Autoliv Initiates Strategic Review of Separating its Business Segments

Autoliv announced that its Board of Directors has instructed management to conduct a strategic review of its operating structure with the intent to create separate companies of its current business segments, Passive Safety and Electronics.

The intent is to create two publicly traded companies capable of addressing two distinct, growing markets with leading product offerings and thereby create additional value for shareholders, customers and other stakeholders as compared to the current, combined structure of Autoliv. The strategic review process will evaluate this and other options. Although the strategic review has been initiated there is no guarantee that the review will result in any transaction, including a separation or listing of the businesses.

"The current operational model has served Autoliv very well, creating tremendous value for its shareholders and other stakeholders since the initial listing on the Stockholm stock exchange in 1994. Over the last decade our Electronics business has grown and matured next to our world leading Passive Safety business and today we have two distinct, successful businesses, each with its own unique business drivers. We believe it's time to let them both individually maximize their potential," said Jan Carlson, Chairman, President and CEO of Autoliv.

Electronics consists of Active Safety Products (automotive radars, cameras with driver assist systems, night vision systems and positioning systems), Restraint Control and Sensing and Brake Systems. Its market (particularly in active safety towards autonomous driving) is characterized by a high pace of change and growth which requires an agile innovation and partnering model as well as significant upfront investments to capture future growth. It is estimated that the total available market for Safety Electronics will grow from around $20 billion in 2017 to more than $40 billion in 2025. The objective for Electronics is to capture a significant portion of that growth while continuously improving the profitability of the unit.

Electronics is one of the leaders in Active Safety today with one of the broadest and most advanced product portfolios in the industry. Over the last two years Electronics has further positioned itself to be a major player in automotive electronics, including the competitiveness of the product portfolio, becoming a qualified supplier with a high number of OEM's for active safety and entering into important partnerships with companies like Volvo Cars (Zenuity), NVIDIA and LiDAR experts Velodyne for the next generation of highly automated cars. In 2016, Electronics sales were $2.216 billion, with a target to reach $3 billion in revenue in 2020.

Passive Safety consists of airbag systems, steering wheels and seatbelts. Its market is characterized by stable growth and incremental innovation which requires the highest requirements on quality and manufacturing efficiency. It is estimated that the total available market for Passive Safety will grow from around $20 billion in 2017 to around $25 billion in 2025. During the same period Passive Safety is expected to outgrow the market and light vehicle production, which is expected to grow by close to two percent annually. The objective for Passive Safety is to remain the market and innovation leader while maintaining a high level of quality and capital efficiency and further improving its margin performance.

Passive Safety is the global market leader with a market share of 39% in 2016. Over the last 2.5 years Passive Safety's share of order intake has been around 50% or more indicating significant market share expansion ahead. Standalone, Passive Safety will have increased freedom to further optimize its performance. In 2016 Passive Safety sales were $7.9 billion, with a target to reach more than $10 billion in revenues in 2020.

If the separation takes place, the process is estimated to take around one year under most separation scenarios. Updates to the progress of the strategic review will be provided in a timely manner.

Autoliv has been reporting its Passive Safety and Electronics businesses as two separate segments since the beginning of 2016.