Adds tariff context, CEO comments, margin forecast from paragraph 6

By Anna Chaberska

STOCKHOLM, Jan 31 (Reuters) - Autoliv ALV.N forecast its margins will rise in 2025, despite challenging conditions for the automotive sector due to geopolitical uncertainties and likely trade tariffs.

The Swedish company, which supplies equipment across the autos industry, on Friday posted fourth quarter core profits which were slightly above analyst expectations.

The autos industry has been hit hard over the past few years by supply chain issues, a slowdown in EV sales and continued high costs. As a result, light vehicle production (LVP), a metric Autoliv measures itself against, has suffered.

CEO Mikael Bratt said Autoliv expected a challenging year for the sector, with LVP falling and further geopolitical risks.

"This uncertainty makes it challenging to predict how business conditions in general and automotive markets in particular will develop in 2025," Bratt said.

Autoliv predicted for the second year in a row that it would reach a full year adjusted operating margin of up to 10.5%. It failed to reach the target last year after lower sales forced it to cut its forecast.

The world's largest producer of airbags and seatbelts predicted an adjusted operating margin of between 10% and 10.5% for the full year, compared to last year's result of 9.7%.

This would be the second year in a row that Autoliv hopes to reach close to a 10.5% adjusted operating margin. It failed to reach the target last year after lower sales forced it to cut its forecast.

The car safety equipment maker's Swedish-listed shares were down nearly 3% at 1348 GMT. They rose nearly 1% ahead of the earnings report and were down by as much as 6% shortly after.

Autoliv's headwinds include U.S. President Donald Trump's threat to impose 25% tariffs on Mexican imports, which could hit its operations due to its seven factories in Mexico.

Bratt told Reuters that Autoliv was well positioned with its U.S. footprint already, but that any new tariffs would still cause problems.

"I think it's more of an industry problem," he said, adding that if tariffs were imposed, then the cost "needs to be passed onto our customers ... ultimately that means you'll have more expensive cars," he added.

Fourth quarter operating profit, excluding items affecting comparability, rose to $349 million from $334 million a year before, Autoliv said. This exceeded a company-provided consensus which had on average forecast a profit of $340 million.

(Reporting by Anna Chaberska in Gdansk and Marie Mannes in Stockholm; Editing by Terje Solsvik, Stine Jacobsen and Alexander Smith)

((Anna.chaberska@thomsonreuters.com;))