STOCKHOLM, April 21, 2023 /PRNewswire/ -- (NYSE:ALV) and (SSE: ALIV.sdb)

Q1 2023: Strong sales growth

Financial highlights Q1 2023

$2,493 million net sales

17% net sales increase

21% organic sales increase*

5.1% operating margin

5.3% adjusted operating margin*

$0.86 EPS - 9% decrease

$0.90 adjusted EPS* - 99% 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 first quarter of 2023

Sales increased organically* by 21%, which was 15pp better than global LVP growth of 6.1% (S&P Global April 2023). We outperformed significantly in all regions, mainly due to new product launches and higher prices.
Profitability in line with our indication, positively impacted by price increases, organic growth and our cost reduction activities. Operating income was $127 million and operating margin was 5.1%. Adjusted operating income* improved from $68 million to $131 million and adjusted operating margin* increased from 3.2% to 5.3%, despite inflationary pressure, volatile LVP and adverse FX effects. Return on capital employed was 13.0% and adjusted return on capital employed* was 13.4%.
Operating cash flow decreased from $70 million to negative $46 million, driven mainly by negative working capital effects due to the high sales growth. Free cash flow* decreased to negative $189 million, as capex, net, increased due to capacity expansions and footprint activities. The leverage ratio* increased from 1.4x in the fourth quarter 2022 to 1.6x, impacted by higher net debt. A dividend of $0.66 per share was paid, and 0.45 million shares were repurchased and retired in the quarter.

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

Key Figures

(Dollars in millions, except per share data)	Q1 2023	Q1 2022	Change
Net sales	$2,493	$2,124	17 %
Operating income	127	134	(5.4) %
Adjusted operating income¹⁾	131	68	93 %
Operating margin	5.1 %	6.3 %	(1.2)pp
Adjusted operating margin¹⁾	5.3 %	3.2 %	2.1pp
Earnings per share²⁾	$0.86	$0.94	(8.8) %
Adjusted earnings per share^1,2)	0.90	0.45	99 %
Operating cash flow	(46)	70	n/a
Return on capital employed³⁾	13.0 %	14.6 %	(1.6)pp
Adjusted return on capital employed^1,3)	13.4 %	7.4 %	6.0pp

1) Excluding effects from capacity alignment and antitrust related matters. Non-U.S. GAAP measure, see reconciliation table.

2) Assuming dilution when applicable and net of treasury shares.

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

Comments from Mikael Bratt, President & CEO

I am pleased with our strong sales growth, supported by product launches and price increases, and that we outperformed LVP in all regions significantly. The operating margin impact of the strong sales growth was lower than it should be in the quarter. This is because new product launches normally have lower operating leverage initially. As production ramps up and stabilizes, operating leverage is expected to improve. Together with our actions for cost reductions and price adjustments, this will give the significant full year profit improvement that we expect.

The operating environment in the first quarter 2023 was, as expected, challenging, especially in Europe. We reported an adjusted operating margin in line with prior communication.

Other highlights in the quarter were that our balance sheet and expected cash flow allowed for continued high shareholder returns, and that we issued our first ever green bond. We expect a strong full year cash flow, although our cash flow was temporarily weak in Q1 due to the strong sales growth in March.

We saw continued updates of crash test standards and safety regulations in the U.S. and in India which will support continued increase in safety content per vehicle. Our market position is strong, and we are investing for increased production with a new textile facility in Vietnam. We also continue to look for ways to improve our footprint and to reduce our costs structurally.

The year has so far developed as expected. Like last year, inflationary pressure impacted the first quarter significantly, and in line with last year, we expect to offset this during the rest of the year through productivity, cost reduction actions and price adjustments.

This supports my confidence in expecting a gradually improving adjusted operating margin, which should allow us to deliver a significant full year increase in cash flow and adjusted operating income and to reach the full year indications we set at the beginning of the year.

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 21, 2023.

The following files are available for download:

https://mb.cision.com/Main/751/3755900/2001515.pdf

The full report (PDF)

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SOURCE Autoliv

Autoliv: Financial Report January - March 2023