Autoliv Inc (ALV) 2002 Q2 法說會逐字稿

Thank you for waiting. Ladies and gentlemen, your conference is due to begin shortly. Please continue to stay on the line and once again thank you for waiting.

Thank you Mr. Westerberg, you are now connected, please go ahead and I shall be standing by for questions later.

Thank you very much

. Well good morning to all of you in the United States, and good afternoon to you in England. Welcome to this half-year review of the Autoliv results. My name is Lars Westerberg. I'm the CEO and as usual, I have

, Information Manager, as well as Magnus Lindquist, and we are seating here in Stockholm.

We are going to discuss some slides, and all of these slides are available on the Autoliv home page, it's the autoliv.com, under financial info. I think you push telecom trans. Yes, and then you will find all the slides. And you can also view them live here. Max is going to click them down.

If we can start with the overall picture, net sales possibly, we can say that we seen to change for us, and Autoliv came out better than expected during the second quarter. We did expect an improvement in sales and results partially for seasonal effects, but we made out better than expected. As you know, the sales came up about 13 percent year-on-year, and currencies, notably the decline of the Dollar, added two percent. Also the acquisition of

as of April 1st, added another four percent to it. And as you also know, we are

has not had any profit this year. It's kind of a serious game, at least until further.

If we break it up a little bit, we can say that in the United States we saw a very strong market with some five six percent increase in light-vehicle production, and we had a similar organic increase in our sales. So that was more or less doing as well, nevertheless not as good as the market you could say.

In Europe as well as Japan, we saw much stronger increases in sales than the underlying market. Both of these were kind of minus one percent or in that order of magnitude if you talk about light-vehicle production, we made considerably better from the sales point of view. So we take market shares in both of them and maybe more striking is Japan, where sales is up 20 percent on a market that is at the best flat.

So I would also like to draw your attention to the point that the moving 12 month average trend has actually turned now and they saw last time return was quarter three in the year 2000, and now it turns up actually, well we include also quarter two this year, so it looks like a little bit of a trend shift.

Turning the page and looking at the organic sales, and then again we have cleaned it up for good composition and furthermore, we have cleaned it up for currencies, and we can see roughly the same picture.

We have experienced six quarters with declining sales, organic sales, and also with declining vehicle productions, but quarter two this year, we have a fairly strong sales gain. Organically, we're up seven percent after six negative quarters, and the core production as we see it is a combination of Europe and the United States are up some 2.2 or 2.5 percent, so fairly much stronger than the underlying market, and our conclusion is that we take market share, and you can see it maybe even clearly when we come to the unit sales.

Next slide describes to you there is a mix in the United States between light-vehicles and cars, or low-cars and trucks you could say. And I don't know if we're seeing a trend shift or not.

I believe not, but the last four month actually, the three of the four months, cars have picked up on behalf of the trucks, so we see a little bit of a dip down, but it's essentially 50/50 in quarter two now on cars and light trucks. If you saw that, if you take the import fill it's generally speaking much more cars than trucks in imports, and they all perceive this value of core

for the U.S. production.

So 50/50 for the time being and as you know, we are a little bit more exposed to the cars than the trucks, but that will even out more or less in quarter three.

Light-vehicle production quarter two you have comparing what did we think it would end up when we sat here and talked to you in April and how did it actually come about and as you can see the forecast was for a change very actuate so every margin I change it from the plan and the actual out come you can also see here that North America we believe was up year on year about five percent we have some conflicting figures to be on it's way again sometimes it's more like six percent but in any case it's a good increase in the United States also bill three possibly even five percent on bill three only.

Europe has kind of a flat quarter which was not too bad after you may recall we had an eight percent decline in the first quarters, so all in all two point two maybe even two point five or so improvement for the two largest markets.

Units sales, seat belts we shipped during the quarter 17.4 million seat belts, which was a gain of seven percent and of course since the global car production was not roughly one point six percent needless to say we take market share here.

The protections are up only one percent in volume terms but as you may have read in the report in the value terms were up 11 percent and there are a couple of reasons here as you may recall we have recently added some adapted load limits with much more value added going in to a couple of European modules in increasing numbers also it's a shift away from

to retractor

and it also adds more value to us, so even it's one percent in unit terms it's 11 percent in value terms.

Frontal airbags up 12 percent again we take market share particularly so on passing your airbags and less so on driver airbags. Head protections are up 30 percent if we isolate inflatable

only we are up in unit terms 40 percent and in value terms 57 percent and the reason here is that we are penetrating to a larger extent in the United States and Japan and previously where we have much bigger bags than the United States and also now the price level so you can say the makes have changed and therefore the value

has gone up also and again also steering wheels very hefty increase here which we have some what difficult to cope with actually, 22 percent up on steering wheels which is a variedly sizeable market share again, two million steering wheels in one quarter.

Gross margin we added to you point seven percent compared to the same quarter previous year and as you say we have a number of packages influencing here, first we have reclassification of manuals from new financial manuals here so we have that tends to increase the gross margin with point three percent. At the same time we have all

restrains electronics with a much lower gross margin so that deludes to about point three percent so when every thing is said and done actually I think point four is not such a bad number and why did it go up while a half a percent we gained from material cost, point four percent we gained from labor costs, we had depreciation going down point two but for what ever reason we haven't production supply increasing with point three percent we have no particular reason for that yet we will have to investigate it.

The conclusion I get is that the positive trend continues and again adding point seven percent year on year. Operating margin we are up point two percent we have the same name kind of delusion here from the

restraint electronics so excluding the acquisition we would be looking at eight and a quarter or eight point three percent EBIT margin which is roughly half a percent better than the same quarter last year so I am high in sales and also high in margins.

Then we come to the cash flow and where we are very happy and actually a bit proud to report, we had a third quartering enroll here with a very nice cash flow and as you can see here before investments, we had a positive $132 million.

And also after investments, we are looking at $54 million and then we should remember all of us, that we have paid $27 million for the

company during the quarter. So what, the underline cash flow is more like $80 million for the past quarter, so three very good cash flow quarters, which of course, takes down the net debt rate with ratio.

Next line shows you the operating and free cash flow and you can see that the major, without going through all the figures, the last 12 months, we have generated $189 million of free cash flow. That figure does exclude, what we paid for the

restraint electronics, which was then $27 million.

And as you can see, there is a couple of big difference's, the first one is of course, the net income, that is much higher in the last 12 months, then it was in the previous year 2001, but also the

is to change the working capital, while we are positive five and to compared with minus 138. So our third strong quarter is report cash flow.

The income statement, but first if we just look at the changes on year on year. Sales is up, as you can see total sales is up 13 percent, gross profit is up 18 percent, the income before tax was up 20 percent and at the very bottom line, thanks to a slightly lower tax rate, we are up 22.4 percent. So 13 percent from the top and 22 at the bottom.

We can also see here, that we are up a fair bit on the overhead side and there are of course a couple of explanations. We look at the sales and administration costs, this don't have added 1.3 million the past quarter, also we have view in this past quarter, had an unusual high legal costs about $2 million more then the going rate, sort of speak.

So if we just take away the unusual legal and the required company, we would be running roughly the same percent as the previous year, namely 4.7 percent. The legal matter had a number of courses, one of them of course, being the

acquisition and U.S. lawyers, they charge us you know.

In the RDNE, we have mainly two courses, one again is to restraint, which was $2.6 million for the quarter and if you recall, we had reconfiguration, that was possible among the gross profit, while here we have the negative ends. So we have 2.6 million negatives for the RDNE.

Excluding those two, we are 4.8 percent and including those two we are 5.1 percent. Of these of course, they will both of them continue going forward, so we will be looking at five percent plus,

, for the reminder of the year, as far as we can understand.

Final then, if we look at the, the invalid

, the up grading market 8.0 and again eight and a quarter eight for three, excluding this Jon and then the bottom line here, 53 cents was last year's comparable figure of 44 cents, actually, if you may recall, we had illegal report of 31 cents, because we had other depreciation rules, as you may recall.

Key figures, we have talked about the earnings per share, 53 versus 54. Return on capital employed was comparable last year, 11.3 percent and we have added close to two percent, so we are up 13.1 percent this quarter. Also working capital, we have sort of been in nagging away, so we are from 11.2 down to 10.3 or more or less, one percent lower in 12 months.

In that depth, we decrease also a little bit again, $10 million, we have taken out from 1 billion 46 to 950, or close to $100 million. And the net debt to capitalization, as you may recall, we have a policy of, at the most, 40 percent and we are now down to 32 percent, which leaves us some freedom, you could say.

Capital expenditures and deprecations, also this quarter we had a capital expenditure that was below depreciation and we have

forecasted, if I recall correctly, 225 to 250. We think we're going to end up somewhere in the lower part of that region. I think in the last 12 months we're looking at 233, presently so, holding 225, 230, somewhere in that order of magnitude, is what it looks like today.

Next

would be the net debt to capitalization, where we turned the corner, I think it was quarter three last year?

Yep.

And since then we have been doing better and better, and as we said, we are down to 32, so we have an 8 percent

, you could say, up to the policy. Nothing to do with the bank requirements, but our own policy. So we've seen continued improvement of the balance sheet.

So if you sum up the financials, you can say stronger sales than expected, market share gains, higher

than expected and consequently also higher EBIT. And the balance sheet is on the right way with a lot lower, a very good cash flow and lower net debt to capitalization.

that will be

you in the second quarter, inflates capacity in the U.S., I think we mentioned these the last time, there will be and there will be also the coming quarters, a fair bit of investments

capacity, both in the States and in Europe. So in the States we did invest 7.5 million and in Europe five million in the past quarter. Electronics capacity in Europe that is to be able to ship a number of orders that we have taken already for Central European customers.

We are building a new plant in Korea that cost $3.5 million the past quarter, and

capacity in Germany, about 3 million, also the biggest investments, the past quarter.

What has happened then, in our own company? Well, we are proud to announce we got another Supply Quality Award from Japan, the third one from Japan this year. The two earlier ones were from Toyota Motor Company and now we've got it from

.

We are also the first to open up an airbag plant in China, it will be outside

, in the

district, the first airbag plant, hopefully, available in China. And also inflatable

will, as we said, penetrate even further and Volkswagen Golf will be, most markets will have the inflatable

as standard, going forward. Which will add quite a bit of volume.

We've taken the general

markets, as I believe we are all aware, TRWs automotive emission will be spun off and

told me, if you're still interested you can go into the Internet in SEC and the, what did we call it?

?

. The

, the

, where you can find anything you'd like to know about it. We have a German competitor

is filing for bankruptcy, the name was

, in former East Germany.

And one of our competitors in Japan had an explosion, July 8th. Fortunately, without any fatal accidents, but some people were hurt. The name of that one was

and the

driver airbags, rather driver

, I should say, and MGGs, you know, these Micro Gas Generators, that are particularly, many of them going to

.

So much for that one.

We look a little bit, in going forward here, and start with the light vehicle inventory. I hope you can see that

, there are many lines on it. The long and the short is that we have a fairly normal level, roughly 60 days inventories in the Unites States, which is a normal level, I would say, given the present sales level. And the next line is kind of difficult to see, maybe, you can have units inventory and you're looking at some 73 thousand units in inventor and again, like 61 days and as you can see that's kind of coming up and blowing up and the low all the time going around 60 days inventory, no more so than United so no particular strange things going on in the inventories.

So look at the light vehicle production as it is forecasted by senior Sam and also

also here we have some conflicting figures. Some mention the quarter two, we believe that it was like 5.1 percent up and that we have seen figures up all the way to six and a half actually.

Going forward we have settled for nine percent as our forecast. We can also see forecast as high as 10 and a half percent and then the fourth quarter should have an increase even in relation to quarter four of last year which was kind of boosted by sales incentives.

If we're limited to big C we're going to see something like a seven percent increase in the present quarter and maybe a short fall, a small short fall in the fourth quarter of some two percent.

I think

seems to take overall what we read most that there's going to be like six and a half million units produced in North America and that's how general motors came out the other day with a similar figure.

We can also see looking at this graph here that as usual quarter three and quarter four will be below quarter one and quarter two which is worth while remembering even if we're looking at very nice percentage increases and they are all lower than they are in the Spring which is normal.

In Europe as we mentioned before we started the year with a big backlash we had kind of a flat quarter two. We believe we are going to look at some four or five percent decline in quarter three and we still believe that market will turn around in the fourth quarter, this is DRI that is our source here.

Similiar figure has been manned more or less the whole year for quarter four. So a turn around today for quarter four also in Europe, why should that happen, well there are some signs of a recovery in Germany the registrations were up lately in Germany and Italy we understand some incentives will be available for the other, mostly the consumers. U. K. prices are going down etcetera and the unemployment is under control.

Also I think it's fair to say that an unusual amount of new models coming out some them should be big sellers like Renault Megane. So all and all a decline in Europe which is hurting us of course, a nice increase in the United States which is up and which we sort of rolled it into one pot, we believe that we as resolutely with our customer mix would see a kind of a flat volume.

We have not however conceited the model mix and so far we have had a positive model mix but that may change of course. The Euro donor graph and I think we're all aware that the Euro strengthened very much lately towards the dollar and that is particularly dramatic on the balance sheet, which you know.

With a kind of a photographic view on the last day of June and we have made the same sign as usual where we can say if the dollar, Euro rate or the Euro stay at 99 cent, U. S. cents if that would be the same for the remainder of the year that would mean for us in quarter three a 55 million increase in sales an EBIT increase of four million and a non per share increase of three cents and that's rolled into the forecast, that we haven't even know the guidance.

Now coming back to guidance we have then taken quarter three and tried to make it comparable and there's been some adjustments to the reported figures. So what we're having in the left column is the legally reported quarter three last year and then we have added the accounting changes that we've made to the SSAS-142.

We also added the unusual items package and then we come up with the, what we call the comparable figure where we have a seven percent EBIT margin and

of 908.

The seven percent EBIT last year should really, I'll try to give you some kind of guidance here by saying that we believe that given that the dollar

in the middle of July and given that the forecast on the dates of production comes in where we, as we have explained above. If that happens, we believe that the sales will increase the third quarter roughly as much as it did in the second quarter year on year.

Also, even though we will have an uneven capacity, you can say that over-capacity in Europe and maybe running all the time in the United States and we do have the evolution of

. We still believe that we can hit the same EBIT margin or similar EBIT margin

this year, as we had last year. And I believe that was it, so anything else we will be prepared to take questions and we will do our best to answer.

Thank you Sir. Thank you ladies and gentlemen. If you would like to ask a question on today's call, please press the number one on your telephone touch pad now. Once again that's the number one on your telephone touch pad if you'd like to ask a question on today's call. If you feel your question has been answered or you'd like to cancel that question, press the hash sign.

Once again, that's the number one if you would like to ask a question. Thank you Sir. Your first question comes from

. Please go ahead Sir announcing your company name.

Hello I'm John and I'm from

. Just a short question on the

part. Now that you've had that for a quarter or so, have you any ideas or views on what you can do with that? Profitability wise, has anything come to a negative or a positive surprise so far?

Yeah, there has been many surprises as usual, none of them very very big, but there has been some positives and some negatives. On balance though, I think it's fair to say that the positives are out far out-weighing the negatives and we think it's going to turn out to be a very good acquisition. But, you know John when you require something, that takes time to get in place and we have kind of a program that we're running and we're moving from

offices to our own offices and that would happen just around October 1st.

We have material costs that should go down, we have manning levels et cetera so, yes, many surprises. Most of them however positive.

Have you been in discussions with other carmakers may not have an in-house electronic machine for

or for making a definitive gain, also maybe getting contracts from the

parts.

We are on the waiting list for

as well as Ford nowadays, all three of them.

OK.

Which is kind of new to us.

Thank you.

Thank you.

Thank you Sir. Your next question comes from

. Please go ahead Sir announcing your company name.

Hello it's

from

, just one question on the numbers and then one more general one please. On the numbers, you gave some helpful information about the effects of currency on revenues. I may have missed this but, did you give any specific guidance on what the exact impact on EBIT was on currency, to adjust it for local production costs et cetera?

Well yes, in total we believe that we will achieve approximately the same EBIT, more or less the same period as last year in seven to seven.

So we have not specifically isolated the currency, we just taken the currency and that was nine, I think we took July 10th actually and calculated on July 10th, so we have not skated up. This is the first I would give you so much guidance as we are actually. Lets see if were right.

Very appreciative of that but, I mean in Q2 your not willing to give us an idea of how much of the sort of, EBIT gain in Q2 was specific to currency.

We said in the report it was less than one million.

Less than one million.

Less than one million when it comes to net income.

So, net net income less than one million dollar due to currency fluctuation in the past quarter too.

Yeah, right, great and OK and just a couple of short general questions TRW are you seeing any signs of them being treated with more caution by the car makers at the moment in the bidding process - sort of given the uncertainty hanging over the business or is it business as usual in the contract level?

I would say that we here a lot of questions from the OEM's and what do we believe will happen with TRW - I don't see a reason for that - I mean TRW is just solid company and I mean they are a big factory in our game here and so I think it's unjustified if there is any nervousness.

I would say when you come down to work - in level its business as usual.

Right - then there's just the second - just general question - you talk about Volkswagen putting inflatable curtains inside the airbags et cetera in the Golf as standard. In a situation like that does the customer pay the same price as when the equipment is optional or do you start to give them a volume discount when it becomes standard

.

OK I thought 'twas the customer - oh yes I thought you meant the end user and he usually doesn't pay anything extra because you know what actually happens is the more money -

at - you run - when the car is new you run it for a couple of years and you sell well and then you need to sort of give it up a little bit and then you add some features such as the inflatable curtain - I believe in this particular case it might be driven from French competition but not surprisingly - Peugeot and Renault already have a high treatment rate in inflatable curtains.

If you take our prices to Volkswagen there are no quantity discounts if they buy more all discounts unfortunately given already from the start.

And you talked about having excess capacity in Europe so when a customer makes a decision like that it's very easy to ramp up production is it?

Yes, but you know how this works I mean a line for inflatable curtains for a certain car like Golf - it is one special line and that line can usually only run inflatable curtains for Golf.

We cannot sort of run inflatable curtains for Volvo on the same line so unfortunately and that's what we try to say if we have over capacity in Europe we cannot sort of compensate it is

is idle and it might even be so crazy that we have to buy another line to be able to supply the golf or else take an existing line and rebuild it. But the lines are unfortunately tailor made for each and every car model.

I imagine at that, that contract is pretty satisfactory given the what must be quite a material volume increase in it.

Yes, it's an OK contract.

Great, thank you very much.

Thank you.

Thank you sir, your next question comes from

please go-ahead sir announcing your company name.

Hi Lars how you doing?

Hi.

Quick question for you what - can you refresh us on what was happening in working capital in Q2 2001?

Q2 2001 - what happened in working capital?

It was a relatively big hit especially relative to this year seems like it inflated a little bit - showing another

million use.

Do you remember that one?

Yeah the receivables were up and was that we had some problems getting the money and that was really it.

I mean so it was - more unusual items rather than kind of improvements to the business?

Yeah, I say that it was probably that we didn't spend enough time on collecting money and we have learned the hard way that we need to do that and actually many of the business director now they are reporting to our

every month exactly how much over due there is that every corner of their sort of account.

Also, if you look now on the since you asked the question - you actually take the accounts receivable starting form June this year - there are

but that is of course because the dollar is down you know, so the, all of the time we see a big hit on the financial side just because the dollar fell apart at the end of June. But as you can also see, so did the a

, it also went up, so they compensate fairly well, and Magnus I think you said it would take these two restraints, and I have dollar effect, we're more or less there. Particularly, since I think we all realized June was a very sales month. That means that aging of the receivable is flat or even slightly better.

Right, interesting. Now, one other question I had for you as well was, I think in the past we talked about

being offered on 70 percent of all offerings in the U.S. by roughly '05. I guess one, is that still correct, and two, is that happening any faster or slower than you originally thought?

I think it's still a fact. We could of course always wish that the

would go up faster, but as you heard, it is improving in the United States, and as you may have seen, the inflatable portions in the States can be huge for these vans and so on. So they've completely different price level in the States.

Right.

If you compare this to Mercedes 'A' Class with a van in the United States, two different animals, even though we call both of them inflatable portions.

But you still see it on roughly seven out of 10 cars, offering

?

I would say so. I'm not aware of any unchanged since April or May.

Excellent. OK. Thanks guys. Appreciate it.

Thank you very much.

Thank you Sir. Your next question comes from

. Please go ahead announcing your company name.

Yes, good afternoon.

, Morgan Stanley. Just on your cash flow generation, that was very good in the first half as you mentioned, around 150 million, could you share any plans you have in terms of using that potentially for share buy-backs, and also give us an idea of the targeted net debt for the end of '02?

OK. Well as we spoke about, I believe at the last quarterly review, we wanted to have a third quarter with good cash flow, and I think we had a third quarter with better than expected cash flow actually, and as you also saw the net debt for capitalization has gone down to 32 percent. And that, I would say, is one proven equity for buying back shares.

And the other one is that we would like to see that the share is cheap, and anybody can have an opinion on that. But nevertheless, you have to say that possibilities of buying back shares has of course increase a lot with this second quarter results.

We have not taken any decision of yet, Nicholas. We're going to let you know as soon as we've taken a decision, we're going to go out with a press release so everybody knows that at the same time.

Thanks, maybe a second quick one. And that would be on sustainability of your top-line. There was a marked acceleration of the six negative quarters, how sustainable is that, given that you have performed the car production by five percentage points roughly.

Well as you heard here, we believe that the year for us that's going to be relatively flat called production also for the third quarter, and we still believe that we can grow sales fairly much, then maybe same order of magnitude, so at least in the short-term, it's sustainable, but then we all know of course, if all of a sudden Japan saw us

, we have still no such a high market as China and Japan, as we have for instance in Europe. So it's going to, I think it depends a lot on the make, on the market and also on the models.

Here in Europe as you know, when we say that they European margin was down, it was down, but if you exclude Fiat and General Motors, you will of course impact bad actually, so we had a good mix here in Europe, so we did not suffer nearly as much as the market in the place. And of course, then if Europe would come back and start to grow in some kind of fashion, then it would be very sustainable since we have half of our sales in Europe, and about half of Europe in market share.

Thanks a lot.

Thank you.

Thank you Sir, your next question comes from

please go ahead and announce your company name.

Hello, Hans Fetzaburg from

Bank.

Hello.

Obviously a very pleasing quarter Lars, but what are you managed to

live over all the positive items.

I think the cash flow sits pretty well actually and for us here we have managed them to kick in as you saw a lot of cash and that is I think it's verily good then I think it's critical that were back in the gross mode also again I mean it's not so fun to have an organic decline quarter after quarter even though it's explainable and all of that it's much better to see an organic increase some thing to price but it came out as high as seven percent actually but those two cash flow and organic growth I think are two positives.

and looking forward where do you see or what are you going to work hardest on in terms of further improvement?

as you know

internally we know exactly where we are I mean overall that we think we had a very good quarter I agree with you but I can tell you we had lot's of areas we can improve.

Please do.

thank you we will do our best we know exactly where they are unfortunately.

Could it have something to do with capacity restrains on the steering wheel side?

While we do have a little bit of a constant capacity restrains but we have many other things that we need to even out you know when you move to low cost countries we talked about this before in the short term it does create a lot of problems for us so there are many things we need to iron out and make smooth and running in a good way and there's lot's of costs to take out if we proceed but having said that inflammable

, 70 plan

in which summer were going to be in trouble of course. You never get them to run smooth all of them at the same time.

Well best of look any way to that.

Thank you.

Thank you Sir, your next question from

, please go ahead and announce your company name.

Hi K J Donaveer from

first of all congratulations to a very good Q two and I think a good, doing a good think to getting us this guidance for Q three obviously this is the quarter where you restore yourself how glad the biggest variations to sell looking back at those and

lap yes

going in to Q three how do you look at thee, say the role out to how much constraint will be for you all this new program for that coming in the quarter is there any risk for that adding any thing on top of it or how extensive this quarter compared to previous Q three if you put it like that.

I agree with your assessment that this is the most risky quarter really and that why we tried to give some guidance to because really first

all this new launches and as we speak I am not aware of any problem any where but there must be something coming up, the question will only be if it's small and secondly he have the problem you know that if people want to take down the inventories and so on they will do it in quarter three and they will add kind of couple of lay days in relation, in connection with the annual vacation, things that we don't really know, they just pop up, so we are not aware of any restraints today nor are we avail of any launch

if they are grossly in jeopardy and so on and we get to

sale say every month and I read the whole,

report must have been 15 pages just a couple of minutes ago. No particular alarm clocks nothing guaranteed any thing though.

and if you look at the number of launches that you are seeing say in Q two this year compare to last year is there a major difference?

If any thing now more this year but it is very much depending on what we call a launch it's difficult to, sometimes we can make a big problem with just a little buckle or something you know and sometimes it's a complete cause there is differences.

and if you turn this look forward how does the ordering

look for the moment and looks at new models?

the order in take that we get presently?

Yes.

Well, the order intake we have presently, you know, that's going to influence us in 2005, and afterwards. Now just looking at the figures here, the spring has been kind of OK, actually. Stronger than last years spring, but not as strong as the 2000 spring, but stronger than '99.

I think, overall, you could say, it's pretty good order intake for the time being and I expect a good quarter three, in order intake.

And in perspective to the marks, do you feel that they're at least keeping your market share, in the order intake side of

.

We believe so. And we believe we take, we defend it with good

. I mean, it's much more than we have today, we believe.

the follow on question on this

move on the Gulf. Do you know what kind of

they had when this was an option?

Do you know that

?

Less than?

He estimates.

I'm not sure.

He doesn't know, so then I think you shouldn't guess. If you twist his arm to guess, he would say 20 percent. But we don't know.

And that's what you'd see normally, when this is an option, say, from other suppliers as well? Or?

No, it depends very much on where they're selling the car. In Japan, it might be lower and higher in Europe. It depends a lot. There is nothing such like a normal

. You know what it is, it's that this is priced in, typically in packages, it's, you get maybe

with some kind of break assistance system, or safety package, or you can get a comfort package or a whatever kind of package.

That depends on how it's packaged by the OEM.

Excellent. And Magnus, I look forward to seeing you restarting the buy-back program. Good luck.

OK.

Thank you.

Thank you sir. Your next question comes from

, please go ahead, announcing your company name.

Good afternoon,

,

.

Question on this inflatable curtain, as a standard. Can you tell us whether you have additional equipments on this car, on the top of inflatable curtains? And secondly, can you compare the level of equipment on the new one compared to the previous one, as far as Autolivs concerned?

We are sitting here trying to scrutinize, what do we have on the present Golfs! Excluding the inflatable curtains, that is your question Rene?

Yes.

OK, and while

is leaving here, on his very silent shoes, I can tell you for the new Golf, we have everything. But for the present one, I cannot answer you. I hope that

finds and come back.

Your question two was?

No, I think you, if not get back to me, it will be fine on that. So you are a sole, the sole supplier for seatbelts and airbags for the new Golf?

For the new, for the new platform, we have, yeah, we have all of it. Maybe not the steering wheel itself, and maybe not the electronics, but driver airbags; passenger airbags;

; and so forth, yes.

And do you see this as a trend towards a one stop shopping solutions, from your customers, since you have the same pattern for the new Mini, for instance? Where you are the sole suppler. Is that something that something that gains momentum?

Yes, I think we have talked many times, there is certainly a trend towards buying the whole package from somebody and I happened to see the

, and he's to go and explain that, his engineers have not quite realized yet, that they should buy it in packages because they are not accustomed to do so, in Japan.

But they turn out so many models these days, not the least in Nissan. They don't have engineering capacity internally, to make all the engineering

, they're going to have to buy it. And they're going to have to buy it from companies that do have engineering capacity and can supply a system. That of course means it's

. So this definite trend, it's because there are too many morals from the same platform form the

point of view and they do not have the internal engineering capacity.

OK. I've got a follow up question on the lifelike sales growth end of quarter which was seven percent, which was a major difference for the previous quarters, you said six quarters. To what extent is it related to different pricing, I mean, do you see pricing better in the quarter and to what extent this pricing situation might explain this seven percent lifelike growth in the quarter?

I don't think it's any dramatic pricing difference at all really. I think it's basically, when we try to find out if we take market share or not, pricing is never a big issue. We think that from our point of view, the way we see the world and the core production, then worldwide was up about one and a half percent. To that you know, we think that basically there is a five- percent underlying growth in the market, you could say.

And that makes it from the market point of view, given the volume and given the content, we should have been up about 6.5 percent. From that we should then deduct the price erosion and we believe in the order of magnitude two percent only nowadays and that means that we would have, had we been on par with the market, we would have been somewhere like four, four and a half percent growth, we were on seven percent.

So, this regarding the price difference which I don't think has an influence, it's just basically, we have taken two to three percent market share.

With this five percent underlying growth for the market share

, that's point number two, how does it compare with previous periods? Do you see some acceleration here?

It's very difficult to say really because you know we have the whole currency game too. As you are well aware, there have been many instances where the year has been a market growth than in the local face value but, compared to the dollar, it's been the opposite.

Here when we say organic, when we compare organic with seven, then we have illuminated the dollar influence.

Sure, OK. It's just a final question if I may.

, Japan will be consolidated as from the first of January '03, or first of April '03?

First of April.

OK and there's nothing you can do to delay that this time?

No, I don't know. We have an option of course but we really consolidate as from first of April.

OK.

You can rely on that one.

OK, thanks a lot.

Thank you.

Thank you Sir. Your next question comes from

. Please go ahead announcing your company name.

Hi,

from Securities. I've a, actually most of my questions you have touched upon but still about the supply value for car growth rate of sort of, five percent. Just wondered if you expect that to continue also for the remainder of this year or not? Because you were talking about that being continued in the coming years, but there's no reason to believe it's going to change in the second half.

No we try. Maybe we were a little bit over

, because really we believe its going to last for a number of years, so this year and many more years is our estimation.

OK, very good. But Japanese growth rate, I understand you have a

growth rate in Japan, which is quite astounding I think. Could you explain why you have such a big growth rate? Have you taken lots of new orders and new customers and what is your market share now in Japan by the way?

Well in value terms, we still believe that we are, in rough numbers we believe it's one quarter of the Japanese market, that's roughly, what we control and because we still have a very strong position on the

generates, where half of the market, where the fourth increasing market share on the modules, I would say, where they make a lot of money.

And then the seat belts is like 22, 23 and so

, all in all, it's about 25 percent. Why are we growing so fast? I think really that we have been, I think Japanese alternatives have well come the third compared to

. They had to

, they have had

, but then all of a sudden, we come in here and, I think they regard us as a serious player in Japan.

We have proved on our own, we have all types of production modules gas generated,

, we have a Japanese experience heat on the manager of our board and we are there to stay simply.

So, what we are selling now you know, is what we both in the year 2000, roughly, if we talk Japanese, because they have a much faster turn around rate, then they do in the States, but also this year the ordering intake in Japan has been very strong, surprisingly strong and I would say, properly more orders taking in Japan then in the United States for Autoliv this year.

OK. Impressive. The tax rate finally, you guided us, that it's going to be 33 and half for the rest of year, or for the full year, this year. Do you have any information about the rate of expectation on next year and so fourth?

No, no, we think, we will be there and that it will somewhere, where we strike clear, down rather then up.

OK.

So 33 and a half, is a good estimate.

OK. Very good and cap, next year. Do you have any estimate for that?

No, we have not given any guidance on that, until next year.

No, we don't know, but there is no reason to believe it will increase dramatically, I think 260 would be a good forecast.

OK. I'll keep that number.

Why don't you do that.

Thanks.

Before, we have the next one in, we have Mr.

is back here, from

research. And what we have today in the Gulf is, we have the passing of the new airbag, we have an inflatable torches and we have both of the side airbag as well. So what we don't have, seems to be the stirring wheel and the driver airbag.

And seat belt.

And seat belts today, for the future we will have the seat belts too.

Did you hear that

?

Who me?

That's alright.

Yeah.

You can't come in here.

OK.

But that's not going to work.

OK. Any?

OK. Thank you sir, we move on to the next question from

, please go ahead, announcing your company name.

Thank you and good afternoon,

Down Securities. I have first of all question and then a nitty gritty one. Last time we spoke, we talked about the market and you at that time, said that there could be a chance of better marketing in the U.S. and a slight of weak market. In Europe, looking now, what is your prediction with the forecast that you have given today on them, on wall market?

Is it the same?

Yeah, basically more of the same, I would say, we still believe that quarter three will be even stronger in the States and slightly worse in Europe and then, if it DRI is correct, Europe will turn around during the fourth quarter and we believe, there is going to be a slight positive

in the States, so that would be, if Europe turns around, that would be very good for us, because as you know, we have too much of our sales in Europe, very much of our sales.

Because if we go for the big three forecast,

motors 16.5 will tend to be slightly higher then the predictions given by CSM?

It could will be, yes. I have to say though, that Ford has been given me 16.5 for a long time or even 16.5 plus.

Alright.

So, you're right, you can get so many figures, so you have to grab one of them by the end of the day.

Just choose one - then on the R&D side this has been a topic for quite some time and you have earlier stated 5.5 in that area and now it turn out to be below five if you exclude things that you did.

It's the five- percent rate it's correct and was it something else effecting the R&D cost in the second quarter.

Well it were 5.1 as you know then because - we have these two explanations these two are explained and the re classification but they cannot say what they are of course. So year to date we are 5.4 and so 5.5 is not to bad of a prediction.

OK.

We still believe that it's gonna be somewhere in that order of magnitude but you can't hang us for point

.

No I won't.

Thank you sir your next question comes from

please go ahead sir.

Sorry Lars I have to bug you a bit again - you mentioned process erosion of a minus two percent.

Right.

Is that - what has happened it seems like I mean we've been talking substantially more and around the three - four percent bracket do you see the kind a two percent even going forward?

We are talking considerably more here because you've been in this business so long Hans.

Well I hope you're not gonna scare me with those double digit numbers again.

No - well actually we believe you see that in

stage really on all price erosion those have had fairly firm and fixed prices.

Yeah.

The bags though turn out about four and five percent some of them probably less than and so the more mature products are the less there is price erosion of course so I - we estimate two and that's about where we are and you know when we see price erosion that is price erosion that is price down.

Yeah could this partly because of the competitor situation change a little - I mean breed is basically work out for the banks.

Well it could be it depend on many things but you may be like maybe we are few competitors maybe everybody wants to make some money and also you think it's also because the products are maturing - you know the first generation of anything is cost - the second year is a lot cheaper and we have many innovations behind us now when it come to gas generators. So I think the products are only beginning to be more proven and cost you see is taken out a couple of times already.

Excellent, thanks Lars.

Thank you.

Thank you once again ladies and gentlemen may I remind you that if you have any further questions at this time to press the number one on your telephone touch pad, once again that's the number one if you would like to ask any further questions at this time.

Well very good.

OK sir sorry to interrupt now - just gonna say that there are no further questions.

I was about to conclude the same, so just like to say thank you very much to all of you for taking a break in your vacations and listening to this review so thanks a lot enjoy your summer and be talking to you I believe October 17th next time when we review the third quarter. Thank you very much, bye, bye.

Ladies and gentlemen this does conclude the program you may now disconnect.