Q: Can you provide insights into the factors affecting margins year over year, including FX transaction impacts and labor inflation? A: Fredrik Westin, CFO, explained that while FX should continue to be a positive factor, specific currency pair contributions are not disclosed. Restructuring is expected to yield around $50 million in savings for 2025. Inflation, particularly supply cost inflation, remains a headwind, but labor cost inflation is decreasing. The company aims to offset inflation through customer recoveries throughout the year.
Q: How would potential tariffs, especially from Mexico to the US, impact Autoliv, and how would you manage this with customers? A: Mikael Bratt, CEO, stated that any tariffs would be passed on to customers, as there is no reason for Autoliv to absorb such costs. Discussions with customers would begin immediately to address any tariff impacts.
Q: What impact are you expecting from mix changes in 2025 compared to 2024? A: Fredrik Westin, CFO, noted an expected 1% point negative mix impact in 2025, which is an improvement from the 2-3% negative mix seen in 2024.
Q: Can you elaborate on the decline in order intake and its impact on growth? A: Fredrik Westin, CFO, mentioned that 2024 saw the lowest sourcing activity since the electronics business spin-off, due to drivetrain uncertainties and production location decisions. Some platforms have been delayed to 2025, with sourcing expected in the first half of the year.
Q: How do you expect regional organic sales growth to vary in 2025? A: Mikael Bratt, CEO, indicated that Asia, particularly China and India, is expected to show the strongest growth. Europe and North America face challenges due to economic conditions and light vehicle production (LVP) levels.
Q: What assumptions are included in the 2% organic growth guidance regarding potential tariffs? A: Mikael Bratt, CEO, clarified that no tariff assumptions are included in the 2025 guidance due to the difficulty in predicting tariff levels and durations. Any potential impacts would be negotiated with customers.
Q: How did the content per vehicle (CPV) in China change in 2024, and what is expected for 2025? A: Fredrik Westin, CFO, noted a slight decrease in CPV in China from 2023 to 2024 due to market mix favoring lower-end vehicles. This trend is expected to reverse in 2025 as content per vehicle increases across segments.
Q: What is the basis for Autoliv’s LVP outlook, and how does it compare to S&P’s forecast? A: Mikael Bratt, CEO, stated that the 0.5% LVP decline outlook is mainly based on S&P Global’s forecast, without adjustments for potential tariffs or other factors.
Q: Can you discuss the market share dynamics and expectations for 2025? A: Mikael Bratt, CEO, expressed confidence in maintaining a market share around 45%, attributing the slight decline in 2024 to the growth of BYD in China, which manufactures safety products in-house.
Q: What are the expectations for Q1 2025 operating margin, considering historical trends? A: Fredrik Westin, CFO, noted that while specific guidance for Q1 is not provided, the typical seasonal decline in margins is expected, influenced by a larger LVP decline and traditional seasonality.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.