Autoliv's Q2 Pops On Solid Tariff Recovery, But China Overhang Pressures Stock

Autoliv, Inc. (NYSE:ALV) topped second-quarter earnings on strong margins and tariff gains, but China headwinds dragged shares lower in Friday’s premarket.

Autoliv registered second-quarter adjusted earnings per share of $2.21, beating the analyst consensus estimate of $1.97.

Quarterly sales of $2.714 billion (+4.2% year over year) outpaced the Street view of $2.578 billion.

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“The performance was driven by good sales development coupled with successful actions to reduce costs and achieve tariff compensations,” said CEO Mikael Bratt.            

Adjusted operating income jumped 14% year over year to $251 million, while adjusted operating margin expanded to 9.3% from 8.5% in the year-ago period.

“We outperformed in Americas, Europe and Asia excl. China and continued to outperform global Light Vehicle Production (LVP) despite strong headwinds from LVP mix shifts, particularly in China,” Bratt added.

“Based on a positive trend during the second quarter and a record number of new launches we continue to expect significantly improved sales vs. LVP in China in the second half year.”

The company exited the quarter with cash and equivalents worth $237 million, and net inventories worth $957 million.

Long-term debt contracted to $1.372 billion, compared with $1.540 billion in the year-ago period.

During its Capital Markets Day in June, the company reaffirmed its financial targets, introduced a new share repurchase program of up to $2.5 billion through 2029, and announced a 21% increase in its third-quarter dividend to $0.85 per share.

Operational Efficiency

Autoliv noted a 6% reduction in direct headcount alongside 3% organic sales growth, which, combined with ongoing share repurchases, led to a 27% rise in earnings per share.

While acknowledging uncertainty in the broader tariff environment, Autoliv expressed confidence in its ability to secure customer compensation for tariffs, having already recovered about 80% of related costs in the second quarter.

The company anticipates recovering most of the remaining costs later in the year and emphasized its ongoing focus on adaptability and agility amid evolving conditions.

Outlook

For full-year 2025, Autoliv expects approximately 3% organic sales growth with minimal FX impact on net sales.

The company projects an adjusted operating margin of around 10–10.5%.

Operating cash flow is anticipated to reach roughly $1.2 billion.

“Our 2025 guidance for organic sales growth has increased to around 3% due to tariff compensations, and we reiterate our guidance of an adjusted operating margin of around 10-10.5%,” the CEO added.

Price Action: ALV shares are trading lower by 1.76% to $114.72 at last check Friday.

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