Stockholm, Sweden, January 26, 2024
(NYSE: ALV and SSE: ALIV.sdb)
 

Q4 2023: Record sales and strong profitability
 

Financial highlights Q4 2023

$2,751 million net sales
18% net sales increase
16% organic sales growth*
8.6% operating margin
12.1% adjusted operating margin*
$2.71 EPS, 51% increase
$3.74 adjusted EPS*, 105% 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.
 

• Record sales, increased organically* by 16%, which was 7pp better than global LVP growth of 9% (S&P Global January 2024). We outperformed in all regions, except China, mainly due to new product launches and higher prices. LVP in China grew by 31% for domestic OEMs with typically lower safety content but only by 7% for global OEMs with typically higher safety content.
• Profitability improved substantially, positively impacted by price increases, organic growth, and our cost reduction activities. Operating income was $237 million and operating margin was 8.6%. Adjusted operating income* improved from $233 million to $334 million and adjusted operating margin* increased from 10.0% to 12.1%. Return on capital employed was 24% and adjusted return on capital employed* was 33%.
• Operating cash flow remained strong, at $447 million. Free cash flow* was unchanged at $297 million. The leverage ratio* improved to 1.2X compared to 1.3X in the third quarter of 2023, despite returning $207 million to shareholders as dividends and share repurchases. A dividend of $0.68 per share was paid (a 3% increase), and 1.51 million shares were repurchased and retired in the quarter

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

Key Figures

[][][][][][]
(Dollars in millions, Q4 Q4 Change FY 2023 FY Change
except per share data) 2023 2022 2022
Net sales $2,751 $2,335 18% $10,475 $8,842 18%
Operating income 237 230 3.1% 690 659 4.7%
Adjusted operating 334 233 43% 920 598 54%
income[1)]
Operating margin 8.6% 9.8% (1.2)pp 6.6% 7.5% (0.9)pp
Adjusted operating 12.1% 10.0% 2.2pp 8.8% 6.8% 2.0pp
margin[1)]
Earnings per share[2)] 2.71 1.80 51% 5.72 4.85 18%
Adjusted earnings per 3.74 1.83 105% 8.19 4.40 86%
share[1,2)]
Operating cash flow $447 $462 (3.4)% $982 $713 38%
Return on capital 24.4% 24.3% 0.1pp 17.7% 17.5% 0.2pp
employed[3)]
Adjusted return on 32.9% 24.9% 8.1pp 23.1% 16.0% 7.1pp
capital employed[1,3)]
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) 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
As we indicated throughout the year, we finished 2023 strong. We achieved or exceeded all of our 2023 indications. Sales and adjusted operating income hit new records while operating cash flow remained strong. I am pleased that gross margin improved substantially. 2023 order intake was the highest in the past five years, supporting our around 45% market share position, with a good mix of new and traditional OEMs as well as EV and ICE platforms. 
We increased shareholder returns to more than $200 million in the quarter while continuing to improve our leverage ratio. As of the end of 2023, we have repurchased shares close to $0.5 billion under our existing $1.5 billion repurchase program.
We outperformed LVP in all regions except China, which had a very strong LVP growth for domestic OEMs with typically lower safety content. We strengthened our market position in China and our order intake was strong in the rapidly changing market, where domestic OEMs are now the drivers behind LVP development.
We continue to deliver on our structural cost reductions, with around 75% of the planned indirect workforce reductions detailed and announced. We also see positive effects on direct labor productivity.
Our 2023 performance developed very much as we indicated with heavy cost headwinds early in the year, which led to a weak Q1 2023. However, quarter-by-quarter, our performance improved, driven by customer recoveries, efficiencies, and organic growth leading to a substantial full year profitability improvement. Our sustainability agenda is yielding results with good progress in GHG emissions, renewable electricity use and incident rate. 
The seasonality of past years is likely to be repeated in 2024, with an expected Q1 adjusted operating margin of around 7%, followed by gradual quarterly improvements, leading to a full year 2024 adjusted operating margin of around 10.5%. Key drivers for the full year margin progression are continued improvement in call-off stability, outgrowing LVP and benefits from strategic and structural initiatives. The improving results we expect in 2024 should take us one important step closer to 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 January 26, 2024.