Autoliv, Inc. Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in million dollars)
FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 Rate of
Sales 8,267 8,232 0.4 1)
Operating income 705 889 (20.7) -


1) Overall
-Net sales for 2012 (8,267 million dollars) were virtually flat compared to 2011 despite of organic sales growing by 4% (332 million dollars). Currency effects reduced sales by more than 3% (273 million dollars) and divestitures by 24 million dollars. The organic sales increase was 3 percentage points less than the 7% increase in global LVP primarily due to the Company's higher dependence on the European market and the fact that the strongest increase in global LVP was in Japan where the Company's market share is lower than in Europe. This negative effect was partially offset by a positive vehicle model mix in North America and strong performance in active safety and China.

Factors by products
-Organic sales of airbag products rose by 3% to 5,392 million dollars, mainly driven by the strong LVP in North America along with the Company's strong performance in side-impact airbags, higher market share for steering wheels and new business for knee airbags.

-Organic sales of seatbelt products increased by 4% to 2,657 million dollars despite of the LVP decline in the European market. It's driven by strong sales in Asia and North America and by the trend towards higher value-added seatbelt systems.

Active safety
-Sales of active safety system rose by 38% organically to 218 million dollars, mainly due to new radar business with Mercedes and GM along with new camera business with BMW.


-The Company announced that the Company has sold its subsidiary Autoliv Mekan AB to Verktygs Allians i Hassleholm AB, a Sweden-based privately held company. This subsidiary with sales of 260 million SEK  (37 million USD)  manufactures primarily seat components for seats in Volvo vehicles. The subsidiary has close to 200 employees and is located in Hassleholm, Sweden. The name of Autoliv Mekan will be changed to its original name Lareda Mekan. (From a press release on June 11, 2012)


-The Company announced that its airbag plant in Spain was presented the Ford World Excellence Award. The Company was one of 12 suppliers to achieve the "gold" distinction. This is the Company's eleventh award from customers for its performance achievements during 2011. In addition to this award from Ford, the Company has been recognized by BMW, Daimler, Toyota, Subaru, Great Wall, First Automotive Works and Volkswagen of China. (From a press release on June 14, 2012)

-The Company announced that it has received the "Excellence in Partnership" award from Subaru. The Company has recently awarded incremental new business on the Subaru "Outback" and Subaru "Legacy" vehicles. (From a press release on April 5, 2012)

-The Company announced that it has received the Supplier Award 2011 in the category Interior from Daimler. This is the sixth award the Company has received so far for its contributions to customers during 2011. In November 2011, the Company received a Supplier Innovation Award from BMW for the Company's new camera-based driver assist system launched in the BMW "1- " and "3-series". In February 2012, the Company received the Global Contribution Award from Toyota. In China, the Company has recently received a Gold Award from Volkswagen Shanghai, an Excellent Supplier Award from Great Wall Motors and an Excellent Development Supplier Award from First Automotive Works. (From a press release on March 21, 2012)

-The Company announced that it was selected as a winner of the "Global Contribution Award" by Toyota. In addition to the global award, the Company received a "Mass Innovation Award", in recognition of the Inflatable curtain technology designed especially for the new Toyota "Aqua (Prius c) ", where the Company achieved a 50% weight reduction and 40% cost improvement with this new development. The Company was also the recipient of a third award, the "Excellent" Value Improvement Award. (From a press release on February 24, 2012)

Settlement with U.S. Department of Justice (DOJ) regarding antitrust violations

-The Company announced a plea agreement with the U.S. Department of Justice (DOJ). Under the terms of the agreement, the Company will plead guilty to two counts of antitrust law violations involving a Japanese subsidiary and pay a fine of 14.5 million USD. This settlement does not include the ongoing investigation by the European Commission (EC). (From a press release on June 6, 2012)

Outlook for FY ending Dec.31, 2013

-For the full year 2013, the Company's indication for organic sales growth is in the range of 1% to 3% and an operating margin of around 9%, excluding costs for capacity alignments and antitrust investigations.


R&D Expenditure

(in million dollars)
FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Total 598 568 490
% of Sales 7.2 6.9 6.8

R&D Structure

-The Company has 4,700 people in Research, Product development and Application engineering.
-The Company holds 18 technical centers in 9 countries.
-No single project accounts for more than 3% of the total R&D spending.

R&D Facilities

-The Company announced that it has decided to expand its technical center in Shanghai, China. It will allow the Company to increase its crash testing, engineering of passive and active safety systems, as well as airbag development in China. The Company is investing an estimated 8 million USD in this building and test equipment. The current tech center is 17,000 square meters and will be 20,500 square meters after expansion. The Company is adding an additional new crash simulation test track and office space for 130 more technical experts. Currently, 6% of the Company's 7,200 employees in China work in engineering and product development including its vehicle crash testing center. These 430 employees represent 10% of the Company's global headcounts in research, development engineering (R,D&E). (From a press release on October 19, 2012)

-The Company announced that it will expand its Lowell, Massachusetts, U.S. facility where it develops radar technology and driver assistance features including Blind Spot Detection and Forward Collision Warning. The project scope includes 30,000 square feet of office space and 30,000 square feet of production, engineering, and testing space. The project is slated for completion in February 2012.  (From a press release on January 11, 2012)

R&D Activities

-The Company announced that it has been selected as a partner to participate in the second phase of the Driver Alcohol Detection System for Safety (DADSS) research program co-sponsored by the U.S. National Highway Traffic Safety Administration (NHTSA) and Automotive Coalition for Traffic Safety (ACTS). The Company will use infrared (IR) spectroscopy to measure blood alcohol content (BAC). This phase of the project is expected to be completed within two years. (From a press release on January 11, 2012)

Product Developments

-The Company has developed a new seatbelt concept that supplements the regular 3-point seatbelt with a 2-point belt so both shoulders of the vehicle occupant are strapped in. By adding a 2-point shoulder belt, the crash load on the occupant can be distributed over a wider area. Additionally, the new seatbelt system offers enhanced safety in side-impact collisions. This system prevents an occupant from being thrown or sliding out of the "open side" of a 3-point seatbelt, when the vehicle is hit on the side where the occupant is not sitting. In those cases, tests indicate that the Company's new vertical seatbelt will reduce the risk for severe injuries and fatalities by approximately 30%. The seatbelt concept is currently being launched on Renault's new electrical vehicle "Twizy". The regular 3-point belt on the Twizy's left side is supplemented with a 2-point belt over the driver's right shoulder.  (From a press release on May 7, 2012)

-The Company announced that it has developed a new airbag inflator APG (for Autoliv Passenger-inflator Gas), which uses hydrogen and oxygen with inert gas to inflate the airbag, instead of pyro­technic substances. As a result, there are no waste particles at all from the combustion and no effluent gases. The only side product is regular vapor. In addition, the mixing of the hydrogen and the oxygen takes place in the textile cushion of the airbag, instead of in a steel vessel as in traditional airbag inflators, which reduced the weight by 20% compared to most traditional inflators. If only a quarter of the Company's own needs for such passenger airbag inflators will be converted to the new technology, the Company would save 1,000 tons of steel every year. The new hydrogen/oxygen inflator went into production earlier 2012, in a passenger-side airbag for a European manufacturer of premium-brand vehicles. (From a press release on February 28, 2012)

Investment Activities

Capital Expenditure

(in million dollars)
FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Total 360 357 224
% of sales 4.4 4.3 3.1

-Capital expenditures for 2013 are expected to be around 4.5% of sales to support the increasing need for manufacturing capacity in China and other growth markets.

Investment Outside Sweden

-The Company has opened a new seatbelt plant in Cibitung near Jakarta, Indonesia. The new plant will enable the Company to grow its sales in Indonesia from 12 million USD last year to 25 million USD by 2015 in already booked business and to 50 million USD when the plant will be fully utilized. The plant will replace the Company's existing Indonesian plant and serve Toyota, Daihatsu and Nissan, The Company's main customers in Indonesia. The new plant has a floor space of nearly 2,500 square meters (sqm) on a land plot of 11,000 sqm and, at the start, 170 employees. All of the employees will be transferred from the Company's existing Indonesian plant. The capital expenditures for the new plant amount to 3 million USD. The Company entered the Indonesian market in 2002. (From a press release on December 4, 2012)

-The Company is adding a sixth processing facility at its Promontory, Utah location in the U.S. to meet growing demand for airbag gas generant. The new facility in Promontory will add 20% more capacity to the Company's existing global gas generant production capabilities. Capital investment is expected to cost approximately 13 million USD. Today, the facility produces gas generant used to inflate the more than 50 million driver, passenger, side and inflatable curtain airbags that the Company builds in the Americas annually. The Company also announced plans to expand its Tremonton, Utah facility to increase the production capacity for initiators and micro gas generators used in its airbag and seatbelt products. The Company is adding 33,000 square feet (3,065 square meters) to its Tremonton facility. The majority of floor space added in this 5 million USD expansion is slated for new production lines which could supply up to 30% more capacity when the space is fully utilized. Current plans call for just two new lines to be completed in 2013 adding 10% more initiator capacity. When completed in 2013, the two expanded Utah facilities expect to add nearly 50 employees to the labor force. (From a press release on November 22, 2012)
-The Company announced that it has started the construction of a new facility in China that will manufacture propellant for its airbags in the Asian markets. The cost for the new plant is estimated to amount to 33 million USD. The new plant is being constructed on an almost 200,000 square meter site, 200 km from Shanghai. The propellant plant will be the Company's twelfth manufacturing facility in China. So far, the propellants for the Company's airbags for the Chinese market have been imported from the U.S. The addition of the new plant in China will increase this propellant capacity by approximately 25% and enable the Company long-term to produce 25-30 million more airbags. (From a press release on October 19, 2012)