Autoliv: Financial Report October - December 2022

STOCKHOLM,Jan. 27,2023 -- (NYSE:ALV) and (SSE: ALIV.sdb)

Q4 2022: Solid performance

Financial highlights Q4 2022

$2,335 million net sales

10%net sales increase

18% organic sales increase*

9.8%operating margin

10%adjusted operating margin*

$1.80 EPS,a 38% increase

$1.83 adjusted EPS*,a 40% increase

Full year 2023 indications

Around 15%organic sales growth

Around 1% negative FX effect on net sales

Around 8.5-9.0%adjusted operating margin

Around $900 million operating cash flow

Key business developments in the fourth quarter of 2022

Sales increased organically* by 18%,which was 15pp better than global LVP growth of 2.3% (S&P Global Jan 2023). We outperformed by around 5-23pp in all regions,mainly due to price increases and new product launches.

Profitability improved significantly,driven by successful execution of price increases,cost reductions and volume growth. Operating income improved by 32% and operating margin improved to 9.8% from 8.2% with adjusted operating margin* improving to 10.0%,despite continued adverse market conditions,including raw material cost increases,broad inflationary pressure and volatile LVP. Return on capital employed increased by 5.4pp to 24.3%.

Operating cash flow improved from $317 million to $462 million,driven by higher net income and positive working capital effects. Free cash flow* increased to $297 million. Leverage ratio* decreased to 1.4x from 1.6x in the third quarter. Dividend paid was increased by 2.7% to $0.66 per share and 0.65 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)

Q4 2022

Q4 2021

Change

FY 2022

FY 2021

Change

Net sales

$2,335

$2,119

10%

$8,842

$8,230

7.4%

Operating income

230

174

32%

659

675

(2.3)%

Adjusted operating income1)

233

177

31%

598

683

(12)%

Operating margin

9.8%

8.2%

1.6pp

7.5%

8.2%

(0.7)pp

Adjusted operating margin1)

10.0%

8.3%

1.6pp

6.8%

8.3%

(1.5)pp

Earnings per share2,3)

1.80

1.31

38%

4.85

4.96

(2.2)%

Adjusted earnings per share1,2,3)

1.83

1.30

40%

4.40

5.02

(12)%

Operating cash flow

$462

$317

46%

$713

$754

(5.4)%

Return on capital employed4)

24.3%

18.9%

5.4pp

17.5%

18.3%

(0.7)pp

Adjusted return on capital employed1,4)

24.9%

19.1%

5.7pp

16.0%

18.5%

(2.5)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

The fourth quarter and the full year 2022 were important steps towards our medium-term targets. In 2022,we faced the worst cost inflation seen in three decades,which initially significantly impacted our profitability. Through aggressive price adjustments,we managed to gradually offset this raw material cost inflation and profitability was restored towards the end of the year.

In Q4 2022,profitability recovered significantly,with double-digit adjusted operating margin* and an operating cash flow of $462 million. This was made possible through extensive customer discussions initiated early in 2022 that resulted in price increases to compensate for high raw material cost inflation. A high level of product launches and relentless cost control also supported our strong performance. Our organic sales growth outperformed LVP significantly in all regions,mainly due to price increases and product launches. Our balance sheet remained strong,and our leverage ratio* improved despite increased capex,dividends and share repurchases.

We continued to strengthen our position as the market leader in 2022 through our strong sales growth and the solid profitability and cash flow performance in the second half of the year. Order win rates for new EV platforms were high,both with new EV makers and traditional OEMs. We expect an increase in overall product launches in 2023. This development contributes to building an even stronger platform for our long-term success. We remain confident in our ability to reach our medium term adjusted operating margin target of around 12%,under the framework previously communicated.

The strong 2023 sales growth we foresee,together with the actions we undertook in 2022,creates a solid base for a significant improvement in our adjusted operating margin. This is despite the challenges from inflation impacting our non-raw material costs such as labor,logistics and energy. We continue to execute on productivity and cost reduction activities to offset this,and we have also initiated discussions with our customers on non-raw material cost inflation. We believe price adjustments will offset the non-raw material cost inflation,with small positive effects in the first quarter and gradually larger positive effects as the year progresses.

Our FY 2023 indication is an organic sales growth of around 15% and an adjusted operating margin of around 8.5-9%,with Q1 2023 adjusted operating margin around 5%. Our positive cash flow trend should 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 January 27,2023.

The following files are available for download:

https://mb.cision.com/Main/751/3704512/1810107.pdf

ALV Financial Report Q4 2022