Autoliv Financial Report October - December 2020

STOCKHOLM,Jan. 26,2021 --

(NYSE: ALV and SSE: ALIV.Sdb)

Q4 2020: Record net sales,operating income,cash flow

Financial highlights Q4 2020

$2,517mnet sales

12.7%organic sales growth*

12.2%operating margin

12.4%adjusted operating margin*

$2.15EPS - an increase of 21%

$2.19adjusted EPS* - an increase of 19%

Full year 2021 indications

Around 25% net sales growth

Around 20% organic sales growth

Around 10% adjusted operating margin

Key business developments in the fourth quarter of 2020

Record net sales,for our passive safety business. Sales increased organically* by 12.7%,outperforming global LVP by almost 11pp. All major regions outperformed LVP by around 9-13pp. Full year 2020 sales declined organically by 12% compared to our guidance of around 13% decline. Order intake share for the full year 2020 was around 45%.

Record operating income,driven by continued cost control and demand recovery. Adjusted operating margin* improved by 1.3 pp to a ten year high of 12.4% despite around $55m in higher warranty and recall accruals. RoCE improved to 33.7% and RoE to 33.3%. Full year 2020 adjusted operating margin was 6.5% vs. our guidance of around 6%.

Record cash flow and stronger balance sheet. Operating cash flow reached a record $469m and free cash flow* a record $358m. Operating working capital* improved,net debt* declined by $359m,and our leverage ratio* improved to 1.8x.

*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)

Q4 2020

Q4 2019

Change

FY 2020

FY 2019

Change

Net sales

$2,517

$2,191

15%

$7,447

$8,548

(13)%

Operating income

$307

$229

34%

$382

$726

(47)%

Adjusted operating income1)

$311

$242

29%

$482

$774

(38)%

Operating margin

12.2%

10.5%

1.7pp

5.1%

8.5%

(3.4)pp

Adjusted operating margin1)

12.4%

11.1%

1.3pp

6.5%

9.1%

(2.6)pp

Earnings per share,diluted2,3)

$2.15

$1.78

21%

$2.14

$5.29

(60)%

Adjusted earnings per share,diluted1,2,3)

$2.19

$1.84

19%

$3.15

$5.72

(45)%

Operating cash flow

$469

$312

50%

$849

$641

32%

Return on capital employed4)

33.7%

24.3%

9.4pp

10.4%

19.7%

(9.3)pp

1) Excluding costs for capacity alignment and antitrust related matters and in 2019 separation of our business segments. 2) Assuming dilution when applicable and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 4) Operating income and income from equity method investments,relative to average capital employed.

Comments from Mikael Bratt,President & CEO

Our focus throughout the COVID-19 crisis has been the health and safety of our employees and to come out of it as a stronger company. Although the pandemic is not yet behind us,I am confident that our performance in the second half of the year shows that we have built a solid platform to move towards our mid-term targets. The fourth quarter was a quarter with record net sales,record operating income and record cashflow. This was a result of high sales growth,good operational execution,structural savings,and crisis management cost reductions. This was achieved despite significant warranty and recall accruals. The high recall costs in the fourth quarter do not reflect Autoliv's high quality standards.

The business year 2020 was a turbulent year,with the low point in the second quarter and the high point in the fourth quarter. I am proud of how the company has managed rapid demand changes as well as supply chain challenges in a safe and efficient way. We strengthened our balance sheet and reduced net debt despite the challenges of 2020 and we continue to evaluate the opportunities for shareholder value creation.

I am pleased that our sales outperformed the global light vehicle production organically by almost 11pp in the quarter,with 9-13pp outperformance in all major regions. Supported by new and recent launches,we expect to outgrow LVP by mid-single digits in 2021. We increase our medium term target of annual average LVP outgrowth from 3-4% to 4-5%,supported by the strong order intake in the past few years.

Our Structural Efficiency Programs remain on track and are delivering savings. As part of our footprint optimization,in the fourth quarter,we announced the plan to close one plant in Sweden and we will continue to evaluate further footprint optimization.

It is important to recognize that we are still in an uncertain environment and that we continue to face significant challenges in 2021. Our strong performance in the second half of 2020 was supported by temporary cost reductions that we do not expect to be equally supportive in 2021. Light vehicle production rates are expected by IHS Markit to be lower in 2021 compared to the second half of 2020. We also face headwinds from the surge in raw material prices.

The health and safety of our employees is our first priority while continuing with more activities to further improve efficiency and implementing our strategic initiatives to support our journey towards our 2022-24 targets in order to create shareholder value.

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 January 26,2021.

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