Autoliv: Financial Report January - March 2024

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Autoliv reported strong financial results for Q1 2024 with a 5% increase in net sales and organic sales growth. The company achieved a 7.4% operating margin and a 77% increase in EPS. Key business developments included record sales, improved profitability, and strong cash flow. Autoliv's return on capital employed was 19.7%, and the company is on track to meet full-year guidance. Investments in capacity expansion in Vietnam, China, and India are planned to support future growth.

Positive

• Record first quarter sales with a 5% organic sales growth and outperforming global LVP decline of 1%
• Significant improvement in profitability with a 7.4% operating margin and 7.6% adjusted operating margin
• 77% increase in EPS and 76% increase in adjusted EPS compared to the previous year
• Strong cash flow improvement with operating cash flow up by $168 million and free cash flow up by $171 million
• Return on capital employed at 19.7% and adjusted return on capital employed at 20.2%
• Investments in capacity expansion in Vietnam, China, and India to support future growth

Negative

• None.

Financial Analyst

Autoliv's Q1 2024 report highlights a 5% increase in net sales reaching $2,615 million, which is significant considering the global LVP (Light Vehicle Production) decline of 1%. This indicates that Autoliv is gaining market share and is successful with its new product launches and pricing strategies. The 77% increase in EPS (Earnings Per Share) to $1.52 reflects strong profitability and operational efficiency, which is further underscored by the 7.4% operating margin. Investors should note the company's strong performance in India, with a 27% organic growth, showing potential for Autoliv to capitalize on emerging markets. Furthermore, the commitment to return $0.7 billion to shareholders through dividends and share repurchases is a testament to Autoliv's cash flow strength and prioritization of shareholder value.

Market Research Analyst

The reported broad-based improvements across Autoliv's global operations, including strong growth in China and India, suggest the company is well-positioned to navigate the automotive industry's shift towards electric vehicles (EVs). The mention of investing in increased capacity in Vietnam, China and India indicates strategic positioning to tap into these high-growth markets. However, with ongoing inflation pressures, investors should monitor how Autoliv manages its costs and pricing negotiations with customers to maintain its profit margins. The expected full year adjusted operating margin of around 10.5% suggests that management is confident in their ability to balance growth with efficiency.

STOCKHOLM, April 26, 2024 /PRNewswire/ -- (NYSE: ALV) (SSE: ALIV.sdb)
 
Q1 2024: Broad based improvements

Financial highlights Q1 2024
$2,615 million net sales
5% net sales increase
5% organic sales growth*
7.4% operating margin
7.6% adjusted operating margin*
$1.52 EPS, 77% increase
$1.58 adjusted EPS*, 76% increase

Full year 2024 guidance
Around 5% organic sales growth
Around 0% FX effect on net sales
Around 10.5% adjusted operating margin
Around $1.2 billion operating cash flow

All change figures in this release compare to the same period of the previous year except when stated otherwise.
 
Key business developments in the first quarter of 2024       

• Record first quarter sales, increased organically* by 5%, which was 6pp better than global LVP decline of 1% (S&P Global April 2024). We outperformed in all regions, mainly due to new product launches and higher prices carried over from last year. 
• Profitability improved substantially, driven mainly by organic growth and cost reduction activities. Operating income was $194 million and operating margin was 7.4%. Adjusted operating income* improved from $131 million to $199 million and adjusted operating margin* increased from 5.3% to 7.6%. Return on capital employed was 19.7% and adjusted return on capital employed* was 20.2%.
• Strong cash flow improvement. Operating cash flow improved by $168 million and free cash flow* improved by $171 million. The leverage ratio* of 1.3x was close to unchanged compared to three months earlier and 0.3x lower than a year earlier despite returning $0.7 billion to shareholders as dividends and share repurchases in the last 12 months. In the quarter, a dividend of $0.68 per share was paid, and 1.37 million shares were repurchased and retired.

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

Key Figures

(Dollars in millions, except per share data)	Q1 2024	Q1 2023	Change
Net sales	$2,615	$2,493	4.9 %
Operating income	194	127	52 %
Adjusted operating income1)	199	131	51 %
Operating margin	7.4 %	5.1 %	2.3pp
Adjusted operating margin1)	7.6 %	5.3 %	2.3pp
Earnings per share2)	1.52	0.86	77 %
Adjusted earnings per share1,2)	1.58	0.90	76 %
Operating cash flow	$122	$(46)	n/a
Return on capital employed3)	19.7 %	13.0 %	6.7pp
Adjusted return on capital employed1,3)	20.2 %	13.4 %	6.8pp
1) Excluding effects from capacity alignments 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
We delivered record first quarter sales, outperforming global LVP growth by 6pp. We outperformed in all regions, including China despite a negative LVP mix development with domestic Chinese OEMs growing by 17% and global OEMs declining by 5%. It is encouraging that our sales in India grew organically by 27%. 
Sales in India are now larger than in South Korea, accounting for more than 4% of our global sales.
  
We delivered results in line with what we previously communicated, despite LVP being 1pp below what was expected three months ago, and we are on track to deliver on our full year outlook. We expect a record number of product launches in 2024, despite some OEMs changing certain vehicle model launch plans, mainly for EV platforms.
  
Profitability continued to improve significantly, driven mainly by volume growth and cost reductions. Restructuring activities are yielding results with indirect headcount declining by around 1,000, or by more than 5%, in the past 12 months.
 
Our continued focus on balance sheet efficiency is supporting our strong performance for cash flow, cash conversion, and return on capital employed.
 
I am particularly pleased with our leverage ratio of 1.3x, which declined significantly compared to a year ago, despite returning $0.7 billion to shareholders and investing in footprint optimization and growth. To support future growth, we are currently investing in increased capacity in Vietnam, China and India.
 
We are facing inflationary pressure again this year and we continue to expect compensation for what is in excess of what we can offset through normal productivity measures. The discussions with our customers are progressing according to plan.
 
As we have previously communicated, we expect the seasonality of past years to likely continue in 2024, with a gradual improvement throughout the year, leading to a full year adjusted operating margin* of around 10.5%. Key drivers for the full year margin progression are organic growth, our structural and strategic cost reduction initiatives, and a lower call-off volatility.
 
The 2024 development we expect should set up a solid base towards a continued high level of shareholder returns and our target of around 12% adjusted operating margin*.

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 Etemad
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 26, 2024

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The full report (PDF)

 

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SOURCE Autoliv

FAQ

What were Autoliv's net sales in Q1 2024?

Autoliv reported $2,615 million in net sales for Q1 2024, representing a 5% increase.

What was the operating margin for Autoliv in Q1 2024?

Autoliv achieved a 7.4% operating margin in Q1 2024.

How much did Autoliv's EPS increase in Q1 2024?

Autoliv's EPS increased by 77% in Q1 2024.

What was the return on capital employed for Autoliv in Q1 2024?

Autoliv's return on capital employed was 19.7% in Q1 2024.

What is Autoliv's full-year 2024 guidance for organic sales growth?

Autoliv's full-year 2024 guidance includes around 5% organic sales growth.