Autoliv Financial Report January – March 2022

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

Q1 2022: Extraordinary times, extraordinary measures

Q1 2022 Financial Highlights
$2,124 million net sales
5.3% drop in net sales
1.0% organic decline in sales*
6.3% operating margin
3.2% adjusted operating margin*
$0.94 EPS – a decrease in $0.85
$0.45 Adjusted EPS* – a decrease of $1.34

Indications for the year 2022
About 12%-17% organic sales growth
About 3% negative currency effect on revenue
About 5.5-7.0% adjusted operating margin
Approximately $750-850 million operating cash

Main business developments in the first quarter of 2022

  • Sales decreased organically* by 1.0% while global LVP decreased by around 4% compared to the first quarter of last year (IHS Markit April 2022). Sales outperformed global LVP by 3pp despite a strongly negative geographic mix.
  • Profitability has declined due to a significant headwind on operating margin due to higher costs mainly related to raw materials, but also to supply chain disruptions, LVP volatility and high level of premium freight, which have all been exacerbated by the war in Ukraine and get locked in China. Operating margin decreased by 4.2 pp and adjusted operating margin* decreased by 7.4 pp. Return on capital employed fell 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 decreased compared to a year earlier, leading to an unchanged leverage ratio of 1.4x. A dividend of $0.64 per share was paid during the quarter and 0.23 million shares were repurchased.

*For non-US GAAP measures, see accompanying reconciliation tables. All change figures in this release compare to the same period of the previous year, unless otherwise stated.

Key figures

(in millions of dollars, except per share data)

Q1 2022

Q1 2021

Switch

Net sales

$2,124

$2,242

(5.3)%

Operating result

134

237

(43)%

Adjusted operating income1)

68

237

(71)%

Operating margin

6.3%

10.6%

(4.2)pp

Adjusted operating margin1)

3.2%

10.6%

(7.4)pp

Earnings per share2, 3)

0.94

1.79

(47)%

Adjusted earnings per share1, 2, 3)

0.45

1.79

(75)%

Operating cash flow

$70

$186

(62)%

Return on capital employed4)

14.6%

26.3%

(11.7)pp

Adjusted return on capital employed 1.5)

7.4%

26.3%

(18.9)pp

1) Excluding capacity alignment costs. Non-US GAAP measure. 2) Assuming dilution where applicable and net of treasury shares. (3) Equity share awards with the right to receive dividend equivalents are (under the two-class method) excluded from the calculation of EPS. 4) Annualized operating profit and profit from equity affiliates compared to average capital employed. 5) Annualized operating profit and profit from equity affiliates compared to average capital employed. For non-US GAAP measures, see the reconciliation table.

Comments from Mikael BrattPresident and CEO
Our sales exceeded global LVP by approximately 3pp (IHS Markit April 2022) during the quarter, despite unfavorable regional mix effects and we expect further 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 buying back shares under our 3-year share buyback program.

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

The first quarter of 2022 saw negative effects on an already struggling global supply chain, leading to increased cost inflation as well as lower global LVP. At the same time, the visibility of customer demand has declined and the volatility of customer calls has increased, leading to significantly higher freight and transportation costs. As a result, our sales and profitability were lower than we had anticipated at the start of the quarter. Raw material cost increases negatively impacted our operating margin, by over 5 percentage points and adding the effects of logistics bottlenecks and premium freight, the margin headwind was over 7 percentage points during the quarter.

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

Our strategic roadmap is on track and delivering results; we recently announced capacity alignments and footprint actions in Japan, Europe and the Americas. During the quarter, we disposed of a property in Japan and closed a factory in South Korea. We continue to adjust direct labor to a lower level of demand.

We are continuing focused discussions with our customers regarding cost inflation claims, which include price increases and other recoveries. We believe that our price increases will begin to offset cost inflation from the middle of the year. However, we expect the adjusted operating margin in the second quarter to be lower than in the first quarter, as we expect cost inflation to increase faster than cost offsets in the second quarter.

Our new guidance of full year 2022 organic sales growth of approximately 12-17% and adjusted operating margin of approximately 5.5%-7.0% is based on the assumption that the LVP will increase by 0 to 5% and that we will achieve our objective for the cost of offsetting effects as well as some stabilization of the market. Based on this, our ongoing actions should get us back on track towards our medium-term adjusted operating margin objective.

Requests: investors and analysts
Anders Trap
Vice President Investor Relations
Tel +46 (0)8 5872 0671

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

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

Autoliv, Inc. is required to make this information public in accordance with the EU Market Abuse Regulation. The information was submitted for release, through the Vice President of Investor Relations noted above, at 12:00 p.m. CET on April 22, 2022.

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SOURCE Autoliv

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