• Net Sales: $2.6 billion, a 1% decrease year over year.
• Adjusted Operating Income: Increased by 28% to $255 million from $199 million last year.
• Adjusted Operating Margin: 9.9%, an improvement of 230 basis points from the previous year.
• Gross Margin: 18.6%, an increase of 160 basis points year over year.
• Adjusted Earnings Per Share (EPS) Diluted: Increased by $0.58, driven by higher operating income and a lower number of shares.
• Return on Capital Employed: 26%.
• Return on Equity: 29%.
• Share Buybacks: Repurchased and retired 500,000 shares for $50 million.
• Dividend: $0.70 per share.
• Operating Cash Flow: $77 million, a decrease of $45 million from the previous year.
• Free Operating Cash Flow: Negative $16 million, compared to negative $18 million in the prior year.
• Trade Working Capital: Decreased by $56 million, with improvements in accounts receivables, payables, and inventories.
• Leverage Ratio: 1.3 times, virtually flat year over year.

• Warning! GuruFocus has detected 2 Warning Sign with CFG.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Autoliv Inc (NYSE:ALV) outperformed global light vehicle production despite significant headwinds, particularly in China.
• The company achieved record earnings per share for the first quarter, driven by a lower number of shares and high net profit.
• Autoliv Inc (NYSE:ALV) significantly improved its profit and operating margin compared to the previous year, primarily due to well-executed cost reduction activities.
• The company neutralized tariffs almost entirely in the quarter through agreements with customers.
• Autoliv Inc (NYSE:ALV) continues to generate a high level of return on capital employed, supporting a high level of shareholder returns.

Negative Points

• Sales in the first quarter decreased by 1% year over year due to negative effects from currency and adverse regional and customer mix development.
• The company faces significant uncertainty in the global light vehicle production outlook for 2025, influenced by tariffs and slowing economic growth.
• Autoliv Inc (NYSE:ALV) experienced an unfavorable regional light vehicle production mix, significantly impacting its outperformance negatively.
• Operating cash flow decreased by $45 million compared to the same period last year, mainly due to increased receivables.
• The company anticipates cost pressures from labor, especially in Europe and America, and potential inflationary pressure from ongoing tariff situations.

Q & A Highlights

Q: Can you provide clarity on how much of your sales are non-USMCA compliant and at risk? A: Mikael Bratt, CEO, explained that the situation is fluid, and providing too much detail might be confusing. The company is well-positioned with its current footprint, and most of the production in Mexico is for OEMs in Mexico. The non-compliance is mainly due to the unavailability of certain materials in the region, like leather and magnesium. The majority of the tariff costs are passed on to customers.

Q: How should we think about the profit trajectory for the upcoming quarters? A: Mikael Bratt, CEO, stated that the company is returning to a more typical pre-inflationary environment pattern, with a weaker Q1 and stronger Q4, while Q2 and Q3 average out. The sequential development seen in the past three years due to inflationary pressures is not expected to continue.

Q: Can you elaborate on the strong outperformance in Europe and the tariff compensation in Q1? A: Mikael Bratt, CEO, attributed the European outperformance to a strong position with European OEMs and a favorable mix. Regarding tariffs, the company is confident in passing these costs to customers, as the supply chain cannot absorb such additional costs.

Q: What is the rationale behind maintaining the current guidance despite uncertainties? A: Mikael Bratt, CEO, expressed confidence in the company's ability to navigate challenges, supported by a strong Q1 performance and a healthy level of light vehicle production. The guidance accounts for potential risks, including tariffs, and is based on a global light vehicle production decline of around 0.5%.

Q: How quickly can tariff-related costs be passed on to customers? A: Mikael Bratt, CEO, noted that tariff costs are clear and straightforward, allowing for faster negotiations and passing on to customers compared to more complex inflationary compensations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.