Financial Report July - September 2020

STOCKHOLM, Oct. 23, 2020 /PRNewswire/ -- Q3 2020: Better than Q3 2019

Financial highlights Q3 2020

$2,037m  net sales
0.4% organic sales growth*
8.6% operating margin
10.1% adjusted operating margin*
$1.12 EPS - an increase of $0.14
$1.48  adjusted EPS* - an increase of $0.18

Full year 2020 indications

Around 14.5%  net sales decline
Around 13% organic sales decline
Around 6% adjusted operating margin

Key business developments in the third quarter of 2020

• Organic sales* increased by 0.4% which was 4.7pp higher than the change in global light vehicle production. Organically, all major regions developed better than LVP. Sales in China grew by 10.4% compared to 8.7% growth in LVP. Sales in Americas grew by 1.2% compared to the LVP decline of 4.3%. In Europe, LVP declined by 7.6% while our sales declined by 4.8%. Customer sourcing activity was, as expected, low in the quarter, with more than half of planned sourcing for the year expected in the fourth quarter. First nine months order intake supports a prolonged period of outgrowth.
• Profitability improved as demand recovered and our cost reduction activities progressed according to plan. Adjusted operating margin* improved both vs. Q2 2020 and Q3 2019. The gross margin improved by 0.9pp compared to Q3 2019. Indirect workforce was reduced by around 4% vs. Q3 2019 and by around 2% vs. Q2 2020.
• Strong cash flow and strengthened balance sheet. Operating cash flow of $352m and free cash flow* of $276m was significantly above Q3 2019 levels. Net debt* declined vs. a year earlier and the debt leverage ratio* of 2.4x improved vs. 2.9x in Q2 2020, although still higher than the 1.8x in Q3 2019. As of October 2, 2020, our Revolving Credit Facility is repaid and available for us to draw on as needed.

*For non-U.S. GAAP measures see enclosed reconciliation tables. All change figures in this release compare to the same period of previous year except when stated otherwise.

 Key Figures

(Dollars in millions, except per share data)

Q3 2020

Q3 2019

Change

9M 2020