the other three quarters. So that's we're not expecting that to be different this year than in any other year.

Speaker Change #109: The compensation Tonight.

Speaker Change #109: We've never talked about what we're targeting.

Speaker Change #109: The effect of that will adapt.

Speaker Change #110: An important part of it. Yes, then we also I mean as you know we always have a seasonality effect. Our Q4 is traditionally always stronger than the other three quarters. So that's we're not expecting that to be different this year than in any other year.

Speaker Change #111: Okay. Thank you.

Speaker Change #111: Thank you.

Speaker Change #111: Now we're going to take our next question.

Speaker Change #111: Okay. Thank you.

Speaker Change #112: And the question comes from line of Brent at the fan out from Wolfe Research. Your line is open please ask a question.

Speaker Change #111: Thank you.

Speaker Change #112: Now we're going to take our next question.

Speaker Change #113: And the question comes from line of Brent at the sand from Wolfe Research. Your line is open please ask a question.

Speaker Change #112: Hi.

Speaker Change #112: Thank you for taking the questions.

Speaker Change #113: I wanted to ask on the cost reduction opportunity on my math in the second quarter.

Speaker Change #113: Hi.

Brent: Thank you for taking my questions.

Speaker Change #114: Cost reductions I believe added 20% to $25 million year over year.

I wanted to ask on the cost reduction opportunity on my math in the second quarter.

Speaker Change #115: But could you give us a sense of the trajectory of cost reductions. This year, both the $50 million of indirect that you said as well as the direct head count reductions what could those cost savings be on an annualized basis exiting this year.

Speaker Change #115: Cost reductions I believe added 20% to $25 million year over year.

Speaker Change #116: But could you give us a sense of the trajectory of cost reductions. This year, both the $50 million of indirect that you said as well as the direct head count reductions what could those cost savings be.

Speaker Change #115: And then as a follow up to that when we think about these cost reductions.

Speaker Change #117: On an annualized basis exiting this year.

Speaker Change #115: How much of those are.

Speaker Change #118: And then as a follow up to that when we think about these cost reductions.

Speaker Change #115: Offsetting normal price reductions.

Speaker Change #116: Verse, offsetting but beyond the normal productivity improvements that would flow straight to the bottom line. Thank you.

Speaker Change #119: How much of those are.

Speaker Change #120: Offsetting normal price reductions.

Speaker Change #121: Verse, offsetting but beyond the normal productivity improvements that would flow straight to the bottom line. Thank you.

Speaker Change #116: Yeah, No I mean, it's.

Speaker Change #116: They are.

Speaker Change #117: Planned savings from restructuring initiatives are unchanged. They are still a $50 million. This year, and then ramping up to $100 million next year, and then $130 million when fully implemented. So there is no change on that we had about $10 million already last year. So the year over year effect is about $40 million.

Speaker Change #122: Yeah, No I mean its there.

Speaker Change #123: <unk> savings from our restructuring initiatives are unchanged they are.

Speaker Change #123: Still a $50 million this year, and then ramping up to $100 million next year, and then $130 million when fully implemented. So there is no change.

And these are.

Speaker Change #123: <unk>.

Speaker Change #117: Cost out activities and they are not part of our traditional toolbox.

Speaker Change #124: We had about $10 million already last year. So the year over year effect is about $40 million.

Speaker Change #124: And these are.

Speaker Change #118: Work with the two offsets the LTA so the annual price reductions with our customers those we typically offset with <unk>.

Speaker Change #125: Cost out activities and they are not part of our traditional toolbox that we work with the two offsets.

Speaker Change #119: Price negotiations with our supply base.

LTA, so the annual price reductions with our customers those we typically offset with <unk>.

Speaker Change #120: <unk> activity started labor efficiency and so on so this is on top of what we would have done.

Speaker Change #125: Both price negotiations with our supply base Veeva.

Speaker Change #125: <unk> activity started labor efficiency and so on so this is on top of what we would have done.

Speaker Change #120: The normal circumstances to offset the price reductions.

Speaker Change #120: Okay. Thank you.

Speaker Change #120: And then.

Speaker Change #125: Normal circumstances to offset the price reductions.

Speaker Change #120: If we step back and think about.

The company is <unk>.

Speaker Change #128: Okay. Thank you.

And then.

Speaker Change #120: Outgrowth.

If we step back and think about.

Speaker Change #120: <unk> historically thought about it in the mid single digit range half from content half of market share but.

Speaker Change #125: The company is.

Speaker Change #126: Market outgrowth.

Speaker Change #120: As you look forward and you consider the shifting customer mix dynamic you consider the changing price cost and the market share you've already taken over the several years whats the what are the right.

Speaker Change #127: [noise] cushion historically thought about it in the mid single digit range half from content half of market share but.

Speaker Change #127: As you look forward and you consider shifting customer mix dynamic you consider that the changing price cost and the market share you've already taken over several years and what's the what are the right.

Speaker Change #120: What's the right calculus on the.

Speaker Change #121: The outgrowth in and how should we think about sort of a normalized level going forward. Thanks.

Speaker Change #130: What's the right calculus on the outgrowth in and how should we think about sort of a normalized level going forward. Thanks.

Speaker Change #121: Yeah.

Speaker Change #122: I cannot of course, not give us any indication or guidance on what the outperformance would be going forward, but of course, we believe that.

Speaker Change #127: Yeah.

Speaker Change #132: I cannot of course, not give us any indication or guidance on what the outperformance would be going forward but of course.

Speaker Change #122: And strongly see that.

Speaker Change #122: <unk>.

Speaker Change #122: Continuing to grow and grow in importance both in terms of.

Speaker Change #127: We believe that.

Speaker Change #127: And strongly see that.

Speaker Change #129: The content is.

Speaker Change #122: Absolute quantum.

Speaker Change #129: Continuing to grow.

Speaker Change #122: Content also among premium but also to catch up.

Speaker Change #129: Growing importance both in terms of.

Speaker Change #122: You could say with where you have the lower specification models.

Speaker Change #127: Absolutely.

Speaker Change #131: There's also a among premium but also to catch up effect, you could say with where you have the lower specification model.

Speaker Change #122: Adding on gradually I mean, like we see in India. For example, where the content is growing so that trend is there and we see more advanced solutions. Then we also saw price as we drive that forward as an element of both market share growth will be less potential.

Adding on gradually I mean, like we see in India for example, where the content is growing.

Speaker Change #127: So that trend is there and we see more advanced solutions.

Speaker Change #127: Then of course also.

Speaker Change #127: As we drive that forward.

Speaker Change #122: Because what we have said here, we don't have a new market share target.

Speaker Change #127: Elements of both market share growth will be less potentially.

Speaker Change #122: About the around 45, where we are.

Speaker Change #127: Potentially because look we have said here, we don't have a new market share target.

Speaker Change #123: But that's something we're going to defend so so what we have said instead going forward of the the outperformance reference here is really the organic growth guidance or targets or order that we have.

Speaker Change #127: About the around 40 fine where we are.

Speaker Change #127: But that's something we're going to defend so so what we have said instead going forward of the the outperformance reference here is really the organic growth guidance or target their order that we have.

Speaker Change #123: This goes before which is the four to six where we say one to two.

Connected to light vehicle production growth, 1% to two is connected to content growth of one to two is additional business opportunities that we see.

Speaker Change #127: This goes before which is the four to six but we say one to two is connected to light vehicle production growth. One to two is connected to content growth of one to two is additional business opportunities that we see.

Speaker Change #123: Mainly in the mobility and safety solution area. So.

As we said the focus should be more on the organic growth.

Speaker Change #127: Mainly in the mobility and safety solution area. So.

The ambitions that we have there on the four to six.

As we said the focus should be more on the organic growth.

The ambitions that we have there on the four to six.

Speaker Change #123: Okay.

Speaker Change #125: Thank you Bruno.

Speaker Change #123: Okay.

Speaker Change #123: Yeah.

Speaker Change #127: Okay.

Speaker Change #124: Thank you very much.

Bruno: Thank you Bruno.

Okay participants. Thank you very much for all your questions today I would now like to hand, the conference over to your Speaker Mikael Bratt for any closing remarks.

Bruno: Okay.

Bruno: Yeah.

Thank you very much.

Bruno: Okay participants. Thank you very much for all your questions today I would now like to hand, the conference over to your Speaker Mikael Bratt for any closing remarks.

Speaker Change #127: Thank you Nadia before we end today's call I would like to say that we remain fully focused on delivering on the around 12% adjusted operating margin target. We continue to focus on structural cost reductions cost compensation innovation quality and sustainability the positive development of <unk>.

Thank you Nadia before we end today's call I would like to say that we remain fully focused on delivering on the around 12% adjusted operating margin target.

Mikael Bratt: We continue to focus on structural cost reductions cost compensation innovation quality and sustainability the positive development of our cash flow and balance sheet supports our continued commitment to a high level of shareholder returns.

Speaker Change #128: Our cash flow and balance sheet supports our continued commitment to a high level of shareholder returns.

Speaker Change #124: Our third quarter earnings call is scheduled for Friday October 18th.

Speaker Change #124: 1024.

Mikael Bratt: Our third quarter earnings call is scheduled for Friday October 18 2024.

Speaker Change #126: Thank you everyone for participating in today's call. We sincerely appreciate your continued interest in our <unk> until next time drive safely.

Speaker Change #134: Thank you everyone for participating in today's call. We sincerely appreciate your continued interest in our <unk> until next time drive safely.

Q2 2024 Autoliv Inc Earnings Call

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