Autoliv (NYSE:ALV) reported first-quarter 2026 results that management said exceeded internal expectations, supported by strong sales late in the quarter and continued growth momentum in Asia. President and CEO Mikael Bratt said performance was “driven by strong sales in March,” while operational execution came in “ahead of plan,” helped by productivity improvements and reduced customer call-off volatility.
Quarterly performance and profitability
Net sales rose about 7% year over year to nearly $2.8 billion, which the company described as its highest first-quarter sales level. Bratt said the increase was driven by outperformance versus global light vehicle production, favorable currency effects and tariff-related compensation.
Adjusted operating income fell 4% year over year to $245 million, and adjusted operating margin declined to 8.9% from 9.9%. Bratt said adjusted operating income was “slightly lower due to temporary lower RD&E reimbursements and a one-time income in Q1 last year.” Grama added that reported operating income of $237 million was $8 million lower than adjusted, “mainly due to capacity alignment activities.”
Grama also said adjusted EPS diluted decreased by $0.10, driven by lower operating income, financial and non-operating items, and taxes, partly offset by the benefit of fewer diluted shares outstanding. Autoliv reported adjusted return on capital employed of 23% and adjusted return on equity of 24%.
Sales drivers: China and India outperformance
Management emphasized regional outperformance, particularly in China and India. Bratt said Autoliv continued to grow faster than light vehicle production in China, “especially with the Chinese OEMs,” outperforming by more than 40 percentage points in that customer group. In India, he said organic sales rose 38%, reflecting “increased safety content in vehicles in India” and continued production growth.
On a consolidated basis, management said organic sales growth was modest when excluding currency translation effects. Bratt said the year-over-year sales increase included a $154 million positive currency translation effect and $14 million from higher tariff-related compensation. Excluding currencies, organic sales increased $21 million, or 80 basis points, including tariff cost compensation. Based on S&P Global’s latest production data, management said Autoliv outperformed global light vehicle production by more than four percentage points in the quarter.
Autoliv also highlighted its expanding footprint in India. Bratt said India now represents “almost 6%” of global sales, nearly triple the level of three years ago. He said Autoliv operates five manufacturing plants, a technical center and a global support engineering center in India with more than 6,000 associates, and recently opened a new inflator plant to meet growing airbag demand in India and other Asian markets.
In the Q&A session, Bratt reiterated the company’s strategic focus on increasing exposure to Chinese OEMs as their market share grows, while noting that Autoliv does not disclose profitability by customer or region. “Our focus here is to have a market share of around 45% of the global light vehicle production,” he said.
Cash flow, working capital, and shareholder returns
Operating cash flow was negative $76 million, down $153 million from the prior year period. Bratt said the lower cash flow primarily reflected a temporary working-capital impact from strong end-of-quarter sales, other temporary factors expected to reverse later in the year, and the normalization of payables from year-end.
Grama quantified the working-capital change, saying operating working capital was a negative $349 million in the quarter, compared with a negative $179 million a year earlier. She cited higher receivables and “other one-timers” as temporary impacts, along with payables normalizing versus year-end 2025. Capital expenditures net were lower year over year, and capex net was 3% of sales versus 3.6% a year earlier. Despite the first-quarter cash outflow, Autoliv’s cash conversion over the last 12 months was 83%, exceeding the company’s target of at least 80%.
Autoliv paid a quarterly dividend of $0.87 per share, totaling $65 million. Bratt said share repurchases were paused during the quarter due to a restricted period “following multiple filings and the announcement of a new CFO,” but the company’s $2.5 billion repurchase authorization through 2029 remains intact, with an annual repurchase ambition of $300 million to $500 million.
On leverage, Grama said the net debt leverage ratio increased to 1.3 from 1.1 during the quarter as net debt rose by about $200 million while trailing 12-month adjusted EBITDA was “virtually unchanged.”
Guidance reiterated amid geopolitical and raw material uncertainty
Autoliv reiterated its full-year 2026 outlook. Bratt said the company continues to expect flat organic sales while significantly outperforming light vehicle production in China and India, and an adjusted operating margin of around 10.5% to 11%.
Management’s guidance assumes global light vehicle production declines by around 1% and includes a gross raw-material headwind of about $90 million, up from a prior assessment of roughly $30 million. Bratt said oil prices were the primary driver of the increased raw-material estimate, with potential exposure most notable in “textiles and plastics,” along with indirect effects on materials such as aluminum, helium and steel. He said Autoliv’s purchasing mix—primarily components rather than raw materials—reduces direct commodity exposure, though price impacts can lag oil price changes by three to six months.
Management said mitigation efforts include productivity and cost-reduction initiatives, along with customer compensation mechanisms that are expected to offset a “meaningful portion” of cost increases, typically with a timing delay. In response to analyst questions, Bratt said the net raw-material impact is already embedded in the company’s full-year guidance, and the company expects a majority of the gross exposure to be offset through pricing mechanisms, with the remainder addressed through internal actions.
Tariffs were another theme in the quarter. Grama said Autoliv recovered approximately 70% of its U.S. tariff costs in Q1, a lower recovery rate than last year due to delays tied to implementation of the new U.S. administration’s Import Adjustment Offset Program. She said the combination of unrecovered tariffs and the dilutive effect of the recovered portion reduced operating margin by around 40 basis points, but the company expects most outstanding tariffs to be recovered later in the year. Bratt said Autoliv’s exposure is largely tied to the USMCA structure, adding that there were “no changes” to that framework at the time of the call and that recent rule changes were “a minor part” of total exposure.
For market assumptions, Bratt cited S&P Global’s updated outlook calling for global light vehicle production to decline 2% in 2026 versus 2025, reflecting a downward revision attributed largely to production cuts in the Middle East and other regions impacted by hostilities. He said heightened uncertainty around the Persian Gulf adds risk to energy markets, consumer confidence and industry volumes, though he noted the company’s direct exposure to that region is “very limited.”
In Q&A, Bratt also reiterated Autoliv’s typical decremental margin range of 20% to 30% in the event of a “dramatic drop in sales.”
Product launches and expansion beyond core markets
Bratt said Autoliv saw a “relatively high number of new launches” in the first quarter, primarily in China, with higher content per vehicle driven by front center airbags on many new models. He added that for the remainder of 2026 the company expects a high level of new launches mainly driven by Chinese OEMs, offset by fewer launches in the Americas and Europe.
Autoliv also announced new products outside its traditional automotive core. Bratt said the company introduced its “first airbag for motorcycles” and its “first complete wearable airbag solution for motorcycle riders,” which he characterized as part of a longer-term strategy to grow beyond the core business. In response to an analyst question about long-term growth, he said the motorcycle offerings are a “first step” and a sign that the company’s mobility safety solutions plans are “on its way,” without changing the company’s longer-term growth expectations.
Closing the call, Bratt said he remained confident in Autoliv’s market position and growth momentum in Asia, while acknowledging macroeconomic and geopolitical uncertainties. He said the company’s ability to strengthen profitability in a low-growth environment supports shareholder returns and a path toward its 12% adjusted operating margin target.
About Autoliv (NYSE:ALV)
Autoliv Inc (NYSE: ALV) is a leading global supplier of automotive safety systems, specializing in the design, development and manufacture of passive and active safety products. Its core product portfolio includes airbags, seatbelts, steering wheels, restraint control modules and pedestrian protection systems. In recent years, the company has also expanded into active safety technologies, offering radar, camera and sensor solutions that support advanced driver assistance systems (ADAS) and autonomous driving applications.
Founded in 1997 following the spin-off of Electrolux’s automotive safety business, Autoliv has evolved into a multinational organization with a presence in over 27 countries.
