Autoliv Trims 2026 Adjusted Margin Guidance to About 10.5%, the Low End of Its Range

Autoliv reported third-quarter 2026 net sales of $2.69 billion, down 0.5% from a year earlier and 1.1% lower on an organic basis, and narrowed its full-year adjusted operating margin guidance to around 10.5%, the low end of its range of around 10.5-11%.

Autoliv filed the figures as Exhibit 99.1 to a Form 8-K on October 23, 2026, for the quarter ended September 30, 2026.

Costs, not demand, drive the margin guide lower

The full-year framework holds organic sales growth at around 0% and operating cash flow at around $1.2 billion, with net capital expenditure at around 4% of sales. It assumes light-vehicle production of around 2% negative, a currency benefit to sales of around 2.5% and a tax rate of around 30%. The adjusted operating margin line is the one that moved, to around 10.5%, which the company calls the low end of its range of around 10.5-11%.

The arithmetic behind the shift sits in the cost lines. Raw material price changes took a gross $42 million off third-quarter profitability, against a full-year estimate of around $120 million, so roughly a third of the year's raw material impact fell in one quarter. Logistics costs, flooding in Thailand and weaker call-off accuracy since the first quarter added to the total, and the company said labor efficiency, material savings through Value Engineering and negotiations with customers and suppliers absorbed most of it.

Chief Executive Mikael Bratt said in the report: "Throughout the year, cost headwinds have increased materially, mainly related to raw materials, logistics, the recent flooding in Thailand and lower call off accuracy since Q1." He added: "However, the additional headwinds narrows our full year adjusted operating margin expectation to around 10.5%, the low end of our range of around 10.5-11%."

Tariffs remain a smaller, persistent drag. Autoliv recovered more than 80% of its tariff costs from customers, leaving a net cost after that compensation of about $6 million and margin dilution of about 35 basis points in the quarter; for the full year it expects dilution similar to the 20 basis points of 2025.

Organic sales beat a shrinking vehicle market

Global light-vehicle production fell 1.9% in the quarter from a year earlier, on the Mobility Global forecast cited in the report, while Autoliv's organic sales fell 1.1% — 0.8 percentage points of outperformance, struck after a mix drag the company puts at about 0.9 percentage points.

Asia did the work. Organic sales in Asia excluding China rose 8.8% from a year earlier, led by 29% organic growth in India, and China declined while the mix inside that market shifted: sales to Chinese domestic automakers rose about 21% and sales to global automakers fell about 29%. Chinese manufacturers were 58% of Autoliv's China sales, against about 46% a year earlier. EMEA fell 2.9% organically from a year earlier, underperforming local production by 3.7 percentage points; the Americas also fell 2.9%, in line with the market there. Airbag, steering wheel and other sales rose 0.2% organically from a year earlier, while seatbelt sales fell 3.9%.

Taxes and Türkiye costs separate reported profit from adjusted

Operating income fell 5.0% from a year earlier to $254 million and adjusted operating income fell 3.4% to $262 million. The $8 million gap is capacity alignment costs from restructuring in Türkiye, and the prior-year quarter had also carried $13 million of gross profit from a supplier settlement compensation that did not repeat.

Below the operating line, the tax rate rose to 32.5% from 26.9%, with discrete items — mainly the closure of tax audits — costing 4.9 percentage points. Net income fell 11% to $155 million, and diluted earnings per share were $2.13 against $2.28, a 6.8% decline; adjusted earnings per share were $2.19 against $2.32 a year earlier. The company's own bridge attributes $0.16 of the per-share decline to higher taxes and $0.13 to lower operating income, partly offset by $0.11 from fewer diluted shares and $0.05 from lower financial and non-operating items.

For the first nine months, net sales rose 3.1% to $8.25 billion, but operating income fell 11% to $683 million while adjusted operating income was almost flat at $776 million, down 0.1%, as capacity alignment costs climbed to $93 million from $6 million. The nine-month adjusted margin of 9.4% sits below the third quarter's 9.7%, so the weaker profitability came earlier in the year.

Buybacks take the cash as the fourth quarter carries the target

Operating cash flow was $239 million against $258 million a year earlier, and free operating cash flow was $124 million against $153 million, as capital expenditure rose to 4.3% of sales from 3.9%. Nine-month operating cash flow was $598 million, and cash conversion improved to 77% from 59% a year earlier.

The balance sheet carries the returns programme: net debt was $1.76 billion at September 30, 2026, and the leverage ratio was 1.3x against a target of no more than 1.5x. Autoliv spent $150 million repurchasing 1.23 million shares at an average $121.69 in the quarter and paid a $0.87 dividend; over twelve months it bought back 4.14 million shares for $500 million. The current authorisation runs to the end of 2029 and allows up to $2.5 billion.

That leaves the fourth quarter to fund the rest of the roughly $1.2 billion operating cash flow target from $598 million booked in nine months, in the same period Bratt expects "an increasing number of product launches and significant raw material recoveries." The next scheduled test is the fourth-quarter report on January 29, 2027, with a 2027 investor day in Shanghai on April 26 and 27.