Autoliv NYSE: ALV executives told investors the company delivered record sales, cash flow, and earnings per share in the fourth quarter and full year 2025, supported by strong growth with Chinese OEMs and in India, while outlining expectations for margin expansion in 2026 despite a softer light-vehicle production outlook.
Record quarter and full-year results
CEO Mikael Bratt said the company posted “another great quarter” with strong development in sales, profitability, cash flow, and balance sheet metrics. Fourth-quarter sales increased 8% year-over-year to more than $2.8 billion, which management described as the highest quarterly level in the company’s history. Bratt attributed the growth primarily to outperformance versus light vehicle production (LVP), favorable currency effects, and tariff-related compensations, partly offset by an unfavorable regional and market LVP mix.
Adjusted operating income declined 4% year-over-year in the quarter to $337 million, compared with what management characterized as an exceptionally strong fourth quarter in the prior year. Adjusted operating margin was 12.0%, down 140 basis points. Bratt said the quarter’s adjusted operating income decline was driven mainly by lower out-of-period customer compensation and lower customer RD&E reimbursements, while noting the company recovered close to 100% of tariff costs in the fourth quarter.
Autoliv delivered record operating cash flow and free operating cash flow for both the quarter and full year. Fourth-quarter operating cash flow rose 30% year-over-year to $544 million, and free operating cash flow increased to $434 million from $288 million a year earlier. For full-year 2025, free operating cash flow totaled $734 million, an increase of more than $230 million, which Bratt said was driven by higher profitability and disciplined capital management.
Cost actions, productivity, and profitability drivers
Management highlighted progress on cost and productivity initiatives. Bratt said Autoliv continued to deliver improvements “with particularly strong progress in direct costs,” and noted the company reduced direct production personnel by almost 700, supported by automation and digitalization initiatives. Gross profit increased by $22 million year-over-year in the quarter, although gross margin declined 70 basis points, and improved sequentially by 100 basis points versus the third quarter.
CFO Fredrik Westin said fourth-quarter gross profit benefited mainly from improved operational efficiency, including lower logistics and labor costs, as well as higher sales and lower material costs. Those benefits were partly offset by lower out-of-period customer compensation, less capitalization to inventories, and higher depreciation.
Westin also detailed the quarter’s adjusted operating income bridge, saying operations contributed $41 million of improvement driven by higher organic sales and operational initiatives, despite increased cost-of-living adjustment volatility. That was offset by $24 million lower out-of-period cost compensation and $33 million higher RD&E net and SG&A costs, mainly due to lower engineering income. The company said the combination of unrecovered tariffs and the dilutive effect of recovered tariffs reduced operating margin by about 15 basis points in the quarter.
For the full year, Autoliv reported net sales of $10.8 billion, up 4% versus 2024. Adjusted operating income rose 11% to $1.1 billion, and adjusted operating margin improved to 10.3% from 9.7%. Westin said the combination of unrecovered tariffs and the dilutive effect of recovered tariffs reduced operating margin by around 20 basis points for the year. Adjusted earnings per share increased 18% to $9.85, which management said reflected higher net profit and a reduced share count from repurchases.
Market backdrop and regional growth
Autoliv described a volatile but supportive market environment in the fourth quarter. Management said global light vehicle production reached its highest level for any quarter on record, though the regional mix continued shifting toward lower-content-per-vehicle markets in Asia. According to S&P Global data cited on the call, global LVP in the fourth quarter increased 1.3%, beating the expectation from the start of the quarter by 4 percentage points, led by stronger-than-expected China production as consumers utilized scrappage and replacement subsidies ahead of expiration. India also contributed to upside, supported by reduced taxes on new vehicles.
Management said the global regional LVP mix was approximately 150 basis points unfavorable in the quarter, more than 100 basis points worse than expected at the start of the period. The company also pointed to increased volatility from inventory adjustments in North America early in the quarter and production adjustments in Asia, including China, in December due to rising inventories, calling the volatility temporary and expecting improvement in 2026.
Operationally, Autoliv said it outperformed LVP by 3 percentage points globally in the quarter. The company highlighted particularly strong performance in Asia, excluding China, where it outperformed by 11 percentage points, driven by India, where it said it outperformed by more than 30 percentage points. Sales to Chinese OEMs rose nearly 40% in the quarter, exceeding those OEMs’ LVP growth by 34 percentage points, while sales to global customers in China were 8 percentage points below their LVP development.
For the full year, management said organic sales grew in line with global LVP, with outperformance in rest of Asia, the Americas, and Europe, while China underperformed overall due to unfavorable market mix. The company said sales to Chinese OEMs grew 23% in 2025 and represented more than 44% of its China sales, double their share from three years ago. Management said Autoliv’s global market share was about 44% in 2025, nearly 5 percentage points higher than in 2018 following the Veoneer spin-off.
Shareholder returns and balance sheet
Autoliv emphasized cash returns to shareholders alongside improving leverage. Westin said the company paid a dividend of $0.87 per share in the quarter and repurchased $150 million of shares, retiring 1.3 million shares. During 2025, management said Autoliv returned about $590 million to shareholders through dividends and buybacks, raised the quarterly dividend from $0.70 to $0.87 per share, and repurchased $351 million of shares for the year.
Westin said the leverage ratio improved to 1.1 times from 1.3 times during the quarter, despite accelerated shareholder returns, with net debt decreasing by more than $200 million.
2026 outlook: margin expansion amid mixed demand
Looking ahead, Bratt said Autoliv expects to continue significantly outperforming light vehicle production in China and India in 2026. However, management cited an S&P Global forecast calling for global LVP to decline by 1% in 2026, with a 2% decline expected in North America and India expected to grow 8%. The company said geopolitical uncertainty, including tariffs and other trade restrictions and the upcoming USMCA review, represents a key risk to the 2026 outlook.
For full-year 2026, Autoliv guided for flat organic sales, as growth in China, India, and South America is expected to be offset by lower sales in North America and Europe due to fewer new product launches. The company guided to an adjusted operating margin of around 10.5% to 11% and operating cash flow of about $1.2 billion, with capital expenditures below 5% of sales. Management said guidance excludes effects from capacity alignment and antitrust-related matters, and assumes no material changes to tariffs or trade restrictions in effect as of Jan. 23, 2026.
On the Q&A, Westin said raw materials were about a $10 million headwind in 2025 and are expected to be a larger headwind of around $30 million in 2026, driven mainly by non-ferrous metals, with the largest impact from gold. Later in the call, he said gold represents closer to two-thirds of the gross headwind, followed by steel and copper, while yarn was expected to be a tailwind at current pricing levels. Westin clarified the raw material figure discussed was a gross cost impact, not net of customer compensations.
Management also discussed structural cost savings, saying it has achieved $100 million of a $130 million plan, with about $30 million remaining; it expects $20 million of that in 2026 and $10 million in 2027. On foreign exchange, Westin said FX had about a $20 million positive impact in 2025 and the company expects a similar positive effect in 2026, driven largely by translation effects, while transactional FX (including peso exposure) was negative year-over-year in 2025 and could continue to be negative in 2026.
Autoliv also cautioned that the first quarter of 2026 is expected to be the weakest of the year, consistent with seasonality. Management said China faces near-term demand headwinds due to reduced scrappage and new-energy incentives and elevated inventories, with China LVP expected to decline by more than 10% in the first quarter. Autoliv expects first-quarter adjusted operating margin to decline significantly versus the prior year due to lower LVP, lower engineering income, and higher depreciation and amortization relative to sales, and noted that first-quarter 2025 operating income included a $12 million positive impact from the sale of its Russia operations.
In business updates, Bratt highlighted an agreement with Tensor to develop what the company called the first foldable steering wheel for Tensor’s robo car, targeted for volume production in late 2026, and said the company received positive customer feedback after presenting the product at CES. Autoliv also said it secured its first order with a Chinese OEM for vehicle production in Europe, describing the customer relationship as established.
Bratt closed by expressing confidence that growth momentum in Asia, especially in China and India, and the company’s profitability initiatives provide a foundation for continued shareholder returns.
About Autoliv NYSE: ALV
Autoliv Inc NYSE: ALV is a leading global supplier of automotive safety systems, specializing in the design, development and manufacture of passive and active safety products. Its core product portfolio includes airbags, seatbelts, steering wheels, restraint control modules and pedestrian protection systems. In recent years, the company has also expanded into active safety technologies, offering radar, camera and sensor solutions that support advanced driver assistance systems (ADAS) and autonomous driving applications.
Founded in 1997 following the spin-off of Electrolux’s automotive safety business, Autoliv has evolved into a multinational organization with a presence in over 27 countries.
Featured Stories
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Autoliv, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Autoliv wasn’t on the list.
While Autoliv currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
Nuclear energy is entering a new growth cycle as rising power demand, expanding data centers, and renewed policy support bring the sector back into focus. After strong gains in recent years, the most impactful phase of nuclear investment may still be ahead. This report highlights seven nuclear energy stocks positioned across the value chain—combining near-term revenue with long-term upside as next-generation technologies scale. Click the link below to unlock the full list.