Autoliv: Financial Report October - December 2024

Rhea-AI Summary

Autoliv (NYSE: ALV) reported Q4 2024 financial results with record operating performance despite sales challenges. Net sales decreased 4.9% to $2,616 million, with organic sales declining 3.3%. The company achieved record operating profit of $353 million and a record operating margin of 13.5%.

Key highlights include a 14% increase in diluted EPS to $3.10, while adjusted diluted EPS decreased 19% to $3.05. Operating cash flow reached $420 million, contributing to a record full-year cash flow of $1,059 million. The company reduced total headcount by around 7% and successfully executed cost reductions and commercial recoveries.

For 2025, Autoliv guides for around 2% organic sales growth, approximately 2% negative FX effect on net sales, adjusted operating margin of around 10-10.5%, and operating cash flow of about $1.2 billion.

Positive

• Record operating profit of $353 million and margin of 13.5%
• Operating cash flow reached record $1,059 million for FY2024
• Successful cost reduction program with 7% headcount reduction
• Strong 20% sales growth to domestic Chinese OEMs
• Return on capital employed increased to 35.8%

Negative

• Net sales decreased 4.9% to $2,616 million
• Organic sales declined 3.3%, underperforming global LVP by 3.7pp
• Adjusted diluted EPS decreased 19% to $3.05
• Underperformance in China due to negative LVP mix
• Dealer inventory reductions impacted performance in Americas

Insights

Financial Analyst

Autoliv's Q4 2024 results reveal a compelling narrative of operational excellence amid market headwinds. The 13.5% operating margin represents a significant achievement, particularly considering the 3.3% organic sales decline. This divergence between revenue and profitability metrics underscores the effectiveness of management's cost optimization initiatives.

The company's performance in China warrants special attention. While experiencing a 20% growth with domestic OEMs, overall underperformance in the region due to product mix suggests a strategic challenge. However, the anticipated record number of new launches in 2025 could be a catalyst for improved market position.

The cost reduction strategy has been particularly impressive, with indirect workforce reduction of 1,400 positions since Q1 2023 and a 9% reduction in direct headcount. This disciplined approach to cost management, combined with successful inflation recovery negotiations, has created a robust foundation for sustained profitability.

The strong cash flow performance, culminating in a record $1.059B for FY2024, provides significant financial flexibility. With a leverage ratio of 1.2x, the company maintains ample capacity for both strategic investments and shareholder returns through dividends and share repurchases.

Looking ahead to 2025, the guided 2% organic growth reflects a cautious outlook amid industry challenges. However, the projected 10-10.5% adjusted operating margin suggests confidence in maintaining operational efficiency gains. The upcoming Capital Markets Day in June 2025 will be important for understanding the company's long-term strategic positioning in an evolving automotive safety market.

STOCKHOLM, Jan. 31, 2025 /PRNewswire/ -- (NYSE: ALV) and (SSE: ALIV.sdb)

Q4 2024: Record operating profit, margin and EPS

Financial highlights Q4 2024

$2,616 million net sales 
4.9% net sales decrease
3.3% organic sales decline*
13.5% operating margin
13.4% adjusted operating margin*
$3.10 diluted EPS, 14% increase
$3.05 adjusted diluted EPS*, 19% decrease

Full year 2025 guidance

Around 2% organic sales growth
Around 2% negative FX effect on net sales
Around 10-10.5% adjusted operating margin
Around $1.2 billion operating cash flow 

All change figures in this release compared to the same period of the previous year except when stated otherwise.

Key business developments in the fourth quarter of 2024

• Fourth quarter sales decreased organically* by 3.3%, which was 3.7pp below the global LVP increase of 0.4% (S&P Global Jan 2025). Regional and customer LVP mix is estimated to have contributed to about 4pp underperformance. We outperformed in Asia excl. China and in Europe, mainly due to product launches and positive pricing. Our sales to domestic Chinese OEMs grew by 20%, almost in line with their growth in LVP. Due to negative LVP mix in China, as sales of lower safety content models grew strongly while higher content models declined, we still underperformed in China. We expect that our strong order intake with domestic OEMs will lead to a record number of new launches in China and thereby significantly improve Autoliv's performance in China in 2025. Dealer inventory reductions by major customers resulted in underperformance in Americas.
• Profitability improved, with several new record highs mainly due to successful execution of cost reductions and commercial recoveries. Total headcount decreased by around 7%. Operating income reached a new record high of $353 million and operating margin reached a new record high of 13.5%. Adjusted operating income* was also a record at $349 million and adjusted operating margin's* new record is now 13.4%. Return on capital employed was 35.8% and adjusted return on capital employed* was 35.2%.
• Operating cash flow was $420 million, reaching a new record of $1,059 million for FY2024. Free operating cash flow* in the quarter was $288 million compared to $297 million last year. At 1.2x, the leverage ratio* remained well within our target range. In the quarter, a dividend of $0.70 per share was paid, and 1.04 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)	Q4 2024	Q4 2023	Change	FY 2024	FY 2023	Change
Net sales	$2,616	$2,751	(4.9) %	$10,390	$10,475	(0.8) %
Operating income	353	237	49 %	979	690	42 %
Adjusted operating income1)	349	334	4.7 %	1,007	920	9.5 %
Operating margin	13.5 %	8.6 %	4.9pp	9.4 %	6.6 %	2.8pp
Adjusted operating margin1)	13.4 %	12.1 %	1.2pp	9.7 %	8.8 %	0.9pp
Earnings per share - diluted	3.10	2.71	14 %	8.04	5.72	40 %
Adjusted earnings per share - diluted1)	3.05	3.74	(19) %	8.32	8.19	1.6 %
Operating cash flow	420	447	(6.0) %	1,059	982	7.8 %
Return on capital employed2)	35.8 %	24.4 %	11pp	25.0 %	17.7 %	7.2pp
Adjusted return on capital employed1,2)	35.2 %	32.9 %	2.3pp	25.6 %	23.1 %	2.5pp

¹⁾ Excluding effects from capacity alignments, antitrust related matters and for FY 2023 the Andrews litigation settlement. Non-U.S. GAAP measure, see reconciliation table.
²⁾ Annualized operating income and income from equity method investments, relative to average capital employed.

Comments from Mikael Bratt, President & CEO

I am pleased that we delivered strong profitability and cash flow in the fourth quarter. We reached new record highs in the quarter for operating profit, operating margin and EPS. For the full year, we also had a record high operating cash flow. I am also pleased that we generated a high return on capital employed for the quarter and year and that we could achieve this strong performance despite a continued LVP mix deterioration leading to lower sales.

Our strong performance for both the quarter and the full year was mainly a result of our strict cost control. Our structural cost reduction program has enabled a reduction of the indirect work force by 1,400 since Q1 2023. We accelerated our operating efficiency improvements, supported by an improved customer call-off accuracy, which contributed to a reduction of direct headcount by 9% in one year. The strong results for both the quarter and the full year were also supported by reaching agreements with all major customers on excess inflation compensation.

As LVP growth mix continued to be tilted towards lower CPV models, we underperformed the LVP growth in China. However, we expect a record number of new launches in China in 2025 and thereby a significant performance improvement in China in 2025.

We achieved several strategic major wins with new automakers in 2024 although OEMs' sourcing of new business was at a low level in 2024. This was due to technological and geopolitical uncertainties and the sourcing of several large platforms were pushed into 2025.

We expect 2025 to be a challenging year for the automotive industry with LVP declining slightly and continued geopolitical risks. This uncertainty makes it challenging to predict how business conditions in general and automotive markets in particular will develop in 2025. However, our continued focus on efficiency is expected to support further improvement of our profitability towards our mid-term financial targets. Our continued strong cash flow and balance sheet should set a solid foundation for our ongoing commitment to high shareholder returns.

I am looking forward to our Capital Markets Day, planned for June 3, 2025, when we will share our view of our way forward with you. More details to be announced shortly.

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 January 31, 2025.

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SOURCE Autoliv

FAQ

What were Autoliv's (ALV) Q4 2024 earnings per share?

Autoliv reported diluted EPS of $3.10 in Q4 2024, a 14% increase, while adjusted diluted EPS was $3.05, representing a 19% decrease.

How much did Autoliv's (ALV) sales decline in Q4 2024?

Autoliv's net sales decreased by 4.9% to $2,616 million, with organic sales declining by 3.3% in Q4 2024.

What is Autoliv's (ALV) operating margin guidance for 2025?

Autoliv guides for an adjusted operating margin of around 10-10.5% for full year 2025.

How much operating cash flow did Autoliv (ALV) generate in 2024?

Autoliv generated a record operating cash flow of $1,059 million for the full year 2024.

What is Autoliv's (ALV) organic sales growth guidance for 2025?

Autoliv expects around 2% organic sales growth for 2025.