Autoliv (ALV) 22 Oct 212021 Q3 Earnings call transcript

Welcome to the Q3 2021 Autoliv, Inc. Earnings Conference Call. Throughout the call, all participants will be in a listen-only mode and, afterwards, there will be a question-and-answer session. I will now hand over to Anders Trapp, Vice President, Investor Relations. Please begin your meeting.

Martin. you, Thank our to XXXX results financial Welcome third presentation. earnings everyone quarter am President we Officer, Mikael I President call, this and Investor Fredrik Trapp, Relations. of have and Financial On Chief our CEO, Vice our Bratt, Westin, Anders and

CEO earnings as brief well overview provide today's conditions. update an on third During business will results, and our market quarter a our call, as provide of our general

commentary Following around details the will Fredrik Mikael, and provide financials. further

usual, to will are the remain as to questions. We slides respond at your then autoliv.com. available And available

Turning statement, to the part presentation next Safe the slide, we includes which of the have and Q&A Harbor integrated that follows. is an this

our During of the GAAP measures to some non-U.S. we in available reference GAAP historical regulatory autoliv.com. on GAAP SEC measures. filings, U.S. will The non-U.S. reconciliations available presentation, are

that CEO, Bratt. Lastly, follow so, Time, call person. I over I Central to now two per is please p.m. X:XX conclude questions Mikael mention hand this our should at European a of limit intended to

Thank you, Anders.

high and third in quite quarter third components challenging very production during semiconductors led market. Supply dramatic which severely to illustrates a per vehicle Looking Europe, in ago, XX% for developed expected Americas, Japan than their first, Markets facing light It impacted unpredictable on able high what our resulted achieved raw three IHD again in volatility including was saw customer particularly below we most XX% the XX%, managing light the to months the in to QX, all profitability reduction. and and team's a This changes. content LVP, team well lower other XX% decline production July. was significant in despite months commitment, in according performance light was to despite than dramatic control call-offs, and effort, of customers were by changes The headcount I'd safety thank in the our quarter, global supply decline only reduced the cost shortage has slide LVP the the in QX solid were Markit. with vehicle being affected like how call-offs. unrelenting all our expected XXXX, once vehicle three Thanks LVP quarter. to plans, to material next XX% customer since lower and strict a ago. costs slide, what of especially

to the the Looking next on given and strongly the the year. pleased of all LVP the I with global first continued nine-month that that, for intake slide, order am in quarter we outperform strong

current We measures execute including mitigate continue alignment America. strict to Europe the to North in capacity adverse in business and headwinds,

Despite the reduced flow. our the leverage range. revising ratio However, remains in a cash target significant full-year operating year, for paid margin, environment, the per a the solid, $X.XX adjusted within our of cash our light well and We challenging dividend result as flow was operating we indications third share quarter. production outlook our of sales, for and are vehicle debt

income of $XXX a volatility, despite call-off cash The million. XX% billion, to sales a lower was solid result adjusted operating would LVP. slide, financial lower decline have in lower -- almost the higher strong sales, $X.X flow Adjusted The due X% XXXX, consolidated on overview the sales, now as capacity well rising the been as next outperformance, net decline double. Looking our than of sales for margin raw $XXX was operating costs a on was the challenging QX to Without fell environment. our for operating million, alignments in the was margin $XXX excluding materials. were million costs from Operating X.X%.

In eight the percentage global fact despite strong LVP now pleased in am we America, China, order that high-end that by percentage the high continued outperformance growth the content organic and was by our and outperformed our Europe as have This very in light outperformed percentage I affected seven next we slide, spite the more percentage points. per vehicle points sales almost XX achieved book, largest on in on development sales were Looking to declines vehicle on we the execute markets. by regions. in a by very production shortage. We being North points six points. semiconductor had strong In vehicles outperformed of all by

organic airbag region, and compared one sales Rest India growth doubling sales all showed strongly, to this with regions [Ph] than Although last showed year. more side Within year-over-year. sales of outperformance, in only Asia, [ASEAN] region, grow

highest on highest on next quarter, And this products third the new for product remain XX% full-year, XXX Last total any per have new also hybrids, this approximately ever. a this launches market these the on we shown the slide Looking are approximately is on of single have EVs sales, This track in to to of for $XXX. for number slide, year's Six for company. model. extending content to the record vehicle either the or sales. from the we plug-in a accounted Autoliv $XXX The market. vehicle growing further one launch vehicles exposure we of our of content quarter our models almost had an around

of vehicle The sales over talk the hand the financials, doubling cutoff battery per expect to our Fredrik slides. this trend is We will next Westin, by knee airbags, higher of will on almost content segment long-term now to airbags, about XXXX. CFO, introduction front-center switches. who supported few in and the I to and

XXXX, third Thank compared you, Mikael. This to slide XXXX. figures the highlights of our chief for quarter

the income $XXX year, negative decreased from net profit. $XXX vehicle gross half primarily XX%, sales material decrease to $X decline the the operating on in the to quarter, was were $XXX seen to last compared XX%. X% less production. adjusted had billion, global gross was higher of million. quarter decrease impact margin raw same than Our declined operating profit the light the The XX% costs. by million, a by alignments million, the while sales Gross this lower and driven margin $X.XX The In capacity million decreased to

X.X%. margin by was $XXX operating drivers lower percentage adjusted related matters, X.X The per by points diluted from flow to As the $X.XX alignment share decreased operating were declined main partly income the from lower cash a from mitigated $X.XX adjusted antitrust where and million. Earnings for lower operating tax. $X.XX, by result, $X.XX and costs capacity

declared to the quarter dividend was dividend the Our the where capital share a adjusted equity quarter, previous declined return as adjusted quarterly and return employed We of paid in XX%. $X.XX to the in on per same on the and reinstated. XX%,

a operating the $XX XX% was our same price impact operating $XXX adjusted year. margin than million million next negative The slide, of profit on the of quarter. Looking now on changes the adjusted lower the in material last bridge raw was quarter

of in from SG&A of the the and million governments year. cost governmental Foreign to this dollar. $X profit with in mainly results U.S. to connection quarter it by of and million The Support third negatively not weaker third quarter. was in RD&E sales higher impacted was exchange logistics while in $X Lower positively profit million, the was million. operating a year, financial the quarter support from affected our as $XX of the inflation related in inefficiencies call-off $XX mainly impact volatility, increased result pandemic and material adjusted a last utilities resulted operational of net operating by

support, unpredictable and within material income on normal operating foreign sales XX% unplanned communicated range. decremental decline. cost Excluding was increases the is raw adjusted call-offs, the approximately exchange, governmental our XX% the organic leverage Despite customer margin

sales, a and the number and slide, negative next the have These some adjusting include of through cost activities call-off on hours increased such as mitigated personnel. volatility, the of Looking the actions, workweek furloughing from the shortening lower inflation. we production, actions effects

have in X,XXX adjustments. functions and reduced the end the to the footprint alignment as cost Europe, example, quarter, third further in best which well in total, overhead evaluating Americas. headcount capacity by over In of X,XXX of footprint quarter. We're as since first For countries also moving we

measures the operations. key reductions. can just and efficient forecasting for you as much planning more hour and are slide, see our than strict headcount achieving Demand work include week However, on

then During of with that behavior some on means forecasts have our This on frequently XX%, even the customers. volumes we around production short this deviations do In cases from in we We challenging QX, compensation have with them. of to In our high lost commercial notice planning reduced placed our quarter, the for the claims over many weekly production late customer's in own substantially orders higher. assessment been call-off only need cannot seen we months. environment, on include planning. for at customers as demand for customers and and has based initially stage negotiations rely past volume

of to of material base, the the hard working mitigated been have third Through teams management successfully chain negotiations in consolidation to actual the inventories demand. supply and we some balance headwinds raw quarter. Our supply

to Move in on reduced the materials also delayed the prices slightly have We on continue material raw Supply than higher. slide. raw possible. quarter capital material headwinds third expected. plans and raw mitigation was impact drive Through lower the actions, demand expenditure to imbalances and of next successful where

quarter. However, second $XX from XXX higher magnesium of new still headwinds in margin resin by raw quarter, impact in and the expect involving for with materials million limited to million example first the around costs a close around followed basis full-year impact third the have Year-to-date, around in headwind we $X the points. operating zero a mean we quarter,

limited have to some pass contractual throughs We customers.

was Given to customers the expect net On material operating flow high expected $XX effects capital. year, working more compensations XXXX. working necessary see benefiting to million quarter, from raw $XX efforts results with impact in last over are due operating quarter extraordinary XX to from in this expenditure, X% Free was mainly lower months capital our period cash inventories year-over-year mainly for million $XX the changes The and capital receivables, capital. compared prices, a improved we inventories. million. payables $XXX a a time demand due decrease XXXX. working accounts in much was lower period do flow cash Compared decreased income we and It’ll $XX this million of measures the to taken last operating these slide, from to year year increased not to earlier. $XXX by a X.X% The net it mainly and increase sales is million Capital of in by XXXX, reflects cash request increase trade of recovery conversion prior year. XX% versus increased in expenditure. to $XXX negotiations and in million to the XX%. third prior the was of from reduction by lower and A higher from Capital of exceptional to by and million The in the million expenditure the the level next consequence less $XXX change partly impacted challenges. take to This in was million same cash significant chain of is visibility offset relation low believe supply result ongoing. the the positive $XX flow

leverage one significant at the next significant at In of is balanced that our net balance declines the decreased last the to very our well in times million we XX disruptions The to million. by debt $XX in end year slide, have months is $XXX And million recovered is managed in to our severe visibility, last ratio debt and since low quarter vehicle decrease past difficult with supply Now XXXX, by mid still This improvement with as net X.X $XX quarter, a the compared demand a by to we two compared EBITDA as unchanged a environment chains. of XXXX. and position the target. sheet reduced market ago. global September times X.X thereby years, production of line have

impacted of the production to Now be due slide, the North near for light to development new mainly situation the in energy level XX of concerns is monetary vehicle the about shortages the prices. in looking that lowest the affecting new America, the in years. the around to by constraints Europe, to units, pre-pandemic especially outlook Inventory are at light being at semiconductors. Despite continues million healthy In property China, component seen X for level. end the trends also production, ended evolution shortage of meet vehicles U.S. vehicle term, rising Demand industry underlying on vehicles. not have for demand the will semiconductors. least struggle and below and the vehicles policy In September semiconductor next higher by demand returned registrations determined consumer meant

Asia of consequence moderate poor. There a the and production supply As availability North constraints, indications visibility remain the the to is improvement of volatile semiconductor chain America, expected in remains some in fourth are in quarter. but

continue flat vehicles. possible no levels assumption vehicle production production as compared OEMs be as For to the Where of full-year XXXX, prioritize light well will global or COX vehicles likely will XXXX. with that our now low is to larger

Autoliv further vehicle light For support should this versus production. outperformance trend

expect the demand LVP in that availability hand recovery and a good Mikael. I Assuming component low now support the it back improves, to we in to inventories XXXX.

Thank you, Fredrik.

Turning next capacity our slide, indications to XXXX alignment. the exclude full-year for costs revised

indication full-year flat global Our light production to is compared on vehicle based a XXXX.

XXXX Our indication previous assumption around was around points. global our LVP to from versus to growth of July X from XXXX. outperformance percentage expectations We on XX% LVP XX, based for X% an of sales raised X

sales of around translation vehicle our is growth of be production now organic consequence be X%, increase X%. sales our positive lower effects net around currency a and XX%. expect the to light to As we assumption outperformance, around expected higher Including

an expected to flow Operating around million. operating expect around We of $XXX is margin cash be adjusted X%.

Our are few results, strategic good and on internal and of our expected years. in targets yielding confident are recovery initiatives gradually based progress we the light next our vehicle XXXX-XXXX

slide, forward near-term mitigating This, our to explored we on as and back headwinds, beginning the and More continue CMD, will execution, towards of our to will drive The virtual will with be as only targets. more, will the relentless on details at Turning quality well November Anders. at I now focus and be made be And it XX. hand November. available virtually event live-streamed. also

Thank you, Mikael.

like would the Martin. open you, for it line earnings this concludes page, I to questions. call. we now the formal hand for And to comments today's Turning back our

you. Instructions] Emmanuel Bank. it's from question; [Operator have Thank We first our Rosner, Deutsche

is now line Your open.

questions. hello much, of Thank you very and have everybody. lines I two

talk sequentially? far lately, about Your vehicle in in sequential could quarter? seen little specifically, things more some earnings, far particular suggests little one And light of improved America. this a out updated speaks you're fourth I have what, so curious basically operating what environment how production your in much you're first so improvement is then elaborate and just The therefore was about please there, bit if bit you seeing you're seeing could curious as improvements a in the guidance well, the more you part about outlook slide question seeing. North as some And just

questions. I for No, you think -- and thank the

what in it obviously, the on, around -- affected in the here. here mean, to quarter, question of all, would improvements, Asia is the and poor around And that I we some first customers say say semiconductor we're with we and, the ultimately, direct that want and is based think, well here and the here I in I are still U.S., other in indicating and, we're it's midst mainly But visibility more see here as of here. I say, would feedback still also have we the end the that. suppliers the it I dialogues slight

deliver focus on have which we about as as possible pointed for have think continue we we also we to will they here, made that here, have quarters the continue of our what and have necessary in to to months adjustment, expected, do of in situation, here. done to much as all quarter our the the that course. And I have the here to making mitigate out so, come to current we and managed internal customer us, sure And successfully and it's activities we

we it here, can great connected much I here. state, semiconductors. as the to fend really, impacted And us. has year that as far sequential the raw about material throughout that's so, job a the possible. the we development, team Then as the increasing And has off chain seen supply think have environment gave as to done side, you how we And the

there. have is added as come here, I think I has we we challenge zinc energy and, say, connected also external to well the quarter very magnesium in what much headwind. the the also here the seen that when it's to to energy situation And will

it's but can on sure. for So, what volatile focused a very we do environment,

we to getting low but visibility, say. I will used So, it, are

if I may. raw up I These was to the And on follow are materials, helpful. then going actually

recoveries impacts, that what on headwind, incremental see based in just would Can an so seen you've raw us remind to magnitude encouraging you XXXX, to expecting a what exclude there? you're in exposure seeing it's, recoveries XXXX. and is you it's you're materials, XXXX the similar of with development. And of your on second, a far we recoveries. If So, for where less or focus the more important growth And in more? obviously, or then were again, an side, excluding on expect the just that's, magnesium

are and we today, on Yes, here. I XXXX around -- I mean here giving forecast not think any details

first the the that. call next of either. all, think, course, and to we earnings through before is start we get in QX of not regard about I visibility need current helping come Then, talk to to that

So, on. we later will question that have to come back on

magnesium, But exposure to the in business. predominantly the steering our question wheel on it's on

Thank you.

next The The now Hampus line open is for by you. Engellau, Handelsbanken. is question

much. very you Thank

you sales. target order and also indicate order sorry Those calling a possibly maybe magnesium retail it intake. you a to share, questions. is And you. just on price share are and magnesium, won't I on some in it we're maybe market here maybe my see my but situation Thank you for could shortage back That's what could were is seeing first in know having XX% risk question. And China on guys? but on market your discuss trending how related, of second maybe question then be would for if things flavor, long-term add you the or in

Hampus. you, Thank

have production a of of reduced mainly, price question China On have the price. shortage would depends magnesium why side, I for develops. all is it's I the China in in they a then And us, far there, know how that we in, in power near-term. we that it, increases think result on of But more magnesium course, so the reason as situation say, the

I feel following that that, But that's in closely. of we now. what mean, right very say is, have. I alternatives under terms So, now, that, we topic control will it we I And something we are course, looks that of that as to closely a see availability, have right follow

market had see order and here, and order shares continue intake intake, around our to that XX%. as order to our we it new strong we book, indicated the before, side, On expected we a adds talked about support

support to the good years come for for So, here. that

maybe one metal answer know follow-up, how be of you just the this steering it magnesium -- or just can't So, in but interesting you another business in the design maybe wheel? to change the for that wheel steering is this, -- would could it is crucial

so customers, as of do not No, it's not you alternatives, structure and part change But, steering is together crucial, our requirements of are really, short-term is that the alternative wheel. said, I today. don't of There a overnight, is especially to that's under is concern lot it's with a course -- we of of a circumstances. but current that there, the option, main materials a there not

enough. you. Thank Fair

Colin next Langan, Fargo. by open The Wells is now for question The you. line is also

for does this or just other for recently select cost Thanks not to question. suppliers They some are XX% structurally is cut have savings that, schedules actually other is which indicated issue I cut. guidance seem better in the because your tough significantly a on mean margins an there taking decremental much be The better in offsetting volatility that sort low that of you of that have the sort made labor. are it range, performance? are than to

that's you here the the the think cost there, impact, the raw margin the we've sequential here there look if development with in equally exclude am here -- full-year declining an it's update problem quarter, if cost we’ve material third where impact. material yourself mid-XX% we've -- for range. I no if I guidance also think the we us. see, exclude the the been what decremental then large And had you I that also we I raw say No, at, volumes, second in in as the for mean, you

airbags it. doesn't been, some like it got And there's headlines then around that, a there's you I been have about think Okay, charge. recalls look

of I the impacted? numbers sometimes large? changing the landscape And had needs. recall think So you've directly in being at of help haven't to assume investigated I you there that the quite been that Is past, opportunities with anything all? the is are sort seem because competitive impacting actually some

recall, think you're it to. I on which referred depends

inflator. We’re But connected are is is we It's to the we’re and one. this [indiscernible], Volvo connected providing the that inflator the complete to But recall. from sourced module. not an providing

set theory in effect manufacturers, under the other for the insurance larger impact so of of And volume we neutral we was with there. scope that So, end, the see here any impact expect expect no of that recall and material types all liability from net that. us in don't recall, it in to makes

questions. thanks Okay, my for taking

Thank you.

line open The you. for next Agnieszka The now is question by Vilela, is Nordea.

there Thank Could you. with actions also, the actions? or elaborate Europe. alignment My first and cost question that is about you're U.S. in the is now associated these doing And cost there? have what savings you you any capacity please

But and actions, also be would we’re them activity then that Yes, adjusting, we now that Americas, the terms to. and small we're during evaluate initiative still time to And quarter, what or net through is and was then to Structural the related as $X to then activities about the so completed. footprint footprint we that the fourth then to that there to in will quarter. related ongoing to finalization in of XX% the Europe Germany in the is said, the million ongoing all over is activities also the within which and appropriate. two, be in left Sweden further as of Program headcount we’re talking referring communicate here then roughly the would we’re Europe number the is quarter XXX in referring part But concluded the Efficiency come third activities a recorded we continuation and a other fourth the continue

maybe actions? it aren't you this might afraid production more global you're ramp more you if production, of up for car the see or the if point, be kind that difficult that would to recovery you to we the be in and Perfect, doing

in I adjustment are I the then that short-term short-term more No, initiatives, in top headcount long-term we And also from our both that resulting combination taking and of a the, together obviously can refers would days we out on driving. mean, the stoppage offset not to needs, Then doing limit so think a say, in volatility the the reduction would volumes. Fredrik I quickly plants productivity the us is and we efforts lower are footprint of ramp-up, with as that, to really we’re any capacity that ramping-up.

it's more there on. So usage effectively we’re working that

So we risk. don't see that

you these second How thank do question expect compensation? And are discussions you. the about compensated for OEMs are cancelled any having perfect, Yes, proceeding volumes. that discussions getting is about the the or with my you

but Yes, and we’re with is OEMs of course, the then component to past quite discussing, at raw very, that negotiations them cancelling and due larger the a them keeping I mean also behavior it is very at part short-term main the it's call-off reducing that then material levels and are of ongoing, of substantially. high

but customers, compensation is, here. It larger I of it that compensation but to will is much towards see We’re inventory also to on. successful. be seek will so in negotiations said, definitely for -- carrying something happen the that and with inefficiencies we how not yes, part in the that costs now of only discussing tend the the to terms the of have it's we And as of year production, related end that for

Perfect. Thank you.

SEB. question next Erik line The The by you. is open for is now Golrang,

color of in materials I -- Or net more mean, bit do been a on my giving raw raw see on I'll from on still even on Most but with and there expected is basis, questions that? Thanks. perhaps materials that compensations, now it a drag compensation? have based ask XXXX. a answered. another the differently positive appreciate a you one you you're

more, mean, said I is that's more to here. scenario all, would depends of discussion development as in be material see think, cost or for course, with have I Then a will different higher long-term the it But to that say, the in here, long-term medium plays overall discussion situation. the XXXX on there Fredrik then, first also that customer a development significant be ongoing of is with of how a current needed here. let's we raw how if out the materials. it And raw

come think, -- I back that here. quarters how as course, in developments we of see basically the have develops we So, to it's… to it But, next how here the

was specific just something is actually a was? straightforward more it to I… more similar Or situation And more then comments much you wasn't expect. Thanks. very Maybe Okay. how because that a on question bit it but it yes, And recall -- what specific this components wrong, history? I okay, was there -- we question one and in magnesium it of I magnesium. remember correctly, for specific compensation was now if Is that getting fair recollection

different very materials it's generalize raw it's more situation. the is, here, customer it's nature, by in and customer that I that component in It course, on. like our cost with critical say so maybe I meaning will other to No, but, about magnitude a if difficult can is case of products. of it change more than in that. case by what also -- the on the has think It its and is to But structural a you like assume dialogue specifically don't long-term me course, it's generalize

thank Okay, you.

Markets. question next Capital Joseph is RBC Spak, The by

much. very you Thank

little this quarter. versus last So, were bit a worse quarter-over-quarter the quarter decremental margins

probably which below to some what's It's historically quarter improvement fourth what over about. the pointing you I implied speaks some think upside. is volatility of think here. sequence third for I talking on the But quarter, that we're look again at to then we convert as like you're XX%,

near-term that very a think we remains level in right early -- about is into of schedules the uncertainty sort the XXXX. this of So into even here while the in of should the lot part

higher are say -- we but that The look that want we you material and improvement And as or a quarter, in just we it the in the from to. overall if hand, also sequentially third yes, then, a -- calculation quarter, you the income is of at we the versus course, that should for, that fourth we more other price help expect guiding impacts higher in one I made that have LVP factor But sequentially. raw increases referred also sequential a quarter that to that with fourth the quarter. seasonality fourth have engineering typically we volume significant on improvement do headwind expect sequential

need main consider. you components I are that So those to the think

Okay. I like be the what schedules, you conversion the like volatility -- is lot your for you is bit guess given because a expect that in volatility? if is still what sort on that a should mid-term of of little volume we even on aim volume I'm over would below of asking higher there

say, low likely -- most visibility remains similar the as we and No, will we We also fourth into that mean, significant remain I volatility that any change. the that expect don't quarter we and expect levels. at

would -- so? ability in if customers requests? the that you'd does up just just there to is but of past able that mentioned decide the ramp on faster planning here you've do that then just quarters, of couple seen alluded to be -- all I on you to your the And you the based flexibility hinder your customer question behaviors volume that you're Okay. like capacity, second planning not accommodate adjusting sort at Or customer is that over think enough

certain on periods of it production When that of here, exercise volume effective here optimizing a mean, part make can about course, are we to let's schedule flex we up over the I net is based more needed. sure that. really when talk own so the, time we call our in the here about No, it's

have some So and days run and the stable on so and we other stop so days can more on.

it's to so call here more production from And now that optimize own situation based the on schedule our we the volatile experience here. have off

base our we're back forward So on looking looking that. and

you that. Thank for

DNB. Holmberg The at by next is line The question Mattias yours. is

mean, to if there current your me. of your is I'm situation question short-term closer. the if the a the picture, to One trajectory in the starting trying now at with look and left year your the down to to medium-term targets, take or bigger Thank back you. anything further and these understand step particular medium-term the road just reach And I or in try one from ability years that volatility we're on we get targets. impacts

So just to trying order what's to on level. your thinking get that in needed I'm to get

the we I those get holding think And the on target to We our is and paying also that I improvement up that volumes We in yielding normalized here goes towards assume that we meaning our from short-term. we is volumes we LVP at positive the we are have see also mean, is way here here say report see activities. we believe time initiatives that all off. the have manage I that it in lined is same results here, true. come as years that to on to the these -- would the that, stated normalized, it

of horizon, I number numbers kept a there of where there in road, targets expectation be but the being are the would believe the could combination still And year one the we there would is within level volatility time that We vehicles stating comfortable this have say would also absolute of say, left less and produced. be makes in years absolutely. us, we that more normalized down I

thank Great, you.

Brian Your next question Johnson, Barclays. is by

questions. of couple Yes,

keep as wheels of decrementals is of on think the factories send of then depending through and your customer you margins. kind steering to factories feeds kind different -- just schedules, product with are just smoothly and want which modeling trucks to start, stop airbags, help how that understand of kind can us really can decrementals of the kind in you running to we production where fungible, lines volatility, and which through the I First, within

not I'm lines are I really volatility sure you or… more there. followed being flavor your by impacted for Are on the product different how the question asking

Yes.

decrementals? how translates into that So your overall

line think, is I wouldn't another than know. other not or by I I the we easier mean, than line are when one it one worse product product -- down Yes, say is as breaking that here. you

of to here an production into forcing of if may look wouldn't product in manage the is production different way. maybe to see But is a think in I result an certain where can out level you specific have the than the I that you're optimized then here that because more others, compared go higher this And smoothing processes, challenge atomized have same some the more it's inventory can here inventory course, you that and volatility. we volatility as point it the I think regard. also out that line it under down in

the Restraint chip chips, whole kind in chips, any in have I'm Restraint in on of subsidiary? at electronics the secondly, first, your Systems talking used chips you all question the are former And of is shortage? second your Control about business tied-up on interest would And global while Control Okay.

also answer various can interest product say work. say it’s our ourselves And we’re direct through of support that, spun that it spun we’re mean, them semiconductors, it Then for off valid. our in entertaining, look we four, is years to we Tier lines still of that. have, but a to we that's not I to nothing in extent, contact but reason and number semiconductors. question, them first of directly on are suppliers is I of and last your where our not would using where foot working here I various their suppliers, securing with and that a at On we most very off we’re with and course that semiconductors ago, it's closely here sourcing semiconductor X course, of

committed well them own customers to deliver And we I what chain, to our value there. have we’re secure worked very for think and to so have our able deliver together we to to far, been semiconductors

supply job team from chain So, our good here.

Okay, you. thank

open for Lache, The now by is The next you. is question Rod Wolfe. line

margins just to points but with decremental some Thanks, will about have some quite at volatility to of production. that clarification. I the see was of hoping and And considering like point, the you're in diminish two follow-up People volatility. just going production increases this, asked XX% good, are

scrutiny a reasonable inflator. applied do you the that there of or being be then a happens that when non-Takata volatility what to be And the better, still, that's including expect think would that is inflators And incrementals actually to referenced, is your you. costing ZF it would that So of where you have secondly, your Volvo recall I competitors inflators. of estimate that's lot any

wouldn't how your gain customers way around Autoliv in Just what's why this? And thinking you? happening are from some about

Maybe focus mean, and quality top I to can I start to so answer of on mean, first the always really our situation second our proven I we’re I recall, our have course is question, that don't efforts our the the and to here. comment of in I don't list, look with and Fredrik our can here. focus the competition there, But is whenever way to needed. with future. customer speak, them securing our believe with opportunities at customers we best that And work to quality we support and business quality, take

during a margin, reduction very this is And highlight we'll since then on discipline by as we down the X,XXX quarter. headcount you and further throughout then see a QX also our to what at maintained we the want year, X,XXX development that we if decremental strong and and cost have capital indicated, third look

shows benefit the that the focused disciplined of overhead then been also cost And the from. this. implemented coming get on see that that production I we what Then Programs also sequentially. doing that have Efficiency on also have you we Structural SG&A been together think how with that then effect down we're then but is how the or is we and

decremental material if so those main are raw again, headwinds. the of think you I exclude far So the margins components the

course, side, high the to into for we volume But out want here On a recovery should we margin towards achieve when next as as volume. possible, the ‘XX mid-term year, plays will we progression of to come the in. target, kick the to that expect once But guidance. going have incremental on that how back the we to incremental we through out meaningful then the about pull that as we that talk that also laid starts

Fair enough. Great execution, thank you.

Thanks.

further are There no [indiscernible]. Instructions] questions [Operator

Thank Martin. you,

While other can we keeping headwinds, cannot we each control control on focus including we what short-term market safe.

our us and in Our value our creation. confident opportunities progress journey our makes for shareholder targets towards

to XXXX. Our see in everyone in Autoliv. Hope you earnings fourth call scheduled you sincerely Until safe. Thank Friday, appreciate today's quarter call. again interest January participating your continued for is XX, then, in November. We stay for