ALV | Earnings Review — Q2 2026
Autoliv's Q2'26 print is a "quality erosion, not a quality collapse" quarter. Net sales of $2,803 million grew +3.3% YoY and beat consensus of $2,770.3M by +1.2% — but organic growth (volume/price net of FX) was only ~1%, with the rest of the headline growth coming from FX translation (+$62M). Adjusted diluted EPS of $2.43 missed consensus of $2.457 by -1.1%, Autoliv's first EPS miss since Q3 2024 and the quarter that snaps a seven-straight-quarter beat streak (2024Q4–2026Q1) — though it is also the smallest-magnitude surprise (in either direction) of the last 12 quarters. GAAP diluted EPS of $1.35 fell -37.5% YoY, but that decline is overwhelmingly a ~$90M Turkey-plant-closure restructuring charge (of a ~$142M total program); adjusted EPS — the company's own headline metric — actually grew +10.0% YoY.
Guidance: FY2026 adjusted operating margin guidance of 10.5%–11% was reiterated unchanged for the third consecutive quarter, despite the global LVP assumption being cut to -2.5% (from -1%), the gross raw-material headwind rising to ~$110M (from ~$90M at Q1, ~$30M at the start of the year), and the tax rate being raised to ~30% (from ~28%). Every incremental headwind was offset with a higher LVP-outperformance assumption (now ~2.5pp, up from ~1pp) — the guided range itself has not moved once in three prints. The cost of that consistency: nearly all of the year's risk is now concentrated in an analyst-derived, management-confirmed ~15% implied Q4 margin (vs. 12.0% actual in Q4'25) — a "significant step-up" management attributes to Q4-weighted customer compensation, engineering income, and litigation timing.
Tone: the single biggest shift from the Q1'26 call is cadence, not substance. Management explicitly moved from framing 2026 as a "normal, traditional" linear year to a "back-end loaded" one, attributing the change directly to escalating Persian Gulf-driven raw-material inflation (helium specifically cited). CEO Mikael Bratt used notably confident language ("I feel very comfortable... we have done it before") even while disclosing three separate headwinds getting worse simultaneously — confidence is directed at the offsetting levers (self-help, supplier negotiation, customer pricing), not at the macro assumptions themselves.
Contradictions (2 found, both pre-dating this quarter but surfaced in this review's full transcript pass): (1) the CEO states the medium-term adjusted operating margin target as both 12% (Q&A) and 10% (closing remarks) within the same FY2025 Q4 call — with the following quarter's closing remarks siding with 12%. (2) The FY2026 Q1 call gives two different Q1'26 operating cash flow figures (-$76M vs. -$159M) in the CEO's opening highlights vs. the CFO's detailed cash-flow walk — the CFO's -$159M figure appears to actually be free operating cash flow mislabeled.
Catalysts to watch into Q3'26 (reports Oct 23, 2026): the ~15% implied Q4 margin bridge is the single most-watched item (Wells Fargo pegged a ~$35M Q3-vs-consensus gap), layered on top of an ongoing Persian Gulf raw-material shock (helium, aluminum) and the newly announced Turkey plant closure ($142M charge / $40M annual savings from 2027). The best offsetting news is new China OEM cooperation agreements (Great Wall Motor, XPENG) against a backdrop where Chinese OEMs are now 55% of Autoliv's China sales (up from 40% a year ago).
| Quarter | Net Sales | YoY% | Adj. Op. Margin | YoY bps | LTM EBITDA Margin | YoY bps | GAAP Diluted EPS | YoY% | |---|---|---|---|---|---|---|---|---| | 2023Q3 | $2,596M | — | 9.36% | +185bps | 11.82% | — | $1.57 | — | | 2023Q4 | $2,751M | — | 12.14% | +216bps | 12.38% | — | $2.68 | — | | 2024Q1 | $2,615M | +4.9% | 7.61% | +236bps | 12.92% | — | $1.52 | +76.7% | | 2024Q2 | $2,605M | -1.1% | 8.48% | +44bps | 13.06% | — | $1.71 | +180.3% | | 2024Q3 | $2,555M | -1.6% | 9.28% | -8bps | 13.07% | +125bps | $1.74 | +10.8% | | 2024Q4 | $2,616M | -4.9% | 13.34% | +120bps | 13.42% | +104bps | $3.07 | +14.6% | | 2025Q1 | $2,578M | -1.4% | 9.89% | +228bps | 14.00% | +108bps | $2.14 | +40.8% | | 2025Q2 | $2,714M | +4.2% | 9.25% | +77bps | 14.18% | +112bps | $2.16 | +26.3% | | 2025Q3 | $2,706M | +5.9% | 10.02% | +74bps | 14.36% | +129bps | $2.28 | +31.0% | | 2025Q4 | $2,817M | +7.7% | 11.96% | -138bps | 14.06% | +64bps | $2.97 | -3.3% | | 2026Q1 | $2,753M | +6.8% | 8.90% | -99bps | 13.86% | -14bps | $1.88 | -12.1% | | 2026Q2 | $2,803M | +3.3% | 9.63% | +38bps | 14.05% | -13bps | $1.35 | -37.5% |
Adjusted (non-GAAP) diluted EPS — the cleaner read where available: $3.19 (Q4'25, +4.6% YoY) → $2.05 (Q1'26, -4.7% YoY) → $2.43 (Q2'26, +10.0% YoY). The Q2'26 GAAP/adjusted gap (-37.5% vs. +10.0%) is almost entirely the $90M Turkey restructuring impairment — reported operating income of $192M ran $78M below adjusted operating income "mainly due to higher capacity alignment activities" (management, Q2'26 call).
Verdict — decelerating. Organic sales growth has collapsed from +3-4% through 2025 to +0.8-1% in 2026 — headline "reported" growth is now mostly FX translation, not real volume/price. LTM EBITDA margin has rolled over for the first time since the 2022 trough (-14bps then -13bps YoY in Q1/Q2 2026, after 10 straight quarters of expansion). GAAP EPS has swung from +180% YoY (2024Q2) to -37.5% YoY (2026Q2) on restructuring charges — even as adjusted operating margin still shows a small YoY improvement (+38bps) that management attributes largely to one-time items (supplier settlement, IEEPA refund), not underlying operating leverage.
| Quarter | Adj. EPS Actual | Adj. EPS Cons. | EPS Beat/Miss | Revenue Actual | Revenue Cons. | Rev Beat/Miss | |---|---|---|---|---|---|---| | 2024Q3 | $1.74 (+$0.10 adj.) | $1.942 | 🔴 -5.3% | $2,555M | — | 🟢 +1.3% | | 2024Q4 | $3.05 | $2.911 | 🟢 +4.8% | $2,616M | — | 🔴 -3.6% | | 2025Q1 | $2.15 | $1.678 | 🟢 +28.2% | $2,578M | — | 🟢 +2.8% | | 2025Q2 | $2.21 | $2.090 | 🟢 +5.8% | $2,714M | — | 🟢 +3.5% | | 2025Q3 | $2.32 | $2.094 | 🟢 +10.8% | $2,706M | — | 🔴 -0.02% (~inline) | | 2025Q4 | $3.19 | $2.906 | 🟢 +9.8% | $2,817M | — | 🟢 +1.9% | | 2026Q1 | $2.05 | $1.827 | 🟢 +12.2% | $2,753M | — | 🟢 +5.3% | | ▶ 2026Q2 (THIS QTR) | $2.43 | $2.457 | 🔴 -1.1% | $2,803M | $2,770.3M | 🟢 +1.2% |
| Window | Adj. EPS beat rate | Revenue beat rate | |---|---|---| | L12Q (2023Q3–2026Q2) | 8/12 = 66.7% | — | | L4Q (2025Q3–2026Q2) | 3/4 = 75.0% | — |
Pattern: a "consistent beater" that just broke its streak. From 2023Q3 through mid-2024, ALV alternated beats and misses roughly 50/50, with swings as large as -14.6% and +11.1%. Starting 2024Q4, the company strung together seven consecutive EPS beats (2024Q4 through 2026Q1), including a standout +28.2% beat in 2025Q1, before this quarter's narrow -1.1% miss snapped the streak. Magnitude was narrowing, not deteriorating — the average absolute surprise actually rose from ~8.7% (2023-24) to ~11.3% (2025-26) — and this quarter's miss is the smallest-magnitude surprise of the last 12 quarters, reading less like "the business slipped" and more like "Street has caught up to the cost-execution story, and a raw-material timing/cadence shift produced a rounding-error-sized miss."
FY2026 guidance — set at Q4'25, reiterated at Q1'26 and Q2'26 without change:
(Q4'25 call)
(Q1'26 call)
(Q2'26 call)
(current)
FY2026 revenue guide waterfall — Street sits almost exactly on the reiterated guide; no meaningful surprise priced. Adj. operating margin guide, by contrast, shows zero movement across all three prints (10.5%–11% every time).
Guidance evolution — original → prior → new
| Assumption | Original (Q4'25 call) | Prior (Q1'26 call) | New (Q2'26 call) | Direction | |---|---|---|---|---| | Organic sales growth | Flat | Flat | Flat | Unchanged | | Global LVP assumption | ~-1% | ~-1% | ~-2.5% | Cut — worse macro | | Outperformance vs. LVP | ~1pp | ~1pp | ~2.5pp | Raised — offsets LVP cut | | Net FX translation | ~+1% | ~+3% | ~+2.5% | Trimmed vs. Q1 | | Adj. operating margin | 10.5%–11% | 10.5%–11% | 10.5%–11% | Unchanged, 3 straight prints | | Operating cash flow | ~$1.2B | ~$1.2B | ~$1.2B | Unchanged | | Tax rate | ~28% | ~28% | ~30% | Raised — EPS headwind | | Gross raw-material headwind | ~$30M | ~$90M | ~$110M | Rising every quarter | | Restructuring (Turkey) | Not disclosed | Not disclosed | ~$142M total charge (new) | New this quarter |
FY2026 guide vs. consensus (current, live 2026-07-25)
| Metric | New Guide Mid | Consensus (FMP) | vs. Consensus | |---|---|---|---| | Revenue | ~$11.07B (+2.5%) | $11.10B (14 analysts) | Roughly in-line | | Adj. operating margin | 10.75% | ~12.9% implied (EBIT-based) | Likely a GAAP/adjusted definitional mismatch in FMP's EBIT field, not genuine Street disagreement | | Operating cash flow | ~$1.2B | Not separately covered | n/a | | Tax rate | ~30% | n/a | +200bps EPS headwind vs. Q1'26 guide |
Quarterly margin cadence — reported vs. guided
| Quarter | Adj. op margin | YoY change | Status | |---|---|---|---| | Q1 2025 | 9.9% | +230bps | Reported | | Q2 2025 | 9.3% | +80bps | Reported | | Q3 2025 | 10.3% | +70bps | Reported | | Q4 2025 | 12.0% | -140bps | Reported | | Q1 2026 | 8.9% | -100bps | Reported | | Q2 2026 | 9.6% | +30bps | Reported (this quarter) | | Q3 2026 | ~9.4% (guide) | ~-90bps | Guided — deceleration | | Q4 2026 | ~15% (implied, analyst-derived, mgmt-confirmed) | ~+300bps | Guided — sharp acceleration |
Read: H1 2026 actual margin (9.23% blended) is already below H1 2025's 9.53% — the year is running behind YoY through the midpoint. Management's new guide explicitly extends that shortfall into Q3 (guided below Q3 2025's 10.3%), then requires an unprecedented Q4 jump to ~15% (+300bps YoY, the highest quarterly margin in the model) to land the full year at 10.5–11%. Nearly the entire year's guidance credibility now rests on Q4 execution — raw-material recovery timing, customer compensation, and engineering income, all explicitly flagged by management as Q4-weighted. Multiple sell-side analysts (Colin Langan/Wells Fargo, Emmanuel Rosner/Wolfe) pressed on this live on the call rather than accepting the reiterated range at face value.
| Metric | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 | |---|---|---|---|---|---|---|---|---| | Revenue YoY % | -1.6% | -4.9% | -1.4% | +4.2% | +5.9% | +7.7% | +6.8% | +3.3% | | Rev accel (bps QoQ) | -44 | -333 | +350 | +559 | +173 | +177 | -89 | -351 | | GAAP EPS YoY % | +10.8% | +14.6% | +40.8% | +26.3% | +31.0% | -3.3% | -12.1% | -37.5% | | EPS accel (bps QoQ)* | — | +380 | +2,620 | -1,450 | +470 | -3,430 | -880 | -2,540 |
*Q3'24 EPS acceleration is a statistical artifact of an unusually depressed 2023Q2 GAAP EPS base and is excluded as non-representative.
Three inflection points:
- Q4'24 — revenue trough (-4.9% YoY), followed by four straight quarters of acceleration (Q1'25 through Q4'25, cumulative +1,259bps) to peak growth of +7.7% in Q4'25.
- Q1'26 — the deceleration inflection. Growth has decelerated for two consecutive quarters since (Q1'26 +6.8%, Q2'26 +3.3%, a combined -440bps). Management's own framing confirms this is real but largely mix/timing, not demand collapse: Q2'26's headline growth was "primarily driven by positive currency translation" (+$62M) with organic growth of only ~$27M (~1%).
- Q4'25 → Q2'26 — GAAP EPS flips negative and accelerates its decline (-3.3% → -12.1% → -37.5%, a cumulative -3,850bps of deceleration across three quarters) — the sharpest, most persistent negative inflection in the series. This is overwhelmingly a restructuring-charge story: adjusted EPS actually grew +10.0% YoY in Q2'26 on higher sales, cost efficiency, and a lower share count. Investors reading headline GAAP EPS without adjusting for the Turkey closure impairment ($90M of a ~$142M total program) would materially overstate the deterioration in profitability.
Key drivers per management commentary: China/Chinese-OEM mix (now 55% of China sales, up from 40% a year ago, 40+pp faster growth than LVP; new Great Wall/XPENG agreements); India (+36% organic, now ~6% of global sales, triple the level three years ago); a fading FX tailwind ($154M in Q1'26 → $62M in Q2'26, partly explaining the deceleration); the EMEA structural cost program/Turkey closure (the dominant GAAP EPS swing factor); and rising raw-material/tariff inflation driving the back-half-loaded 2026 cadence.
| # | Catalyst | Timing | Read-through | |---|---|---|---| | 1 | Q4 margin step-up to hit FY guide | Q3 print Oct 23, 2026; full resolution at Q4/FY print (~Jan 2027) | Wells Fargo math implies ~15% adj. op margin needed in Q4; Wolfe pegs the Q3-vs-consensus delta at ~$35M. Single most-watched near-term catalyst. | | 2 | Persian Gulf raw-material shock (helium, aluminum) | Ongoing through 2H 2026; next update at Q3 call | FY2026 guidance embeds a $110M gross raw-material headwind; independent reporting confirms a March 2026 strike hit on Qatar's Ras Laffan helium/LNG complex (~33% of global helium supply). | | 3 | EMEA structural cost program — Turkey plant closure | Transition through 2026-2028; full closure 1H 2028; savings begin 2027 | ~2,200 employees affected; $142M total restructuring charge ($90M recognized Q2'26); ~$40M annual pre-tax savings once fully ramped. | | 4 | China OEM strategic agreements — Great Wall Motor & XPENG | Signed Jul 6 and Jul 8, 2026 | Chinese OEMs' share of China LVP has risen from ~43% (2022) to ~72% (Q2'26); Autoliv now derives 55% of China sales from Chinese OEMs (vs. 40% a year ago). | | 5 | Section 232 tariff recovery cadence | Ongoing | Recovered 83% of U.S. tariff costs in Q2 (78% YTD); net tariff dilution improving (~20bps negative vs. ~35bps a year ago). | | 6 | S&P Global LVP forecast revisions | Next read ahead of Q3 print | July 2026 vintage: global LVP -2.3% for FY2026 (ALV guides -2.5%); China cut to -5% (from -1% in January) — the single biggest swing factor. | | 7 | Competitive positioning — ZF Lifetec / Joyson | Ongoing | Autoliv, ZF, Daicel, Joyson, Toyoda Gosei hold ~83% of the global airbag-inflator market; management reiterated confidence in defending ~45% global passive-safety share. | | 8 | Sell-side sentiment / price-target moves | Concurrent with the print | RBC raised PT $138→$148 (Outperform); Wells Fargo raised PT $116→$122 (Equal-Weight, but pressing hardest on the Q4 margin bridge). | | 9 | Vårgårda innovation center (Sweden) | Inaugurated June 2026 | Long-cycle R&D catalyst for content-per-vehicle / advanced-seating positioning; not a near-term earnings event. |
task_5_key_catalysts.md for full per-row citations). No Carbon Arc/Visible Alpha/AlphaSense alt-data feed connected this session — flagged as unavailable throughout rather than fabricated.8 analysts asked questions (16 question/answer pairs, 2-question limit) on the FY2026Q2 call; 11 well answered, 4 clear deflections, plus one softer non-quantified answer.
| # | Analyst | Topic | Verdict | |---|---|---|---| | 1 | Colin Langan (Wells Fargo) | Q4 margin cadence / raw-material headwind change | 🟢 Well answered — direct explanation + historical analogy | | 1b | Colin Langan (Wells Fargo) | Raw-material recovery % for the full year | 🔴 Deflected — process color given, no recovery % | | 1c | Colin Langan (Wells Fargo) | LVP cut offset (mix/growth) | 🟢 Well answered — specific offsets named | | 2 | Emmanuel Rosner (Wolfe) | Q4 weighting of mitigants vs. Q3 consensus gap | 🟢 Well answered — drivers named | | 2b | Emmanuel Rosner (Wolfe) | IEEPA refund detail | 🟢 Well answered — precise dollar figures | | 3 | Tom Narayan (RBC) | Americas growth-over-market / content mix | 🟢 Well answered — mechanism confirmed | | 3b | Tom Narayan (RBC) | Turkey plant closure rationale | 🟢 Well answered — sites and rationale named | | 4 | Winnie Dong (Deutsche Bank) | LVP guidance revision driver | 🟢 Well answered — China named as the single driver | | 4b | Winnie Dong (Deutsche Bank) | China export vs. domestic split | 🟡 Softer — qualitative only, no split disclosed/tracked | | 5 | Hampus Engellau (Handelsbanken) | Turkey closure vs. broader restructuring program | 🟢 Well answered | | 6 | Itay Michaeli (TD Cowen) | Margin guidance — bias to top/bottom of range | 🔴 Deflected — explicit refusal to narrow the range | | 6b | Itay Michaeli (TD Cowen) | Order intake trends | 🔴 Deflected — "we don't disclose any details" | | 7 | Agnieszka Vilela (Nordea) | China OEM mix impact on group profitability | 🔴 Deflected — explicit refusal on profitability | | 7b | Agnieszka Vilela (Nordea) | Growth-over-market acceleration to +3pp | 🟢 Well answered — bps-level bridge given | | 8 | Dan Levy (Barclays) | Recovery streams (tariffs vs. inflation), pricing power | 🟢 Well answered — structured breakdown | | 8b | Dan Levy (Barclays) | More OEM strategic agreements planned? | 🟢 Well answered — qualitatively substantive |
Deflected in detail: (1) raw-material recovery % — Langan asked for a number, got process color only; (2) margin-range bias — Michaeli asked top/bottom, management explicitly declined given macro volatility; (3) order intake — flat non-disclosure; (4) China OEM mix profitability impact — explicit refusal, platform-by-platform confidentiality cited. A fifth, softer instance: Dong's China export/domestic split was answered qualitatively but never quantified.
Read-through: deflections cluster around forward-looking precision (margin positioning, order intake, quarter-specific recovery completion) and customer-specific profitability — consistent with standing non-disclosure policy, not a sign of hidden bad news. All reported Q2 actuals (sales, margin, cash flow, leverage) were answered with full specificity elsewhere on the call.
Statement A — FY2025 Q4 call (reported 2026-01-30), Q&A with Jairam Nathan (Daiwa): asked whether the 12% medium-term margin goal needs updating; Mikael Bratt (CEO): "No. I mean, we are very firm and committed on the 12%."
Statement B — same call, Closing Remarks, same speaker: "...a clear path towards achieving our 10% adjusted operating margin target."
Within the same earnings call, the CEO affirms two different medium-term margin targets — once directly to an analyst, once unprompted in scripted remarks. The following quarter's closing remarks (FY2026 Q1 call) reinforce 12% ("a clear path towards achieving our 12% adjusted operating margin target"), so the weight of evidence favors 12% as the real target and the Q4'25 "10%" closing-remarks line as the outlier — but as stated in the primary source, it is a direct contradiction, flagged rather than silently reconciled.
Statement A — FY2026 Q1 call (reported 2026-04-17), CEO opening highlights: "Operating cash flow was a negative USD 76 million, a decrease of USD 153 million compared to last year."
Statement B — same call, CFO cash-flow detail section: "The operating cash flow for the quarter was negative $159 million compared to negative $16 million in the same period in the year..."
Both statements label the figure "operating cash flow for the quarter" for the same period, yet give two different numbers with two different prior-year comparisons. The internal math is a near-perfect match for free operating cash flow (OCF of -$76M less ~$83M of net capex ≈ -$159M), sitting directly beside a CapEx discussion and immediately followed by a free-operating-cash-flow-based cash-conversion metric — strongly suggesting Statement B is free operating cash flow mislabeled. As written, the document states both figures under the same label — a direct internal contradiction a reader relying on the CFO section alone would take at face value.
Reviewed, not flagged: raw-material headwind ($30M→$90M→$110M), FY2026 LVP assumption (-1%→-2.5%), tax rate (28%→30%), and the "linear" vs. "back-end loaded" cadence framing were all explicitly self-acknowledged guidance revisions by management, not two simultaneous unreconciled claims — reviewed and excluded from the contradictions above.
Macro commentary:
- China: S&P Global cut its 2026 China LVP outlook by 4 points since January to a -5% decline, citing "a challenging demand environment... and increasingly cautious consumer sentiment." Management: "the big move... is that we have seen a deeper weakening in China than expected... it's really about the weakening in China, domestic sales" — exports are propping up production even as domestic retail sentiment weakens.
- Persian Gulf tension: the swing factor for the back-half-loaded 2026 margin cadence. "Escalating geopolitical tension in the Persian Gulf continues to increase risks across the automotive value chain, with potential implications for energy prices, consumer sentiment, supply chain stability, raw material availability."
- Europe: LVP expected -1% in 2026, "reflecting ongoing affordability challenges and increasing competition from Chinese imports."
- India: LVP expected +9% in 2026 on purchase-tax cuts; ALV separately notes India content-per-vehicle up ~20% for two consecutive years.
- Japan/South Korea: both revised upward on strengthening hybrid-vehicle exports to the U.S. and Europe.
- Tariffs: recovered ~83% of U.S. tariff costs in Q2 (78% YTD); the Section 232 framework for Mexico-U.S. flows is expected to become "almost automatized" once fully in effect — a structural easing of the recovery mechanism, not just case-by-case negotiation.
Company mentions:
| Company | Relationship | Read-through | |---|---|---| | Great Wall Motor | Customer (new agreement, Jul 6) | Positive — deeper Tier-1 partnership, international expansion, co-innovation access (e.g., "zero-gravity seat"). | | XPENG | Customer (new agreement, Jul 8) | Positive — reinforces its positioning as an innovation-forward premium EV maker investing in cabin/safety content. | | NIO | Customer | Positive — the ES9 launch was "the most significant [launch] in the quarter," a real proof point of demand. | | Chery | Customer | Positive — one of the "four out of eight fastest growing customers," continuing to outgrow the broader China market. | | Suzuki | Customer | Positive — named among the "largest drivers of sales growth," plausibly linked to India/Japan export strength. | | Chinese OEMs (aggregate) | Customers | Chinese OEMs are now 55% of ALV's China sales (vs. 40% a year ago); their share of China LVP rose from ~43% (2022) to ~72% (Q2'26) — negative read-through for foreign/JV automakers (GM, VW, Toyota/Honda JVs) losing home-market share. | | South American / low-content OEMs (unnamed) | Indirect — market mix | Regional LVP strength is real but low-content, diluting supplier revenue mix — a reminder that regional volume growth doesn't uniformly translate to supplier economics. |
No traditional direct competitors (ZF, Joyson/Key Safety, Continental) were named on the call; competitive commentary was limited to aggregate market-share defense (~45%).
Data sourced from Daloopa (company_id 11), Autoliv's FY2026Q2 earnings call transcript, and FMP quarterly analyst estimates for consensus.