Autoliv: Financial Report July - September 2022

STOCKHOLM,Oct. 21,2022 -- (NYSE: ALV) and (SSE: ALIV.sdb)

Q3 2022: Actions yielding results

Financial highlights Q3 2022

$2,302 net sales

25% net sales increase

32% organic sales increase*

7.4% operating margin

7.5% adjusted operating margin*

$1.21 EPS - 78% increase

$1.23 adjusted EPS* - 68% increase

Full year 2022 indications

Around 15% organic sales growth

Around 6% negative FX effect on net sales

Upper end of around 6.0%-7.0% adjusted operating margin

Around $700-750 million operating cash flow

Key business developments in the third quarter of 2022

Sales increased organically* by 32.5%,which was 3.7pp better than global LVP growth of 28.8% (S&P Global Oct 2022). We outperformed in all regions except Rest of Asia,mainly due to price increases and new product launches. Net sales of $2,302 million was a new third quarter record for our passive safety business.

Profitability improved significantly,driven by successful execution of price increase negotiations,LVP recovery and our cost reduction activities. Operating income improved by 72% and operating margin improved to 7.4% from 5.4% with adjusted operating margin* improving to 7.5%,despite continued adverse market conditions including inflationary pressure,volatile LVP and adverse currency effects. Return on capital employed was 18.0% and adjusted return on capital employed* was 18.4%.

Operating cash flow increasedto $232 million,driven by higher net income and positive working capital effects while free cash flow* decreased to $68 million,impacted by higher capex. Leverage ratio improved to 1.6x from 1.7x in the second quarter. A dividend of $0.64 per share was paid and 0.26 million shares were repurchased in the quarter.

*For non-U.S. GAAP measures see enclosed reconciliation tables.

Key Figures

(Dollars in millions,except per share data)

Q3 2022

Q3 2021

Change

9 M 2022

9 M 2021

Change

Net sales

$2,302

$1,847

25%

$6,507

$6,111

6.5%

Operating income

171

99

72%

429

500

(14)%

Adjusted operating income1)

173

103

67%

365

506

(28)%

Operating margin

7.4%

5.4%

2.1pp

6.6%

8.2%

(1.6)pp

Adjusted operating margin1)

7.5%

5.6%

1.9pp

5.6%

8.3%

(2.7)pp

Earnings per share2,3)

1.21

0.68

78%

3.06

3.65

(16)%

Adjusted earnings per share1,2,3)

1.23

0.73

68%

2.58

3.72

(31)%

Operating cash flow

$232

$188

23%

$251

$437

(43)%

Return on capital employed4)

18.0%

10.5%

7.5pp

15.3%

18.1%

(2.8)pp

Adjusted return on capital employed1,4)

18.4%

10.9%

7.5pp

13.1%

18.3%

(5.2)pp

1) Excluding costs and gains from capacity alignments. Non-U.S. GAAP measure,see reconciliation table.

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) Annualized operating income and income from equity method investments,relative to average capital employed.

Comments from Mikael Bratt,President & CEO

As the market leader,we are building resilience and strength in turbulent times. We believe these actions enable us to build an even more competitive position. Despite the challenging macro environment,our third quarter performance enables us to update our full year 2022 adjusted operating margin indication towards the upper end of the 6.0-7.0% range. Our actions initiated earlier in the year are now delivering results,especially our price adjustments to compensate for the inflationary pressures and our cost reduction activities.

I am pleased that we achieved a strong recovery in the third quarter,delivering record sales for a third quarter and increasing the adjusted operating margin to 7.5% despite adverse FX effects of almost 2pp and challenges from inflationary pressure and high call-off volatility. This is an important step towards our medium-term targets. We also achieved another strong organic sales outperformance vs. LVP,despite an unfavorable regional LVP mix development.

During the quarter,we retained a strong balance sheet,our operating cash flow recovered compared to recent quarters and our leverage ratio improved compared to the previous quarter. We have reached agreements in more than 90% of the raw material related price adjustment discussions that we initiated earlier this year. Price adjustment discussions with our customers for cost increases related to labor,logistics and utilities are progressing.

We expect continued sequential margin improvement in the fourth quarter,due to positive seasonal effects,price increases,cost and headcount activities and somewhat lower volatility in customer call-offs. The gradual improvement in our performance throughout the year underlines our confidence in reaching our medium-term targets. In addition,we expect that our balance sheet and positive cash flow trend will allow for increasing shareholder returns.

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 October 21,2022.

The following files are available for download:

https://mb.cision.com/Main/751/3652554/1641845.pdf

ALV Financial Report Q3 2022