On April 22, automotive safety system supplier Autoliv released its financial report for the first quarter of 2022.
The company's first-quarter net sales were $2.124 billion, down 5.3% year-over-year, organic sales down 1%, operating profit of $134 million, down 43% year-over-year, operating margin down to 6.3% from 10.6% in the same period last year, and earnings per share of $0.94, the earnings were down, according to the earnings report.
Otoliv first quarter results data; Image source: Otoliv
In the first quarter of this year, global light vehicle production fell by about 4% year-on-year, while Autoliv organic sales naturally fell by 1%, still outperforming the market by 3 percentage points. Over the same period, Autoliv's profitability declined, mainly due to a sharp decline in operating margins due to supply chain disruptions, rising raw material costs and higher freight rates, which were exacerbated by the situation in Russia and Ukraine and the recent outbreak in China.
Mikael Bratt, President and CEO of Autoliv, said: "In the first quarter of this year, the already troubled global supply chain was further adversely affected, resulting in higher cost inflation and a decline in global light vehicle production. At the same time, customer demand visibility declined and order cancellation volatility increased, resulting in a significant increase in shipping costs. As a result, our sales and profitability were lower than expected at the beginning of the quarter. Rising raw material costs had a negative impact on our operating margin, which exceeded 5 percentage points, which, combined with the impact of logistics bottlenecks and excess freight rates, contributed to a decline in margins of more than 7 percentage points during the quarter. ”
Image source: Otoliv
In response to the increasingly tough market environment, Autoliv has further strengthened cost control measures, frozen recruitment, and accelerated other cost-saving activities. At the same time, Autoliv continues to negotiate with customers about cost inflation, including price increases. Autoliv believes that the price increase of its products will offset the cost increase from about the middle of the year.
In light of this, Autoliv lowered its financial forecast for this year to expect organic sales growth of approximately 12% to 17%, and the company expects a negative impact of foreign exchange on net sales of approximately 3%, adjusted operating margin of 5.5% to 7%, and operating cash flow of approximately $750 million to $850 million.