Autoliv Financial Report January - March 2022

STOCKHOLM, April 22, 2022 /PRNewswire/ -- (NYSE: ALV) (SSE: ALIV.sdb)

Q1 2022: Extraordinary times, extraordinary measures

Financial highlights Q1 2022
$2,124m net sales
5.3% net sales decline
1.0% organic sales decline*
6.3% operating margin
3.2% adjusted operating margin*
$0.94 EPS - a decrease of $0.85
$0.45 adjusted EPS* - a decrease of $1.34

Full year 2022 indications
Around 12%-17% organic sales growth
Around 3% negative FX effect on net sales
Around 5.5-7.0% adjusted operating margin
Around $750-850 million operating cash flow

Key business developments in the first quarter of 2022

• Sales declined organically* by 1.0% as global LVP declined by around 4% vs. Q1 last year (IHS Markit April 2022). Sales outperformed global LVP by 3pp despite sharply negative geographical mix.
• Profitability declined due to significant operating margin headwind from higher costs related mainly to raw materials but also related to supply chain disruptions, LVP volatility and high level of premium freight, all of which have been exacerbated by the war in Ukraine and lock downs in China. Operating margin declined by 4.2pp and adjusted operating margin* declined by 7.4pp. Return on capital employed declined to 14.6% and adjusted return on capital employed* to 7.4%.
• Strong balance sheet and leverage ratio* within target range. Operating cash flow of $70 million and free cash flow* of $53 million support a strong balance sheet. Net debt* and EBITDA declined vs. a year earlier, leading to an unchanged leverage ratio of 1.4x. A dividend of $0.64 per share was paid in the quarter and 0.23 million shares were repurchased.

*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

Comments from Mikael Bratt, President & CEO
Our sales outperformed global LVP by around 3pp (IHS Markit April 2022) in the quarter, despite adverse regional mix effects and we expect increased outperformance for the remainder of the year. Our balance sheet remains strong, and our leverage ratio* remains within our target range. We paid a dividend of $0.64 per share and started repurchasing shares under our 3-year stock repurchase program.

The war in Ukraine is an inconceivable tragedy and a massive humanitarian crisis and my thoughts go to those affected.

The first quarter of 2022 saw adverse impacts on an already distressed global supply chain, leading to increased cost inflation as well as lower global LVP. At the same time, customer demand visibility decreased, and customer call-off volatility increased leading to significantly higher premium freight and transportation costs. As a result of this, our sales and profitability were lower than we expected at the beginning of the quarter. Raw material cost increases impacted our operating margin negatively, by more than 5 percentage points and adding effects from logistical bottlenecks and premium freight, the margin headwind was more than 7pp in the quarter.

In response to the increasingly difficult market conditions, we further strengthened our cost control measures, implemented a hiring freeze and accelerated other cost savings and footprint activities.

Our strategic roadmap is on track and yielding results; we recently announced capacity alignments and footprint actions in Japan, Europe and Americas. In the quarter, we divested one property in Japan and closed one plant in South Korea. We continue to adjust direct labor to a lower demand level.

We continue focused discussions with our customers regarding cost inflation compensation claims, which include price increases and other recoveries. We believe our price increases will begin to offset the cost inflation from around mid-year. However, we expect the second quarter adjusted operating margin to be weaker than in the first quarter, as we expect cost inflation to increase faster than cost compensations in the second quarter.

Our new indication of a 2022 full year organic sales growth of around 12-17% and an adjusted operating margin of around 5.5%-7.0% is based on the assumptions that global LVP will grow 0-5% and that we achieve our targeted cost compensation effects along with some market stabilization. Based on this, our ongoing actions should bring us back on track towards our mid-term adjusted operating margin target.

Inquiries: Investors and Analysts
Anders Trapp
Vice President Investor Relations
Tel +46 (0)8 5872 0671

Henrik Kaar
Director Investor Relations
Tel +46 (0)8 5872 0614

Inquiries: Media
Gabriella Ekelund
Senior Vice President Communications
Tel +46 (0)70 612 6424

Autoliv, Inc. is obliged to make this information public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the VP of Investor Relations set out above, at 12.00 CET on April 22, 2022.

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