Q1 2025 Autoliv Inc Earnings Call
[music].
Operator: Good day and thank you for standing by.
Good day and thank you for standing by welcome to the Old Tilly's, Inc. First quarter 2025 financial results Conference call. At this time, all participants are in a listen only mode.
Operator: Welcome to the Autoliv Inc. first quarter 2025 financial results conference call. At this time all participants are in a listen-only mode.
Operator: After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone.
Then here an automated message advising Johan is raised.
To withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today I'm just trap head of.
Operator: Please be advised that today's conference is being recorded.
Operator: I would now like to hand the conference over to your speaker today, Anders Trapp, head of investor relations. Please go ahead. Thank you, Melanie.
Mr Relations. Please go ahead.
Speaker Change: Thank you Melanie.
Anders Trapp: Welcome everyone to our first quarter 2025 earnings call. On this call, we have our President and Chief Executive Officer, Mikael Bratt, our Chief Financial Officer, Fredrik Westin, and me, Anders Trapp, VP, International Relations.
Speaker Change: Welcome everyone to our third quarter 2025 earnings call.
Speaker Change: On this call, we have our president and Chief Executive Officer Niko drops.
Speaker Change: Our chief financial Officer for adequacy on the on the job VP Investor Relations.
Anders Trapp: During today's earnings call, we will cover several topics, including our strong sales and earnings development in the first quarter, market development and tariffs that are affecting the automotive industry, as well as how our strong balance sheet and asset returns provide financial resilience and support the continued high level of shareholder return. Following the presentation, we will be available to answer your questions. As usual, the slides are available on autoliv.com. Turning to the next slide.
Speaker Change: During today's earnings call, we will cover several topics, including our strong sales in all of these developments in the fourth quarter.
Speaker Change: Market development and tariffs that are affecting the automotive industry as.
Speaker Change: As well as how our strong balance sheet and asset return provides a natural resilience and support the continued high level of shareholder return.
Speaker Change: Following the presentation, we will be available to answer your questions as usual the cycle available on hopefully booked corn.
Speaker Change: Turning to the next slide.
Anders Trapp: We have the statement, which is an integrated part of the presentation and includes the Q&A that follows. During the presentation we will reference non-U.S. gap measures. The reconciliations of historical U.S. gaps to non-U.S. gap measures are disclosed in our quarterly earnings release available on autoliv.com and in the TEMQ that will be filed with the FDA.
Speaker Change: Probably the statement, which is an integrated part of it.
Speaker Change: I don't think they are doing.
Speaker Change: That follows during the.
Speaker Change: For some patients we will reference non U S. GAAP measures the reconciliations of historical U S. GAAP to non us GAAP measures are disclosed in our quarterly earnings release.
Speaker Change: Well I'll tell you the cold and independent too that will be filed with the SEC.
Anders Trapp: Lastly, I should mention that this call is intended to conclude at 3 p.m. Central European Time, so please follow a limit of two questions per person.
Speaker Change: Lastly, I should mention that this call is intended to conclude at three P M Central European time.
Speaker Change: Please follow a limit of two questions per person.
Mikael Bratt: And I'll hand over to our CEO, Mikael Bratt. Thank you, Anders. Looking on the next slide.
Speaker Change: And I'll hand over to our CEO Mick.
Thank you Anders looking on.
Speaker Change: The next slide.
Mikael Bratt: I am happy to present the solid first quarter, showcasing the company's adaptability and resilience. Driven by our diverse product portfolio and strong customer relationship.
Speaker Change: I'm happy to present, a solid fourth quarter with showcasing that left the company.
Speaker Change: How resilient.
Speaker Change: Driven by our diverse product portfolio and strong customer relationships. This achievement lays a solid foundation.
Mikael Bratt: This achievement lays a solid foundation for the 25 years to come.
Speaker Change: Thank you for it.
Mikael Bratt: However, we remain cautious about the reminder of the year as we navigate the complexities of tariffs and other economic factors. It is encouraging that we, based on light vehicle production data from March, outperformed global light vehicle production despite continued significant headwinds from light vehicle production mix shifts, particularly in China. The stronger than expected sales were partly driven by LVP pull forward in Europe and North America.
Speaker Change: However, we remain cautious about the reminder of the year as we navigate the complexities of targets and other economic factors.
Speaker Change: It is encouraging that we based on light vehicle production data for March outperformed global light vehicle production. Despite continued significant headwinds for light vehicle production mix shift, particularly in China.
Speaker Change: The stronger than expected same pocket driven by.
Speaker Change: LDC pull forward in Europe, and North America.
Mikael Bratt: We significantly improved our profit and operating margin compared to a year ago. This strong performance was primarily driven by well-executed cost-reduction activities. Our structural cost reduction program reduced our indirect workforce by over 1,500 since Q1 2023 and our direct headcount by 3,700 over the past year. We neutralized tariffs almost entirely in the quarter by agreement with capital. We also achieved record earnings per share for the first quarter, thanks to lower number of shares and high net profit. I am also pleased that we continue to generate a high level of return on capital employment. Our cash flow remains solid despite higher receivables from strong sales towards the end of the course.
Speaker Change: We significantly improve gross profit.
Speaker Change: Profits and operating margins compared to a year ago.
Speaker Change: This strong performance was primarily driven by well executed cost reduction activities.
Speaker Change: Our structural cost reduction program reduced our indirect workforce by over 1500, since Q1, 2023, and our direct head count by 3700 over the past year.
Speaker Change: We neutralize tariffs almost entirely in the quarter by agreements with customers.
Speaker Change: We also achieved record earnings per share for the fourth quarter, thanks to lower number of shares and high net profit.
Speaker Change: Im also pleased that we continue to generate a high level of return on capital employed.
Speaker Change: Our cash flow remained solid despite higher receivable from strong sales towards the end of the quarter.
Mikael Bratt: supporting a high level of shareholder return.
Importing a high level of shareholder return.
Mikael Bratt: In the quarter, we repurchased and retired 500,000 shares for 50 million US dollars and paid a dividend of 70 cents per share.
Speaker Change: In the quarter, we repurchased and retired 500000 shares.
Speaker Change: 50 million U S dollar and paid a dividend of <unk> 70 cents per share.
Mikael Bratt: Looking now on the next slide.
Speaker Change: Looking now on the next slide.
Mikael Bratt: Last night Autoliv was recognized by the Automotive News in the category Pace Pilot Innovation to Water. The prestigious PACE Pilot Award recognizes achievements under development with new materials, fresh ideas, creative processes, and bold execution in the automotive and future mobility space. Autoliv received an award for its Banuli airbag module, which inflates larger airbags more efficiently by leveraging pressure differential with the small single-stage inflator, lowering deployment costs and weight.
Speaker Change: Last night, our belief was recognized by the hour automotive news in the category paced pilot innovation towards the.
Speaker Change: The prestigious pace pilot award recognizes achievements under development with new materials fresh ideas.
Speaker Change: These new processes and bond execution in the automotive and future will be the peak.
Speaker Change: Ultimate received the award for its Bernoulli airbags module, which inflates larger airbags more efficiently by leveraging pressure differential.
Speaker Change: Single stage in later.
Speaker Change: Lowering deployments deployment cost and weight.
Mikael Bratt: I want to thank the team for this great achievement. It reflects our collective effort and commitment to excellence and innovation.
Speaker Change: I want to thank the team for this great achievement.
Speaker Change: Our collective effort and commitment to excellence and innovation.
Mikael Bratt: Looking now on financials in more detail on the next slide. Sales in the first quarter decreased by 1% year-over-year due to negative effects from currency, light vehicle production development, and adverse regional and customer mix development. The adjusted operating income for Q1 increased by 28% to $255 million from $199 million last year.
Speaker Change: Looking now on financials in more detail on the next slide.
Speaker Change: Sales in the fourth quarter decreased by 1% year over year due to negative effects from currency.
Speaker Change: Light vehicle production development, and adverse regional and customer mix development.
Speaker Change: The adjusted operating income for Q1 increased by 28%.
Speaker Change: $255 million from $199 million last year.
Mikael Bratt: The adjusted operating margin was 9.9%. 230 basis points better than in the same quarter last year.
Speaker Change: The adjusted operating margin was nine 9%.
Speaker Change: 230 basis points better than in the same quarter last year.
Mikael Bratt: Operating cash flow was a solid 70% despite a temporary working capital build-up.
Speaker Change: Operating cash flow was a solid 70.
Speaker Change: However, despite a temporary working capital buildup.
Mikael Bratt: Looking now on the next slide. We continue to generate broad-based improvements. Our positive direct labor productivity trend continues as we reduce our direct production personnel by 3,700 year over year. This is supported by the implementation of our strategic initiatives, including automation and digitalization. Our gross margin was 18.6%, an increase of 160 basis points year-over-year. The improvement was mainly the result of direct labour efficiency and headcount reduction. partly obsessed by a supplier settlement, as communicated last year. As a result of our structural efficiency initiatives, the positive trend for RD&E continued. Combined with the gross margin improvement, this led to 230 basis points improvement in adjusted operating margin.
Speaker Change: Looking now on the next slide.
Speaker Change: We continue to generate broad based improvement.
Speaker Change: Our positive direct labor productivity trend continues as we reduce our direct production personnel by 3700 year over year. This is supported by the implementation of our strategic initiatives, including optimization and digital.
Speaker Change: Jason.
Speaker Change: Our gross margin was 18, 6% an increase of 160 basis points year over year.
Speaker Change: <unk> was mainly the result of direct labor efficiency and head count reductions.
Speaker Change: Partly offset by a supplier.
Speaker Change: Settlement as communicated last year.
Speaker Change: As a result of our structural efficiency initiatives the positive trend for our DNA continue combined with the gross margin improvement. This led to 230 basis points improvement.
Adjusted operating margin.
Mikael Bratt: Looking now on the market development in the first quarter on the next slide. According to S&P Global data from March, global light vehicle production for the first quarter declined 40 basis points, exceeding the expectation from the beginning of the quarter by 140 basis Supported by the scrapping and replacement subsidy policy, we continue to see strong growth for domestic OEMs in China, while light vehicle production in higher content per vehicle markets in North America and Western Europe declined by 7% and 10% respectively. This resulted in an unfavorable regional light vehicle production mix of more than three percentage points in the quarter.
Speaker Change: Looking now on the market development in the fourth quarter on the next slide.
Speaker Change: According to S&P global data from March Global light vehicle production for the first quarter decline.
Speaker Change: Basis points.
Speaker Change: Exceeding the expectation from the beginning of the quarter by 140 basis points.
Speaker Change: Supported by the scrapping a replacement.
Speaker Change: Subsidy policy.
Speaker Change: We continue to see strong growth for domestic Oems in China, while light vehicle production in higher content per vehicle market in North America, and Western Europe declined by 7% and 10% respectively.
Speaker Change: This resulted in an unfavorable regional light vehicle production of more than three percentage points in the quarter Cigna.
Mikael Bratt: significantly impacting our outperformance negatively. In the quarter, we did see call of volatility continue to improve near the end.
Significantly impacting our outperformance negatively.
Speaker Change: In the quarter, we did see call of volatility continued to improve year over year.
Mikael Bratt: We will talk about the market development more in detail later in the presentation.
Speaker Change: We will talk about the market development more in detail later in the presentation.
Mikael Bratt: Looking now on our sales growth in more detail on the next slide. Our consolidated net sales were $2.6 billion. This was slightly lower than a year earlier, driven by negative currency translation effects, which reduced sales by almost 4% in the quarter. excluding currencies, our organic sales grow by 2% including out of period compensation of $4 million.
Speaker Change: Looking now on our sales growth in more detail on the next slide.
Speaker Change: Our consolidated net sales were $2 6 billion U S dollar.
Speaker Change: This was slightly lower than a year earlier driven by negative currency translation effects.
Speaker Change: Which reduced sales by almost 4% in the quarter.
Speaker Change: Excluding currency, our organic sales grew by 2%, including out of period compensation of $4 million.
Mikael Bratt: The regional sales split reflects the seasonally weak sales in China due to the Lunar New Year celebration. China and counted for 17%. Asia, excluding China, accounted for 20%. America for 33% and Europe for 30%.
Speaker Change: The regional sales split reflects the seasonally weak.
Speaker Change: <unk> sales in China due to the lunar new year celebration.
Speaker Change: China accounted for 17%.
Speaker Change: Asia, excluding China accounted for 20%.
Speaker Change: America for 33%.
Speaker Change: And Europe was 30%.
Mikael Bratt: We outline our organic sales growth compared to live leaks in production on the next slide. Our quarterly sales were robust and slightly exceeded our expectations. Driven by strong performance across most regions, particularly in Europe and America. Based on light vehicle production data from March, we outperformed light vehicle production in all regions except China, fueled by product launches and prices. In China, our sales to domestic OEMs grow by 19% aligned with their light vehicle production growth. Our growth with the global customers in China was just one percentage point below their LVP growth. Due to LVP mix shift that continues, we underperformed significantly in China overall.
Speaker Change: We outlined our organic sales growth compared to last week's introduction on the next slide.
Speaker Change: Our quarterly sales were robust and slightly exceeded our expectations.
Speaker Change: Driven by strong performance across most regions, particularly in Europe and America.
Speaker Change: Based on light vehicle production data for March we outperformed nicely to production in all regions, except China.
Speaker Change: And by product launches and pricing.
Speaker Change: In China, our sales to domestic OEM grew by 19%.
Speaker Change: Aligned with the light vehicle production growth.
Speaker Change: Our growth with the global customers in China.
Speaker Change: One percentage point below their LBP growth.
Speaker Change: Due to LBP mix shift that continues we underperformed significantly in China overall.
Mikael Bratt: Among the primary net sales growth drivers for the company this quarter, four were Chinese OEMs. and two were Japanese. highlighting the importance of the Asian market and its customers.
Speaker Change: Among the primary net sales growth drivers for the company this quarter.
Speaker Change: While Chinese Oems.
Speaker Change: And two were Japanese highly.
Speaker Change: Highlighting the importance of the Asian markets and its customers.
Mikael Bratt: On the next slide, we show some key model launch. New launches in the first quarter of 2025 was, as you can see on this slide, mostly in America, Europe and South Korea, with few launches in China. The reason for this is that many OEMs are planning to unveil new vehicles in the Shanghai Auto Show in April.
Speaker Change: On the next slide we show some key model launches.
Speaker Change: New launches in the first quarter of 2025 Watts as you can see on this slide mostly in America, Europe, South Korea with few launches in China.
Speaker Change: The reason for this is that many Oems are planning to unveil new vehicles in the Shanghai Auto show in April.
Mikael Bratt: We expect significant number of new launches in China as of Q2. But we are unable to disclose these lodges. as the vehicles have not yet been unveiled. The models displayed here features Autoliv content per vehicle, ranging from approximately $130 to nearly $500 US. In terms of Autoliv's sales potential, the U.S. produced Honda Passport and the Ford Expedition are the most significant.
Speaker Change: We expect significant number of new launches in China as of Q2.
Speaker Change: But we are unable to disclose these losses.
Speaker Change: As the vehicles have not yet.
Speaker Change: Yes.
Speaker Change: The modest displayed here features after the content per vehicles, ranging from approximately 130 to nearly 500 U S dollar.
Speaker Change: In terms of outlet sales potential.
Speaker Change: U S produced on the passport and the Ford expedition are the most significant.
Speaker Change: Now looking at the next slide.
Fredrik Westin: I will now hand it over to Fredrik Westin. Thank you, Mikael.
Speaker Change: I will now hand, it over to credit business.
Mikael: Thank you Mikael.
Fredrik Westin: I will talk about the financials now more in detail on the next few slides. So turning to the next slide. This slide highlights our key figures for the first quarter of 2025 compared to the first quarter of 2024. Our net sales was $2.6 billion, representing a 1% decline. Gross profit increased by $35 million and the gross margin increased by 1.6% this year. The adjusted operating income increased from $199 million to $255 million and the adjusted operating margin increased by 230 basis points to 9.9%. The reported operating income was one million lower than the adjusted operating income, mainly due to costs for capacity.
Mikael: I will talk about the financials more in detail over the next few slides.
Mikael: So turning to the next slide.
Mikael: Yes.
Mikael: This slide highlights our key figures for the first quarter of 2025 compared to the first quarter of 2024.
Mikael: Our net sales was $2 6 billion, representing a 1% decrease.
Mikael: Gross profit increased by $35 million and the gross margin increased by one six percentage points.
Mikael: The adjusted operating income increased from 199 million to $255 million and the adjusted operating margin increased by 230 basis points to nine 9%.
Mikael: The reported operating income was 1 million lower than the adjusted operating income mainly due to costs for capacity alignment.
Fredrik Westin: Adjusted earnings per share diluted increased by $0.58, where the main drivers were $0.48 from higher operating income and $0.13 from lower number of shares. Our adjusted return on capital employed was a solid 26% and our adjusted return on equity was 29% driven by share buybacks impacting total equity.
Mikael: Adjusted earnings per share diluted increased by 58.
Mikael: Were the main drivers were <unk> 48 from higher operating income and 13 stems from lower number of shares.
Mikael: Our adjusted return on capital employed was a solid 26% and our adjusted return on equity was 29%.
Mikael: Driven by share buybacks impacting total equity.
Fredrik Westin: We paid a dividend of $0.70 per share in the quarter and repurchased shares for slightly over $50 million US dollars and retired half a million shares.
Mikael: We paid a dividend of <unk> 70 per share in the quarter.
Mikael: And repurchased shares for slightly over 50 million U S dollars and retired half a million shares.
Fredrik Westin: Looking now on the Adjusted Operating Income Bridge, on the next slide. In the first quarter of 2025, our adjusted operating income increased by $56 million. Operations contributed with 46 million mainly from higher organic sales and improved operational efficiency supported by the better call of accuracy.
Mikael: Looking now on the adjusted operating income bridge on the next slide.
Mikael: In the first quarter of 2025, our adjusted operating income increased by $56 million.
Mikael: Operations contributed with $46 million, mainly from higher organic sales and improved operational efficiency supported by the better color accuracy.
Fredrik Westin: The net currency effect was 5 million negative as the positive effect from the Mexican peso versus the US dollar was offset by translation and revaluation. The impact from raw materials was around 5 million negative. Out-of-period cost compensation was $4 million higher than last year. Costs for SG&A and RD&E net decreased slightly, despite higher costs for SG&A personnel.
Mikael: The net currency effect was $5 million negative as the positive effects from the Mexican peso versus the U S dollar.
Mikael: It was offset by translation and revaluation effects.
Mikael: The impact from raw materials was around $5 million negative.
Mikael: Out of period cost compensation was 4 million higher than last year.
Mikael: Costs for SG&A and <unk> net decreased slightly despite higher costs for SG&A personnel.
Fredrik Westin: The recycled accumulated currency translation differences related to the divestment of our idle operations in Russia amounted to $12 million. and the year-over-year impact from the supplier settlement in 2024 was around $2 million.
Mikael: The recycled accumulated currency translation differences related to the divestment of our idle operations in Russia.
Mikael: Wanted to $12 million.
Mikael: The year over year impact from the supplier settlement in 2024 was around $2 million negative.
Fredrik Westin: Looking now at the full year results on the next slide.
Mikael: Looking now at the full year results on the next slide.
Fredrik Westin: I'm the cash flow, sorry, I'm the next. For the first quarter of 2025, operating cash flow decreased by 45 million compared to the same period last year to 77. namely a result of increased receivables following the strong sales towards the end of the quarter. Capital expenditures net decreased by 47%. Capital expenditures net in relation to sales was 3.6% versus 5.4% a year earlier.
Mikael: On the cash flow starts on the next slide.
Mikael: For the first quarter of 2025 operating cash flow decreased by $45 million compared to the same period last year to $77 million.
Mikael: Mainly a result of increased receivables following the strong sales towards the end of the quarter.
Mikael: Capital expenditures net decreased by $47 million.
Mikael: Capital expenditures net in relation to sales was three 6% versus four.
Mikael: Five 4% a year earlier.
Fredrik Westin: The lower level of anthropocentrism is mainly related to lower birth rate dynamics in Europe and America, so less capacity stands at the end. The free operating cash flow was negative 16 million compared to negative 18 million in the same period the prior year, as the lower operating cash flow was offset by lower capital. The cash conversion in the last 12 months, defined as free operating cash flow in relation to net income, was around 72%, slightly below our target of 80%.
Mikael: The lower level.
Mikael: Yeah.
Mikael: It's grade related lower.
Mikael: In Europe.
Mikael: Less capacity.
Mikael: Okay.
Mikael: The free operating cash flow was negative $16 million compared to negative $80 million in the same period. The prior year as the lower operating cash flow was offset by lower capex.
Mikael: The cash conversion in the last 12 months defined as free operating cash flow in relation to net income was around 72% slightly below our target of 80%.
Fredrik Westin: Now looking at our trade working capital development on the next Trade working capital decreased by $56 million compared to the prior year, where the main drivers were $11 million in higher accounts receivables, $17 million in lower accounts payables, and $84 million in lower inventory.
Mikael: Now looking at our trade working capital development on the next slide.
Mikael: Trade working capital decreased by $56 million compared to the prior year were the main drivers were $11 million and higher accounts receivables.
Mikael: $17 million lower accounts payables and $84 million lower inventories.
Fredrik Westin: In relation to sales, the trade working capital decreased from 12.8% to 12.4%.
Mikael: In relation to sales the trade working capital decreased from 12, 8% to 12, 4%.
Fredrik Westin: Improvement in trade working capital as a result of our multi-year working capital improvement program, and an improvement in customer call of accuracy, enabling a more efficient inventory.
Mikael: The improvement in trade working capital as a result of our multi year of working capital improvement program.
Mikael: And an improvement in customer call of accuracy, enabling a more efficient inventory management.
Fredrik Westin: Now looking on our depth leverage ratio development on the next slide. Autoliv has consistently prioritized maintaining a strong leverage ratio, reflecting our prudent financial management and commitment to a strong balance. This approach has enabled the company to navigate economic fluctuations, invest in innovation, and continue delivering value to stakeholders over time.
Mikael: Now looking at our debt leverage ratio development on the next slide.
Mikael: I also leave us consistently prioritized, maintaining a strong leverage ratio, reflecting our prudent financial management, our commitment to a strong balance sheet.
Mikael: This approach has enabled the company to navigate economic fluctuations.
Mikael: <unk> innovation to continue delivering value to stakeholders over time.
Fredrik Westin: Our leverage ratio is virtually flat year over year at 1.3 times, despite close to 700 million U.S. dollars in shareholder returns. Compared to the end of last year, our debt leverage ratio increased by 0.1 times, as our net debt increased by $242 million, while the 12-month trailing adjusted EBITDA increased by $55 million.
Mikael: Our leverage ratio is virtually flat year over year at one three times, despite despite close to $700 million in shareholder returns.
Mikael: Compared to the end of last year, our debt leverage ratio increased by 0.1 times as our net debt increased by $242 million, while the 12 month trailing adjusted EBITDA increased by $55 million.
Mikael Bratt: With that, I'll hand it back to you, Nick. Thank you very much, Fredrik.
Mikael: With that I'll hand, it back to you later.
Mikael: Thank you your luxury onto the next slide.
Mikael Bratt: On to the next slide. In recent years, our business has faced significant challenges from COVID, disrupted global supply chain, component shortages, inflation, and the changing LVP land. Our company has adapted quickly, found new ways to mitigate risk and maintaining profitability.
In recent years, our business has faced significant challenges from Covid disrupted global supply chain components shortages in place.
Mikael: Changing LDL C landscape our.
Mikael: Our company has adapted.
Mikael: <unk> found new ways to mitigate risk and.
Mikael: And maintaining profitability.
Mikael Bratt: Now facing a challenging tariff situation, we are well equipped with a diversified customer portfolio, a broad regionalised footprint, a strong balance sheet and a single focus on automotive safety and saving lives. Autoliv has a diversified customer and model mix in North America. This diverse model mix base helps Autoliv mitigate risks associated with slowing import of certain vehicle models from Mexico and Canada. The company has multiple production and assembly facilities across North America. ensuring timely delivery of airbags, seatbelts and sealing lids.
Mikael: Now facing a challenging tariff situation, we are well equipped with a diverse diversified customer portfolio.
Mikael: Road regionalized footprint.
Mikael: Strong balance sheet and the singular focus on automotive safety and saving lives.
Mikael: I don't believe has diversified customer and model mix in North America.
Mikael: This diverse model mix base helps ultimately mitigate risks associated with slowing imports of certain vehicle models for Mexico and Canada.
Mikael: The company have multiple production and assembly facilities across North America.
Mikael: Ensuring timely delivery of airbags seatbelts is dealing with.
Mikael Bratt: Our largest production hub is in Mexico, however not all products are made there meet USMCA standards due to customer specific components or the unavailability of certain materials like magnesium and leather for steering wheel. Our logistics in North America are complex. While some of our Mexican production support local vehicle manufacturing, the majority is still destined for U.S. vehicle assembly. were products sent to the US customers managed about one third of the transportation and import and these shares continue to grow.
Mikael: Our largest production hub is in Mexico. However, not all products are made the made the meet U S. MCA standards due to customer specific components or the availability of certain materials like magnesium and lender FTSE.
Mikael: <unk>.
Mikael: Our logistics in North America are complex, while some of our Mexican production support.
Mikael: Local vehicle manufacturing the minority.
Mikael: And we will do with vehicle Assembly plant.
Mikael: For product <unk> to the U S customers manage.
Mikael: About one third of the transportation on imports and these shares continue to grow.
Mikael: Dry driving from past experiences after Lee has developed.
Mikael Bratt: Driving from past experiences, Autoliv has developed a stress-free vehicle-handled tariff. Over the years, we demonstrated that our methods for navigating challenging environments are effective.
Mikael: I'll handle tariffs.
Mikael: Over the year.
Mikael: We demonstrated that our method for navigating challenging environments are affected.
Mikael Bratt: On to the next slide. The instability and overall magnitude of the tariffs have placed the automotive industry in a challenging position. Tariff costs need to be passed on to the end consumer.
Mikael: Onto the next slide.
Mikael: The instability and overall magnitude of the tariffs have placed the out amongst the industry in this challenging the system.
Mikael: Tariff costs need to be passed on to the end consumers.
Mikael Bratt: which would lead to higher vehicle prices and potentially impact. Consumer Demand and Light Vehicle Products. To mitigate the effects of US tariffs on our support and materials, we have implemented several strategic measures. We established a task force early in the year with a focus on minimizing the impact of COVID-19. We are engaged in ongoing discussions with our customers to find setups that are mutually beneficial while negotiating compensation for the transition period. Our large existing footprint in the U.S. enables us to navigate the challenges posed by terrorists effectively. It gives us opportunity to ramp up production in the U.S.
Mikael: Would lead to higher vehicle prices potentially impact.
Mikael: Consumer demand in light vehicle production.
Mikael: To mitigate the effects of your U S tariffs on our approach and materials.
Mikael: We have implemented several strategic measures.
Mikael: We established a task force early in the year with a focus on minimizing the impact.
Mikael: We are engaged in ongoing discussions with our customers to find setup.
Mikael: Our mutually beneficial one negotiating compensation for the recent period.
Mikael: Our large existing footprint in the U S enable us to navigate the challenges.
Post vitaros effectiveness.
Mikael: It gives us opportunities to ramp up production in the U S.
Mikael Bratt: Should that be the best option when evaluating future production locations together with our customers? We are committed to increasing our compliance with the USMCA regulations. working closely with our customers and suppliers to achieve this through increased local sourcing of components and changing of specifications.
Mikael: That would be the best option when evaluating future production locations together with our customers.
Okay.
Mikael: We are committed to increase our compliance with the U S MCA regulation.
Mikael: Working closely with our customers.
Mikael: Suppliers to achieve this through increased local sourcing of components and changing of specification.
Mikael Bratt: On to the next slide.
Mikael: Onto the next slide.
Mikael Bratt: The outlook for global light vehicle production in 2025 has become significantly more uncertain since January. with regional variation influenced by tariffs, slowing economic growth and other factors. In North America, the production outlook may be significantly downgraded due to trade risk and higher vehicle prices from import tariffs. This reduction is likely to affect vehicles produced in Mexico and Canada more severely. In Europe, production is expected to increase slightly short term due to revision in EU regulations and higher demand in some Eastern European markets. China is also growing, driven by government policies supporting the new energy vehicle model.
Mikael: The outlook for global light vehicle production in 2025 has become significantly more uncertain since January.
Mikael: With regional variation.
Mikael: But terry slowing economic growth and other factors.
Mikael: In North America, the production outlook may.
Mikael: May be significantly downgraded due to trade risks and higher vehicle prices from import tariffs.
Mikael: This reduction is likely to affect vehicles produced in Mexico, and Canada more similar.
Mikael: In Europe production is expected to increase slightly short term due to revision EU regulations and higher demands in some eastern European market.
Mikael: China is also growing.
Mikael: Driven by government policies supporting the new energy vehicle market.
Mikael Bratt: Japan and South Korea are potentially facing declines due to the impact of lower exports to the US. Overall, while some regions are still expecting growth, the global auto industry remains cautious.
Mikael: Japan, and South Korea are potentially facing declines due to the impact of lower exports to the U S.
Mikael: Overall, while some regions are still expecting grow the global outdoor industry remains cautious.
Mikael Bratt: Navigating the complexities of tariffs and other economic factors, now looking on the business outlook on the next We expect 2025 to be a challenging year for the automotive industry. However, our ongoing focus on efficiency is expected to further enhance our profitability. We anticipate a significant improvement in our sales performance in China. Additionally, our strong cash conversion and solid balance sheet provide financial resilience and a robust foundation for maintaining high shareholder returns. We expect cost pressures from 2025. But still, we expect some pressure coming mainly from labor, especially in Europe and America. However, the ongoing tariff situation could add inflationary pressure.
Mikael: Navigating the complexities of tariffs and other economic factors.
Mikael: Now looking on the business outlook on the next slide.
Mikael: We expect 2000 and.
Mikael: We expect 2025 to be a challenging year for the apomorphine.
Mikael: However, our ongoing focus on efficiency is expected to further enhance our profitability.
Mikael: We anticipate a significant improvement in our sales performance in China.
Mikael: Additionally, our strong cash flow cash conversion and solid balance sheet provide financial resilience and a robust foundation for maintaining high shareholder returns.
Mikael: We expect cost pressures from.
Mikael: In 2025.
Mikael: But still we expect some pressure coming mainly from labor, especially in Europe and America.
Mikael: However, the ongoing tariff situation could add inflationary pressure.
Mikael Bratt: Certain raw material prices have increased and we expect headwind for the year, mainly in the US. We successfully navigated the new tariff environment in the first quarter. This gives us confidence that it's possible to continue on that course. But there is significant uncertainty.
Mikael: Certain raw material prices have increased and we expect headwind for the year, mainly in the U S.
Mikael: We successfully navigated the new tariff environment in the first quarter.
Mikael: This gives us confidence that is possible to continue.
Mikael: On that course, but there is significant uncertainty.
Mikael Bratt: Contrary to the past three years, we do not anticipate a gradual quarter-by-quarter adjusted operating margin increase as the inflationary environment differs from retail. However, the fourth quarter is still expected to be the strongest of the year.
Contrary to the past three years we.
Mikael: We do not anticipate gradually quarter by quarter or adjusted operating margin increase.
Mikael: The inflationary environment differs from recent years. However, the fourth quarter is still expected to be the strongest of the year.
Mikael Bratt: Turning to the next slide.
Mikael: Turning to the next slide.
Mikael Bratt: This slide shows our full year 2025 guidance, which excludes effects from capacity alignment, antitrust-related matters, as well as no further changes to tariffs or trade restrictions that are in effect as of April 15, 2020. as well as no significant changes in the macroeconomic environment or changes in capital call-off, volatility or significant supply chain disruption.
Mikael: This slide shows our full year transplanted by guidance, which excludes the effects on capacity alignment antitrust related matters as well as no further changes to tariffs or trade restrictions.
Mikael: As of April 15.
Mikael: Yes.
Mikael: As well as no significant changes in the macroeconomic environment or changes in customer call off volatility or significant supply chain disruptions.
Mikael Bratt: The business environment uncertainties make it difficult to predict the remainder of 2025. However, based on the strong first quarter performance and encouraged... Operating operating cash flow is expected to be around 1.2 billion US dollar Our positive cash flow and strong balance sheet supports our continued commitment to a high level of shareholder returns. Our two-year guidance is based on a global light vehicle production decline of around negative 0.5%. a tax rate around 28% and that the net currency translation effect on sales will be around minus 3%.
Mikael: The business environment, uncertainties makes it difficult to predict the reminder, quantified.
Mikael: However, based on the strong first quarter performance in Ontario.
Mikael: Correct.
Mikael: Okay.
Mikael: Okay.
Mikael: Okay.
Mikael: Today's program.
Mikael: Very good.
Mikael: Bob.
Mikael: Okay.
Mikael: <unk>.
Mikael: Yes.
Mikael: Operator operating cash flow is expected to be around $1 2 billion U S. Dollar.
Mikael: Our positive cash flow and strong balance sheet.
Mikael: In support of our continued commitment to a high level of shareholder returns.
Mikael: Our full year guidance is based on our global light vehicle production decline of around negative <unk>.
Mikael: 5%.
Mikael: Our tax rate around 28% and Thats the net currency translation effects on sales will be around minus 3%.
Mikael Bratt: We are monitoring the situation closely and are prepared to be as agile as needed to adjust to any change.
Mikael: We are monitoring the situation closely and are prepared to be as AGL as needed.
Mikael: Just to any change.
Mikael Bratt: Looking on the neckline.
Mikael: Looking on the next slide.
Mikael Bratt: We are pleased to invite you to the Autoliv Capital Markets Day on June 4, 2025 in Stockholm, Sweden. Join us to learn more about our journey towards achieving our targets, capturing growth opportunities and translating these into attractive and sustainable shareholder returns. We will showcase how Autoliv is strategically securing a strong position with successful OEMs supporting our medium and long term growth in a rapidly changing market environment.
Mikael: We are pleased to remind you to the outlet capital markets day on June four.
Mikael: Goodbye in Stockholm, Sweden.
Mikael: Join us to learn more about our journey towards achieving our target capturing growth opportunities and translating this into attractive and sustainable shareholder return.
Mikael: We will showcase our outlet is strategically secure in a strong position with successful Oems.
Mikael: Supporting our medium and long term growth in a rapidly changing market environment.
Mikael Bratt: You will also have the opportunity to see our latest innovation and technologies. I personally look forward to seeing you all in Stockholm.
Mikael: You will also have the opportunity to see our latest innovation.
Mikael: <unk> technologies I personally look forward to seeing you all in Stockholm.
Mikael: Now turning to slide.
Mikael Bratt: This concludes our formal comments for today's earnings call and we would like to open the line for questions from analysts and investors.
Mikael: This concludes our formal comments for today's earnings call and we would like to open the line for questions from analysts and investors.
Operator: I will now hand it back to Madeline. Thank you.
I will now hand, it back to modeling.
Mikael: Thank you.
Operator: As a reminder, if you have a question, you will need to press 1-1 on your telephone and we can give you a call. draw a question please press star 1 1 again please note that there is a limit of two questions per person on today's call Please stand by while we compile the Q&A.
Mikael: As a reminder.
Mikael: And you will need to press one on your telephone.
Mikael: Yeah.
Mikael: Sure.
Speaker Change: Press Star one one again. Please note that there is a limit of two questions per person on today's call.
Mikael: These standby, while we compile the Q&A.
Mikael: Okay.
Colin Langan: Our first question comes from the line of Colin Langan from Wells Fargo. Please go ahead, your line is open. Oh, great. Thanks for taking my question. I know mid-quarter, you were trying to size the USMCA exposure. Do you have any better clarity now on how much of your sales are non-USMCA compliant that are at risk? Because, you know, I didn't see any actual, you know, impact on the walks on margin or sales. So I assume it was pretty small in March. But at any run rate, you could kind of help so that we could frame the potential.
Speaker Change: Our first question comes from the line of Colin Langan from Wells Fargo. Please go ahead. Your line is open.
Colin Langan: Oh, great. Thanks for taking my question.
Speaker Change: I don't mid quarter, you were trying to size.
Speaker Change: U S. MCA exposure do you have any better clarity now on how how much of your sales are non U S. MCA compliant that are at risk.
Speaker Change: I didn't see any actual impact on the walk on margin or sales. So I assume it was pretty small in March.
Speaker Change: But any run rate you can kind of help so that we can frame the potential risk.
Mikael Bratt: Yeah, we haven't given you any detail around the split there with the U.S. MTA compliance or non-compliance here, because it's, I would say, with the current circumstances here, I mean, it's a pretty fluid situation here, and giving too much details in this environment, I think, would be more confused than support. I think the bottom line here is that we are well positioned here with the footprint we just described here. We are having a really nice setup, so meaning America for America. However, now with this, you know, focus on the US side. It means the tariffs imply impacts us mainly for the Mexico, Mexican flow.
Yes.
Speaker Change: We haven't given you any detail around the split there with the U S MCA compliance or noncompliance here, because it's I would say.
Speaker Change: Circumstances here I mean, it's pretty fluid.
Speaker Change: The situation here.
Speaker Change: Giving too much detail in this environment I think.
Speaker Change: Confused and support I think the bottom line here is that.
Speaker Change: We are well positioned here with the footprint we have described here.
Speaker Change: We are having a regionalized setup, so meaning my America for America, However, now with this.
Speaker Change: Hello folks.
Speaker Change: Because on the U S side it means the tariffs.
Speaker Change: Implies impacts us mainly for the Mexico Mexican global.
Mikael Bratt: But as we have mentioned here, That production we have in Mexico is to a large extent for OEMs in Mexico also. Our customers are there. They also have pickup points in Mexico, meaning that they are carrying them over. And then a smaller part of that is also carried by us over the border into the customer's plant in the US. We are working with our customers here to see what we can do to improve that. The reason why we have USMCA non-compliant components here is because to a very large extent there is no available supply in the region there.
Speaker Change: Mention here.
Speaker Change: That production, we have in Mexico is to large extent for Oems in Mexico, and so our customers are there.
Speaker Change: We also have pickup points in Mexico, meaning that they are carrying them over and then some.
Speaker Change: Part of that is also carried by us over the border into the customers' plants in the U S.
Speaker Change: We are working with our customers here to.
Speaker Change: See what we can do to improve that but the reason why we are not.
Speaker Change: While we have <unk>.
Speaker Change: <unk>.
Speaker Change: U S. MCA Noncompliant component here is because there is no.
Speaker Change: <unk> heard lots Exxon.
Speaker Change: Available.
Speaker Change: Supply in.
Mikael Bratt: We mentioned, for example, leather. We mentioned magnesium for the steering wheels. We have also uniqueness when it comes to to certain directed components when it comes to electronics in the steering wheels, etc. So we are working to find alternatives with our customers, but that will take time. But whatever we are impacted by there, it's what we then pass on to the customer here through surcharges. So I think we are as good as we can get in this environment here right now, and we monitor it carefully going forward to see what we can do. And the vast majority was passed on to the customer in the quarter already.
Speaker Change: In the region, there and we mentioned for example, leather we mentioned magnesium for the steering wheels.
Speaker Change: Have also uniqueness when it comes to.
Speaker Change: So certain directed components when it comes to electronics.
Speaker Change: So.
Speaker Change: We are working to find alternatives with us with our customers will take time, but.
Speaker Change: Wherever we are impacted by that.
Speaker Change: What we do.
Pass onto the customer here through surcharges. So I think we are.
Speaker Change: But the good thing is.
Speaker Change: The environment right now.
Speaker Change: We monitor carefully going forward, let's see what we can do.
Speaker Change: And the vast majority was passed onto the customer in the quarter already yes, yes.
Mikael Bratt: Yeah, yeah.
Speaker Change: Okay.
Mikael Bratt: And just as a follow-up, in your comments, you said, I believe maybe I misheard, but the profit trajectory is not going to be like prior years now, is that, but it would be strongest in Q4, so how should we be thinking about, I know you don't guide quarters, but you know, Q2, any rough color there? Are we now expecting that to not increase sequentially? And why would that be the case? No, I mean, I would say we are more back to the normal pre-inflationary environment here, where you always had a weaker Q1, you had the stronger Q4, and then Q2 and Q3 was more average in between there.
Speaker Change: And just as a follow up.
Speaker Change: In your comments, you said ablation impairment charge.
Speaker Change: Profit trajectory is not going to be like prior years now as that but it will be strongest in Q4. So how should we be thinking about I know you don't guide quarters, but Q2 any.
Speaker Change: Color there or are we now expecting.
Speaker Change: To not increase sequentially.
Speaker Change: And why would that be the case.
Speaker Change: Sure.
Speaker Change: I mean.
Speaker Change: We are.
Speaker Change: I would say, we're more back to the normal.
Speaker Change: Free inflationary environment here.
Speaker Change: Well you always.
Speaker Change: The weaker Q1.
Speaker Change: <unk> Q4, and then Q2 Q3 was.
Speaker Change: Averaging between there and I think thats, what we are trying to say now.
Mikael Bratt: And I think that's what we're trying to say now, that we are not seeing the same inflationary pressure that creates this sequential development that we have seen for the last three years. More back to normal.
Speaker Change: We are not.
Speaker Change: Not seeing the same inflationary pressure that creates this the sequential development that we have seen for the last three years.
Speaker Change: More back to normal.
Mikael Bratt: All right, thanks for taking my question.
Speaker Change: Got it alright, thanks, taking my questions.
Speaker Change: Thank you.
Mikael Bratt: Thank you.
Speaker Change: Thank you.
Erik Gorrang: We'll now move on to our next question. Our next question comes from the line of Erik Gorrang from Sweden. Please go ahead, your line is open. Thank you. I have three questions.
Speaker Change: Now move onto our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Eric Coldwell banker from Sweden. Please go ahead. Your line is open.
Thank you.
Speaker Change: Questions.
Mikael Bratt: Firstly, on Europe, if you give some more color on that big outperformance, what's behind that? And then the second question on the size of tariff compensation in Q1, to the extent you would share that. And then thirdly, continue on the tariff topic. Just some more sort of color on this. I mean, you've covered yourself fully in Q1. It seems that you're confident that you'll be able to continue to do so. But just thinking of why wouldn't this burden be shared across the value chain? Thank you. Okay, thank you.
Speaker Change: Firstly on Europe, if you can give some more color on that big outperformance what's behind that.
Speaker Change: And then the second question on the size of <unk>.
Speaker Change: Compensation in Q1 to the extent you would share that.
Speaker Change: And then thirdly, continuing on the tariff topic.
Speaker Change: Just some more sort of color on the.
Speaker Change: Covered yourself fully in Q1, it seems that you're confident that you'll be able to continue to do so.
Speaker Change: But just thinking why wouldn't this third and be shared across the value chain.
Speaker Change: <unk>.
Speaker Change: Okay. Thank you.
Mikael Bratt: On the European side, I think... We, I think we see the result of our position here with the European OEMs and a positive result of the mix we have there. I have some, because I pulled forward here also to Well connected to the European regulations here, so we have a good Good, good mix there. So, more on the tariff side, I would say here that we... Let's start with the last question then maybe, I think we are confident, I mean... We have been very clear here that this tariff needs to be passed on to our customers and obviously to the end consumer here, in my view.
Speaker Change: On the European side I think.
Speaker Change: Okay.
Speaker Change: We.
Speaker Change: I think we see the result of our position here with European Oems.
The positive result of the mix we have there.
Speaker Change: Dave.
Speaker Change: Some because I pulled forward here also too.
Speaker Change: Two.
Speaker Change: Well connected to the European regulations here, so we have a good.
Speaker Change: Good good mix there so more.
Speaker Change: On the tariff side I would say here that.
Speaker Change: We are.
Speaker Change: Start with the last question then.
Speaker Change: My confidence.
Speaker Change: We have been better.
Speaker Change: Clipping here that these tariffs needs to be passed on.
Speaker Change: So our customers.
Speaker Change: Obviously.
Speaker Change: To the end consumer here in my view, therefore, this up to the Oems what they want to do here, but I don't see any logic at all.
Mikael Bratt: Then, of course, it's up to the OEMs what they want to do here. But I don't see any logic at all why the supply chain should absorb these tariffs. and this is you know the cost of doing business which is implemented from one day to another and yeah we'll see for how long and at what magnitude they will be but there's no way the supply chain can absorb this kind of magnitude of additional costs so the pure nature of it in my mind needs to be passed on to them. So so we start farming that and we'll continue to hold that position as we move forward.
Speaker Change: The supply chain should absorb these tariffs.
Speaker Change: This is.
Speaker Change: The cost of doing business.
Speaker Change: Which implemented from one day to another.
Speaker Change: And.
Speaker Change: Yes, we will see for how long and at what magnitude will be but there is no way.
Speaker Change: <unk> can absorb.
Speaker Change: This kind of magnitude of additional costs.
Speaker Change: So the pure nature of it.
Speaker Change: Mine needs to be passed on to the end consumer.
Speaker Change: So we start form and that will continue to hold that position as we move forward with that said of course, we are working with our customers to see.
Mikael Bratt: Then with that said, of course, we'll be working with our customers to see. What can be done in terms of, you know, fulfill the requirements so you don't need to have to pay a tariff at all. But in order to do any bigger things there, you need to have some kind of stability and certainty on the tariff situation before you can take that kind of decision. For example, moving large... large part of your capacity from, let's say, Mexico or somewhere else into the US. So you see that you have the right circumstances there to have a business case to do it.
Speaker Change: What can be done.
Speaker Change: In terms of Bureau.
Speaker Change: Sure Phil.
Phil: The requirements. So you don't need to have to pay a tariff at all.
Phil: In order to do bigger things there you need to have some kind of stability and certainty on the tariff situation before we can take the kind of the systems for example, moving.
Phil: <unk> launched.
Phil: Large part of your capacity from let's say, Mexico or somewhere else into the U S.
Phil: So you will see that we have the right.
Phil: First as a sector.
Phil: I have a business case to do it.
Mikael Bratt: But as I said, we are well positioned here with the footprint we have, and of course we can work on... We have here to see what kind of... And there, of course, it's more forces than our own force here that can change that. So we are dependent on the industry here as well. But we're working together with industry on this and see what happens. But once again, stability and predictability is required before any bigger changes can be done, if they should be done. And we haven't given any details on how much the tariffs are because I don't think that...
Phil: But as are we.
Phil: We are well positioned here with the footprint, we have and of course, we can work on.
Phil: The footprint, we have yet to see what kind of.
Phil: Especially as we can do there in terms of using the footprint we already have.
Phil: I would say among our peers the one with the strongest.
Phil: Industrial footprint in the U S. Here. So we are in it.
Phil: Good software.
Phil: And then when it comes to what we discussed before here with the non U S compliance is the availability.
Phil: It's more.
Phil: The forces and our own four theatres Kim.
Phil: Change that so we are dependent on the industry here as well, but we're working together with industry analyst.
Phil: What will happen.
Phil: Once again stability.
Phil: Flexibility is required before any bigger changes can be done if that could be done.
Phil: And we haven't given any details on how much the tariffs are because I don't think that.
Mikael Bratt: I mean, it's a figure that is not meaningful in terms of the details here, because we are passing on the tariffs that we get as a result of this. And it's changing all the time also, so it's a lot of changing parts here, because besides the automotive tariffs here, you have the steel, magnesium, aluminium, and all that, so yeah, it's a very complicated picture. Thank you.
Phil: I mean.
Phil: It's a figure that is not meaningful in terms of the details here because we are seeing on the tariffs that we get as a result of.
Phil: This.
Phil: It's.
Phil: Changing all the time also so it's a lot of.
Speaker Change: Changing for sure because besides the automotive sorry, Sir you have the seal Miami.
Phil: And all that so.
Phil: It's a very complicated.
Phil: Thank you and if I could just follow up.
Mikael Bratt: And if I could just follow up, you mentioned the business case to relocate production, probably early days, but do you see that? Is there sort of an investment that you could do in the US where the total cost to bring your product to the market and your customer doesn't go up? Or is that a beneficiary? Do you think that you'll stay where you are based on at least the current level of tariffs? It's way too early to have any firm views on that because, as I said, we need to know what the landscape will be for a foreseeable future so you can actually do a business case around it.
Phil: Mentioned the business case to relocate production probably early data do you see that is there.
Phil: And sort of an investment that you could do in the U S where the total cost to bring your product to the market on your customers doesn't go up.
Phil: Or it's actually a beneficiary or.
Phil: Do you think that Youll stay where you are based on the current level of tariffs.
Phil: Tariffs, it's way too early to.
Phil: B.
Phil: Any views on that because as I said.
Phil: We need to know what the landscape will be for the foreseeable future you can actually do a business case around it and.
Mikael Bratt: And for certain, the cost in the US will go up. I mean, there is a reason why we are in Mexico. So the question is what that would be and what everybody is prepared to do there. So it's too early to have any firm opinions about that. Okay, thank you. Thank you.
Phil: Turn the cost.
Phil: The U S.
Phil: We'll go up I mean, there is a reason why we are in Mexico. So the question is what that would be.
Phil: Everybody is trying to do there so it's too early to have any.
Sure.
Phil: Forward opinions about.
Phil: Okay.
Phil: Thank you.
Speaker Change: Thank you, we'll now move on to our next question.
Mikael Bratt: We'll now move on to our next question.
Emmanuel Rosner: Our next question comes from the line of Emmanuel Rosner from Wolfe.
Speaker Change: Our next question comes from the line of Emmanuel Rosner from Wolfe. Please go ahead. Your line is open.
Mikael Bratt: Please go ahead, your line is open. Great. Thank you so much. My first question is your decision to reiterate guidance. Can you elaborate a little bit about this? Is it mostly a function of just a lot of uncertainty, so it's really difficult to know what to assume for any changes, or is it strong confidence in the ability to offset future challenges? Is it both? Can you just comment a little bit more about it? I think first of all we feel comfortable with the guidance here when we look at our own ability to move forward here.
Emmanuel Rosner: Great. Thank you so much.
Speaker Change: My first question is your.
Speaker Change: Decision to retreat guidelines can.
Speaker Change: Can you elaborate a little bit about this is it mostly a function of just a lot of uncertainty so it's really difficult to.
Speaker Change: No what you assume for any changes or is it a strong confidence in the ability to offset future challenges is it post can you just comment a little bit more about it.
Speaker Change: Sure.
Speaker Change: I think first of all we feel comfortable.
The guidance here when we look at our own ability to move forward here I think.
Mikael Bratt: I think we had a strong first quarter here and we continue to see also when we look into the horizon that we have with call-offs that we continue to see a healthy level of light vehicle production moving into the second quarter with the horizon we have there. And as I said our own activity level controlling what we produce in a good way. So I feel that we are steadily moving forward in the right direction there. So we have no reasons I would say to change our guidance here. We feel comfortable with what we can see.
Speaker Change: Sure.
Speaker Change: Strong first quarter here and we continue to see also when we look into the horizon that we have with the calls that we continue to see healthy level of.
Speaker Change: Light vehicle production moving into the second quarter with Verizon we have there.
Speaker Change: And as I said.
Speaker Change: Our own.
Speaker Change: Activity level controlling what we project for being a good way. So that we are steadily moving moving forward. We're in right direction. There. So we have no no reasons. So I would say two to change our guidance here, we feel comfortable with what we can see.
Mikael Bratt: Then of course what you pointed to here we are absolutely fully aware of the risk you could say that is out there connected to the tariffs and overall uncertainty there. But today we don't have any data points pointing in. dramatic changes to that. Plus, that we also in our guidance has a range mentioned that also that, you know, can absorb some movements as well. So yeah, we've been comfortable with the guidance that we've been given here today with what we know.
Speaker Change: And then of course, what you're pointing to here, we are absolutely fully aware of.
Speaker Change: The risk you could say that is there out there connected to the tariff.
And overall uncertainty there.
Speaker Change: But today, we don't have any data points are pointing in.
Speaker Change: The dramatic change that stood us plus we also in our guidance has a range.
Speaker Change: I mentioned that also.
Speaker Change: Can absorb some movement as well so yes, we feel comfortable with the guidance. We've given you today with what we know.
Mikael Bratt: Thank you. If I could just ask this sort of like a different way, and then I have a quick follow-up, but for example, this morning, I think, you know, you're based on the March S&P file, but this morning S&P, you know, cut the global production, you know, a little bit deeper than the down 0.5% that you're assuming. So, all else equal, is that something that we should be flowing through your guidance, essentially saying, look, the production is lower than assumed, therefore, you know, it's actually sort of like a lower outcome, or are you essentially saying that you have offsets or the Q1 was so much stronger than expected?
Speaker Change: Thank you if I could just ask just sort of like a different way and then as a quick follow up but so for example.
Speaker Change: This morning I think.
Speaker Change: Based on the March S&P filed that this morning SMT.
Speaker Change: Global production.
Speaker Change: The deeper than that.
Speaker Change: The down zero point faster and that Youre, assuming so all else equal is that something that we should be flowing through your guidance and especially strong local production was lower than assumed therefore.
Speaker Change: Actually sort of like a lower outcome are you essentially saying that you have offsets or the Q1 was so much stronger.
Mikael Bratt: and expect that all in even with sort of like this somewhat weaker outlook, you still good with your guide. I mean we as we said here I mean we have based our guidance on the one 0.5 negative so we were already from the beginning remember more as a negative than S&P Global now they have made an adjustment I would say that ballpark figure around where we are at also I mean one percent lower than what we have so I mean I would say it's within margin of error when you look at light vehicle production so it doesn't change the picture for me here.
Speaker Change: And I expected that all in even with the somewhat weaker outlook.
Speaker Change: Still good with your guidance.
Speaker Change: I mean is this.
Speaker Change: Yes, I mean, we have based our guidance on that one.
Speaker Change: <unk> five negative so we were already from the beginning.
Speaker Change: I remember more.
Speaker Change: Negative.
Speaker Change: S&P global now they have made an adjustment I would say that.
Speaker Change: All four figure around where we are at also 1% lower than what we have.
Speaker Change: I will say is within margin of error. So when you look at the light vehicle production. So it doesn't change the picture for me here.
Mikael Bratt: That's great.
Speaker Change: That's great and then a quick follow up is your.
Mikael Bratt: And then the quick follow up is your capital allocation strategy, and in particular, the shoulder returns. Are you still comfortable with your existing strategy? Or is the current uncertain environments make you want to potentially, you know, slow down the cash returns to shareholders or change it in any other No, I think I mean, our strategy and commitment here lays firm to be a shareholder friendly company return liquidity to our shareholders. We continued in the first quarter here with our buyback, even though at a slightly lower pace. But we hold on to it. And what we will do going forward, of course, we can't comment here, but our commitment still stands.
Speaker Change: Our capital allocation strategy and in particular the shareholder returns.
Are you still comfortable with your existing strategy or is the current uncertain environment makes you want to.
Speaker Change: Potentially slow down the cash returns to shareholders or change it in any other way.
Speaker Change: No I think I mean, our strategy and commitment here lies firm.
Speaker Change: To be shareholder friendly company return liquidity to our shareholders.
Speaker Change: Continued.
Speaker Change: In the fourth quarter here with our buybacks, even though at.
Speaker Change: Slightly lower pace.
Speaker Change: But we hold onto it.
What we will do going forward of course, we call comments Airbus our commitments.
Mikael Bratt: Thank you so much. Thank you.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Edison Yu: We'll now move on to our next question.
Speaker Change: Thank you.
Speaker Change: I'll move onto our next question.
Mikael Bratt: Our next question comes from the line of Edison Yu from Deutsche Bank. Please go ahead, your line is open. Hi, thank you for taking our questions. First on a near term, in terms of the tariff related cost, it seems like you absorbed it or were able to pass it on, sorry, pass it on very quickly. Would you expect that going forward to be that quick in terms of the time when you pass it on to when you actually run it through the P&L? Yeah, I think it needs to be quickly. I mean, you remember when we have described our negotiations when it comes to the inflationary compensation, that was related to very detailed and complicated negotiations on a component by component, plant by plant level across the whole globe.
Speaker Change: Our next question comes from the line of Edison.
Speaker Change: Which bank. Please go ahead your line is open.
Speaker Change: Alright, Thank you for taking our questions first of all in the near term in terms of the tariff related costs. It seems like you absorbed that are able to pass it on site pass it around very quickly.
We expect that going forward to be that quick in terms of the.
Tim: Tim when you pass it onto when you actually relatively P&L.
Speaker Change: Yes, I think it needs to be quickly.
Speaker Change: You'll remember when we have described our negotiations when it comes to the inflationary compensation.
Speaker Change: That was related to.
It's very detailed and complicated.
Speaker Change: Negotiations on a component by component the plant by plant level across the whole globe.
Mikael Bratt: The tariff is very, I would say, clear and obvious when you have to pay them and say the evidence to prove that you have had this cost is much more simple and therefore the negotiations will go more fast. Okay, so just to check, let's say tariffs continue on for the next couple of quarters. You would expect to recover that pretty much intra-quarter going forward. I mean, I will not promise anything here, but as I said, we stand firm in our opinion here that the tariff course needs to be passed on, and we will continue to do so, and I think we have a well-established way of doing it without a doubt.
Speaker Change: It's very I would say.
Speaker Change: Clear obvious venue.
Have to pay them in.
Let's say the evidence to prove that you have had these costs.
Speaker Change: Much more simple and therefore, the negotiations will go much faster.
Speaker Change: Okay. So just to check lets say cups continue on for the next couple of quarters, you would expect to recover that pretty much intra quarter.
Speaker Change: Going forward.
Speaker Change: I mean.
Speaker Change: I will not promising anything here, but as I said, we stand firm in our opinion here.
Speaker Change: Tariff cost needs to be passed on and we will continue to do so.
I think we have.
Speaker Change: Well established way of doing it with our customers.
Speaker Change: Gotcha, and then longer term on automation I know, it's a bit early to decide whether to necessarily relocate a lot back to the U S. But I think you've discussed in the past you've done a lot of automation overseas in China, it's been very successful.
Speaker Change: If you had to automate do you have a playbook do you have kind of a system.
Speaker Change: That you can implement based on your learnings.
Mikael Bratt: I mean, I'm not worried about, you know, the process or the way of moving capacity or establishing capacity in the US. It's more a question about the business case. And as I said, the reliability in the environment that makes you comfortable in making an investment. in this environment. It's not how or so that is the problem. It's the calculation, the business case that we can provide the competitive, better cost. Domestic Freedom with Heritage Breakeven, CalPERS. That is it. Thank you.
Speaker Change: Yes.
Speaker Change: I'm not worried about.
Speaker Change: The process or.
Speaker Change: The the way of.
Speaker Change: Moving capacity or establishing capacity in the U S.
Speaker Change: It's more a question about the.
Speaker Change: The business case.
Speaker Change: And as I said the reliability in the environment that makes you.
Speaker Change: Comparable.
Speaker Change: Making.
Speaker Change: Investments.
Speaker Change: In this in this environment.
Speaker Change: If not how are or so that is the problem.
Speaker Change: The calculation.
Speaker Change: The business case.
Speaker Change: That we can provide the competitive.
Speaker Change: Hello Beth.
Speaker Change: After.
Speaker Change: Costs.
Speaker Change: Domestically them with Paris.
Speaker Change: The breakeven in place.
Speaker Change: Thank you.
Speaker Change: Thank you we will now move onto our next question.
Chris Mcnally: We'll now move on to our next question.
Mikael Bratt: Our next question comes from the line of Chris McNally from Evercore. Please go ahead, your line is open. Thank you so much, team. And I apologize if I miss this in the prepared remarks, but just in terms of the call-offs you're seeing, you know, through early April, do they align with some of the March projections around Q2? I think we're all sort of anticipating basically any day now that we'll get major Mexico and Canadian shutdowns, you know, basically permanently until tariffs are changed. So just curious if some of that is reflected in what you've seen in the call-offs, you know, over the last two to three weeks.
Speaker Change: Our next question comes from the line of Chris Mcnally from Evercore. Please go ahead. Your line is open.
Speaker Change: Thanks, so much team and.
And I apologize if I missed this in the prepared remarks, but just in terms of the call ups Youre seeing.
Speaker Change: Through to early April do they have do they align with some of the margin.
Speaker Change: Sections around Q2.
Speaker Change: I think we're all sort of anticipating basically any day now that will get major Mexico and Canadian shutdowns.
Speaker Change: No.
Speaker Change: Basically permanently until tariffs or or or change. So just curious if some of that is reflected in what you've seen in call offs.
Speaker Change: Last two to three weeks.
Mikael Bratt: As I indicated before here, we see that the Call Ops is holding up well. No other indications than that we are moving forward here with the horizon we have.
Speaker Change: As I indicated before here, we see that the call ups is holding up well.
Speaker Change: No other indications that we are moving forward here.
Speaker Change: With the horizon, we have.
From the call.
Mikael Bratt: And maybe just to follow up on that, because I think you've answered the other questions really helpfully. It basically seems like, you know, production is the primary variable here. There will be a little bit on raw materials, but you're expecting to get repaid for any tariffs from the suppliers. I think we've heard that from every supplier. I'm just a little surprised.
Speaker Change: Yes.
Maybe just to kick.
Speaker Change: Follow up on X I think you've answered. The other question is really really helpful. It basically seems like production is the primary variable here there'll be a little bit on raw materials, but youre expecting to get repaid for for any tariffs on some suppliers I think before that.
Speaker Change: From every supplier.
Speaker Change: I'm just a little surprised.
Mikael Bratt: I mean, basically, if there was no change in call-offs, particularly for Mexican and Canadian facilities, it would sort of imply that the Detroit 3 were continuing to build, which means they were planning to cross the border, which does not seem to be the case. So could you help us reconcile that? Because you would imagine we would see weakness based on everything that we know. If shutdowns were to be coming soon, because they're building inventory at the border, essentially. Now, I mean, I can't suppose comments or speculating in what our customers are doing here in The totality of the polos that I refer to here when we look at Autoliv Inc.
Speaker Change: Basically if there was no changing in call ups, particularly from.
Speaker Change: For Mexican and Canadian facilities, it would sort of imply that.
Speaker Change: The Detroit three were continuing to build.
Speaker Change: Which means they weren't planning to cross the border, which does not seem to indicate so.
Speaker Change: Could you could you help us reconcile that because you would imagine we would see weakness.
Speaker Change: And based on everything that we know is shutdowns were becoming soon because youre building inventory at the border essentially.
Speaker Change: No I mean I can't comment.
Speaker Change: Comment on speculation.
Speaker Change: Our customers are doing here.
Speaker Change: Or specifically.
Speaker Change: But I mean the totality.
Speaker Change: Of the call offs that I referred to here when we look at the elderly.
Mikael Bratt: The order book, so to speak, is, as I said, holding up well here as we move forward into the second quarter with what we can see and the time horizon we have. Okay, excellent.
Speaker Change: Order book so to speak.
Speaker Change: Ted.
Speaker Change: Holding up well here as we move forward into the second quarter with what we can see in the time horizon.
Speaker Change: Okay excellent.
Mikael Bratt: So it's sort of a global order perspective, and maybe we'll hold off on giving very specific Canadian, Mexican facilities, because a lot of that stuff is live. Thanks so much for the comments. Really appreciate it. Thank you.
Speaker Change: Our global order perspective, and maybe we'll hold off on giving very specific Canadian Mexican.
Speaker Change: I would expect a lot of that stuff.
Speaker Change: Yes.
Speaker Change: Thanks, so much for the comments really appreciate it.
Speaker Change: Thank you.
Speaker Change: Thank you.
Hampus Engellau: We'll now move on to our next question.
Move on to our next question.
Hampus Engellau: Our next question comes from the line of Hampus Engellau from Handelsbanken. Please go ahead, your line is open. Thank you very much.
Our next question comes from the line of Hans Engel from Handelsbanken. Please go ahead. Your line is open.
Hans Engel: Thank you very much two questions from me.
Hampus Engellau: Two questions for me, starting off on the Capacity Liner program. I just have a question. Are you happy where you are on these levels or are you going to go ahead fully on the 8000 that you previously indicated in terms of healthcare production?
Hans Engel: Starting off on the capacity alignment program.
Hans Engel: I guess the question. If you are are you.
Hans Engel: While you're on this level sort of what are you going to go ahead to fully on data Allison.
Speaker Change: As Lynn indicated.
Hans Engel: So we have some production.
Mikael Bratt: The second question is more related to the mix. I was also surprised of the very outgrowth in Q1, and if you look at the... Thank you very much.
Hans Engel: Second question is more related to that.
Hans Engel: The mix.
Hans Engel: Surprisingly low health growth in Q1.
Hans Engel: <unk>.
Hans Engel: If we look at the.
Hans Engel: The quarters ahead.
Hans Engel: On the <unk> outlook should we assume.
Speaker Change: Any big changes in mix in the quarter from what you see now I know youre not going to guide on the quarter. So I guess it sounds it sounds trusted model. Thank you.
Mikael Bratt: On your first question on the headcount reduction, I think we're progressing well. You saw that we have reduced our indirect or salaried headcount by over 1,500. So that has progressed further versus the Q4 report. And we also hold on to the expected savings of an incremental 50 million for the year. that's progressing well. Also on the direct labor side, I think we're down in total headcount, we're down 6%. Whereas organically, we grew sales by 2%. So also here, we see a good development on the operational excellence side and productivity side. So that's also helped by the better call for volatility.
Speaker Change: Yes. Your first question on the head count reduction.
Speaker Change: I think we're progressing well.
Speaker Change: Now that we have reduced our indirect or salaried head count by over 1500.
Speaker Change: So that has progressed further versus the Q4 report.
Speaker Change: We.
Also hold onto the expected savings of an incremental $50 million for the year.
Speaker Change: So that's progressing well also on the direct labor side I think were down in total head count was down 6%.
Speaker Change: Whereas organically we grew sales by 2%. So also here, we see a good development on the.
Speaker Change: Operational excellence and productivity side, so thats also.
Speaker Change: Was helped by the better call volatility.
Mikael Bratt: That was around 93% here in the first quarter. So a continuation of the positive trend we saw in the fourth quarter.
Speaker Change: That was around 93% here in the first quarter. So.
Speaker Change: A continuation of the positive trend we saw in the fourth quarter.
Mikael Bratt: And then on the on the mix side, and we mentioned here, we had three percentage points negative mix in the first quarter, that's We'll most likely continue also in the second quarter. And then we expect a more favorable development in the second half of the year, at least when you look at our expected sales performance versus LVP development in China. But we still expect a negative mix also for the full year, still about 1% this year. Okay, fair enough, thank you. Thank you.
Speaker Change: And then on the on the mix side, and we mentioned that we had three percentage points negative mix in the first quarter.
Speaker Change: We will most likely continue we'll see in the second quarter.
Speaker Change: We expect a more favorable development in the second half of the year at least when you look at our expected sales performance versus MVP development in China.
Speaker Change: But we still expect a meg.
Speaker Change: Mix also for the full year.
Speaker Change: Still about one percentage point.
Speaker Change: Okay fair enough. Thank you.
Speaker Change: Thank you we will now move onto our next question.
Mikael Bratt: We'll now move on to our next question. Our next question comes from the line of Agnieszka Vilela from Nordea. Please go ahead, your line is open. Thank you so much. So my first question is on the pull forward impact that you saw in Q1 when it comes to car production. I wonder if you can just tell us about what has been happening and also did you only see that on the kind of car production or did you also see that OEMs are stocking up your product? Yeah I mean it's very difficult for us to say what volume deviation here that we saw in the first quarter which was favourable and that the volumes in the first quarter were better than we had expected going into the quarter but to quantify a pull ahead effect of that is incredibly difficult for us and was even impossible.
Speaker Change: Our next question comes from the line of Agnieszka Villella from Nordea. Please go ahead. Your line is open.
Agnieszka Villella: Thank you so much. So my first question is on the pull forward impact that you saw in Q1 when it comes to car production I Wonder if you can just tell us about.
Speaker Change: It's been happening and also because you only see that on the kind of car production or did you also say that Oems are stocking up your products.
Agnieszka Villella: Okay.
Agnieszka Villella: Yes, I mean, it's very difficult for us to save more.
Speaker Change: Innovation here that we saw in the first quarter, which was favorable.
Speaker Change: One is in the first quarter were better than we had expected going into the quarter, but to quantify a pull ahead of effect of that is incredibly difficult for us. This.
Speaker Change: Even impossible.
Mikael Bratt: But as Mikael already pointed out here that we see the call of continuing at a good level also here in the second quarter so it's not that we see them falling off yeah so that would indicate that the either the pull ahead effect continues or it was smaller in the first quarter.
Speaker Change: But as <unk> already pointed out here that we received a call off continuing at a good level also here in the second quarter.
Speaker Change: So it's not that we see them falling off.
Speaker Change: Yes, so that would indicate that.
Speaker Change: Sure.
Speaker Change: Pull ahead effect continues or it was smaller in the first quarter.
Mikael Bratt: Understood, thank you.
Speaker Change: Understood. Thank you and then maybe just if you could help us to understand.
Mikael Bratt: And then maybe just if you could help us to understand the impact on the P&L from getting compensations from tariffs and overall tariff impact. Does it filter through sales and your costs or how should we think about it when you get the compensations for tariffs? Yeah, the majority filters through sales. But in the first quarter, it was not of such a large magnitude that it would have any meaningful effect on the on the total. Thank you.
Speaker Change: <unk> on the P&L from getting compensation is from tariffs and overall tariff impact and does it filter through sales and your costs, how should we think about it.
Speaker Change: <unk> got the compensations for ties.
Speaker Change: Yes, the majority of filters through sales.
Speaker Change: But in the first quarter it was not such a large magnitude that it would have any meaningful effect on the top line.
Speaker Change: Thank you.
Speaker Change: Thank you, we'll now move onto our next question.
Jairam Nathan: We'll now move on to our next question.
Mikael Bratt: Our next question comes from the line of Jairam Nathan from Daiwa Capital Markets America. Please go ahead, your line is open. Hi, thanks for taking my question. Just wanted to understand, in terms of the cost reduction or your CEP, can you make any enhancements or, you know, increase the cost reduction potential if things wasn't from here? What kind of flexibility would you have? No, I think, I mean... I think we have already shown that we have a high flexibility in the company to manage big shifts in demand here. So, of course, what we're seeing the result of from now in the quarter one here, for example, is from really what we call the strategic roadmap activities here to drive our mid-term targets here.
Speaker Change: Our next question comes from the line of Jairam Nathan from Daiwa Capital Markets America. Please go ahead. Your line is open hi.
Jairam Nathan: Hi, Thanks, Thanks for taking my question just wanted to understand in terms of the cost reduction.
Speaker Change: CP.
Speaker Change: Can you make any.
Speaker Change: Enhancements.
Speaker Change: Increased cost reduction potential.
Speaker Change: So listen from here, what kind of flexibility do you have.
Speaker Change: No I think you mean.
Speaker Change: Yes.
Speaker Change: I think we have already has shown that we have.
Speaker Change: The high flexibility in the company to manage.
Speaker Change: Big shifts in demand here.
Speaker Change: Of course, what we are seeing the result of from now in the quarter. One year. For example is from really.
Speaker Change: We called out the strategic roadmap activities here to drive towards our.
Mikael Bratt: If something dramatically would happen in the market, then, of course, we have more levers to pull to bring down the costs and reduce the labour, etc.
Speaker Change: Our midterm targets here, if something domestically would happen in the market. Then of course, we have more levers levers to pull to bring down the cost and reduced.
Speaker Change: Labor et cetera.
Mikael Bratt: The short answer is yes, we can do more if needed.
Speaker Change: The short answer is yes, we can do more if needed.
Mikael Bratt: Okay, just as a follow-up, we are seeing a lot of, especially Japanese OEMs, I think, moving, trying to shift production back to the U.S., and I just wanted to understand how would that have any impact on margins, you know. Yeah, I think, I mean, first of all... I mean, yes, we see some of that also, and of course we... If there is platforms that we are on that changes location, we have a procedure for that. That has happened before, so that's nothing dramatically with that. That's basically a reset of the program and you need to do.
Speaker Change: Okay and just.
Speaker Change: As a follow up of the we are seeing a lot of especially Japanese Oems I think moving trying to shift production back to the U S.
Speaker Change: And I just wanted to understand how would that have any impact on margins.
Speaker Change: No.
In Japan the U S.
Speaker Change: And with the U S facilities have the capacity.
Speaker Change: No I think yes.
Speaker Change: First of all.
Speaker Change: Yes.
Speaker Change: Yes, I mean, yes, we see some of that also in the fourth.
Speaker Change: If there is platforms that we are on that the changes location. We have a procedure that does happen before so that's not nothing dramatically with that.
Speaker Change: Basically a reset of the program.
Speaker Change: Will do.
Mikael Bratt: New Calculation and all that stuff. So we have a well-defined way of working around that. And I think here we have also a big advantage since we have this global footprint we have. We can also support our customers if they want to move to a different region. So that's not very dramatic for us today. So, yeah, and I think it will take some time until you actually see any meaningful volume impacting that. I think they have this. same situation here as we as a supplier have that you need to make sure that you you have a long-term view on on the the landscape here in order to actually make those investments at the end of the day.
Speaker Change: New calculation and all that stuff so we have.
Speaker Change: Well defined.
Speaker Change: Working around that and I think here we have also.
Speaker Change: Our big advantage since we have this global footprint. We have we can also support to our customers if they want to move to different regions.
Speaker Change: That's not very dramatic for us.
Speaker Change: So yes, I think it will take some time until you actually see any.
Speaker Change: Meaningful volume impacting nothing.
Speaker Change: Hey, Pat.
Speaker Change: Same situation here as we get the supply that you need to make sure all of you.
Speaker Change: Youll have a long term view on the landscape here in order to actually make those investments at the end of the day.
Speaker Change: Okay. Thank you for the color.
Mikael Bratt: Thank you. That's all there.
Dan Levy: Thank you, we'll now move on to our next question.
Speaker Change: Thank you, we'll now move on to our next question.
Dan Levy: Our next question comes from the line of Dan Levy from Barclays. Please go ahead, your line is open. Hi, good afternoon to you. Thank you for taking the questions.
Speaker Change: Our next question comes from the line of Dan Levy from Barclays. Please go ahead. Your line is open.
Speaker Change: Hi, good afternoon. Thank you for taking the questions first can you just outline what your exposure is within Europe, and Asia could vehicles that are exported to North America.
Mikael Bratt: First, can you just outline what your exposure is within Europe and Asia to vehicles that are exported to North America? I don't have the number here in front of me. We could come back to you on that one. I mean, it's typically premium vehicles more that are exported and then we are a bit overweighted maybe against those. but I would have to come back on the exact number but you can talk to Henrik and Anders here. Okay, thank you.
Speaker Change: Okay.
Speaker Change: I don't have the number here in front of me, we could come back to you on that one.
Speaker Change: It's typically premium vehicles more that are exported in than we are.
Speaker Change: Overweighted maybe against those.
Speaker Change: But I would have to come back on the exact number but you can talk to.
Speaker Change: And we can understand.
Speaker Change: Okay. Thank you.
Mikael Bratt: And then a second question is on the tariffs and what specifically is not USMCA compliant? How much of this is Tier 2 directed content by the OEM that is essentially in a position where the OEMs have to negotiate because they've directed this content as opposed to content that you chose to source on your own, you know, and there's maybe a little less of a basis for getting those recoveries. We're not breaking it down in detail. It's, I was going to say, too detailed to keep in an external content there, and especially in a situation like this one, it's quite fluid here.
Speaker Change: And then.
Speaker Change: Question is on the tariffs and what specifically is not U S. MCA compliant how much of this is.
Speaker Change: <unk> directed content by the Oems that is essentially in a position where the Oems have to negotiate and Dave directly to content as opposed to content that you chose to source on your own.
Speaker Change: And there is maybe a little less of a basis for getting the recoveries.
Speaker Change: We are not breaking it down in detail.
Speaker Change: Yes.
The.
Speaker Change: Our <unk> to be to keep the.
Speaker Change: External content, there and especially in a situation like this when it's quite fluid.
Mikael Bratt: As I said, I mean... The directed part, as I said, is obviously something we need support from the OEMs, allow our customers here to find alternatives too. But most cases, when we are not USMCA compliant, it's because it's not available in the... https://www.youtube.com.au I think you have to live with it. Okay, thank you. Thank you.
Speaker Change: As I said I mean.
Speaker Change: The directed towards.
Speaker Change: It's obviously something we support from the Oems.
Speaker Change: Allowing customers to find alternatives to.
Speaker Change: Most cases, when we announced U S. MCA compliance is because it's not available in the.
Speaker Change: And.
Speaker Change: Those conditions.
Speaker Change: Sure.
Speaker Change: We have delivered.
Speaker Change: Yes.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Mikael Bratt: Due to time constraints, this concludes our question and answer session, so I'll hand the call back to Michael Bratt, President and CEO, for closing remarks. Thank you, Melanie. Before we conclude today's call, I want to emphasize our commitment to achieve our financial targets. Our focus remains on structural cost reductions, innovation, quality, sustainability and on tariff mitigation efforts. Despite significant market challenges in key markets, we expect to continue to perform strongly. We remain vigilant about the risks associated with the tariffs and geopolitical challenges, which could impact our cost structure and market balance. Navigating these complexities as well as we did in the first quarter will be instrumental in maintaining our momentum throughout the year.
Michael <unk>: Due to time constraints. This concludes our question and answer session. So I will hand, the call back to Michael <unk>, President and CEO for closing remarks.
Michael: Thank you Melanie.
Michael: Before we conclude today's call I want to emphasize our commitment to achieve our financial targets. Our focus remains on structural cost reductions innovation quality sustainability and on tariff mitigation efforts.
Michael: Despite significant market challenges in key markets, we expect to continue to perform strongly.
Michael: We remain vigilant about the risks associated with the tariffs and geopolitical challenges.
Michael: Which could impact our cost structure and market dynamics.
Michael: Getting these complex complexities as well as we did in the first quarter will be instrumental in maintaining our momentum throughout the year. Once again I'm delighted to invite you to our capital markets day on your both quantify the five I look forward to see you there.
Mikael Bratt: Once again, I'm delighted to invite you to our Capital Markets Day on June 4th, 2025. I look forward to seeing you there.
Michael: Sure.
Mikael Bratt: Our second quarter call is scheduled for Friday July 18, 2025. Thank you for your attention.
Michael: Our second quarter call is scheduled for Friday July 18 2025. Thank.
Michael: Thank you for your attention.
Michael: Okay.
Michael: Yes.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
Operator: Speakers please stand by.
Speaker Change: Okay.
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Operator: Thanks for watching!
Speaker Change: Okay.
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