Autoliv Q4 2025 Autoliv Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Autoliv Inc Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Autoliv Q4 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and 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, Anders Trapp, Vice President, Investor Relations. Please go ahead.
Speaker #1: Good day and thank you for standing by . Welcome to the Outer Leaf . Fourth quarter 2025 Financial Results conference . At call this time , all participants are in a listen only mode .
Speaker #1: After the speakers 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 You will telephone .
Speaker #1: You then hear an automated message advising Johannes Race to withdraw your question. Please press star one, and then one again. Please be advised that today's conference is being recorded.
Speaker #1: I will now like to hand the conference over to your speaker today , Anders Trapp Vice President , Investor Relations . Please go ahead .
Anders Trapp: Thank you, Sandra. Welcome everyone to our Q4 and full year 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, Vice President, Investor Relations. During today's earnings call, we will highlight several key areas, including our record-breaking sales, cash flow, and earnings per share. We also provide an update on the latest market developments, and finally, we will outline the expected margin improvement in 2026, and how our strong balance sheet and asset returns will support the continued high levels of shareholder returns. 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. We have the safe harbor statement, which is an integrated part of this presentation, and it includes the Q&A that follows.
Anders Trapp: Thank you, Sandra. Welcome everyone to our Q4 and full year 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, Vice President, Investor Relations. During today's earnings call, we will highlight several key areas, including our record-breaking sales, cash flow, and earnings per share. We also provide an update on the latest market developments, and finally, we will outline the expected margin improvement in 2026, and how our strong balance sheet and asset returns will support the continued high levels of shareholder returns. 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. We have the safe harbor statement, which is an integrated part of this presentation, and it includes the Q&A that follows.
Speaker #2: Thank you . Sandra . Welcome , everyone , to our fourth quarter and full year , 2020 earnings call . On this call , we have our Chief President and Executive Officer , Mikael Bratt , our Chief Financial Officer Fredrik Westin .
Speaker #2: me , And Anders Trapp . VP , Investor Relations during today's earnings call , we will highlight several key areas , including our record breaking sales , cash flow and earnings per share .
Speaker #2: also We provide an update on the latest market developments . And finally , we will outline the expected margin improvement in 2026 and how how our strong balance sheet and asset returns will support the continued high returns shareholder level of .
Speaker #2: Following the presentation , we will be able available to answer your questions . As usual , the slides are available on Outlook.com . Turning to the next slide .
Anders Trapp: During the presentation, we will reference non-US GAAP measures. The reconciliations of historical US GAAP to non-US GAAP measures are disclosed in our quarterly earnings release, available on autoliv.com and in the 10-K that will be filed with the SEC, or at the end of this presentation. Lastly, I should mention that this call is intended to conclude at 3:00PM, Central European Time, so please follow a limit of two questions per person. I now hand it over to our CEO, Mikael Bratt.
During the presentation, we will reference non-US GAAP measures. The reconciliations of historical US GAAP to non-US GAAP measures are disclosed in our quarterly earnings release, available on autoliv.com and in the 10-K that will be filed with the SEC, or at the end of this presentation. Lastly, I should mention that this call is intended to conclude at 3:00PM, Central European Time, so please follow a limit of two questions per person. I now hand it over to our CEO, Mikael Bratt.
Speaker #2: We have the Safe Harbor statement, which is an integrated part of this presentation. And it includes the Q&A that follows during the presentation.
Speaker #2: We will reference non-U.S. GAAP measures. The reconciliations of historical use cap to non-GAAP measures are disclosed in our quarterly earnings release, available on Autoliv Inc and in the 10-K.
Speaker #2: That will be filed with the SEC or at the end of this presentation. Lastly, I should mention that this call is intended to conclude at 3:00 p.m.
Speaker #2: Central European Time. So please follow the limit of two questions per person. I now hand it over to our CEO, Mikael Bratt.
Mikael Bratt: Thank you, Anders. Looking on the next slide. I am very pleased to report another great quarter, with strong development in sales, profitability, cash flow, and balance sheet. These achievements reflect the performance of the whole Autoliv team and the depth of our customer partnerships and our dedication to ongoing structural cost savings. We achieved record high sales for both the quarter and the full year, supported primarily by strong growth in India and with Chinese OEMs. Sales to rapidly expanding Chinese OEMs surged nearly 40% in the quarter, reinforcing our position in the industry's most dynamic markets. India, again, delivered exceptional growth, representing nearly half of our global organic growth. Looking ahead, we expect to continue to significantly outperform light vehicle production in both China and India in 2026.
Mikael Bratt: Thank you, Anders. Looking on the next slide. I am very pleased to report another great quarter, with strong development in sales, profitability, cash flow, and balance sheet. These achievements reflect the performance of the whole Autoliv team and the depth of our customer partnerships and our dedication to ongoing structural cost savings. We achieved record high sales for both the quarter and the full year, supported primarily by strong growth in India and with Chinese OEMs. Sales to rapidly expanding Chinese OEMs surged nearly 40% in the quarter, reinforcing our position in the industry's most dynamic markets. India, again, delivered exceptional growth, representing nearly half of our global organic growth. Looking ahead, we expect to continue to significantly outperform light vehicle production in both China and India in 2026.
Speaker #3: Thank you . Anders . Looking on the next slide , I am very pleased to report another great quarter with strong developments in sales , profitability , cash and flow balance sheet .
Speaker #3: These achievements reflect the performance of the whole Autoliv team, the depth of our customer partnerships, and our dedication to ongoing structural cost savings.
Speaker #3: We achieved record-high sales for both the quarter and the full year, supported primarily by strong growth in India and with Chinese OEMs.
Speaker #3: Sales to rapidly expanding Chinese OEMs surged nearly 40% in the quarter, reinforcing our position in the industry's most dynamic markets. India again delivered exceptional growth, representing nearly half of our global organic growth.
Speaker #3: Looking ahead , we expect to continue to significantly outperform light vehicle production in both China and India in 2026 , as we have guided for adjusted operating income declined slightly in the quarter , mainly due to lower auto period compensation and lower customer reimbursements .
Mikael Bratt: As we have guided for, adjusted operating income declined slightly in the quarter, mainly due to lower out of period compensation and lower customer RD&E reimbursements. We recovered close to 100% of tariff costs in the fourth quarter. We delivered record operating and free operating cash flow for both the quarter and for the full year. In 2025, we generated $734 million in free operating cash flow, an increase of over $230 million, driven by higher profitability and disciplined capital management. It is also important to note that we delivered record earnings per share for both the quarter and the full year.
As we have guided for, adjusted operating income declined slightly in the quarter, mainly due to lower out of period compensation and lower customer RD&E reimbursements. We recovered close to 100% of tariff costs in the fourth quarter. We delivered record operating and free operating cash flow for both the quarter and for the full year. In 2025, we generated $734 million in free operating cash flow, an increase of over $230 million, driven by higher profitability and disciplined capital management. It is also important to note that we delivered record earnings per share for both the quarter and the full year.
Speaker #3: We recovered close to 100% of tariff costs in the fourth quarter. We delivered record operating and free operating cash flow for both the quarter and for the full year in 2025.
Speaker #3: We generated 734 million US dollars in free operating cash flow . An increase of over 230 million USD , driven by higher profitability and disciplined capital management .
Speaker #3: It is also important to note that we delivered record earnings per share for both the quarter and the full year . During the quarter , we returned 216 million USD to shareholders while reducing our debt leverage ratio to 1.1 times , reinforcing my confidence in our ability to continue delivering attractive shareholder returns .
Mikael Bratt: During the quarter, we returned $216 million to shareholders, while reducing our debt leverage ratio to 1.1x, reinforcing my confidence in our ability to continue delivering attractive shareholder returns. We also announced that Autoliv and Tensor have developed the first foldable steering wheel for the Tensor's robo car, targeted for volume production in late 2026. This innovation enhances safety and design flexibility for autonomous vehicles and marks an important strategic step in expanding our role in the emerging autonomous vehicle ecosystem. Looking on the next slide. Fourth quarter sales increased by 8% year-over-year, driven by strong outperformance relative to LVP, along with favorable currency effects and tariff-related compensations. This growth was partly offset by an unfavorable regional and market light vehicle production mix.
During the quarter, we returned $216 million to shareholders, while reducing our debt leverage ratio to 1.1x, reinforcing my confidence in our ability to continue delivering attractive shareholder returns. We also announced that Autoliv and Tensor have developed the first foldable steering wheel for the Tensor's robo car, targeted for volume production in late 2026. This innovation enhances safety and design flexibility for autonomous vehicles and marks an important strategic step in expanding our role in the emerging autonomous vehicle ecosystem. Looking on the next slide. Fourth quarter sales increased by 8% year-over-year, driven by strong outperformance relative to LVP, along with favorable currency effects and tariff-related compensations. This growth was partly offset by an unfavorable regional and market light vehicle production mix.
Speaker #3: We also announced that Autoliv and Tensor have developed the first foldable steering wheel for the Tensor Robocar, targeted for volume production in late 2026.
Speaker #3: This innovation enhances safety and design flexibility for autonomous vehicles, and marks an important strategic step in expanding our role in the emerging autonomous vehicle ecosystem.
Speaker #3: Looking on the next slide . quarter Fourth sales increased by 8% year over year , driven by strong outperformance relative to LVP , along with favorable currency effects and tariff related compensations .
Speaker #3: This growth was partly offset by an unfavorable regional and market light vehicle production mix. The adjusted operating income for Q4 decreased by 4% to $337 million, compared to an exceptionally strong fourth quarter last year.
Mikael Bratt: The adjusted operating income for Q4 decreased by 4% to $337 million, compared to an exceptionally strong fourth quarter last year. The adjusted operating margin was 12%, 140 basis points lower than in the same quarter last year. Operating cash flow was $544 million, an increase of $124 million, or 30% compared to last year. Looking now on the next slide. We continue to deliver broad-based improvements, with particularly strong progress in direct costs. Our positive direct labor productivity trend continues as we reduce our direct production personnel by almost 700. This is supported by the implementation of our strategic initiatives, including automation and digitalization.
The adjusted operating income for Q4 decreased by 4% to $337 million, compared to an exceptionally strong fourth quarter last year. The adjusted operating margin was 12%, 140 basis points lower than in the same quarter last year. Operating cash flow was $544 million, an increase of $124 million, or 30% compared to last year. Looking now on the next slide. We continue to deliver broad-based improvements, with particularly strong progress in direct costs. Our positive direct labor productivity trend continues as we reduce our direct production personnel by almost 700. This is supported by the implementation of our strategic initiatives, including automation and digitalization.
Speaker #3: The adjusted operating margin was 12% 140 basis points lower than in the same quarter last year . Operating cash flow was 544 million USD , an increase of 124 million USD , or 30% , compared to last year .
Speaker #3: Looking now , on the next slide . We continue to deliver broad based improvements with particularly strong progress in direct costs . Our positive direct labor productivity trend continues as we reduced our direct production personnel by almost 700 .
Speaker #3: This is supported by the implementation of our strategic initiatives , including automation and digitalization , gross profit increased by 22 million USD , while gross margin declined by 70 basis points year over year .
Mikael Bratt: Gross profit increased by $22 million, while gross margin declined by 70 basis points year-over-year, but improved by sequentially by 100 basis points compared with Q3. Our D&E net costs rose year-over-year, primarily on lower engineering income due to timing of specific customer development projects. SG&A costs increased by $12 million, mainly due to higher costs for personnel, as well as negative FX translation effects. Looking now on the market development in Q4 on the next slide. Light vehicle production in Q4 2025 reached its highest level for any quarter on record. This reflects strong demand across several major markets. The regional production mix has changed significantly in recent years, with a large share now coming from lower content per vehicle markets in Asia.
Gross profit increased by $22 million, while gross margin declined by 70 basis points year-over-year, but improved by sequentially by 100 basis points compared with Q3. Our D&E net costs rose year-over-year, primarily on lower engineering income due to timing of specific customer development projects. SG&A costs increased by $12 million, mainly due to higher costs for personnel, as well as negative FX translation effects. Looking now on the market development in Q4 on the next slide. Light vehicle production in Q4 2025 reached its highest level for any quarter on record. This reflects strong demand across several major markets. The regional production mix has changed significantly in recent years, with a large share now coming from lower content per vehicle markets in Asia.
Speaker #3: But improved by sequentially by 100 basis points , compared with the third quarter . R.d.a net costs rose year over year , primarily on lower engineering income due to timing of specific customer development projects .
Speaker #3: SG&A costs increased by 12 million USD , mainly due to higher costs for personnel . As well as negative effects , translation effects .
Speaker #3: Looking now on the market development in the fourth quarter , on the next slide . Light vehicle production in the fourth quarter of 2025 reached its highest level for any quarter on record .
Speaker #3: This reflects strong demand across several major markets . The regional production mix has changed recent significantly in years , with large share now coming from lower content per vehicle markets in Asia .
Mikael Bratt: According to S&P Global data from January, global light vehicle production for Q4 increased 1.3%, exceeding the expectation from the beginning of the quarter by 4 percentage points. The stronger than expected market was primarily driven by China, where light vehicle production came in 8 percentage points above expectations, supported by consumers taking advantage of scrapping and replacement subsidies before their expiration. India also contributed to better than expected light vehicle production growth, supported by significantly reduced taxes on new vehicles. Light vehicle demand and production in North America have held up better than expected, leading to a small decline in light vehicle production than anticipated. As many low content markets grow during the quarter, the global regional light vehicle production mix was approximately 150 basis points unfavorable.
According to S&P Global data from January, global light vehicle production for Q4 increased 1.3%, exceeding the expectation from the beginning of the quarter by 4 percentage points. The stronger than expected market was primarily driven by China, where light vehicle production came in 8 percentage points above expectations, supported by consumers taking advantage of scrapping and replacement subsidies before their expiration. India also contributed to better than expected light vehicle production growth, supported by significantly reduced taxes on new vehicles. Light vehicle demand and production in North America have held up better than expected, leading to a small decline in light vehicle production than anticipated. As many low content markets grow during the quarter, the global regional light vehicle production mix was approximately 150 basis points unfavorable.
Speaker #3: According to S&P Global data from January, global light vehicle production for the fourth quarter increased 1.3%, exceeding the expectation from the beginning of the quarter by four percentage points.
Speaker #3: Stronger than expected, the market was primarily driven by China, where light vehicle production came in eight percentage points above expectations, supported by consumers taking advantage of scrapping and replacement subsidies before their preparation.
Speaker #3: India also contributed to better than expected light vehicle production growth , supported by significantly reduced taxes on new vehicles , light vehicle demand and production light vehicle demand and production in North America have held up better than expected , leading to small decline in light vehicle production than anticipated , as many low content markets grow during the quarter .
Mikael Bratt: This was more than 100 basis points worse than expected at the start of the quarter. During the quarter, we experienced increased volatility, driven by inventory adjustments in North America early in the period. In December, we also saw production adjustments in Asia, including China, in response to rising inventory levels. We view this volatility as temporary and expect conditions to improve in 2026. We will talk about the market development more in detail later in the presentation. Looking now on our sales growth in more detail on the next slide. Our consolidated sales were over $2.8 billion, the highest for any quarter yet. This was around $200 million higher than last year, driven by volume and positive currency translation effects, and $27 million from tariff-related compensation. Excluding currencies, our organic sales grew by 4%, including tariff cost compensations.
This was more than 100 basis points worse than expected at the start of the quarter. During the quarter, we experienced increased volatility, driven by inventory adjustments in North America early in the period. In December, we also saw production adjustments in Asia, including China, in response to rising inventory levels. We view this volatility as temporary and expect conditions to improve in 2026. We will talk about the market development more in detail later in the presentation. Looking now on our sales growth in more detail on the next slide. Our consolidated sales were over $2.8 billion, the highest for any quarter yet. This was around $200 million higher than last year, driven by volume and positive currency translation effects, and $27 million from tariff-related compensation. Excluding currencies, our organic sales grew by 4%, including tariff cost compensations.
Speaker #3: The global Regional light vehicle production mix was approximately 150 basis points , unfavorable . This was more than 100 basis points worse than expected at the start of the quarter .
Speaker #3: During quarter , we experienced increased volatility driven by inventory adjustments in North America early in the period in December , we also saw production adjustments in Asia , including China .
Speaker #3: In response to rising inventory levels . We view these volatility as temporary and expect conditions to improve in 2026 . We will talk about the market development more in detail later in the presentation .
Speaker #3: Looking now on our sales growth in more detail on the next slide . Our consolidated sales were over 2.8 billion . The highest for any quarter .
Speaker #3: Yet this was around 200 million higher than last year , driven by volume and positive currency translation effects . And 27 million USD from tariff related compensation .
Speaker #3: Excluding currencies . Our organic sales grew by 4% , including tariff costs , compensations China accounted for 23% of our group sales . Asia , excluding China , accounted for 20% .
Mikael Bratt: China accounted for 23% of our group sales. Asia, excluding China, accounted for 20%, Americas for 30%, and Europe for more than 27%. We outline our organic sales growth compared to LVP on the next slide. Our quarterly sales growth was driven by strong performance across most regions, particularly in the rest of Asia and China. Based on the latest light vehicle production data from S&P Global, we outperformed the market by 3 percentage points globally, despite the unfavorable regional light vehicle production mix. We return to outperformance in Europe and the Americas. In rest of Asia, we outperformed the market by 11 percentage points, driven by continued strong sales growth in India, where we did outperform in more than 30 percentage points. Our sales to Chinese OEMs grew by almost 40%, exceeding their light vehicle production growth by 34 percentage points.
China accounted for 23% of our group sales. Asia, excluding China, accounted for 20%, Americas for 30%, and Europe for more than 27%. We outline our organic sales growth compared to LVP on the next slide. Our quarterly sales growth was driven by strong performance across most regions, particularly in the rest of Asia and China. Based on the latest light vehicle production data from S&P Global, we outperformed the market by 3 percentage points globally, despite the unfavorable regional light vehicle production mix. We return to outperformance in Europe and the Americas. In rest of Asia, we outperformed the market by 11 percentage points, driven by continued strong sales growth in India, where we did outperform in more than 30 percentage points. Our sales to Chinese OEMs grew by almost 40%, exceeding their light vehicle production growth by 34 percentage points.
Speaker #3: Americas for 30% , and Europe for more than 27% . We outlined our our organic sales growth compared to LVP . On the next slide .
Speaker #3: Our quarterly sales growth was driven by strong performance across most regions , particularly in the rest of Asia and China . Based on the latest light vehicle production data from S&P Global .
Speaker #3: We outperformed the market by three percentage points globally despite the unfavorable regional light vehicle production mix . We returned to outperformance in Europe and the Americas in rest of Asia , we outperformed the market by 11 percentage points , driven by continued strong sales growth in India , where we did outperform in more than 30 percentage points .
Speaker #3: Our sales to Chinese OEMs grew by almost 40%, exceeding their light vehicle production growth by 34 percentage points. Sales to global customers in China were eight percentage points below their light vehicle production.
Mikael Bratt: Sales to global customers in China were 8 percentage points below their light vehicle production development. On the next slide, we see some key model launches from the fourth quarter. The fourth quarter of 2025 saw a relatively high number of new launches, primarily in China, with both Chinese and other OEMs. These new China launches reflect strong momentum for Autoliv in this important market. The models displayed here feature Autoliv content per vehicle from $150 to over $400. Highest EPV is driven by front center airbags on three of these vehicles produced in China. In terms of Autoliv's sales potential, the Mercedes GLB and CLA combined are the most significant. The CLA was the highest scoring car by Euro NCAP in 2025. For 2026, we expect a record number of new product launches driven by Chinese OEMs.
Sales to global customers in China were 8 percentage points below their light vehicle production development. On the next slide, we see some key model launches from the fourth quarter. The fourth quarter of 2025 saw a relatively high number of new launches, primarily in China, with both Chinese and other OEMs. These new China launches reflect strong momentum for Autoliv in this important market. The models displayed here feature Autoliv content per vehicle from $150 to over $400. Highest EPV is driven by front center airbags on three of these vehicles produced in China. In terms of Autoliv's sales potential, the Mercedes GLB and CLA combined are the most significant. The CLA was the highest scoring car by Euro NCAP in 2025. For 2026, we expect a record number of new product launches driven by Chinese OEMs.
Speaker #3: Development for the next slide , we see some key model launches from the fourth quarter . The fourth quarter of 2025 saw a relatively high number of new launches , primarily in China , with both Chinese and other OEMs .
Speaker #3: These new China launches reflect strong momentum for how to live in this important market. The models displayed here feature auto lead content per vehicle from $150 to over $400.
Speaker #3: ICP is driven by front center airbags on three of these vehicles produced in China. In terms of outer sales potential, the market's GLB and CLA combined are the most significant.
Speaker #3: The CLA was the highest scoring core by Euro NCAP in 2025. With 2026, we expect a record number of new product launches driven by Chinese OEMs.
Mikael Bratt: Now, looking at the next slide... 2025 was a challenging year for the industry, marked by tariffs, ongoing supply chain disruptions, a slowdown in EV demand, shifts in the OEM landscape, and demand pressure due to concerns of vehicle affordability. Despite these headwinds, Autoliv delivered a record year. On the next slide, where we summarize the year. For the year, we met or exceeded all of our full year guidance matrix: sales, adjusted operating margin, and cash flow. Our sales reached a new all-time record. Global light vehicle production surpassed 90 million units for the first time since 2018. However, the regional mix has shifted significantly, with higher volumes in Asia and lower volumes in high content markets such as Western Europe and North America. We also reached several other significant milestones. Operating income exceeded $1 billion for the first time.
Now, looking at the next slide 2025 was a challenging year for the industry, marked by tariffs, ongoing supply chain disruptions, a slowdown in EV demand, shifts in the OEM landscape, and demand pressure due to concerns of vehicle affordability. Despite these headwinds, Autoliv delivered a record year. On the next slide, where we summarize the year. For the year, we met or exceeded all of our full year guidance matrix: sales, adjusted operating margin, and cash flow. Our sales reached a new all-time record. Global light vehicle production surpassed 90 million units for the first time since 2018. However, the regional mix has shifted significantly, with higher volumes in Asia and lower volumes in high content markets such as Western Europe and North America. We also reached several other significant milestones. Operating income exceeded $1 billion for the first time.
Speaker #3: Now looking at the next slide . 2025 was a challenging year for the industry , marked by tariffs , ongoing supply chain disruptions , a slowdown in demand , shifts in the OEM landscape and demand pressure due to concerns of vehicle affordability .
Speaker #3: Despite these headwinds , auto delivered a record year on the next slide , we where we summarize the year . For the year we met or exceeded all of our full year guidance metrics , adjusted operating and , sales cash flow margin , our sales reached a new all time record .
Speaker #3: Global light vehicle production surpassed 90 million units for the first time since 2018 . However , the region mix has shifted significantly with higher volumes in Asia and lower volumes in high content markets such as Western Europe and North America .
Speaker #3: also We reached several other significant milestones operating income exceeded 1 billion USD for the first time . Earnings per share rose above $9 , and we paid more than $3 per share in dividends .
Mikael Bratt: Earnings per share rose above $9, and we paid more than $3 per share in dividends. During our capital markets day in June, we reiterated our medium- and long-term financial targets, and we initiated a new $2.5 billion share repurchase program. Another highlight of the year was the signing of the strategic agreement with Qatar, and we expand further into advanced automotive safety electronics. Now, looking at the next slide. The industry's sourcing of new business remained at a low level during 2025, as OEMs continued to reassess their product plans. Amid high geopolitical and technological uncertainty, our customers are reassessing both what and where to produce future models. At the same time, they are navigating a more dynamic and competitive industry landscape with many new players.
Earnings per share rose above $9, and we paid more than $3 per share in dividends. During our capital markets day in June, we reiterated our medium- and long-term financial targets, and we initiated a new $2.5 billion share repurchase program. Another highlight of the year was the signing of the strategic agreement with Qatar, and we expand further into advanced automotive safety electronics. Now, looking at the next slide. The industry's sourcing of new business remained at a low level during 2025, as OEMs continued to reassess their product plans. Amid high geopolitical and technological uncertainty, our customers are reassessing both what and where to produce future models. At the same time, they are navigating a more dynamic and competitive industry landscape with many new players.
Speaker #3: During our Capital Markets Day in June , we reiterated our medium and long term financial targets and we initiated a new 2.5 billion USD share repurchase program .
Speaker #3: highlight of the year was the Another signing of the strategic agreement with Qatar , and we expanded further into advanced osmotic safety electronics .
Speaker #3: Looking at now, the next slide. Induced sourcing of new business remained at a low level during 2025 as OEMs continued to reassess their product plans.
Speaker #3: Amid high geopolitical and technical , logical uncertainty , our customers are reassessing both what and where to produce future models . At the same time , they are navigating a more dynamic and competitive industry landscape with many new players .
Mikael Bratt: We have also experienced notable market mix effects, as shorter program life cycles at Chinese OEMs reduced their average lifetime sales. With these OEMs now representing roughly 1/3 of global industry sourcing, the impact of this shift is increasingly pronounced. Despite these headwinds, our order intake remained robust, supporting our current market position. Chinese OEMs remained a strong contributor for us, accounting for over 30% of our global order intake. And importantly, we secured our first order with Chinese OEMs for vehicle production in Europe. Despite this, looking on the order intake, more detail on the next slide. In 2025, about 1/3 of our total order intake came from new automakers, highlighting the growth in importance of new mobility players. We won multiple awards tied to industry trends such as autonomous driving.
We have also experienced notable market mix effects, as shorter program life cycles at Chinese OEMs reduced their average lifetime sales. With these OEMs now representing roughly 1/3 of global industry sourcing, the impact of this shift is increasingly pronounced. Despite these headwinds, our order intake remained robust, supporting our current market position. Chinese OEMs remained a strong contributor for us, accounting for over 30% of our global order intake. And importantly, we secured our first order with Chinese OEMs for vehicle production in Europe. Despite this, looking on the order intake, more detail on the next slide. In 2025, about 1/3 of our total order intake came from new automakers, highlighting the growth in importance of new mobility players. We won multiple awards tied to industry trends such as autonomous driving.
Speaker #3: also We are experienced , notable market mix effects as shorter program lifecycles at Chinese OEMs reduce their average lifetime sales with these OEMs now representing roughly one third of global industry sourcing .
Speaker #3: The impact of this shift is increasingly pronounced. Despite these headwinds, our order intake remained robust, supporting our current market position.
Speaker #3: OEMs Chinese remained a strong contributor for us , accounting for over 30% of our global order intake . And importantly , we secured our first order with Chinese OEMs for vehicle production in Europe .
Speaker #3: Despite this , looking on the order intake more in detail on the next slide . In 2025 , about one third of our total order intake came from New automakers , highlighting the growing importance of new mobility players .
Mikael Bratt: This includes solution that protects occupants in the reclining seating position, addressing critical safety risks in next generation interiors. We strengthen our mobility safety solution business by winning new orders for our advanced Pyro Safety Switch, supporting the growing segment of 1,000-volt electrical vehicles. Additionally, awards including an occupant safety system development program from a major premium automaker, as well as wins for steering wheel switches with integrated ECUs and Rear Window Inflatable Curtain Airbags. We continued to expand our safety offering in India with advanced systems such as Seat Cushion Airbags and Front Center Airbags. We licensed our Human Body Model solution to our first customer, a leading automaker, enabling next level virtual crash testing and demonstrating the strength of our digital safety capabilities. Let's now look at the organic sales growth for the full year 2025.
This includes solution that protects occupants in the reclining seating position, addressing critical safety risks in next generation interiors. We strengthen our mobility safety solution business by winning new orders for our advanced Pyro Safety Switch, supporting the growing segment of 1,000-volt electrical vehicles. Additionally, awards including an occupant safety system development program from a major premium automaker, as well as wins for steering wheel switches with integrated ECUs and Rear Window Inflatable Curtain Airbags. We continued to expand our safety offering in India with advanced systems such as Seat Cushion Airbags and Front Center Airbags. We licensed our Human Body Model solution to our first customer, a leading automaker, enabling next level virtual crash testing and demonstrating the strength of our digital safety capabilities. Let's now look at the organic sales growth for the full year 2025.
Speaker #3: We won multiple awards tied to industry trend trends , such as autonomous driving . These include solutions that protects occupants in the reclining seating position , addressing critical safety risks in next generation interiors .
Speaker #3: strengthen We our mobility , safety solution business by winning new orders for our advanced Pyro safety switch , supporting the growing segment of thousand volt electrical vehicles .
Speaker #3: Additionally including , awards an occupant safety system , development program from a major premium automaker as well as wins for steering wheel switches with integrated ECUs and rear window inflatable curtain airbags .
Speaker #3: We continued to expand our safety offering in India with advanced systems such as systems Seat Cushion airbags and front centre airbags . We licensed our human body model solution to our first customer , a leading automaker enabling next level virtual crash testing and demonstrating the strength of our digital safety capabilities .
Mikael Bratt: For the full year, we grow in line with global light vehicle production. Our performance came in lower than anticipated earlier in the year, as the regional and market light vehicle production mix developed almost 4 percentage points less favorable than expected. We outperformed in rest of Asia by 6 percentage points, in the Americas by 3 percentage points, and in Europe by 2 percentage points. In China, our sales to Chinese OEMs grew by 23%, and they accounted for more than 44% of our China sales, double their share from 3 years ago. However, the unfavorable market mix still resulted in a 6 percentage points underperformance in China overall. Our global market position remains strong, with clear market leadership across all regions and product categories...
For the full year, we grow in line with global light vehicle production. Our performance came in lower than anticipated earlier in the year, as the regional and market light vehicle production mix developed almost 4 percentage points less favorable than expected. We outperformed in rest of Asia by 6 percentage points, in the Americas by 3 percentage points, and in Europe by 2 percentage points. In China, our sales to Chinese OEMs grew by 23%, and they accounted for more than 44% of our China sales, double their share from 3 years ago. However, the unfavorable market mix still resulted in a 6 percentage points underperformance in China overall.
Speaker #3: Let's now look at organic sales growth for the full year in line grow 2025 . year we For the full with global light vehicle production .
Speaker #3: Outperformance came in lower than anticipated earlier in the year, as the regional and market light vehicle production mix developed almost four percentage points less favorable than expected.
Speaker #3: We outperformed in the Rest of Asia by six percentage points, in the Americas by three percentage points, and in Europe by two percentage points. In China, our sales to Chinese OEMs grew by 23% and accounted for more than 44% of our China sales, double their share from three years ago.
Our global market position remains strong, with clear market leadership across all regions and product categories. In 2025, our global market share was around 44%, almost 5 percentage points higher than in 2018, following the Veoneer spin-off. Supported by new launches, especially with Chinese OEMs and CPV growth, we expect sales to outperform light vehicle production by around 1 percentage point in 2026. Now looking at the next slide. I will now hand over to Fredrik Westin.
Speaker #3: However, the unfavorable market mix still resulted in a six percentage point underperformance in China overall. Our global market position remains strong, with clear market leadership across all regions and product categories.
Mikael Bratt: In 2025, our global market share was around 44%, almost 5 percentage points higher than in 2018, following the Veoneer spin-off. Supported by new launches, especially with Chinese OEMs and CPV growth, we expect sales to outperform light vehicle production by around 1 percentage point in 2026. Now looking at the next slide. I will now hand over to Fredrik Westin.
Speaker #3: In 2025 , our global market share was around 44% . Almost five percentage points higher than in 2018 . Following the Veoneer spin off .
Speaker #3: Supported by new launches, especially with Chinese OEMs and TPV growth, we expect sales to outperform light vehicle production by around one percentage point in 2026.
Fredrik Westin: Thank you, Mikael. I will talk about the financials now more in detail on the next few slides. Turning to the next slide. This slide highlights our key figures for Q4 2025, compared to Q4 2024. The net sales were approximately $2.8 billion, representing an 8% increase. Gross profit increased by $22 million. The drivers behind the gross profit improvement were mainly improved operational efficiency, with lower costs for logistics and labor, as well as positive effects from higher sales and lower material costs. This was partly offset by lower out-of-period customer compensation, less capitalization to inventories, and higher depreciation. The adjusted operating income decreased from $349 million to $337 million, and the adjusted operating margin decreased to 12.0%.
Fredrik Westin: Thank you, Mikael. I will talk about the financials now more in detail on the next few slides. Turning to the next slide. This slide highlights our key figures for Q4 2025, compared to Q4 2024. The net sales were approximately $2.8 billion, representing an 8% increase. Gross profit increased by $22 million. The drivers behind the gross profit improvement were mainly improved operational efficiency, with lower costs for logistics and labor, as well as positive effects from higher sales and lower material costs. This was partly offset by lower out-of-period customer compensation, less capitalization to inventories, and higher depreciation. The adjusted operating income decreased from $349 million to $337 million, and the adjusted operating margin decreased to 12.0%.
Speaker #3: Now , looking at the next slide . I will now hand over to Fredrik Westin . Thank you talk Michael . about the financials now more in detail on the next few slides .
Speaker #3: So, turning to the next slide. This slide highlights our key figures for the fourth quarter of 2025, compared to the fourth quarter of 2020.
Speaker #3: For the net sales were approximately 2.8 billion , representing an 8% increase . Gross profit increased by 22 million . The drivers behind the gross profit improvement were mainly improved operational efficiency , with lower costs for logistics and labor .
Speaker #3: As well as positive effects from higher sales and lower material costs . This was partly offset by lower out of period customer compensation , less capitalization to inventories , and higher depreciation .
Speaker #3: The adjusted operating income decreased from $349 million to $337 million, and the adjusted operating margin decreased to 12.0%. The reported income of $319 million was lower, by $18 million, mainly due to costs for recycled accumulated currency translation differences related to the closure.
Fredrik Westin: The reported operating income of $319 million was $18 million lower, mainly due to costs for recycled accumulated currency translation differences related to the closure of our entities in the Netherlands and Italy. Despite lower adjusted profit, the adjusted earnings per share diluted increased by $0.14. The main drivers were $0.10 from taxes, $0.11 from lower number of outstanding shares, and $0.05 from financial items, partly offset by $0.16 from lower operating income. The adjusted return on capital employed was a solid 32%, and our adjusted return on equity was 37%. We paid a dividend of $0.87 per share in the quarter and repurchased shares for $150 million and retired 1.3 million shares. Looking now on the adjusted operating income bridge on the next slide.
The reported operating income of $319 million was $18 million lower, mainly due to costs for recycled accumulated currency translation differences related to the closure of our entities in the Netherlands and Italy. Despite lower adjusted profit, the adjusted earnings per share diluted increased by $0.14. The main drivers were $0.10 from taxes, $0.11 from lower number of outstanding shares, and $0.05 from financial items, partly offset by $0.16 from lower operating income. The adjusted return on capital employed was a solid 32%, and our adjusted return on equity was 37%. We paid a dividend of $0.87 per share in the quarter and repurchased shares for $150 million and retired 1.3 million shares. Looking now on the adjusted operating income bridge on the next slide.
Speaker #3: Closure of our entities in the Netherlands and Italy. Despite lower adjusted profit, the adjusted earnings per share diluted increased by $0.14.
Speaker #3: The main drivers were $0.10 from taxes, $0.11 from a lower number of outstanding shares, and $0.05 from financial items, partly offset by $0.16 from lower operating income.
Speaker #3: The adjusted return on capital employed was a solid 32% , and our adjusted return on equity was 37% . We paid a dividend of $0.87 per share in the quarter and repurchased shares for 150 million USD and retired 1.3 million shares .
Fredrik Westin: In Q4 2025, our adjusted operating income decreased by $12 million. Operations contributed $41 million, primarily driven by higher organic sales and the successful execution of operational improvement initiatives, despite increased raw material volatility. Out-of-period cost compensation was $24 million lower than last year. Costs for RD&E, net, and SG&A increased by $33 million, mainly due to lower engineering income. The net currency effect was $7 million positive, mainly from translation effects. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 15 basis points on our operating margin in the quarter. Looking now at full year results on the next slide. 2025 was a record year for sales, adjusted operating profit, operating cash flow, and adjusted EPS.
In Q4 2025, our adjusted operating income decreased by $12 million. Operations contributed $41 million, primarily driven by higher organic sales and the successful execution of operational improvement initiatives, despite increased raw material volatility. Out-of-period cost compensation was $24 million lower than last year. Costs for RD&E, net, and SG&A increased by $33 million, mainly due to lower engineering income. The net currency effect was $7 million positive, mainly from translation effects. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 15 basis points on our operating margin in the quarter. Looking now at full year results on the next slide. 2025 was a record year for sales, adjusted operating profit, operating cash flow, and adjusted EPS.
Speaker #3: Looking now at the adjusted operating income, the next bridge on the slide. In the fourth quarter of 2025, our adjusted operating income decreased by $12 million. Operations contributed $41 million, primarily driven by higher organic sales and the successful execution of operational improvement initiatives.
Speaker #3: Despite increased Cola volatility , out of period cost compensation was 24 million , lower than last year . Costs for net and SG&A increased by 33 million , mainly due to lower engineering income .
Speaker #3: The net currency effect was $7 million positive, mainly from translation effects. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 15 basis points on the operating margin in the quarter.
Speaker #3: Looking now at full year results on the next slide . year record sales for adjusted profit , operating operating cash flow and adjusted EPs .
Fredrik Westin: Our net sales were $10.8 billion, a 4% increase compared to 2024. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 20 basis points on our operating margin for the year. The adjusted operating income increased by 11% to $1.1 billion. The adjusted operating margin was 10.3%, compared to 9.7% in 2024. Your operating cash flow was $1.2 billion, about $100 million higher than in 2024, and the adjusted earnings per share rose 18% to $9.85, reflecting higher net profit and the benefit of reduced share count from repurchase activities. The earnings per share has grown on average by close to 18% per year since 2021.
Our net sales were $10.8 billion, a 4% increase compared to 2024. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 20 basis points on our operating margin for the year. The adjusted operating income increased by 11% to $1.1 billion. The adjusted operating margin was 10.3%, compared to 9.7% in 2024. Your operating cash flow was $1.2 billion, about $100 million higher than in 2024, and the adjusted earnings per share rose 18% to $9.85, reflecting higher net profit and the benefit of reduced share count from repurchase activities. The earnings per share has grown on average by close to 18% per year since 2021.
Speaker #3: Our net sales were $10.8 billion, a 4% increase compared to 2024. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of around 20 basis points on our operating margin for the year.
Speaker #3: The adjusted operating income increased by 11% to 1.1 billion . The adjusted operating margin was 10.3% , compared to 9.7% in 2024 . Your operating cash flow was 1.2 billion , about 100 million higher than in 2024 .
Speaker #3: And the adjusted earnings per share rose 18% to $9.85, reflecting higher net profit and the benefit of reduced share count from repurchase activities.
Fredrik Westin: Dividends of $3.12 per share were paid, an increase of 14%, and we repurchased shares for $351 million. Looking now at the cash flow in more detail on the next slide. The operating cash flow for the fourth quarter totaled $544 million, an increase of $124 million, mainly as a result of positive working capital effects. The positive working capital was primarily driven by lower accounts receivables due to lower sales levels towards the end of the quarter, and also from $44 million improvement in inventories, mainly due to lower sales levels towards the end of the quarter. Capital expenditures net for the quarter decreased by $22 million. Capital expenditures net in relation to sales was 3.9% versus 5.0% a year earlier.
Dividends of $3.12 per share were paid, an increase of 14%, and we repurchased shares for $351 million. Looking now at the cash flow in more detail on the next slide. The operating cash flow for the fourth quarter totaled $544 million, an increase of $124 million, mainly as a result of positive working capital effects. The positive working capital was primarily driven by lower accounts receivables due to lower sales levels towards the end of the quarter, and also from $44 million improvement in inventories, mainly due to lower sales levels towards the end of the quarter. Capital expenditures net for the quarter decreased by $22 million. Capital expenditures net in relation to sales was 3.9% versus 5.0% a year earlier.
Speaker #3: earnings The per share has grown on average by close to 18% per year since 2021 . Dividends of $3.12 per share were paid , an increase of 14% , and with repurchased shares for 351 million .
Speaker #3: Looking now at the cash flow in more detail on the next slide. The operating cash flow for the fourth quarter totaled $544 million, an increase of $100 million to $124 million, mainly as a result of positive working capital effects.
Speaker #3: The working positive capital was primarily driven by lower accounts receivable due to lower sales levels towards the end of the quarter, and also from a $44 million improvement in inventories, mainly due to lower sales levels.
Speaker #3: Towards the end of the quarter . Capital expenditures . Net for the quarter , decreased by 22 million . Capital expenditures , net in relation to sales , was 3.9% versus 5.0% a year earlier .
Fredrik Westin: The lower level of capital expenditure net is mainly related to lower footprint CapEx in Europe and Americas, and less capacity expansion in Asia. Free operating cash flow for the quarter was $434 million, compared to $288 million in the same period the prior year, mainly due to higher operating cash flow and the lower CapEx. For the full year, free operating cash flow was $734 million. Over the past 5 years, we have delivered average annual free operating cash flow growth of 25%, reflecting improved profitability and capital management discipline. The cash conversion for the full year, defined as free operating cash flow in relation to net income, was 100%, exceeding our target of at least 80%. Now, looking at our trade working capital development on the next slide.
The lower level of capital expenditure net is mainly related to lower footprint CapEx in Europe and Americas, and less capacity expansion in Asia. Free operating cash flow for the quarter was $434 million, compared to $288 million in the same period the prior year, mainly due to higher operating cash flow and the lower CapEx. For the full year, free operating cash flow was $734 million. Over the past 5 years, we have delivered average annual free operating cash flow growth of 25%, reflecting improved profitability and capital management discipline. The cash conversion for the full year, defined as free operating cash flow in relation to net income, was 100%, exceeding our target of at least 80%. Now, looking at our trade working capital development on the next slide.
Speaker #3: The level of lower capital expenditure, net, is mainly related to lower CapEx in Europe and the Americas, and a footprint with less capacity and expansion in Asia.
Speaker #3: Free operating cash flow for the quarter was 434 million , compared to 288 million in the same period . The prior year , mainly due to higher operating cash flow and the lower CapEx .
Speaker #3: For the full year , free operating cash flow was 734 million over the past five years , we have delivered average annual free operating cash flow growth of 25% , reflecting improved profitability and capital management discipline .
Speaker #3: cash The conversion for the full year , defined as free operating cash flow in relation to net income , was our 100% exceeding target of at least 80% .
Fredrik Westin: We continue to advance our capital efficiency program with a target of improving working capital by $800 million. Over the last five years, we have improved working capital by approximately $740 million. Improved cash conversion supports a stronger balance sheet and supports our ability to deliver attractive shareholder returns. Compared to the prior year, trade working capital increased by $106 million, where the main drivers were $243 million in higher accounts receivables, $208 million in higher accounts payables, and $72 million in higher inventories. This increase in trade working capital was mainly due to increased sales. In relation to sales, it was virtually unchanged year-over-year at 10.8%, despite higher dollar volatility towards the end of the quarter. Now, looking on our shareholder returns on the next slide.
We continue to advance our capital efficiency program with a target of improving working capital by $800 million. Over the last five years, we have improved working capital by approximately $740 million. Improved cash conversion supports a stronger balance sheet and supports our ability to deliver attractive shareholder returns. Compared to the prior year, trade working capital increased by $106 million, where the main drivers were $243 million in higher accounts receivables, $208 million in higher accounts payables, and $72 million in higher inventories. This increase in trade working capital was mainly due to increased sales. In relation to sales, it was virtually unchanged year-over-year at 10.8%, despite higher dollar volatility towards the end of the quarter. Now, looking on our shareholder returns on the next slide.
Speaker #3: Now , looking at our trade , working capital next development on the slide . We advance our capital continue to efficiency program with a target of improving working by capital 800 million over the last five years , we have improved working capital by approximately 740 million .
Speaker #3: Improved cash conversion supports a stronger balance sheet and supports our ability to deliver attractive shareholder returns compared to the prior year. Trade working capital increased by $106 million, with the main drivers being higher inventory of $243 million.
Speaker #3: Accounts receivables in, $208 million in higher accounts payables, and $72 million in higher inventories. This increase in trade working capital was mainly due to increased sales in relation to sales.
Speaker #3: It was virtually unchanged year over year at 10.8% , despite higher Cola volatility towards the end of the quarter . Now , looking on our shareholder returns on the next slide .
Fredrik Westin: Over the years, Autoliv has demonstrated its ability to generate solid cash flow across different market conditions. During 2025, we returned approximately $590 million to shareholders through dividends and share buybacks. Over the past five years, we have improved our debt leverage while returning $2.44 billion directly to shareholders. This includes repurchases totaling nearly $1.4 billion and dividends of almost $1.1 billion. In 2025, we substantially increased the quarterly dividend from $0.70 to $0.87 per share, representing a 24% increase. Since initiating the previous stock repurchase program in 2022, we have reduced the number of outstanding shares by almost 15%. When executing the program, we consider several factors, including our balance sheet, the cash flow outlook, our credit rating, and the general business conditions, as well as the debt leverage ratio.
Over the years, Autoliv has demonstrated its ability to generate solid cash flow across different market conditions. During 2025, we returned approximately $590 million to shareholders through dividends and share buybacks. Over the past five years, we have improved our debt leverage while returning $2.44 billion directly to shareholders. This includes repurchases totaling nearly $1.4 billion and dividends of almost $1.1 billion. In 2025, we substantially increased the quarterly dividend from $0.70 to $0.87 per share, representing a 24% increase. Since initiating the previous stock repurchase program in 2022, we have reduced the number of outstanding shares by almost 15%. When executing the program, we consider several factors, including our balance sheet, the cash flow outlook, our credit rating, and the general business conditions, as well as the debt leverage ratio.
Speaker #3: Over the years , Autoliv has demonstrated its ability to generate cash solid flow across different market conditions . During 2025 , we returned approximately 590 million to shareholders through dividends and share buybacks over the past five years , we have debt improved our leverage while returning 2.44 billion directly to shareholders .
Speaker #3: This includes repurchases totaling nearly $1.4 billion and dividends of almost $1.1 billion. In 2025, we substantially increased the quarterly dividend from $0.70 to $0.87 per share, representing a 24% increase since initiating the previous stock repurchase program in 2022.
Speaker #3: We have reduced the number of outstanding shares by almost executing 15% when the program . We consider several factors , including our balance sheet , the cash flow outlook , our credit rating , and the general business conditions , .
Fredrik Westin: We always strive to balance what is best for our shareholders in both the short and long term. Now, looking on our Debt Leverage Ratio development on the next slide. Autoliv's balanced leverage strategy reflects prudent financial management, enabling resilience, innovation, and sustained stakeholder value over time. Our leverage ratio improved from 1.3 times to 1.1 times during the quarter, despite accelerated shareholder returns. Our net debt decreased by over $200 million. The twelve-month trailing Adjusted EBITDA was $3 million lower in the quarter. Now on to the next slide, and with that, I hand it back to you, Mikael.
We always strive to balance what is best for our shareholders in both the short and long term. Now, looking on our Debt Leverage Ratio development on the next slide. Autoliv's balanced leverage strategy reflects prudent financial management, enabling resilience, innovation, and sustained stakeholder value over time. Our leverage ratio improved from 1.3 times to 1.1 times during the quarter, despite accelerated shareholder returns. Our net debt decreased by over $200 million. The twelve-month trailing Adjusted EBITDA was $3 million lower in the quarter. Now on to the next slide, and with that, I hand it back to you, Mikael.
Speaker #3: As we as well always strive to debt leverage balance, what is best for our shareholders in both the short and long term.
Speaker #3: Now , looking on our debt leverage ratio development on the next slide . How to list balanced leverage strategy reflects prudent financial management , enabling resilience , innovation and sustained stakeholder value over time .
Speaker #3: Our leverage ratio improved from 1.3 times to 1.1 times during the quarter, despite accelerated shareholder returns. Our net debt decreased by over $200 million.
Speaker #3: The 12 months trailing adjusted EBITDA was 3 million lower in the quarter . Now , on to the next slide . And with that , I hand it back to you , Mikaela .
Mikael Bratt: Thank you, Fredrik. I will talk about the outlook for 2026, more in detail on the next few slides. Turning to the next slide. Overall, global light vehicle production in 2026 is expected to be slightly down compared to 2025, with regional gains and losses nearly offsetting each other. European light vehicle production is expected to remain broadly unchanged, as improved affordability is likely to be offset by rising imports from China. Looking to North America, US light vehicle sales in 2025 generally outperformed expectations. However, the market is now facing inflationary pressures as automakers seek to recoup at least part of tariff costs. As a result, S&P Global forecast light vehicle production to decline by 2% in 2026. The North America outlook remains uncertain due to upcoming USMCA negotiations.
Mikael Bratt: Thank you, Fredrik. I will talk about the outlook for 2026, more in detail on the next few slides. Turning to the next slide. Overall, global light vehicle production in 2026 is expected to be slightly down compared to 2025, with regional gains and losses nearly offsetting each other. European light vehicle production is expected to remain broadly unchanged, as improved affordability is likely to be offset by rising imports from China. Looking to North America, US light vehicle sales in 2025 generally outperformed expectations. However, the market is now facing inflationary pressures as automakers seek to recoup at least part of tariff costs. As a result, S&P Global forecast light vehicle production to decline by 2% in 2026. The North America outlook remains uncertain due to upcoming USMCA negotiations.
Speaker #2: Thank you Frederic , I will talk about the outlook for 2026 more in detail on the next few slides . Turning to the next slide .
Speaker #2: Overall global light vehicle production in 2026 is expected to be slightly down compared to 2025 . With regional gains and losses nearly offsetting each other .
Speaker #2: European light vehicle production is expected to remain broadly unchanged, as improved affordability is likely to be offset by rising imports from China. Looking to North America, US light vehicle sales in 2025 generally outperformed expectations.
Speaker #2: However , the market is now facing inflationary pressures as seek automakers to recoup at least part of tariff costs . As a result , SMP for SMP forecast light vehicle production to decline by 2% in 2026 .
Speaker #2: The North America outlook remains uncertain due to upcoming USMCA negotiations and weaker demand in China. Despite this, full year production is expected to show only a modest decline, supported by continued strength in exports.
Mikael Bratt: Despite weaker demand in China, full year production is expected to show only a modest decline, supported by continued strength in exports. Japan's short-term outlook has improved, supported by tax reductions and the reallocation of production from certain vehicles from Mexico to Japan. For the year, S&P is forecasting flat light vehicle production. Korean light vehicle production remain subdued, given weaker domestic demand and a tough, tougher export environment. India's light vehicle production is expected to increase by 8%, driven by a reduction in purchase taxes on new vehicles, which disproportionately benefits smaller and lower-priced models. Geopolitical uncertainty, including tariffs and other trade restrictions, the USMCA review, and industrial policy shifts are expected to be the biggest risk to the 2026 light vehicle production outlook. Now, looking on our way forward on the next slide. For the full year, 2026, we expect flat organic sales overall.
Despite weaker demand in China, full year production is expected to show only a modest decline, supported by continued strength in exports. Japan's short-term outlook has improved, supported by tax reductions and the reallocation of production from certain vehicles from Mexico to Japan. For the year, S&P is forecasting flat light vehicle production. Korean light vehicle production remain subdued, given weaker domestic demand and a tough, tougher export environment. India's light vehicle production is expected to increase by 8%, driven by a reduction in purchase taxes on new vehicles, which disproportionately benefits smaller and lower-priced models. Geopolitical uncertainty, including tariffs and other trade restrictions, the USMCA review, and industrial policy shifts are expected to be the biggest risk to the 2026 light vehicle production outlook. Now, looking on our way forward on the next slide. For the full year, 2026, we expect flat organic sales overall.
Speaker #2: Japan's short term outlook has improved , supported by tax reductions and reallocation of production from certain vehicles from Mexico to Japan for the year .
Speaker #2: S&P is forecasting flat light vehicle production . Korean light vehicle production remain subdued , given weaker domestic demand and a tougher export environment .
Speaker #2: vehicle India's light production is expected to increase by 8% , driven by a reduction in purchase taxes on new vehicles . With this disproportionally benefits smaller and priced lower models .
Speaker #2: The political uncertainty , including tariffs and other trade restrictions , the industrial policy and review expected to be the biggest risk to the 2026 light vehicle outlook production .
Speaker #2: Now , looking on our way forward on the next slide . For the full year 2026 , we expect flat organic sales overall growth in China , India and South America is expected to be offset by lower North sales in America and Europe , reflecting a number product limited launches in those regions .
Mikael Bratt: Growth in China, India, and South America is expected to be offset by lower sales in North America and Europe, reflecting a limited number of new product launches in those regions. Turning to profitability, we expect margin expansions, expansion supported by higher operational efficiency, ongoing structural cost reductions, and improved light vehicle production call off volatility. At the same time, we anticipate headwinds from higher raw material costs, particularly gold, and from higher depreciation as, as recent investments come online. Finally, we expect continued strong operating and free operating cash flow generation. CapEx is expected to be slightly higher than in 2025, but still below 5% of sales, as we invest in new manufacturing capacity to meet increasing demand in fast-growing regions such as India. Now, looking more specifically on Q1 2026.
Growth in China, India, and South America is expected to be offset by lower sales in North America and Europe, reflecting a limited number of new product launches in those regions. Turning to profitability, we expect margin expansions, expansion supported by higher operational efficiency, ongoing structural cost reductions, and improved light vehicle production call off volatility. At the same time, we anticipate headwinds from higher raw material costs, particularly gold, and from higher depreciation as, as recent investments come online. Finally, we expect continued strong operating and free operating cash flow generation. CapEx is expected to be slightly higher than in 2025, but still below 5% of sales, as we invest in new manufacturing capacity to meet increasing demand in fast-growing regions such as India. Now, looking more specifically on Q1 2026.
Speaker #2: Turning to profitability , we expect margin expansions expansions supported by higher operational efficiency , ongoing structural cost reductions , and improved light vehicle production .
Speaker #2: All of volatility . At the same time , we anticipate headwinds from higher raw material costs , particularly gold from , and depreciation as higher as recent online come investments .
Speaker #2: Finally, we expect continued strong operating and free operating cash flow generation. CapEx is expected to be slightly higher than in 2025, but still below 5% of sales.
Speaker #2: We are investing in new manufacturing capacity to meet increasing demand in fast-growing regions such as India. Now, looking more specifically at the first quarter of 2026.
Mikael Bratt: The first quarter is expected to be the weakest of the year, which is consistent with the normal seasonal pattern for our industry. China is facing near to demand headwind due to the reduced scrappage and new energy vehicle incentives, alongside elevated inventories of new vehicles. As a result, light vehicle production in the Chinese market is expected to decline by more than 10% in the first quarter. As a result, Q1 global light vehicle production is expected to decline by nearly 1 million units, or 4% compared with the same period last year. Subsequently, versus Q4 2025, LVP is expected to fall by 3.3 million units, or 14%, about twice the normal sequential decline.
The first quarter is expected to be the weakest of the year, which is consistent with the normal seasonal pattern for our industry. China is facing near to demand headwind due to the reduced scrappage and new energy vehicle incentives, alongside elevated inventories of new vehicles. As a result, light vehicle production in the Chinese market is expected to decline by more than 10% in the first quarter. As a result, Q1 global light vehicle production is expected to decline by nearly 1 million units, or 4% compared with the same period last year. Subsequently, versus Q4 2025, LVP is expected to fall by 3.3 million units, or 14%, about twice the normal sequential decline.
Speaker #2: The first quarter is be the expected to weakest of the year , which is consistent with the normal seasonal pattern for our industry .
Speaker #2: China is facing near-term demand headwind due to the reduced scrappage and a new energy energy vehicle incentives alongside elevated inventories of new vehicles .
Speaker #2: result , light As a vehicle production in the Chinese market is expected to decline by more than 10% in the first quarter . As a result , Q1 global light vehicle production is expected to decline by nearly 1 million units , or 4% , compared with the same last year period .
Speaker #2: Versus subsequently, Q4 2025, LVP is expected to fall by 3.3 million units, or 14%, about twice the normal sequential decline we expect.
Mikael Bratt: We expect adjusted operating margin in the first quarter to decline significantly compared to Q1 2025, primarily due to lower light vehicle production, lower engineering income, higher depreciation, and amortization in relation to sales. It's also worth noting that Q1 operating income last year included $12 million positive impact from the sale of our Russia operations. Turning to the next slide. This slide shows our full year 2026 guidance, which excludes effects from capacity alignment and antitrust related matters. It is based on no material changes to tariffs or trade restrictions that are in effect as of 23 January 2026, as well as no significant changes in the macroeconomic environment or changes in customer call off volatility or significant supply chain disruptions.
We expect adjusted operating margin in the first quarter to decline significantly compared to Q1 2025, primarily due to lower light vehicle production, lower engineering income, higher depreciation, and amortization in relation to sales. It's also worth noting that Q1 operating income last year included $12 million positive impact from the sale of our Russia operations. Turning to the next slide. This slide shows our full year 2026 guidance, which excludes effects from capacity alignment and antitrust related matters. It is based on no material changes to tariffs or trade restrictions that are in effect as of 23 January 2026, as well as no significant changes in the macroeconomic environment or changes in customer call off volatility or significant supply chain disruptions.
Speaker #2: we Adjusted operating margin in the first quarter to decline significantly compared to Q1 2025 , primarily due to lower light vehicle production , lower engineering income , higher depreciation , amortization in relation to sales .
Speaker #2: Worth also noting, Q1 operating income last year included a $12 million positive impact from the sale of our Russia operations.
Speaker #2: Turning to the next slide . This slide shows our full year 2026 guidance , which excludes effects from capacity , alignment and antitrust related matters in it is based on no material changes to tariffs or trade restrictions that are in effect as of January 23rd , 2026 .
Speaker #2: As well as no significant changes in the macroeconomic environment or changes in customer call off volatility or significant supply chain disruptions . We expect to outperform light vehicle production by around one percentage points as our organic sales is expected to be flat , while global light vehicle production is expected to decline by 1% .
Mikael Bratt: We expect to outperform light vehicle production by around 1 percentage points, as our organic sales is expected to be flat, while global light vehicle production is expected to decline by 1%. The net currency translation effect on sales is expected to be around 1% positive. The guidance for adjusted operating margin is around 10.5 to 11%. Operating cash flow is expected to be around $1.2 billion. We expect CapEx to be below 5% of sales. Our positive cash flow and strong balance sheet supports our continued commitment to a high level of shareholder return. We expect a tax rate of around 28%, and now looking on the next slide. This concludes our formal comments for today's earnings call, and we would like to open the line for questions from analysts and investors.
We expect to outperform light vehicle production by around 1 percentage points, as our organic sales is expected to be flat, while global light vehicle production is expected to decline by 1%. The net currency translation effect on sales is expected to be around 1% positive. The guidance for adjusted operating margin is around 10.5 to 11%. Operating cash flow is expected to be around $1.2 billion. We expect CapEx to be below 5% of sales. Our positive cash flow and strong balance sheet supports our continued commitment to a high level of shareholder return. We expect a tax rate of around 28%, and now looking on the next slide. This concludes our formal comments for today's earnings call, and we would like to open the line for questions from analysts and investors. Now, I hand it back to our operator, Sandra.
Speaker #2: The net currency translation effects on sales are expected to be around 1% positive. The guidance for adjusted operating margin is around ten and a half to eleven percent.
Speaker #2: Operating cash flow is expected to be around 1.2 billion USD . We expect CapEx , CapEx to be below sales 5% of . Our positive cash flow and strong balance sheet supports our continued commitment to high level of shareholder return expect the tax .
Speaker #2: We rate of around 28% , and now looking on the next slide . 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 Bratt: Now, I hand it back to our operator, Sandra.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question from the line of Colin Langan from Wells Fargo. Please go ahead.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question from the line of Colin Langan from Wells Fargo. Please go ahead.
Speaker #2: Now I'll hand it back to our operating operator Sandra .
Speaker #1: Thank you. As a reminder, to ask a question please press one-one on your telephone and wait for your name to be announced.
Speaker #1: To withdraw your question , please press star one and one again . We will now take the first question from the line of Colin Langan from Wells Fargo .
Colin Langan: Oh, great. Thanks for taking my questions. You know, is there a way to frame some of the major puts and takes when you talk about margins on slide 25? You know, in particular, I think you mentioned it was about $30 million in cost savings. Is that the structural bucket? How large is the raw material drag? Any way to quantify that? And then two things not mentioned on the puts and takes. Engineering was a drag last year. Is that good news in 2026? And is there any FX or peso impact that we should be worried about?
Colin Langan: Oh, great. Thanks for taking my questions. You know, is there a way to frame some of the major puts and takes when you talk about margins on slide 25? You know, in particular, I think you mentioned it was about $30 million in cost savings. Is that the structural bucket? How large is the raw material drag? Any way to quantify that? And then two things not mentioned on the puts and takes. Engineering was a drag last year. Is that good news in 2026? And is there any FX or peso impact that we should be worried about?
Speaker #1: Please go ahead .
Speaker #4: Oh , great . Thanks for taking my questions . Is there a way to frame some of the major puts and takes when you talk about margins on in slide 25 , particular , I think you mentioned it was about $30 million of cost savings .
Speaker #4: Is that the structural bucket? How large is the raw material drag? Any way to quantify that? And then two things not on the mentioned puts and takes.
Speaker #4: Engineering was a drag last year. Is that good? And is 26 news in there? Any FX or peso impact that we should be worried about?
Mikael Bratt: Yeah, thanks for the question. So the puts and takes, if I try to quantify them or explain them a bit more in detail. So on the raw material side, we had about $10 million in headwinds in 2025 for the full year, and we expect that to be a larger headwind in 2026, so more around $30 million headwinds, and that's mainly related to non-ferrous metals, and here, the largest headwind is from gold, actually. Then on the RD&E part, for the full year, we expect the RD&E cost as a percent of sales to be more or less flat.
Mikael Bratt: Yeah, thanks for the question. So the puts and takes, if I try to quantify them or explain them a bit more in detail. So on the raw material side, we had about $10 million in headwinds in 2025 for the full year, and we expect that to be a larger headwind in 2026, so more around $30 million headwinds, and that's mainly related to non-ferrous metals, and here, the largest headwind is from gold, actually. Then on the RD&E part, for the full year, we expect the RD&E cost as a percent of sales to be more or less flat.
Speaker #3: Yeah . Thanks for the question . So the the puts and if try to bit more in explain detail I a takes , quantify the more .
Speaker #3: So on the raw material side , we had about 10 million in headwinds in 25 for the full year . And we expect that to be a larger headwind in in 26 .
Speaker #3: So more around 30 million in headwinds . And that's mainly related to non-ferrous metals in here . The largest headwind is from gold actually .
Speaker #3: Then on the on part for the full year , we expect the the cost as a percent of sales to be more or less flat .
Mikael Bratt: ... And that was also the case in 2025. It's just the timing in 25 was different compared to 2024. But if you look at the full year, cost in, in, as a % of sales, it was, yeah, more or less unchanged, and that's also what we expect for, for 26 in terms of % of sales. So, then, FX, that had about $20 million positive impact in 25, and we expect that the current or the rates that we have included in the forecast, which, yeah, they've changed a little bit since then, in our guidance, it would indicate a similar, positive effect of around maybe $20 million, for 26, again, which is, as, as in 25. And then lastly, the structure cost savings.
Mikael Bratt: And that was also the case in 2025. It's just the timing in 25 was different compared to 2024. But if you look at the full year, cost in, in, as a % of sales, it was, yeah, more or less unchanged, and that's also what we expect for, for 26 in terms of % of sales. So, then, FX, that had about $20 million positive impact in 25, and we expect that the current or the rates that we have included in the forecast, which, yeah, they've changed a little bit since then, in our guidance, it would indicate a similar, positive effect of around maybe $20 million, for 26, again, which is, as, as in 25. And then lastly, the structure cost savings.
Speaker #3: And that was also the case in 2025 . It's just the timing . In 25 was different compared to 2024 . But if you look at the full year cost as a of sales , percent it was more or less unchanged .
Speaker #3: And that's also what we expect for 26 . In terms of for percent of sales . Then FX , then that had about 20 million positive impact in 25 .
Speaker #3: we And expect at the current or the rates that we have included in the forecast , which , yeah , they've changed a little bit since then .
Speaker #3: We're now guiding. It would indicate a similar positive effect of around maybe $20 million for '26, again, which is as in, and then '25.
Mikael Bratt: So we have now achieved $100 million of the $130 million that we set out or that we detailed out when we announced the plan. So it's about $30 million left, of which we expect to get $20 million here in this year, and then the remaining $10 million next year. So that's maybe some more quantifications there on the puts and takes for 2026.
Mikael Bratt: So we have now achieved $100 million of the $130 million that we set out or that we detailed out when we announced the plan. So it's about $30 million left, of which we expect to get $20 million here in this year, and then the remaining $10 million next year. So that's maybe some more quantifications there on the puts and takes for 2026.
Speaker #3: Lastly, the structural cost savings. So, we have now achieved $100 million of the $130 million that we set out, or that we detailed out when we announced the plan.
Speaker #3: So it's about 30 million left , of which we expect to get 20 million here in this year . And then the remaining 10 million next year .
Colin Langan: Yeah, that was very helpful. Just as a follow-up, there was media reports earlier this week that Hyundai has an airbag recall, and I think the reports are saying that you were a supplier. Is that quantified in the guidance? Any color you could provide there? I guess a lot of investors are always a little worried when there's recalls. Yeah, or is that very specific to the, those models that were recalled? Thank you.
Colin Langan: Yeah, that was very helpful. Just as a follow-up, there was media reports earlier this week that Hyundai has an airbag recall, and I think the reports are saying that you were a supplier. Is that quantified in the guidance? Any color you could provide there? I guess a lot of investors are always a little worried when there's recalls. Yeah, or is that very specific to the, those models that were recalled? Thank you.
Speaker #3: So that's maybe some more quantifications here on on the puts and takes for 26 .
Speaker #4: Yeah , that was very helpful . Just as a follow up , there was media reports earlier this week that Hyundai has an airbag recall .
Speaker #4: And I think the reports that you were a are saying supplier . Is that quantified in the guidance ? Any color you could provide there ?
Speaker #4: I guess a lot of investors are always a little worried when there's recalls . Yeah . Is there or is that very specific to those models that were recalled ?
Mikael Bratt: Thank you for the question there. I think, as I said, it's just came out here, and, I mean, we're working together with the customer here. But at this point, there is no indication really towards our products and so forth. But we continue to work with them there to support them. But we have nothing more really to say at this point than that. So right now, at this point, no indication towards us.
Mikael Bratt: Thank you for the question there. I think, as I said, it's just came out here, and, I mean, we're working together with the customer here. But at this point, there is no indication really towards our products and so forth. But we continue to work with them there to support them. But we have nothing more really to say at this point than that. So right now, at this point, no indication towards us.
Speaker #4: Thank you .
Speaker #2: for the Thank you question there . I think as I said , it's just came out here . And I mean , we're working together with the with the customer here .
Speaker #2: at this point , But there is no indication really towards our products and so forth . But we continue to work with with them there to support them .
Speaker #2: But they have nothing more really to say at this point than that . So right now , at this point , no indication towards us .
Colin Langan: Got it. All right. Thanks for taking my questions.
Colin Langan: Got it. All right. Thanks for taking my questions.
Mikael Bratt: Thank you.
Mikael Bratt: Thank you.
Operator: Thank you. We will now take the next question from the line of Tom Narayan from RBC. Please go ahead.
Operator: Thank you. We will now take the next question from the line of Tom Narayan from RBC. Please go ahead.
Speaker #2: .
Speaker #4: Got it . All right . Thanks for taking my questions .
Speaker #2: Thank you .
Speaker #1: Thank you. We will now take the next question from the line of Tom Narayan from RBC. Please go ahead.
Tom Narayan: Hi, yes, thanks for taking the question. The first one is on the 2026 guidance, I know you're calling for a 1% outperformance versus the market. You know, last quarter, Q4, you did, I think, a 3% outperformance. Just wanted to know if we could just better understand why the outperformance is only 1%. I know the market items you called out, the launch delays in North America and Europe, those are kind of impacting LVP. Is this perhaps, you know, worse for you guys? Just, yeah, just trying to understand the Autoliv specific why the outperformance, I guess, is only 1%. And then I have a follow-up.
Tom Narayan: Hi, yes, thanks for taking the question. The first one is on the 2026 guidance, I know you're calling for a 1% outperformance versus the market. You know, last quarter, Q4, you did, I think, a 3% outperformance. Just wanted to know if we could just better understand why the outperformance is only 1%. I know the market items you called out, the launch delays in North America and Europe, those are kind of impacting LVP. Is this perhaps, you know, worse for you guys? Just, yeah, just trying to understand the Autoliv specific why the outperformance, I guess, is only 1%. And then I have a follow-up.
Speaker #5: Hi . Yes , thanks for taking the question . The first one is on the 2026 guidance and you're calling for a 1% , I guess , outperformance versus the market .
Speaker #5: last You know , quarter , Q4 , you did , I think a 3% outperformance . Just wanted to know if we could just better understand why the outperformance is only 1% .
Speaker #5: I know the market items you called out , the launch delays , the North America and Europe , those are kind of impacting LVP .
Speaker #5: Is this perhaps , you know , you worse for guys ? Just just trying to understand the auto leave specific why the outperformance I guess is only 1% .
Mikael Bratt: Yeah. Thank you. I mean, first of all, I think this is very much in line with what we have talked about for quite some while here about our organic growth components, where we have, you know, the 4 to 6 breaking up into three pieces, you could say, or contributors. And light vehicle production there stands for the first 1 to 2%, and then our content or, yeah, the safety market as such, 1 to 2%, and then our mobility safety solutions, 1 to 2%. And here we've been also clear that the 1 to 2% related to mobility safety solutions is more towards the 2030 time horizon, which leaves us with the LVP and the content here. And LVP, as we mentioned, is negative.
Mikael Bratt: Yeah. Thank you. I mean, first of all, I think this is very much in line with what we have talked about for quite some while here about our organic growth components, where we have, you know, the 4 to 6 breaking up into three pieces, you could say, or contributors. And light vehicle production there stands for the first 1 to 2%, and then our content or, yeah, the safety market as such, 1 to 2%, and then our mobility safety solutions, 1 to 2%. And here we've been also clear that the 1 to 2% related to mobility safety solutions is more towards the 2030 time horizon, which leaves us with the LVP and the content here. And LVP, as we mentioned, is negative.
Speaker #5: And then I have a follow-up.
Speaker #2: Yeah . Thank you . I mean , first of all , I think this is very much in line with what we have talked about for for quite some while here about our growth organic components , where we have , you know , the , the 4 to 6 breaking up pieces , you into three contributors could say , or and light vehicle production .
Speaker #2: There stands for the first 1 to 2% . And then our content or yeah the safety market as such 1 to 2% . And then our mobility safety solutions 1 to 2 .
Speaker #2: And here we've been also clear that the 1 to 2 related to mobility , safety solutions is more towards the 2030 time horizon , which leaves us with the the , the , the , the , the LVP and the content there and LVP .
Mikael Bratt: So the 1% that we outperform here is then consistent with the 1% to 2% CPV contributor here, even though it's the lower end of the range here. And as we have indicated here, I think we have faced the headwinds during 2025 here due to the mix effect, where the, let's say, the lower end vehicles with lower content has been the ones that really have been growing. And for 2026, we expect a neutral mix effect, meaning that the mix structure we have now is moving into 2026, and then the lower end of the range of 1% for content growth.
Mikael Bratt: So the 1% that we outperform here is then consistent with the 1% to 2% CPV contributor here, even though it's the lower end of the range here. And as we have indicated here, I think we have faced the headwinds during 2025 here due to the mix effect, where the, let's say, the lower end vehicles with lower content has been the ones that really have been growing. And for 2026, we expect a neutral mix effect, meaning that the mix structure we have now is moving into 2026, and then the lower end of the range of 1% for content growth.
Speaker #2: As we mentioned , it's negative . So the 1% that we outperform here is then . Consistent with the 1 to 2% . CPV here , even contributor though it's the lower end of the range of here .
Speaker #2: And as we have indicated here , I think we have faced the headwinds during 2025 here due to the mix mix effect , where the the let's lower end vehicles with lower content has the ones been the that really have been growing .
Speaker #2: And for we, we expect the neutral mix effect, meaning that the mix for 2026, the structure we know now, is moving into 2026.
Mikael Bratt: So I think it hangs very well together with what we have communicated in the past and our expectation as well here. Of course, we would like to have seen some more positive mix effect coming through here, but we don't see that right now here for 2026. But it will come further down the road here, I believe.
Mikael Bratt: So I think it hangs very well together with what we have communicated in the past and our expectation as well here. Of course, we would like to have seen some more positive mix effect coming through here, but we don't see that right now here for 2026. But it will come further down the road here, I believe.
Speaker #2: Hence, the lower end of the content range hangs very well together with what we have communicated in the past. So, I think 1% for growth is well in line.
Speaker #2: then the Hence lower end of the of of content range So hangs very I think together growth . with have what 1% for communicated in well past . we it and our And , expectation as the here course , we well would like , of to have seen some more positive mix effects through coming here .
Speaker #2: we don't But that right 2026 . see But . will now here come It further down the road I believe here . .
Tom Narayan: Got it. Understood. Thanks, thanks for that. That's actually very helpful. Then my follow-up is, you know, we've all seen the registration data in Europe in the recent months with obviously Chinese OEMs really gaining share very quickly in certain countries. Maybe you could just... I know you talked about this a little in the prepared commentary, but maybe you could just give a little more detail on how you guys are performing with exports and also prospective production, you know, in Europe from the Chinese OEMs. Thanks.
Tom Narayan: Got it. Understood. Thanks, thanks for that. That's actually very helpful. Then my follow-up is, you know, we've all seen the registration data in Europe in the recent months with obviously Chinese OEMs really gaining share very quickly in certain countries. Maybe you could just... I know you talked about this a little in the prepared commentary, but maybe you could just give a little more detail on how you guys are performing with exports and also prospective production, you know, in Europe from the Chinese OEMs. Thanks.
Speaker #5: Got Understood . Thank thanks for actually very that's follow . My that . is That's it . you helpful know we've up all seen the data in registration the in with months Europe recent obviously the Chinese quickly could just I know you .
Speaker #5: in the countries in certain commentary , OEMs prepared maybe you could just little give a more really talked about very Maybe you detail on how you guys are performing with exports .
Mikael Bratt: Yeah. Thank you. No, I think, I mean, as we have indicated here, I think our overall ambitions here to grow with the Chinese OEMs in general is progressing very well. And we basically have, as I said, doubled our position here in the last couple of years here. And have a very strong position in China as the market leader there. And one of the, I think, strength we have here is really that we can support our Chinese customers as they move outside their home market.
Mikael Bratt: Yeah. Thank you. No, I think, I mean, as we have indicated here, I think our overall ambitions here to grow with the Chinese OEMs in general is progressing very well. And we basically have, as I said, doubled our position here in the last couple of years here. And have a very strong position in China as the market leader there. And one of the, I think, strength we have here is really that we can support our Chinese customers as they move outside their home market.
Speaker #5: also And prospective production , you know , in Europe from from the Chinese OEMs . Thanks
Speaker #5: .
Speaker #2: you Thank . No , Yeah . I think I mean , as we have indicated here , I think our overall ambitions here to grow with the Chinese in general is , is progressing very well .
Speaker #2: And we basically have , as I said , doubled our our position here in the in the last couple of years here and have a very strong position in China as the market leader .
Speaker #2: There . And one of the I think strength we have here is really that we can support our Chinese customers as they move outside their their market , their home .
Mikael Bratt: As we reported here, we are happy to share that we have one first very important quote here with one of the Chinese customers setting up production in Europe, and we are the only external supplier to that platform, which of course is a really good indication of where we are at. However, I mean, right, so far, it's not a massive localization taking place right now. We are on-
Mikael Bratt: As we reported here, we are happy to share that we have one first very important quote here with one of the Chinese customers setting up production in Europe, and we are the only external supplier to that platform, which of course is a really good indication of where we are at. However, I mean, right, so far, it's not a massive localization taking place right now. We are on-
Speaker #2: as we And reported , here , we are happy to share that we we have one first very important quote here with with one of the Chinese customers setting up production in in Europe .
Speaker #2: And we are the the only external supplier to the to that platform , which of course is is a really good , good good indication of where we are at .
Operator: Mm-hmm
Operator: Mm-hmm
Mikael Bratt: ... many of the vehicles that are exported into Europe, of course, but we - I think it's still some way to go until we see really high volumes of localized Chinese production, going forward, yeah.
Mikael Bratt: ... many of the vehicles that are exported into Europe, of course, but we - I think it's still some way to go until we see really high volumes of localized Chinese production, going forward, yeah.
Speaker #2: However , I mean right so far it's not a massive localization place right taking now . We are on many of the the vehicles that are exported into Europe .
Speaker #2: Of course, but I think it's still some way to go until we see really high volumes of localized Chinese production.
Operator: Understood. Thank you.
Operator: Understood. Thank you.
Mikael Bratt: Bottom line is we are well positioned for that.
Mikael Bratt: Bottom line is we are well positioned for that.
Speaker #2: Going forward here .
Operator: Yeah. Thank you. Thank you. We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead.
Operator: Yeah. Thank you. Thank you. We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead.
Speaker #5: Understood . Thank you .
Speaker #2: The bottom line is we are well positioned for that.
Speaker #5: Yeah .
Speaker #1: Thank you , thank you . We will now take the next question from the line Agnieszka of Villella from Nordair . Please ahead go .
Agnieszka Vilela: Thank you. I have two questions. Maybe starting with your orders progress. Can you tell us what, what is your estimation of your current market share in the industry? And also, as I understand, you are making progress with the China OEM, but are you keeping your position with the Western OEs?
Agnieszka Vilela: Thank you. I have two questions. Maybe starting with your orders progress. Can you tell us what, what is your estimation of your current market share in the industry? And also, as I understand, you are making progress with the China OEM, but are you keeping your position with the Western OEs?
Speaker #6: Thank you . I have two questions . Maybe starting your with order's progress . Can you tell us what what is your estimation of your current market share in the industry ?
Speaker #6: And also , as I understand , you are making progress with the China OEM , but are you keeping position with your the Western OS ?
Mikael Bratt: Yeah, I mean, we had a market share of 44% in 2024. We can also report we are reporting a market share of 44% in 2025. So, yes, we are defending our market share position globally here. And an important part of that, of course, is that we see such a strong growth also with the Chinese OEMs here and continue to be in focus. But we shouldn't forget also our strong position in India, which we also mentioned here, where we, with roughly 60% market share in the Indian market, see strong CPV growth and also light vehicle production growth. And I think also India is growing its importance as a global hub as well.
Mikael Bratt: Yeah, I mean, we had a market share of 44% in 2024. We can also report we are reporting a market share of 44% in 2025. So, yes, we are defending our market share position globally here. And an important part of that, of course, is that we see such a strong growth also with the Chinese OEMs here and continue to be in focus. But we shouldn't forget also our strong position in India, which we also mentioned here, where we, with roughly 60% market share in the Indian market, see strong CPV growth and also light vehicle production growth. And I think also India is growing its importance as a global hub as well.
Speaker #2: Yeah , I mean , we we had market share of 44% in in 2024 . We can also report and we are reporting a market share of 44% in 2025 .
Speaker #2: So yes , we we are are defending our market share position globally here . part of an And important that , of course , is that we see such a strong also with the growth Chinese OEMs here .
Speaker #2: And continue to be in focus . But we shouldn't forget also our strong position in India , which we also mentioned here , where we with 60 , roughly 60% market share in the Indian market , see strong CPV growth and also like vehicle production growth .
Mikael Bratt: So of course, with our position there and that growth, we're also well positioned there to continue to, to build on our market, position globally here. So,
Mikael Bratt: So of course, with our position there and that growth, we're also well positioned there to continue to, to build on our market, position globally here. So,
Speaker #2: And I think also India is is growing its importance as a global hub as well . So of course with position there our and that growth also , we well positioned that to continue to to build on our market position globally .
Agnieszka Vilela: Thank you.
Agnieszka Vilela: Thank you.
Mikael Bratt: Yeah.
Mikael Bratt: Yeah.
Agnieszka Vilela: Yeah. Understood. And then the second question is on the raw material headwind that you assumed for 2026 of $30 million or about $30 million. How did you calculate that headwind? Did you use any kind of spot prices that you receive? And if, in that case, from what date, or are you using some contract prices that you have?
Agnieszka Vilela: Yeah. Understood. And then the second question is on the raw material headwind that you assumed for 2026 of $30 million or about $30 million. How did you calculate that headwind? Did you use any kind of spot prices that you receive? And if, in that case, from what date, or are you using some contract prices that you have?
Speaker #2: Here .
Speaker #6: So thank you .
Speaker #2: Yeah .
Speaker #6: Yeah yeah . Understood . And then the second question is on the raw material headwind that you assumed for 2026 of 30 million , or about 30 million , how did you calculate the calculate that headwind ?
Speaker #6: Did you use any kind of spot prices that you see? And if that's the case, from what date? Or are you using some contract prices that you have?
Mikael Bratt: It's a mix of both. So in some cases, we have, say, long-term agreements with, yeah, with our suppliers. That's mostly related to steel in Europe. But then we also have contracts which are updated, yeah, anywhere between quarterly up to annually. And then we base the forecast here on different index forecasts that we have available. And it's, yeah, we lock this forecast at, say, late November. We lock the prices, and that's the, what $30 million is estimate or based on. Yeah. So we see,
Mikael Bratt: It's a mix of both. So in some cases, we have, say, long-term agreements with, yeah, with our suppliers. That's mostly related to steel in Europe. But then we also have contracts which are updated, yeah, anywhere between quarterly up to annually. And then we base the forecast here on different index forecasts that we have available. And it's, yeah, we lock this forecast at, say, late November. We lock the prices, and that's the, what $30 million is estimate or based on. Yeah. So we see,
Speaker #3: It's it's a mix of both . So in some cases we have a long term agreements with . With our suppliers . That's mostly related to steel in Europe .
Speaker #3: But then we also have contracts which are updated, yeah, anywhere between quarterly up to annually. And then we base the forecast here on different index forecasts that we have available.
Speaker #3: And it's yeah , this we lock forecast at say , late November . We lock the prices . And that's what what the 30 million is estimated or based on .
Agnieszka Vilela: And then just to-
Agnieszka Vilela: And then just to-
Mikael Bratt: ... a headwind from steel, but as I said, the largest impact we see from gold and on the ferrous part.
Mikael Bratt: ... a headwind from steel, but as I said, the largest impact we see from gold and on the ferrous part.
Speaker #3: So, we see a headwind from steel. But as I said, the largest impact we see is from gold and the non-ferrous part.
Agnieszka Vilela: Yeah. And just to understand that this is net of any potential compensations that you will be getting for that from your end customers?
Agnieszka Vilela: Yeah. And just to understand that this is net of any potential compensations that you will be getting for that from your end customers?
Mikael Bratt: This is a gross impact we're talking about. So this is only how our cost will be impacted. This is not, this is not the net impact on our P&L.
Mikael Bratt: This is a gross impact we're talking about. So this is only how our cost will be impacted. This is not, this is not the net impact on our P&L.
Speaker #3: .
Speaker #6: And just to understand that this is net of any potential compensations that you will be getting for that , this is a .
Speaker #3: This is a gross impact . We're talking about . So this is only how our cost will be impacted . This is not this is not the net impact on our final .
Agnieszka Vilela: Okay. Thank you.
Agnieszka Vilela: Okay. Thank you.
Operator: Thank you. We will now take the next question from the line of Winnie Dong from Deutsche Bank. Please go ahead.
Operator: Thank you. We will now take the next question from the line of Winnie Dong from Deutsche Bank. Please go ahead.
Speaker #3: .
Speaker #6: Okay . Thank you .
Speaker #1: Thank you. We will now take the next question from the line of Winnie Dong from Deutsche Bank. Please go ahead.
Winnie Dong: Hi, thanks so much for taking my question. I wanted to just go back to the order intake lifetime sales chart. Just wanted to ask, what part of this do you think is structural and what part of it is more temporary? If we just take a step back, we've been talking about that we're in this phase of OEMs reconsidering their future offerings, you know, due to many different market factors. And then, like, where are we, do you think, in this phase of uncertainty? And then I have a follow-up. Thanks.
Winnie Dong: Hi, thanks so much for taking my question. I wanted to just go back to the order intake lifetime sales chart. Just wanted to ask, what part of this do you think is structural and what part of it is more temporary? If we just take a step back, we've been talking about that we're in this phase of OEMs reconsidering their future offerings, you know, due to many different market factors. And then, like, where are we, do you think, in this phase of uncertainty? And then I have a follow-up. Thanks.
Speaker #7: Hi . Thanks so much for taking my question . I wanted to just go back to the order intake lifetime sales chart . Just wanted to ask what part of this do you think is structural , and what part of it is is more temporary ?
Speaker #7: It would just take a step back . We've been talking about that in this phase of OEMs future reconsidering their offerings due to many different market factors .
Mikael Bratt: Yeah. I think, yeah, when you look at that number, as I said, it's in lifetime, slightly low compared to historic, but in line with the previous year. I would say that the structural part is the effect you get from the more higher turnover of platforms. So, I mean, as we take the Chinese here for example, with the high pace of renewal of their model programs, then you get that effect. And I think that will continue. I think there will continue to be a high pace of new models coming out, meaning that you have end of life also coming quicker here for the models here.
Mikael Bratt: Yeah. I think, yeah, when you look at that number, as I said, it's in lifetime, slightly low compared to historic, but in line with the previous year. I would say that the structural part is the effect you get from the more higher turnover of platforms. So, I mean, as we take the Chinese here for example, with the high pace of renewal of their model programs, then you get that effect. And I think that will continue. I think there will continue to be a high pace of new models coming out, meaning that you have end of life also coming quicker here for the models here.
Speaker #7: And like where we do think is in this phase of of uncertainty . And then I have a follow up . Thanks .
Speaker #2: Yeah , I think when you look at that number , as I said , it's in in lifetime , slightly low compared to historic , but in line with the previous year and I would say that the structural part is the effect you get from the more higher turnover of platforms .
Speaker #2: So , I mean , as we take the Chinese here , for example , with , with , with the high pace of renewal of their model programs , then then you get that effect .
Speaker #2: And I think that will continue . I think that will continue to be a high pace of new models coming out , meaning that you you have end of life also coming quicker here for , for for the models here .
Mikael Bratt: So I think that at least for a period of time here, I think that's a long-term effect. I think the short-term effect here is the cancellation of, you know, programs that were intended to launch here as the uncertainty around the driveline question here is prominent here and now. But that should, of course, be of a temporary nature. So then we will get more to more certain product planning that has cleared out. So you have a little bit of both here in these numbers for 2025.
Mikael Bratt: So I think that at least for a period of time here, I think that's a long-term effect. I think the short-term effect here is the cancellation of, you know, programs that were intended to launch here as the uncertainty around the driveline question here is prominent here and now. But that should, of course, be of a temporary nature. So then we will get more to more certain product planning that has cleared out. So you have a little bit of both here in these numbers for 2025.
Speaker #2: So I think that that at least for , for a period of time here , I think that's , that's a long term effect .
Speaker #2: I think the short term effect here is the , the , the cancellation of , you know , programs that were intended to , to launch here as the uncertainty around the the driveline question here is prominent here and now that that should of course be of a temperature temporary nature .
Speaker #2: So then we will get more and more of a certain product planning that has cleared out. So you have a little bit of both here in these numbers for 2025.
Winnie Dong: Okay, got it. That's very helpful. My second question is on the foldable steering wheels that you guys unveiled for autonomous driving. Will this be essentially like the first of many products to come potentially for autonomous driving? And then just curious on any potential customer feedback that you might have, and when do you foresee for this to take off? And if you can also comment on this content versus traditional steering wheels. Thanks.
Winnie Dong: Okay, got it. That's very helpful. My second question is on the foldable steering wheels that you guys unveiled for autonomous driving. Will this be essentially like the first of many products to come potentially for autonomous driving? And then just curious on any potential customer feedback that you might have, and when do you foresee for this to take off? And if you can also comment on this content versus traditional steering wheels. Thanks.
Speaker #7: Got it . That's very Okay . helpful . My my second question is on the the foldable steering wheels that you guys unveiled for autonomous driving .
Speaker #7: Will this be essentially like the first of many products to come for potentially autonomous, for driving? And then, just curious, any potential customer feedback that you might have, and when do you foresee for this to take off?
Mikael Bratt: Yeah, I think, I mean, in general, starting with last question here, I think in general, with, with more advanced, products, it's a, it's a good thing from a, from a growth point of view, for sure. And I think the whole autonomous, even if it's still early days when it comes to volume, we see a lot of interesting and, attractive innovation opportunities here, where the Foldable Steering Wheel is one. Then, of course, you know, zero gravity seats, even if that's applicable also on the traditional vehicles, is for sure, becoming, even more interesting in an autonomous, vehicle. So comfort is one driver there. And, I think, as we said, we will launch this, together with, our, our customer here towards the end of 2026.
Mikael Bratt: Yeah, I think, I mean, in general, starting with last question here, I think in general, with, with more advanced, products, it's a, it's a good thing from a, from a growth point of view, for sure. And I think the whole autonomous, even if it's still early days when it comes to volume, we see a lot of interesting and, attractive innovation opportunities here, where the Foldable Steering Wheel is one. Then, of course, you know, zero gravity seats, even if that's applicable also on the traditional vehicles, is for sure, becoming, even more interesting in an autonomous, vehicle. So comfort is one driver there. And, I think, as we said, we will launch this, together with, our, our customer here towards the end of 2026.
Speaker #7: And if also, could you comment on this content versus traditional steering wheels? Thanks.
Speaker #2: Yeah , I think I mean , in general , starting with last I think in general with more advanced products is a good thing from from a growth point of view , for sure .
Speaker #2: And I think the whole autonomous , even if it's still early days when it comes to volume , we see a lot of interesting and attractive innovation opportunities here , where the foldable steering wheel is one .
Speaker #2: Then of course , you know , zero gravity seats , even if that's applicable . Also , on the traditional vehicles , it's for sure becoming even more interesting in a autonomous vehicle .
Speaker #2: So comfort is one driver . There . And I think as we said , we will launch this together with our customer here at towards the end of 2026 .
Mikael Bratt: So of course, volume-wise, it's not big in 2026. And then it depends on, of course, the ramp-up of autonomous vehicles going forward here. So I think it's more long term, or a medium-term play, at least here. But the important thing here is that I think we see great opportunities in the changing of vehicles going forward here, both when we talk the drivelines as well as, as autonomous vehicle, is, is positive from a content point of view. And also on the reactions you, you asked about here, it's very positive here, and we have had several approaches and discussions after that presentation there at CES. So very positive response on the Foldable Steering Wheel.
Mikael Bratt: So of course, volume-wise, it's not big in 2026. And then it depends on, of course, the ramp-up of autonomous vehicles going forward here. So I think it's more long term, or a medium-term play, at least here. But the important thing here is that I think we see great opportunities in the changing of vehicles going forward here, both when we talk the drivelines as well as, as autonomous vehicle, is, is positive from a content point of view. And also on the reactions you, you asked about here, it's very positive here, and we have had several approaches and discussions after that presentation there at CES. So very positive response on the Foldable Steering Wheel.
Speaker #2: So of course , volume wise is not big in 2026 . And then it depends on on . Of course , the ramp up of autonomous vehicles going forward here .
Speaker #2: So I think it's more a long term a medium term play , at least here . But the important thing here is that I think we see great opportunities in the changing of vehicles going forward here , both for the drivelines as well as an autonomous vehicle .
Speaker #2: It is positive from a content point of view, and also on the reactions you asked about here—it is very positive here. And we have had several approaches and discussions after that presentation there at CES.
Winnie Dong: Awesome. Thank you so much for taking my question.
Winnie Dong: Awesome. Thank you so much for taking my question.
Speaker #2: So, very positive response on the foldable steering wheel.
Mikael Bratt: Thank you.
Mikael Bratt: Thank you.
Operator: Thank you. We will now take the next question from the line of Jairam Nathan from Daiwa Capital Markets America. Please go ahead.
Operator: Thank you. We will now take the next question from the line of Jairam Nathan from Daiwa Capital Markets America. Please go ahead.
Speaker #7: Awesome . Thank you so much for taking my questions .
Speaker #2: Thank you .
Speaker #1: Thank you. We will now take the next question from the line of Jairam Nathan from Devo Capital Markets, America. Please go ahead.
Jairam Nathan: Hi. Thanks for taking my question. I just, you know, you mentioned how the mix or the regional mix is changing, and I just wanted to understand if there is... It offers more opportunities in terms of, you know, structural efficiencies or footprint rationalizations going forward.
Jairam Nathan: Hi. Thanks for taking my question. I just, you know, you mentioned how the mix or the regional mix is changing, and I just wanted to understand if there is... It offers more opportunities in terms of, you know, structural efficiencies or footprint rationalizations going forward.
Speaker #8: Hi . Thanks for taking question . my I just know , you , you mentioned how the the the mix or the regional mix changing is and I just wanted to understand if , if there is it offers more opportunities in terms of , you know , structural efficiencies or footprint rationalizations going forward .
Mikael Bratt: Yeah, I think, I mean, we are, of course, extremely focused on continuing to sharpen our abilities here to drive efficiency and productivity and all those things, and that we will continue with. I don't think the mix changes that we talked about here, or the mix change is temporary. Mix composition here is something that has a major impact on our needs to do this. I think what we do and what we drive here to improve the company fits well into also manage that, of course. So, I don't see any drama in it in terms of our possibilities here to generate earnings growth and cash flow, et cetera. But it's more from, as you said, than the light vehicle production outperformance measurement.
Mikael Bratt: Yeah, I think, I mean, we are, of course, extremely focused on continuing to sharpen our abilities here to drive efficiency and productivity and all those things, and that we will continue with. I don't think the mix changes that we talked about here, or the mix change is temporary. Mix composition here is something that has a major impact on our needs to do this. I think what we do and what we drive here to improve the company fits well into also manage that, of course. So, I don't see any drama in it in terms of our possibilities here to generate earnings growth and cash flow, et cetera. But it's more from, as you said, than the light vehicle production outperformance measurement.
Speaker #2: Yeah , I think I mean , we are of course , extremely focused on continuing to sharpen our abilities here to drive efficiency and productivity and all those things and that that we will continue with .
Speaker #2: I don't think the mix changes that we have talked about here, or let mix changes, temporary mix composition here, is something that has a major impact on our needs.
Speaker #2: To do this . I think what we do and what we drive here to improve the company fits well into also manage that course .
Speaker #2: So I don't see any drama in it. In terms of our possibilities here to generate earnings growth and cash flow, etc.
Mikael Bratt: But it's more of a temporary point of view, I think.
Speaker #2: but it's more from from , as we said , than the the light vehicle production outperformance measurement . But is it's it's more of a temporary point of view .
Mikael Bratt: But it's more of a temporary point of view, I think.
Jairam Nathan: Okay. My follow-up was on, you know, when you initially announced a 12% medium-term goal for margins, I think that there was this 85 million or over 85 million LVP. I'm just trying to understand, given the mix changes again, a lower and higher mix of lower content regions, would that—would you need to update that 85, and you might need to, you know, maybe increase it to hit that 12%?
Jairam Nathan: Okay. My follow-up was on, you know, when you initially announced a 12% medium-term goal for margins, I think that there was this 85 million or over 85 million LVP. I'm just trying to understand, given the mix changes again, a lower and higher mix of lower content regions, would that—would you need to update that 85, and you might need to, you know, maybe increase it to hit that 12%?
Speaker #2: I think .
Speaker #8: Okay . And my my follow was on , you know , up when you initially announced 12% medium term margins , I goal for a think the eight there was this 85 million or over 85 million LBP .
Speaker #8: I'm just trying to understand, given that the mix changes again, with low and higher mix of lower content regions. Would that mean you would need to update that 85?
Mikael Bratt: No, I mean, we are very firm and committed on the 12%. I think what we have said here, that, you know, the 85% is, of course, also a mix effect, as you mentioned here. Also, we have markets here that has disappeared since we talked about that. Certain regions that we can't operate in any longer, as well as, we have some customers that are taking a large share of the growth here, that has their own domestic. And of course, thinking about BYD and SAIC, that stands for a large portion of the difference there in between that is more of a captive solution. So of course, we see that we can continue to drive our own controllable activities here to support our growth.
Mikael Bratt: No, I mean, we are very firm and committed on the 12%. I think what we have said here, that, you know, the 85% is, of course, also a mix effect, as you mentioned here. Also, we have markets here that has disappeared since we talked about that. Certain regions that we can't operate in any longer, as well as, we have some customers that are taking a large share of the growth here, that has their own domestic. And of course, thinking about BYD and SAIC, that stands for a large portion of the difference there in between that is more of a captive solution. So of course, we see that we can continue to drive our own controllable activities here to support our growth.
Speaker #8: And you might need to , you know , maybe increase it to hit that 12% ?
Speaker #2: No , I mean are we very firm and committed on the 12% . I think what we have said here that , you know , the 85% is , is , of course , also a mixed effect , as you mentioned here .
Speaker #2: And also we have markets here that has disappeared since we talked about that certain regions that we can't operate in any longer , as well as we have some customers that have taken a large of the share growth here that has their own domestic and of course , thinking about That stands and BYD for a psych .
Speaker #2: And also we have markets here that has disappeared since we talked about that certain regions that we can't operate in any longer , as well as we have some customers that have taken a large of the share growth here that has their own domestic and of course , thinking about That stands and BYD for a portion of the large the , the difference there in between that is more of a captive solution .
Speaker #2: So of course we we see that we can continue to to drive our own controllable activities here to support our growth . So we are not hesitating on our ability to get there .
Mikael Bratt: So we are not hesitating on our ability to get there.
Mikael Bratt: So we are not hesitating on our ability to get there.
Fredrik Westin: Thank you, Ola.
Fredrik Westin: Thank you, Ola.
Operator: Thank you. We will now take the next question from the line of Hampus Engellau from Handelsbanken. Please go ahead.
Operator: Thank you. We will now take the next question from the line of Hampus Engellau from Handelsbanken. Please go ahead.
Speaker #8: Thank you . That's all I .
Speaker #1: Thank you . We will now take the next question from the line of Hampus Angelo from Handelsbanken . Please go ahead .
Hampus Engellau: Thank you very much. Yeah, two questions for me. Just a question on this domestic Chinese OEM that you got business in Europe with. Is that an already existing client to you guys in China, or is it a new client? And fundamentals behind this, is this basically transportation costs, it's not the client in China. The second question is just to get the sense of your margin, margin guidance for the full year, the upper range, the 11%, is that within your control, or is it just the stability in customer call off? Is that the denominator there? Thank you.
Hampus Engellau: Thank you very much. Yeah, two questions for me. Just a question on this domestic Chinese OEM that you got business in Europe with. Is that an already existing client to you guys in China, or is it a new client? And fundamentals behind this, is this basically transportation costs, it's not the client in China. The second question is just to get the sense of your margin, margin guidance for the full year, the upper range, the 11%, is that within your control, or is it just the stability in customer call off? Is that the denominator there? Thank you.
Speaker #9: very Thank you much . Two questions for me . Just just a on question this . And domestic Chinese OEM that you got business in Europe .
Speaker #9: Is that an already client existing to you guys in China or is it a new client and fundamentals behind this ? Is this basically transportation cost ?
Speaker #9: If it's not the client in China , the second question is , is just to get the sense of your margin margin guidance for the full year .
Speaker #9: Upper the range, the 11%. Is that within your control, or is it just the stability in customer call of that?
Mikael Bratt: Thank you, Hampus. Regarding the customer there, it's a customer we interact with already, so it's an established relationship, so it's not a completely new customer for us. And then on the second question here, I don't know if you would like to take it, Fredrik, but I would say, I mean, this is, as always, a guidance based on our best knowledge about the future and what we see here in terms of the external environment, et cetera, what we have taken into this. So, I mean, within this range, of course, is within our own control. Then, of course, where you can end up a little bit depends on many things, of course, as always.
Mikael Bratt: Thank you, Hampus. Regarding the customer there, it's a customer we interact with already, so it's an established relationship, so it's not a completely new customer for us. And then on the second question here, I don't know if you would like to take it, Fredrik, but I would say, I mean, this is, as always, a guidance based on our best knowledge about the future and what we see here in terms of the external environment, et cetera, what we have taken into this. So, I mean, within this range, of course, is within our own control. Then, of course, where you can end up a little bit depends on many things, of course, as always.
Speaker #9: Hello there. Thank you.
Speaker #2: Thank you. Regarding the customer, there is a customer we interact with already, so it's an established relationship. It's not a completely new customer for us.
Speaker #2: And then on the second question here , I don't know if you would like to take it further here , but I would say , I mean , this is as always a guidance based on our best knowledge about the future and see here what we in terms of the external environment , etc.
Speaker #2: , is what we have taken into to this . So , I mean , within this range , of course our control . And within own of course , where you can end up a little bit depends on on many things .
Mikael Bratt: So I think the range is there, as it has been now for also last year, is because of the high level of certainty in the world around us here. But, of course, we feel comfortable on our road here, road ahead here to have earnings growth and also a new guidance of $1.2 billion in cash flow here. So that's within a lot of our own control. And what you can see also, just as a reference there, I mean, when we talk about last year's results, it's primarily it's not all coming from our own internal activities.
Mikael Bratt: So I think the range is there, as it has been now for also last year, is because of the high level of certainty in the world around us here. But, of course, we feel comfortable on our road here, road ahead here to have earnings growth and also a new guidance of $1.2 billion in cash flow here. So that's within a lot of our own control. And what you can see also, just as a reference there, I mean, when we talk about last year's results, it's primarily it's not all coming from our own internal activities.
Speaker #2: Of course , as always . So I think the range there is it has as been now for , for also last year is because of the high level of uncertainty in the world around us here .
Speaker #2: of course we feel But comfortable on on our road here , road ahead here to to have earnings growth and , and also the guidance of 1.2 billion in cash flow here .
Speaker #2: So so that's within a lot of our own control and what you can see . Also . Just as a reference there I mean when we talk about last year's result is is primarily , if not all coming from our own internal activities .
Hampus Engellau: And just to -- sorry, I know we need time, but the customer call-ups, are you getting indication that it's kind of resuming to the trend that-
Hampus Engellau: And just to -- sorry, I know we need time, but the customer call-ups, are you getting indication that it's kind of resuming to the trend that-
Mikael Bratt: Oh, sorry. No, on the call-off here, I mean, that we dropped in the fourth quarter here, we see as a temporary thing, so we expect that to at least come back to the 95-ish that we talked about. And I'm still a strong believer that over time, we will get back to pre-pandemic levels when we get, assuming more stable external environment here as an industry. But for sure, getting back to where we were before Q4 here, because the volatility here was very much related to some OEMs deciding to, with very short notice or no notice at all, stop production to manage the inventory situations. We also had some cases with some customers that had some supply issues related to inventory management and supply chain issues.
Mikael Bratt: Oh, sorry. No, on the call-off here, I mean, that we dropped in the fourth quarter here, we see as a temporary thing, so we expect that to at least come back to the 95-ish that we talked about. And I'm still a strong believer that over time, we will get back to pre-pandemic levels when we get, assuming more stable external environment here as an industry. But for sure, getting back to where we were before Q4 here, because the volatility here was very much related to some OEMs deciding to, with very short notice or no notice at all, stop production to manage the inventory situations. We also had some cases with some customers that had some supply issues related to inventory management and supply chain issues.
Speaker #9: And I know we need to , but the customer call ups , are you getting indications that it's kind of to the resuming trend ?
Speaker #2: Sorry , no . On the call off here . I mean that we dropped in the fourth quarter . see as a temporary thing .
Speaker #2: So we expect that to at least come back to to the 95 ish that we talked about . And , and I'm still a strong believer that over time we will get back to pre-pandemic when we get assuming more stable external environment here as as an industry .
Speaker #2: But for sure , getting back to the to where we were before Q4 here , because the , the the volatility here was very much related to some of deciding to to with very short notice or no notice at all .
Speaker #2: Stop production to manage the inventory situations . We also had some cases with some customers that had some supply issues . Inventory management and supply chain issues .
Hampus Engellau: Thank you.
Hampus Engellau: Thank you.
Mikael Bratt: Thank you.
Mikael Bratt: Thank you.
Operator: Thank you. We will now take the last question from the line of Emmanuel Rosner from Wolfe Research. Please go ahead.
Operator: Thank you. We will now take the last question from the line of Emmanuel Rosner from Wolfe Research. Please go ahead.
Speaker #9: Thank .
Speaker #9: you Thank
Speaker #2: you
Speaker #2: .
Speaker #1: Thank you. We will now take the last question from the line of Emmanuel from Wolfe Research. Please go ahead.
Emmanuel Rosner: Great. Thank you so much for taking the question. I wanted to ask you again about the margin walk and improvement for this year. So, you know, on basically stable organic growth, you're still planning to achieve pretty meaningful margin expansion, and you gave some of the percentages, and you very helpfully quantified some of them before, but I was wondering if there's a couple that we can come back to. In particular, you know, currency looks like the peso has moved quite a bit, so I've been surprised that, you know, it's not a little bit more of a headwind. So maybe you have some other offsets that you can talk about. And then on the positive side, I think you quantified for us the structural cost reduction.
Emmanuel Rosner: Great. Thank you so much for taking the question. I wanted to ask you again about the margin walk and improvement for this year. So, you know, on basically stable organic growth, you're still planning to achieve pretty meaningful margin expansion, and you gave some of the percentages, and you very helpfully quantified some of them before, but I was wondering if there's a couple that we can come back to. In particular, you know, currency looks like the peso has moved quite a bit, so I've been surprised that, you know, it's not a little bit more of a headwind. So maybe you have some other offsets that you can talk about. And then on the positive side, I think you quantified for us the structural cost reduction.
Speaker #10: Great . Thank you so much for taking the question . I wanted to ask you again about the the margin walk and improvement for this year .
Speaker #10: So , you know , on on basically stable growth , organic you you still planning to achieve pretty meaningful margin expansion . And you give some of the puts and takes and you very helpfully them quantified some of before .
Speaker #10: But I was wondering if there's a couple that we can come back to in particular , you know , currency looks like the the peso has moved quite a bit .
Speaker #10: So I've been surprised that , you know , it's not a little bit more of a headwind . So maybe you have some other offsets that you could talk about .
Emmanuel Rosner: Curious about how to think about the operational efficiency and the call-off benefit, I guess the positive pieces of the equation.
Emmanuel Rosner: Curious about how to think about the operational efficiency and the call-off benefit, I guess the positive pieces of the equation.
Speaker #10: And then on the positive side , I think you quantified for reductions curious structural . But cost us the about how do you think operational about the efficiency and the call off benefit ?
Fredrik Westin: Yeah. On the effects part, we do expect, as in 2025, a larger part of the positive development here from the translational effect, yeah. I mean, we saw actually on the transactional part, we also saw a net negative effect in 2025, and that could also continue to imply here in 2026. But the overall result or impact we then expect to be slightly positive. On the structural cost savings, I mean, as I said, $20 million of the $30 million remaining coming in, we do then expect also further improvements from, you know, our operational improvement programs, often in automation, digitalization. Those contribute quite significantly here in 2025 already, and we expect further improvements also from that year in 2026.
Fredrik Westin: Yeah. On the effects part, we do expect, as in 2025, a larger part of the positive development here from the translational effect, yeah. I mean, we saw actually on the transactional part, we also saw a net negative effect in 2025, and that could also continue to imply here in 2026. But the overall result or impact we then expect to be slightly positive. On the structural cost savings, I mean, as I said, $20 million of the $30 million remaining coming in, we do then expect also further improvements from, you know, our operational improvement programs, often in automation, digitalization. Those contribute quite significantly here in 2025 already, and we expect further improvements also from that year in 2026.
Speaker #10: I guess the positive pieces of of the equation .
Speaker #3: Yeah . I mean , on the FX part , we do expect , as in 2025 , a larger part of the positive development from the translational effect .
Speaker #3: we saw actually I mean , on the transactional part , we also saw a net or a negative effect in 25 . And that could also continue as a imply here in 26 .
Speaker #3: But the overall result or impact would to be slightly positive on the structural cost savings . I mean , as I said , 20 million of the 30 million remaining coming in , we do then expect also further improvements from our operational improvement programs .
Speaker #3: I mean , automation , digitalization , those contribute quite significantly here in 25 already . And we expect further improvements from that . also from 1026 so that that answers your question a bit .
Fredrik Westin: I hope that that answers your question a bit better than.
Fredrik Westin: I hope that that answers your question a bit better than.
Emmanuel Rosner: ... Yeah, I, I didn't quite catch the FX piece of it, though. Could, could you--would you mind just going back over this?
Emmanuel Rosner: ... Yeah, I, I didn't quite catch the FX piece of it, though. Could, could you--would you mind just going back over this?
Speaker #3: Better than .
Speaker #10: Yeah , I didn't quite catch the the FX piece of it , though . Would you mind just going back over .
Fredrik Westin: Yeah. So as I said, you know, on in 2025, we actually, on the transactional part, which then includes our exposure to the PSO, mostly, we had a negative effect year-over-year for the full year. But the major positive part was from translational effects, and that we expect to continue also in 2026, with a similar picture on, as we stand today. I mean, now the dollar has depreciated a bit further versus the assumptions we have based our guidance on. So that could also then have a larger impact or a more positive impact on the top line, and potentially also on the bottom line.
Fredrik Westin: Yeah. So as I said, you know, on in 2025, we actually, on the transactional part, which then includes our exposure to the PSO, mostly, we had a negative effect year-over-year for the full year. But the major positive part was from translational effects, and that we expect to continue also in 2026, with a similar picture on, as we stand today. I mean, now the dollar has depreciated a bit further versus the assumptions we have based our guidance on. So that could also then have a larger impact or a more positive impact on the top line, and potentially also on the bottom line.
Speaker #3: Yeah . So as I said in 25 , we actually on the transactional part , which then includes our exposure to the the peso mostly we had a negative effect year over year .
Speaker #3: For the full year . But the major or the positive part was from translational effects and that we expect to continue also in 26 .
Speaker #3: With a similar picture as we stand today. Now, the dollar has depreciated a bit further versus the assumptions we have based our guidance on.
Speaker #3: So that could also then have a larger or more positive impact on on the top line . And potentially also on the on the bottom line .
Emmanuel Rosner: Understood. And then also just following up on the raw materials piece, I think you gave some good color for, you know, for what the gross hit would be. Just curious if you can give a little bit more in terms of, you know, which of the specific materials, I guess, are most impactful within that, and how, you know, things have essentially been evolving in terms of input costs.
Emmanuel Rosner: Understood. And then also just following up on the raw materials piece, I think you gave some good color for, you know, for what the gross hit would be. Just curious if you can give a little bit more in terms of, you know, which of the specific materials, I guess, are most impactful within that, and how, you know, things have essentially been evolving in terms of input costs.
Speaker #10: Understood just And then also the up on raw following materials piece , I think you gave some good color for for what the gross hit would be .
Speaker #10: Just curious if you can give a little bit more in terms of , you know , which of the , you know , specific materials , I guess are most , most impactful within that .
Speaker #10: And how , you know , things have essentially been been evolving in terms of , input costs .
Fredrik Westin: Yeah. So as I said, it's, we expect a gross headwind of a little bit less than $30 million, huh? And then basically half of that we expect from gold alone, of that headwind, or closer to 2/3, actually, huh? Then, the second largest headwind we expect from, from steel, and then behind that, copper, whereas we expect, yarn, actually to be a tailwind for us at the current, pricing levels.
Fredrik Westin: Yeah. So as I said, it's, we expect a gross headwind of a little bit less than $30 million, huh? And then basically half of that we expect from gold alone, of that headwind, or closer to 2/3, actually, huh? Then, the second largest headwind we expect from, from steel, and then behind that, copper, whereas we expect, yarn, actually to be a tailwind for us at the current, pricing levels.
Speaker #3: Yeah . So as I said , it's we expect a gross headwind of of a little bit less than 30 million . And basically half of that we expect from gold alone of that headwind or closer to two thirds , actually .
Speaker #3: Then the second largest headwind , we expect from from steel . And then behind that copper , expect yarn actually to be a tailwind for us at the current pricing levels .
Emmanuel Rosner: Understood. Thank you.
Emmanuel Rosner: Understood. Thank you.
Fredrik Westin: Thank you.
Fredrik Westin: Thank you.
Operator: Thank you. That is all the time we have for questions today. I would now like to turn the conference back to Mikael Bratt for closing remarks.
Operator: Thank you. That is all the time we have for questions today. I would now like to turn the conference back to Mikael Bratt for closing remarks.
Speaker #10: Understood . Thank you .
Speaker #3: Thank you .
Speaker #1: Thank you . That is all the time we have for questions today . I would now like to turn the conference back to Michael Bratt for closing remarks .
Mikael Bratt: Thank you, Sandra. Before we conclude today's call, I would like to say that I'm confident that our strong market position and growth momentum in Asia, especially in China and India, sets us up well for continued success. Combined with our proven abilities to strengthen profitability also in the, in a low growth environment, we have a solid foundation for delivering attractive shareholder return and a clear path towards achieving our 10% adjusted operating margin target. Our Q1 call is scheduled for Friday, 17 April 2026. Thank you for your attention. Until next time, stay safe.
Mikael Bratt: Thank you, Sandra. Before we conclude today's call, I would like to say that I'm confident that our strong market position and growth momentum in Asia, especially in China and India, sets us up well for continued success. Combined with our proven abilities to strengthen profitability also in the, in a low growth environment, we have a solid foundation for delivering attractive shareholder return and a clear path towards achieving our 10% adjusted operating margin target. Our Q1 call is scheduled for Friday, 17 April 2026. Thank you for your attention. Until next time, stay safe.
Speaker #2: Thank you . Sandra . Before we conclude today's call , I would like to say that I'm confident that our strong market position and growth momentum in Asia , especially in China and India , sets us up well for continued success combined with our proven abilities to strengthen profitability .
Speaker #2: Also in the in a low growth environment , we have a solid foundation for delivering attractive shareholder return and a clear path towards achieving our 12% adjusted operating margin target .
Speaker #2: Our first quarter call is scheduled for Friday , April 17 , 2026 . Thank you for your attention . Until next time , stay safe .
Operator: This concludes today's call. Thank you for participating. You may now disconnect.
Operator: This concludes today's call. Thank you for participating. You may now disconnect.
