Q3 FY2026
Filed Oct 23, 2026Q3 2026: Solid performance in a tough environment
Q3 profitability and cash generation remained solid, but net sales, operating income, diluted EPS, gross margin and adjusted operating margin all declined from Q3 2025, while full-year adjusted operating margin guidance was narrowed to around 10.5%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net salesGAAP | $2.69B | – | (0.5)% |
| Q3 2026 organic sales changenon-GAAP | (1.1)% | – | (1.1)% |
| Q3 2026 gross profitGAAP | $496M | – | (5.0)% |
| Q3 2026 gross marginGAAP | 18.4% | – | (0.9)pp |
| Q3 2026 S,G&AGAAP | −$138M | – | 0.9% |
| Q3 2026 S,G&A, in relation to salesGAAP | (5.1)% | – | (0.1)pp |
| Q3 2026 R,D&E, netGAAP | −$99M | – | (16)% |
| Q3 2026 R,D&E, net in relation to salesGAAP | (3.7)% | – | 0.7pp |
| Q3 2026 other income (expense), netGAAP | −$5M | – | 559% |
| Q3 2026 operating incomeGAAP | $254M | – | (5.0)% |
| Q3 2026 adjusted operating incomenon-GAAP | $262M | – | (3.4)% |
| Q3 2026 operating marginGAAP | 9.4% | – | (0.4)pp |
| Q3 2026 adjusted operating marginnon-GAAP | 9.7% | – | (0.3)pp |
| Q3 2026 financial and non-operating items, netGAAP | −$24M | – | (13)% |
| Q3 2026 income before taxesGAAP | $230M | – | (4.0)% |
| Q3 2026 income taxesGAAP | −$75M | – | 16% |
| Q3 2026 tax rateGAAP | 32.5% | – | 5.6pp |
| Q3 2026 net incomeGAAP | $155M | – | (11)% |
| Q3 2026 adjusted net incomenon-GAAP | $160M | – | – |
| Q3 2026 earnings per share - dilutedGAAP | $2.13 | – | (6.8)% |
| Q3 2026 adjusted earnings per share - dilutednon-GAAP | $2.19 | – | (5.7)% |
| Q3 2026 operating cash flowGAAP | $239M | – | (7.3)% |
| Q3 2026 capital expenditure, netother | −$115M | – | 8.7% |
| Q3 2026 free operating cash flownon-GAAP | $124M | – | (18)% |
| Q3 2026 cash conversionnon-GAAP | 80% | – | (6.9)pp |
| Q3 2026 return on capital employedGAAP | 24.1% | – | (1.0)pp |
| Q3 2026 adjusted return on capital employednon-GAAP | 24.4% | – | (1.0)pp |
| 9M 2026 net salesGAAP | $8.25B | – | 3.1% |
| 9M 2026 operating incomeGAAP | $683M | – | (11)% |
| 9M 2026 adjusted operating incomenon-GAAP | $776M | – | (0.1)% |
| 9M 2026 gross marginGAAP | 18.6% | – | (0.2)pp |
| 9M 2026 operating marginGAAP | 8.3% | – | (1.3)pp |
| 9M 2026 adjusted operating marginnon-GAAP | 9.4% | – | (0.3)pp |
| 9M 2026 net incomeGAAP | $398M | – | (22)% |
| 9M 2026 earnings per share - dilutedGAAP | $5.36 | – | (19)% |
| 9M 2026 adjusted earnings per share - dilutednon-GAAP | $6.67 | – | (0.1)% |
| 9M 2026 operating cash flowGAAP | $598M | – | (2.5)% |
| 9M 2026 free operating cash flownon-GAAP | $305M | – | 1.7% |
| September 30, 2026 cash & cash equivalentsGAAP | $197M | – | (12)% |
| September 30, 2026 gross debtGAAP | $1.93B | – | (4.6)% |
| September 30, 2026 net debtnon-GAAP | $1.76B | – | (0.5)% |
| September 30, 2026 leverage rationon-GAAP | 1.3 | – | (0.0) |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Q3 2026 Airbags, Steering Wheels and OtherOrganic sales grew by 0.2%; side airbags, center airbags, driver airbags and steering wheels were the largest contributors, partly offset by passenger airbags, inflatable curtains and knee airbags. | $1.85B | – | 0.9% |
| Q3 2026 Seatbelt Products and OtherOrganic sales declined by 3.9%; sales decreased organically in China, Americas and EMEA while they increased in Asia excluding China. | $845M | – | (3.5)% |
| Q3 2026 AmericasOrganic sales change was (2.9)%; performance overall was in line with LVP, while North America outperformed LVP by close to 2 percentage points. | $901M | – | 0.4% |
| Q3 2026 EMEAOrganic sales change was (2.9)%; Autoliv underperformed LVP by 3.7pp. | $711M | – | (4.5)% |
| Q3 2026 Asia excl. ChinaOrganic sales growth was 8.8%, mainly due to 29% organic sales growth in India. | $553M | – | 2.7% |
| Q3 2026 ChinaOrganic sales change was (5.8)%; sales to domestic OEMs increased organically by around 21% while sales to global OEMs decreased by around 29%. | $528M | – | 0.4% |
| 9M 2026 Airbags, Steering Wheels and OtherOrganic sales grew by 1.3%, led by side airbags and center airbags, followed by driver airbags. | $5.62B | – | 4.1% |
| 9M 2026 Seatbelt Products and OtherOrganic sales declined by 2.0%; sales decreased organically in Americas, China and EMEA while they increased in Asia excluding China. | $2.63B | – | 1.1% |
| 9M 2026 AmericasOrganic sales change was (3.8)%, with underperformance versus LVP of 3.5pp mainly from negative mix due to high LVP growth in lower content South America and lower content on some replacement models. | $2.67B | – | 1.3% |
| 9M 2026 EMEAOrganic sales change was (2.3)%; Autoliv underperformed LVP by 3.7pp. | $2.38B | – | 1.8% |
| 9M 2026 Asia excl. ChinaOrganic sales growth was 10%, mainly due to 34% organic sales growth in India. | $1.66B | – | 5.3% |
| 9M 2026 ChinaOrganic sales growth was 0.5%; sales to domestic OEMs increased organically by around 31% while sales to global OEMs decreased by around 21%. | $1.54B | – | 6.4% |
Full year 2026 outlook
- RevenueAround 0% organic sales growth
- Tax rateAround 30%
- NoteAdjusted operating margin: Around 10.5%
- NoteOperating cash flow: Around $1.2 billion
- NoteCapex, net, % of sales: Around 4%
- NoteLVP growth: Around 2%
- NoteFX impact on net sales: Around 2.5% positive
Capital returns
- Q3 2026 dividends paid: $(63) million, compared to $(65) million in Q3 2025.
- Q3 2026 share repurchases: $(150) million, compared to $(100) million in Q3 2025.
- Q3 2026 cash dividend paid per share: $(0.87), compared to $(0.85) in Q3 2025.
- In Q3 2026, Autoliv repurchased and retired 1.23 million shares of common stock at an average price of $121.69 per share.
- 9M 2026 dividends paid: $(192) million, compared to $(173) million in 9M 2025.
- 9M 2026 share repurchases: $(350) million, compared to $(201) million in 9M 2025.
- Over the last 12 months, Autoliv repurchased 4.14 million shares for $500 million, in addition to paying $258 million in dividends.
What drove it
- Global organic sales decreased by 1.1% versus a global LVP decrease of 1.9%; product launches positively affected relative performance, while regional and model LVP mix negatively affected it by around 90 bps.
- Asia excluding China delivered 8.8% organic sales growth in Q3, driven mainly by India, where organic sales growth was 29%.
- Sales to Chinese OEMs grew by more than 20%, while Chinese OEMs accounted for 58% of sales in China in the quarter, compared to around 46% a year ago.
- Q3 R,D&E, net costs decreased by $18 million, mainly due to $26 million of higher engineering income related to timing effects.
- Labor efficiency, Value Engineering material savings, customer and supplier negotiations, well-executed cost reduction initiatives and increased engineering income supported profitability.
Concerns
- Q3 net sales decreased by 0.5% and organic sales decreased by 1.1%.
- Q3 gross margin decreased to 18.4% from 19.3%, mainly reflecting the $13 million gross profit impact of supplier settlement compensation reported in Q3 2025, lower net sales and higher logistics costs.
- Raw material price changes had a gross negative impact of around $42 million in Q3, and the company estimates a gross impact of around $120 million for full-year 2026.
- Tariffs imposed in 2025 had a net negative impact after compensation of around $6 million in Q3 and an around 35 bps negative impact on operating margin including dilution.
- Customer call-off accuracy deteriorated slightly compared with Q3 2025 and Q2 2026, driven by development in China.
- Q3 tax rate was 32.5% compared with 26.9%, with discrete tax items having an unfavorable impact of 4.9pp.
- Capacity alignment costs related to restructuring activities in Türkiye contributed to negative $5 million of other income (expense), net in Q3 and to the 9M decline in GAAP operating income.
What to watch
- Full-year organic sales growth guidance of around 0% against the expected strong fourth quarter supported by product launches and significant raw material recoveries.
- Delivery of full-year adjusted operating margin of around 10.5%, narrowed to the low end of the previous range of around 10.5-11%.
- Achievement of targeted cost compensation adjustments with customers, including recovery of raw-material and tariff costs.
- Call-off volatility, geopolitical developments, tariffs, trade restrictions, supply-chain conditions and raw-material prices.
- Continued growth with Chinese OEMs and the mix shift in China, where Chinese OEMs represented 58% of quarterly sales in China.
- Full-year operating cash flow guidance of around $1.2 billion and capex, net, % of sales guidance of around 4%.
Balance sheet and cash flow
- Q3 2026 operating cash flow was $239 million, compared to $258 million in Q3 2025.
- Q3 2026 free operating cash flow was $124 million, compared to $153 million in Q3 2025.
- 9M 2026 operating cash flow was $598 million, compared to $613 million in 9M 2025.
- 9M 2026 free operating cash flow was $305 million, compared to $300 million in 9M 2025.
- September 30, 2026 cash & cash equivalents were $197 million, gross debt was $1,934 million, and net debt was $1,763 million.
- September 30, 2026 trade working capital was $1,451 million, compared to $1,504 million at September 30, 2025.
- September 30, 2026 total equity was $2,470 million, compared to $2,559 million at September 30, 2025.
- September 30, 2026 leverage ratio was 1.3, compared to 1.3 at September 30, 2025. The long-term target is equal to or below 1.5x.
Analysis
Autoliv reported Q3 net sales of $2,693 million, down 0.5% from Q3 2025, with organic sales declining 1.1%. This nevertheless exceeded the global LVP decrease of 1.9%. Asia excluding China was the main growth engine, with 8.8% organic growth, led by 29% organic growth in India. China organic sales declined 5.8% as LVP declined 6.9%, but sales to domestic OEMs increased organically by around 21% and Chinese OEMs reached 58% of sales in China. Americas and EMEA both posted 2.9% organic sales declines.
Profitability remained positive but stepped down from the prior-year quarter. Gross profit declined to $496 million from $522 million and gross margin declined to 18.4% from 19.3%. Operating income was $254 million, down 5.0%, while adjusted operating income was $262 million, down 3.4%. Adjusted operating margin was 9.7%, down from 10.0%. The company identified prior-year supplier settlement compensation, lower sales, higher logistics costs and capacity alignment costs as pressures, partly offset by lower R,D&E, net costs that included $26 million of higher engineering income related to timing effects.
Below operating income, the tax rate increased to 32.5% from 26.9%, driven in part by an unfavorable 4.9pp effect from discrete tax items related primarily to closure of tax audits. Net income fell to $155 million from $175 million and diluted EPS fell to $2.13 from $2.28. On an adjusted basis, diluted EPS was $2.19 compared with $2.32. For the first nine months, GAAP operating income declined 11% to $683 million, although adjusted operating income was nearly flat at $776 million versus $777 million, underscoring the impact of capacity alignment costs related to restructuring activities in Türkiye.
Cash flow stayed solid despite lower quarterly earnings. Q3 operating cash flow was $239 million and free operating cash flow was $124 million, compared with $258 million and $153 million, respectively, in Q3 2025. The company repurchased and retired 1.23 million shares for $150 million and paid $63 million of dividends in the quarter. Net debt was $1,763 million at September 30, 2026, while leverage ratio was 1.3, within the stated target of equal to or below 1.5x.
Management maintained full-year organic sales growth guidance of around 0% and operating cash flow guidance of around $1.2 billion. It narrowed adjusted operating margin guidance to around 10.5%, citing increased raw-material, logistics, Thailand flooding and call-off-accuracy headwinds. The guide assumes achievement of targeted customer cost-compensation adjustments, no material changes to tariffs or trade restrictions from October 15, 2026, and no significant changes in the macro-economic environment, customer call-off volatility or supply-chain disruptions.
Management, verbatim
The business environment remains uncertain but we anticipate a strong fourth quarter supported by an increasing number of product launches and significant raw material recoveries.
Mikael Bratt, President & CEO
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%.
Mikael Bratt, President & CEO
We continued to successfully manage geopolitical developments during the quarter, limiting the effects of tariffs, supply chain challenges and raw material price increases.
Mikael Bratt, President & CEO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of reported results with prior guidance is unavailable.
- Q3 2026 prior-quarter comparisons are not reported for most income-statement and cash-flow metrics.
- Full-year 2026 GAAP revenue, GAAP gross margin, GAAP operating income, GAAP EPS, free operating cash flow and capital return guidance are not provided.
- Q3 2026 adjusted gross margin is not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.