Autoliv Narrows Full-Year Margin Guide to Low End

The Tip Desk · October 27, 2026 · 4 min read

The auto-safety supplier cut its 2026 adjusted operating-margin outlook to around 10.5% after third-quarter net sales of $2,693 million and a 1.1% organic sales decline.

Autoliv (ALV) narrowed its full-year 2026 adjusted operating-margin outlook to around 10.5%, the low end of the prior around 10.5-11% range, after citing higher raw-material, logistics, Thailand flooding and call-off headwinds. Organic sales growth and operating cash flow of around $1.2 billion were left unchanged.

Net sales were $2,693 million in the third quarter, a 0.5% year-over-year decline, after a 3.3% year-over-year increase to $2,803 million in the second quarter. Organic sales swung to a 1.1% decline from 1.0% organic growth in the prior quarter. The company said the organic decline was 0.8 percentage points smaller than the global light-vehicle-production decrease of 1.9% (Mobility Global, Oct 2026), mainly driven by Asia, with regional and customer LVP mix estimated to have cut sales by around 0.9 percentage points.

Profitability recovered from the Türkiye restructuring that had compressed the second quarter. Operating margin was 9.4% versus 6.8% in the second quarter; adjusted operating margin was 9.7% versus 9.6%. Operating income fell 5.0% year over year, mainly because of supplier-settlement compensation received in the third quarter of 2025. Adjusted operating income decreased 3.4%. Diluted earnings were $2.13 a share, a 6.8% year-over-year decline, after a 38% year-over-year drop to $1.35 in the second quarter.

Gross margin was 18.4%, down 0.9 percentage points from a year earlier. The company attributed the $26 million drop in gross profit mainly to a $13 million supplier-settlement benefit in the third quarter of 2025, lower net sales and higher logistics costs. Research, development and engineering, net, fell 16% on $26 million of higher engineering income related to timing effects. Other income (expense), net, was negative $5 million, versus negative $1 million a year earlier, consisting mainly of capacity-alignment costs related to restructuring in Türkiye. The tax rate was 32.5%, versus 26.9% a year earlier, with discrete tax items of 4.9 percentage points unfavorable, primarily from closure of tax audits.

Raw-material price changes had a gross negative impact of around $42 million in the third quarter. Tariffs imposed in 2025 produced a net negative of around $6 million after more than 80% customer compensation, about 35 basis points of operating-margin dilution, in line with the net impact in the third quarter of 2025. For the full year 2026, the company currently estimates a gross impact of around $120 million from higher raw-material prices and expects tariff-related dilution on operating margin similar to the around 20 basis points experienced in full-year 2025.

Asia excluding China organic sales rose 8.8%, including 29% organic growth in India, which the company said reflected strong LVP growth and increased safety content per vehicle. China organic sales fell 5.8%. Sales to Chinese OEMs increased organically by around 21% while sales to global OEMs decreased by around 29%; Chinese OEMs accounted for 58% of China sales, versus around 46% a year earlier. EMEA organic sales declined 2.9%, underperforming LVP by 3.7 percentage points. Americas organic sales declined 2.9%. Seatbelt Products and Other organic sales declined 3.9%; Airbags, Steering Wheels and Other organic sales were up 0.2%. President and CEO Mikael Bratt said sales in Japan contributed to Asia exceeding China in the quarter, and that the company opened a second R&D center in China to support partnerships with Chinese OEMs.

Operating cash flow was $239 million, down from $434 million in the second quarter. Free operating cash flow was $124 million versus $340 million. The leverage ratio was 1.3 times versus 1.2 times. The company paid a dividend of $0.87 a share and repurchased 1.23 million shares for $150 million. Over the last 12 months it repurchased 4.14 million shares for $500 million and paid $258 million in dividends.

Customer call-off accuracy deteriorated slightly versus both the third quarter of 2025 and the second quarter of 2026, driven by development in China. The company said it expects full-year 2026 call-off volatility on average to be slightly improved compared with 2025, and that ongoing geopolitical developments, including hostilities in and around the Persian Gulf, may affect supply chains, commodity prices and demand. Bratt said the company anticipates a strong fourth quarter supported by an increasing number of product launches and significant raw-material recoveries. Full-year 2026 assumptions include around 2% negative LVP growth, around 2.5% positive FX impact on net sales and a tax rate of around 30%.