STOCKHOLM, Jan. 28, 2022 /PRNewswire/ -- (NYSE:ALV) and (SSE: ALIV.sdb)

Q4 2021: Solid profitability and cash flow

Financial highlights Q4 2021

$2,119m net sales

16% organic sales decline*

8.2% operating margin

8.3% adjusted operating margin*

$1.31 EPS - a decrease of $0.84

$1.30 adjusted EPS* - a decrease of $0.89

Full year 2022 indications

Around 20% organic sales growth

Around 3% negative FX effect on net sales

Around 9.5% adjusted operating margin

Around $950m operating cash flow

Key business developments in the fourth quarter of 2021

Significant organic sales decline* as global LVP declined by 13% vs. Q4 last year (IHS Markit Jan 2022). Sales decreased organically by 15.6%, underperforming global LVP by 2.6pp, mainly due to negative geographical mix effects as LVP in high safety content per vehicle markets declined significantly more than LVP in low content markets.
Profitability declined due to lower sales and almost 3pp operating margin headwind from higher raw material costs. Adjusted operating margin* declined by 4.0pp to 8.3%. Adjusted return on capital employed* was 19.1%.
Strong balance sheet and leverage ratio* well within target range. Operating cash flow of $317 million and free cash flow* of $164 million support continued balance sheet improvement. A dividend of $0.64 per share was previously declared and paid in the quarter. Net debt* declined, resulting in a leverage ratio of 1.2x.

*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 2021	Q4 2020	Change	FY 2021	FY 2020	Change
Net sales	$2,119	$2,517	(15.8)%	$8,230	$7,447	10.5%
Operating income	$174	$307	(43.2)%	$675	$382	76.6%
Adjusted operating income¹⁾	$177	$311	(43.2)%	$683	$482	41.8%
Operating margin	8.2%	12.2%	(4.0)pp	8.2%	5.1%	3.1pp
Adjusted operating margin¹⁾	8.3%	12.4%	(4.0)pp	8.3%	6.5%	1.8pp
Earnings per share^{2, 3)}	$1.31	$2.15	(38.9)%	$4.96	$2.14	132%
Adjusted earnings per share^{1, 2, 3)}	$1.30	$2.19	(40.5)%	$5.02	$3.15	59.4%
Operating cash flow	$317	$469	(32.5)%	$754	$849	(11.2)%
Return on capital employed⁴⁾	18.9%	33.7%	(14.8)pp	18.3%	10.4%	7.9pp
Adjusted return on capital employed ^{1, 5)}	19.1%	33.4%	(14.3)pp	18.5%	12.9%	5.6pp
1) Excluding costs for capacity alignment and in 2020 antitrust related matters. 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. 5) Annualized operating income and income from equity method investments, relative to average capital employed. Non-U.S. GAAP measure, see reconciliation table.

Comments from Mikael Bratt, President & CEO

The fourth quarter of 2021 remained challenging with indirect effects from COVID-19 continuing to impact our business. LVP continued to be limited by lack of semiconductors, although the situation improved in the latter part of the quarter with improved call-off stability bringing some cause for cautious optimism for LVP growth in 2022.

I am pleased that our operating income was solid, despite headwinds from lower sales, raw material costs and currency exchange rates. I am also pleased that our cash flow and balance sheet remained strong, that we raised the quarterly dividend to $0.64 and that our leverage ratio* remained well within our target range. We met our guidance for 2021 with organic sales growth* of around 8%, adjusted operating margin* of 8.3% and operating cash flow of $754 million.

The fourth quarter saw significant outperformance of low safety content markets vs. high safety content markets, generating a significant negative regional mix for the quarter and the full year. This contributed to our organic* sales outperformance of 5.2 pp in full year 2021 being below the around 8pp we had expected. Our sales were lower than expected in all regions except China, which is in contrast to the changes in LVP reported by IHS Markit during the quarter. We therefore believe that there was an element of pull forward of our sales from the fourth to third quarter of 2021, contributing to a temporary lower than expected outperformance.

Cost increases for raw materials generated a headwind of almost 3pp to our operating margin in the quarter. We expect rising raw material costs to amount to around 3pp in operating margin headwind for full year 2022, with around 5pp y-o-y impact in the first half year and around 1-2 pp in the second half. We expect customer recoveries to offset some of the expected raw material cost increases, mainly in the second half of the year. Combined, this means that the first half year will be quite challenging. In 2021, we reduced headcount by 11%, and we will continue a strict cost control in 2022 including executing on capacity alignments, footprint optimization, and strategic initiatives.

A record number of new product launches in 2021 supports a strong outperformance in 2022. In 2021, we estimate that we booked around 50% of all available orders globally.

Based on an assumption of LVP growth of around 9%, supported by a positive regional mix and high number of product launches, we expect to grow organically by around 20%, generating an adjusted operating margin of around 9.5% for the full year 2022.

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 28, 2022.

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SOURCE Autoliv

Autoliv: Financial Report October - December 2021