STOCKHOLM, June 20, 2022 / PRNewswire / – Autoliv, Inc. (NYSE: VAT) and (SSE: ALIVsdb)A world leader in automotive safety systems, it is adapting to new business conditions and is beginning to see results from its price-negotiating negotiations with customers to offset inflationary pressures.
Market and business update
From year to date, global LVP has been constrained by supply-side problems and blockages related to COVID-19 in Chinaand not from the main problems with market demand. Blocks in China have affected LVP more negatively than expected. This led to a more than 40% drop in Chinese LVP in April on an annual basis. May noted a recovery to about equal to. May 2021. The latest IHS Markit update for LVP’s second quarter China is 11% lower than in April, when our results for the first quarter of 2022 were published. In addition, high-safety vehicles were reduced China in May, which led to negative content for Autoliv. Government incentives are expected to lead to a recovery in the second half of the year. Therefore, combined with improved semiconductor availability, IHS Markit expects to recover what was lost in the second quarter of 2022 in the second half of 2022, leaving global LVP growth around 5% for the full year.
Autoliv is accelerating mitigation activities to support our medium-term goals
Autoliv continues to work intensively with customers to secure price increases to compensate for inflationary pressures and supply chain disruptions. We have made progress in recovering costs through sustained price increases, with some customer prices being reversed to cover costs incurred earlier in 2022. We retain the ability to seek further adjustments in the future if necessary.
In parallel with the price negotiations, Autoliv is introducing additional cost reductions to reduce annual costs, mainly by reviewing and prioritizing certain projects, reducing the number of employees, consultants and temporary staff.
“Our mitigation activities include negotiating prices with customers to support a sustainable business model in the current environment with higher inflation. This includes sustained price increases and higher price adjustments, as well as large-scale cost reductions, ”he said. Mikael Brat, President and CEO of Autoliv. “This means negotiating more flexible contracts with customers to ensure that inflationary pressures are effectively channeled through the value chain. This also includes closer engagement with customers to allow for more predictable production schedules. “, Mikael Brat continues.
Repetition of readings for the whole year
Despite the challenging environment, Autoliv reiterates its 2022 targets for organic sales growth of around 12-17% and an adjusted operating margin of around 5.5% -7.0% based on assumptions that global LVP will increase by 0 -5% and that we continue to achieve our targets to offset cost inflation.
“We have seen a change in conditions in the automotive industry, which affects Autoliv and the entire supply chain. Based on Autoliv’s past mitigation activities and future planned activities, I feel calm to confirm our organic sales for the whole year and adjusted operating margin indications, despite the additional wind with regard to inflationary pressures and challenges in China“He says Mikael Brat, President and CEO of Autoliv. “We maintain a sound balance and remain committed to a shareholder-friendly capital allocation policy, as announced on our Capital Markets Day last year.”
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