Autoliv: Financial Report July - September 2006

STOCKHOLM, Sweden--Net sales: Up 1% to $1.4 billion Operating income: Down 2% to $102 million Operating margin: 7.2%

Strong long-term cash flow

During the quarter ended September 30, 2006, Autoliv Inc. managed to withstand strong headwinds from the struggling automotive market and met its guidance of an operating margin of 7.2%.

Consolidated sales increased by 1% to $1,411 million. Organic sales declined by only 2% despite a 5% decrease in West European and an 8% drop in North American light vehicle production. Operating income decreased by 2% to $102 million. Income before taxes decreased by 3% to $92 million. Net income and earnings per share have been positively affected by $66 million from a release of tax reserves and other discrete tax items. As a consequence, reported net income rose by $63 million to $122 million and reported earnings per share by 82 cents to $1.48 compared to $0.66 per share in 2005. Adjusted net income and earnings per share, excluding the release of tax reserves and the discrete tax items, were $56 million and $0.68, respectively.

During the quarter, 1,600 jobs were added in low-cost countries, which is more than in any previous quarter, while 400 jobs were cut in high-cost countries.

Cash flow provided from operations totaled $102 million and $24 million after investing activities. Cash flow has, in the quarter, been negatively impacted by $20 million from lower factoring. Consolidated sales for the fourth quarter 2006 are expected to increase by 6% with the organic sales portion estimated at 2%, despite anticipated lower light vehicle production in both Western Europe and North America.

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