AUTOLIV INC MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

0
The following discussion and analysis should be read in conjunction with our
Condensed Consolidated Financial Statements and accompanying Notes thereto
included elsewhere herein and with our Annual Report on Form 10-K for the year
ended December 31, 2021 filed with the United States Securities and Exchange
Commission (the "SEC") on February 22, 2022. Unless otherwise noted, all dollar
amounts are in millions.

Autoliv, Inc. ("Autoliv" or the "Company") is a Delaware corporation with its
principal executive offices in Stockholm, Sweden. The Company functions as a
holding corporation and owns two principal operating subsidiaries, Autoliv AB
and Autoliv ASP, Inc.

Through its operating subsidiaries, Autoliv is an automotive safety system supplier with a wide range of products, including modules and components for passenger and driver airbags, side airbags, curtain airbags, seat belts, steering wheels and passenger protection systems. pedestrians.

Autoliv's filings with the SEC, including this Quarterly Report on Form 10-Q,
annual reports on Form 10-K, current reports on Form 8-K, proxy statements and
all of our other reports and statements, and amendments thereto, are available
free of charge on our corporate website at www.autoliv.com as soon as reasonably
practicable after such material is electronically filed with or furnished to the
SEC (generally the same day as the filing).


The primary exchange market for Autoliv's securities is the New York Stock
Exchange ("NYSE") where Autoliv's common stock trades under the symbol "ALV".
Autoliv's Swedish Depositary Receipts ("SDRs") are traded on Nasdaq Stockholm's
list for large market cap companies under the symbol "ALIV SDB". Options in SDRs
trade on Nasdaq Stockholm under the name "Autoliv SDB". Options in Autoliv
shares are traded on Nasdaq OMX PHLX and on NYSE Amex Options under the symbol
"ALV".


Autoliv’s the financial year ends on the 31st of December.

Nope-WE GAAP Financial Measures

Some of the following discussions refer to non-U.S. GAAP financial measures: see
reconciliations for "Organic sales", "Trade working capital", "Free cash flow",
"Net debt", "Leverage ratio", "Adjusted operating income", "Adjusted operating
margin" and "Adjusted earnings per share, diluted" provided below. Management
believes that these non-U.S. GAAP financial measures provide supplemental
information to investors regarding the performance of the Company's business and
assist investors in analyzing trends in the Company's business. Additional
descriptions regarding management's use of these financial measures are included
below. Investors should consider these non-U.S. GAAP financial measures in
addition to, rather than as substitutes for, financial reporting measures
prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial
measures have been identified as applicable in each section of this report with
a tabular presentation reconciling them to the most directly comparable U.S.
GAAP financial measures. It should be noted that these measures, as defined, may
not be comparable to similarly titled measures used by other companies.



                                       19
--------------------------------------------------------------------------------

EXECUTIVE OVERVIEW

The Company performed well in a difficult environment in the second quarter, which led to results that exceeded expectations.

A strong performance in June, with some LVP recovery and progress in the
customer price discussions, including some retroactive compensations, means that
the Company is reporting a second quarter adjusted operating margin (Non-U.S.
GAAP measure) that is better than in the first quarter. Supply chains remained
distressed in the quarter, aggravated by lockdowns in China. Raw material cost
increases, currency movements and a lower-than-expected and volatile LVP were
also major challenges in the quarter. Cash flow was negative in the quarter,
mainly due to volatility and timing effects on working capital. The Company
expects to recover most of these effects in the second half of the year.

In a quarter where the Company experienced a persistently low and volatile LVP, Autoliv
managed to significantly outperform global LVP, despite negative regional mix effects.

It is encouraging that the Company is making progress in compensation from its
customers in the form of sustainable price increases. Discussions continue where
the Company aims for prices that reflect changes in the cost environment and a
contract structure that is flexible and allows for broader and faster
adjustments to future changes in the business environment.

Recent developments in supply chains, customer production plans, raw material
prices and the Company's cost recovery discussions are encouraging and the
Company believes it is well prepared for an improved market development.
However, the Company is also making sure it is agile and prepared for more
adverse market development should that be necessary. Therefore, the Company
continues to step up its cost control measures. Cost reductions and footprint
initiatives are on plan and include capacity alignments and footprint
optimizations.

The Company is adjusting its full year 2022 indication to a narrower range,
reflecting the Company's actions and the shorter time span remaining of the
year. Although the leverage ratio (Non-U.S. GAAP measure) currently is above the
Company's target range, the Company remains committed to its share repurchase
ambitions over time.

The Company remains confident in its medium-term adjusted operating marginWE GAAP) target of 12%, based on the framework defined by the Company during its Capital Market Day in 2021.

Second Quarter 2022 Financial Highlights

$2,081m net sales
2.9% net sales increase
8.0% organic sales increase (Non-U.S. GAAP measure)
6.0% operating margin
6.0% adjusted operating margin (Non-U.S. GAAP measure)
$0.91 EPS - a decrease of 24%
$0.90 adjusted EPS (Non-U.S. GAAP measure) - a decrease of 25%





                                       20
--------------------------------------------------------------------------------

Main business developments in the second quarter of 2022

Sales increased organically (Non-U.S. GAAP measure) by 8%, which was around 7pp
better than global LVP which increased by around 1% (IHS Markit July 2022). The
outperformance was mainly due to price increases and new product launches.

Stronger than expected performance in June driven by price increases, LVP
recovery and a patent litigation settlement led to a better-than-expected
operating profit for the quarter. However, profitability declined due to higher
raw material costs, currency movements, low and volatile LVP and lockdowns in
China. Operating margin and adjusted operating margin (Non-U.S. GAAP measure)
declined by 2.2pp. Commercial recoveries relating to periods prior to second
quarter 2022 and the patent litigation settlement combined amounted to around
$50 million in the quarter. Return on capital employed was 13.1%.

Negative Q2 operating cash flow, expected to recover in the second half.
Operating cash flow was negative $51 million and free cash flow (Non-U.S. GAAP
measure) was negative $190 million impacted by adverse effects from working
capital. Net debt (Non-U.S. GAAP measure) increased and EBITDA declined versus a
year earlier, leading to a leverage ratio of 1.7x. A dividend of $0.64 per share
was paid and 0.30 million shares were repurchased in the quarter.


Case update regarding COVID-19, the war in Ukraine and other market conditions

COVID-19[feminine]

The COVID-19 pandemic continued to impact the Company's business in the second
quarter of 2022 through limited LVP by its customers caused by global
semiconductor shortage and other industry supply chain disruptions. The second
quarter of 2022 saw global LVP growth year over year by around 1% (according to
IHS Markit July 2022). Supply chain disruptions that led to low customer demand
visibility and material changes to customer call-offs with short notice
negatively impacted our production efficiency and profitability in the quarter.
Rising raw material costs amounted to almost 6pp in operating margin headwind in
the second quarter, of which a large part was offset by commercial customer
recoveries, including retroactive compensations.

Direct COVID-19 related costs, such as personal protective equipment, quarantine
costs and similar items, were around $8 million in the second quarter of 2022.
Governmental support in connection with furloughing, short-term work weeks, and
other similar activities was around $0.5 million in the quarter.

Pandemic related lockdowns in China in April resulted in significant loss of
production and adversely impacted sales and profitability. June was not impacted
by lockdowns.

The Company expects the current industry-wide semiconductor supply shortage to
be a limiting factor for the global LVP recovery in 2022. The Company also
expects that the current price environment could lead to raw material costs of
up to 5.5pp in operating margin headwind for the full year of 2022, with similar
year over year impact in all quarters. The Company is currently in discussions
with its customers regarding price increases and the Company believes product
price increases should gradually offset the cost inflation. The Company achieved
significant price increases in the second quarter and expect further positive
results in the second half of 2022.

In response to the increased challenging market conditions, the Company
continues with strict cost control measures, a hiring freeze and accelerated
cost savings and footprint activities. The situation is monitored closely, and
further actions are being evaluated.

The war in Ukraine
The direct impact of the war in Ukraine on the Company's business has been
relatively limited. In 2021, sales in Russia were less than 1.0% of total sales.
The Company has one facility with less than 200 employees in Russia. The
Company's net assets in Russia, mainly USD cash items, amount to around $14
million. The Company has no operations in Ukraine. The Company has identified
four sub-suppliers in Ukraine and the Company is supporting its suppliers in
relocating that sourcing. The Company has been able to fulfill its delivery
commitments to its customers. The war initially impacted European LVP negatively
due to component shortages. The actions undertaken by the impacted suppliers to
relocate sourcing are either activated or could be immediately activated in
emergency cases. The shortage situation has improved and is not currently
materially impacting LVP.



                                       21
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS

Overview

The following table shows some of the key ratios management uses internally to
analyze the Company's current and future financial performance and core
operations as well as to identify trends in the Company's financial conditions
and results of operations. The Company has provided this information to
investors to assist in meaningful comparisons of past and present operating
results and to assist in highlighting the results of ongoing core operations.
These ratios are more fully explained below and should be read in conjunction
with the consolidated financial statements in the Company's Annual Report on
Form 10-K and the unaudited condensed consolidated financial statements in this
Quarterly Report on Form 10-Q.

The Company's management uses the Return on capital employed (ROCE) and Return
on total equity (ROE) measures for purposes of comparing its financial
performance with the financial performance of other companies in the industry
and providing useful information regarding the factors and trends affecting the
Company's business. As used by the Company, ROCE is annualized operating income
and income from equity method investments, relative to average capital employed.
The Company believes ROCE is a useful indicator of long-term performance both
absolute and relative to the Company's peers as it allows for a comparison of
the profitability of the Company's capital employed in its business relative to
that of its peers.

ROE is the ratio of annualized income (loss) to average total equity for the periods shown. The Company’s management believes that ROE is a useful indicator of management’s ability to create value for its shareholders through its operations and capital management.

                                   KEY RATIOS
                  (Dollars in millions, except per share data)
                                             Three Months Ended            Six Months Ended
                                             or As of June 30,            or As of June 30,
                                             2022          2021           2022          2021
Total parent shareholders' equity per
share                                     $    29.20     $   29.72     $    29.20     $   29.72
Capital employed 1)                            3,876         3,815          3,876         3,815
Net debt 2)                                    1,318         1,200          1,318         1,200

Trade working capital8)                        1,379         1,495          1,379         1,495
Trade working capital relative to
sales, %9)                                      16.6 %        18.5 %         16.6 %        18.5 %
Receivables outstanding relative to
sales, %10)                                     21.4 %        21.3 %         21.4 %        21.3 %
Inventory outstanding relative to
sales, %11)                                     10.8 %        11.1 %         10.8 %        11.1 %
Payables outstanding relative to sales,
%12)                                            15.7 %        13.9 %         15.7 %        13.9 %

Gross margin, % 3)                              15.7 %        19.0 %         14.6 %        19.8 %
Operating margin, % 4)                           6.0 %         8.1 %          6.1 %         9.4 %

Return on total equity, % 5)                    12.1 %        16.3 %         12.4 %        20.8 %
Return on capital employed, % 6)                13.1 %        17.6 %        

13.8% 21.8%

Headcount at period-end 7)                    64,700        64,500         

64,700 64,500



1) Total equity and net debt.
2) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular
presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below.
3) Gross profit relative to sales.
4) Operating income relative to sales.
5) Net income relative to average total equity.
6) Operating income and income from equity method investments, relative to
average capital employed.
7) Employees plus temporary, hourly personnel.
8) Outstanding receivables and outstanding inventory less outstanding payables.
See calculation of this non-U.S. GAAP measure in the table below.
9) Outstanding receivables and outstanding inventory less outstanding payables
relative to annualized quarterly sales.
10) Outstanding receivables relative to annualized quarterly sales.
11) Outstanding inventory relative to annualized quarterly sales.
12) Outstanding payables relative to annualized quarterly sales.



                                       22
--------------------------------------------------------------------------------

three month period ended June 30, 2022 COMPARED to the three-month period ended
June 30, 2021


Consolidated Sales Development
(dollars in millions)

                           Three Months Ended June 30,                              Components of change in net sales
                                                                Reported            Currency
                            2022                2021             change            effects 1)                Organic 3)
Airbag products and
Other2)                 $       1,336       $       1,310              2.0 %                (4.9 )%                   6.8 %
Seatbelt products 2)              746                 712              4.7 %                (5.5 )%                  10.2 %
Total                   $       2,081       $       2,022              2.9 %                (5.1 )%                   8.0 %

Asia                    $         732       $         794             (7.8 )%               (6.1 )%                  (1.7 )%
Whereof: China                    363                 399             (9.2 )%               (2.3 )%                  (6.9 )%
 Japan                            142                 175            (18.8 )%              (13.5 )%                  (5.3 )%
 Rest of Asia                     227                 219              3.3 %                (7.2 )%                  10.5 %
Americas                          738                 621             19.0 %                 0.3 %                   18.6 %
Europe                            611                 608              0.6 %                (9.3 )%                   9.9 %
Total                   $       2,081       $       2,022              2.9 %                (5.1 )%                   8.0 %



1) Effects from currency translations.
2) Including Corporate and Other sales.
3) Non-U.S. GAAP measure.

Sales by product - Airbags, Steering Wheels and Other
All major product categories increased organically (Non-U.S. GAAP measure) in
the quarter. The largest contributor to the increase was steering wheels and
inflatable curtains, followed by passenger airbags and side airbags.

Sales by product - Seatbelts
The main contributor to Seatbelt products organic growth (Non-U.S. GAAP measure)
was Europe and Americas, partly offset by a small decline in China.

Sales by region
The Company's global organic sales (Non-U.S. GAAP measure) increased by 8%
compared to the global LVP increase of around 1% (according to IHS Markit July
2022). The 7pp outperformance was driven by price increases and new product
launches, partly offset by negative geographical mix effects. Autoliv
outperformed LVP by around 15pp in Europe, by around 10pp in Japan and by around
8pp in Americas. The Company underperformed by around 4pp in China reflecting
that lower-end vehicles production grew while higher-end vehicle production
declined. The Company underperformed by around 3pp in Rest of Asia.

Organic growth in the second quarter of 20221)

                                                                                                        Rest of
                    Americas               Europe              China               Japan                  Asia                  Global
Autoliv                        19 %                 10 %             (6.9 )%            (5.3 )%                     11 %                 8.0 %
Main growth      Ford, Stellantis          Stellantis,            Toyota,  
         Subaru,              Tata, Suzuki      Ford, Stellantis
drivers                                       Ford, VW           Mercedes             Nissan
Main decline                Honda               Volvo,       Honda, Great            Toyota,        Nissan, Mitsubishi          Honda, Great
drivers                                     Mitsubishi           Wall, GM       Mazda, Honda                                     Wall, Volvo



1) Non-U.S. GAAP measure.


Development of the production of light vehicles

Change in second quarter 2022 compared to second quarter 2021

Americas Europe China Japan Rest of Asia

   Global
LVP1)           11 %      (5.0 )%     (3.1 )%      (15 )%              14 %        0.6 %




                                       23
--------------------------------------------------------------------------------

1) Source: IHS Markit July 2022.

Earnings

                                                  Three Months Ended June 

30,

(Dollars in millions, except per share data)       2022                 2021            Change
Net Sales                                      $      2,081         $      2,022              2.9 %
Gross profit                                            326                  384            (15.2 )%
% of sales                                             15.7 %               19.0 %        (3.3)pp
S, G&A                                                 (112 )               (111 )            0.9 %
% of sales                                             (5.4 )%              (5.5 )%           0.1 pp
R, D&E, net                                            (112 )               (107 )            5.0 %
% of sales                                             (5.4 )%              (5.3 )%       (0.1)pp
Amortization of Intangibles                              (0 )                 (3 )          (85.5 )%
Other income (expense), net                              22                    0              n/a
Operating income                                        124                  164            (24.5 )%
% of sales                                              6.0 %                8.1 %        (2.2)pp
Adjusted operating income1)                             124                  166            (25.1 )%
% of sales                                              6.0 %                8.2 %        (2.2)pp
Financial and non-operating items, net                   (7 )                (12 )          (43.0 )%
Income before taxes                                     117                  152            (23.1 )%
Income taxes                                            (38 )                (48 )          (20.8 )%
Tax rate                                               32.2 %               31.3 %            0.9 pp
Net income                                               79                  105            (24.1 )%
Earnings per share, diluted2)                          0.91                 1.19            (23.8 )%
Adjusted earnings per share, diluted1),2)              0.90                 1.20            (25.2 )%



1) Non-U.S. GAAP measure, excluding costs for capacity alignment and gain on
sale of property.
2) Assuming dilution, when applicable, and net of treasury shares. Participating
share awards with right to receive dividend equivalents are under the two-class
method excluded from the EPS calculation.

Evolution of the second quarter of 2022

Gross profit decreased by $58 million, and the gross margin decreased by 3.3pp
compared to the same quarter 2021. The gross margin decrease was primarily
driven by adverse effects from higher raw material costs, partly offset by price
increases.

General, general and administrative expenses were virtually unchanged from the prior year, as higher IT expenses were offset by positive currency effects.

R, D&E, net costs increased by approximately $5 million compared to the previous year, mainly due to lower engineering revenues. R&D, net, to sales was virtually unchanged at 5.4%.

Other income (expenses), net improvement of approximately $22 million compared to the previous year, mainly due to the settlement of a patent dispute.

Operating income decreased by $40 million compared to the same period in 2021,
mainly as a consequence of the lower gross profit, partly offset by the improved
Other income (expense).

Adjusted operating income (Non-WE under GAAP) decreased by $42 million
compared to the previous year, mainly due to lower gross profit, partly offset by the improvement in Other income (expenses).

Financial and non-operating items, net, improved by $5 millionprimarily due to lower interest expense and non-operating items, net.

Pre-tax profit decreased by $35 million compared to the prior year, primarily due to lower operating profit partially offset by improved financial and non-operating items, net.

                                       24
--------------------------------------------------------------------------------

Tax rate was 32.2%, compared to 31.3% in the same period last year, mainly due
to unfavorable country mix. In addition, discrete tax items, net, increased the
tax rate this quarter by 1.5%. Discrete tax items were not material last year.

Earnings per share, diluted decreased by $0.28 compared to a year earlier, where
the main drivers were $0.33 from lower adjusted operating income (Non-U.S. GAAP
measure) partly mitigated by $0.04 from financial items.


six-month period ended June 30, 2022 compared to the six-month period ended June 30, 2021

Consolidated Sales Development
(dollars in millions)

                          Six Months Ended June 30,                              Components of change in net sales
                                                             Reported            Currency
                           2022               2021            change            effects 1)                Organic 3)
Airbag products and
Other 2)               $      2,716       $      2,773             (2.1 )%               (4.4 )%                   2.4 %
Seatbelt products 2)          1,489              1,491             (0.2 )%               (5.0 )%                   4.8 %
Total                  $      4,206       $      4,265             (1.4 )%               (4.6 )%                   3.2 %

Asia                   $      1,589       $      1,671             (4.9 )%               (4.8 )%                  (0.1 )%
Whereof: China                  810                814             (0.5 )%               (0.0 )%                  (0.4 )%
 Japan                          320                386            (17.0 )%              (11.9 )%                  (5.1 )%
 Rest of Asia                   459                471             (2.7 )%               (7.4 )%                   4.7 %
Americas                      1,431              1,307              9.4 %                 0.2 %                    9.2 %
Europe                        1,186              1,287             (7.8 )%               (9.3 )%                   1.5 %
Total                  $      4,206       $      4,265             (1.4 )%               (4.6 )%                   3.2 %



1) Effects from currency translations.
2) Including Corporate and Other sales.
3) Non-U.S. GAAP measure.

Sales by product – Airbags, Steering Wheels and Others Largest contributor to organic growth (Non-WE GAAP) were the steering wheels, followed by the airbags and front center airbags.

Sales by product - Seatbelts
The main contributor to Seatbelt products organic growth (Non-U.S. GAAP measure)
was Americas followed by Rest of Asia and Europe, partly offset by a decline in
China.

Sales by region
The Company's global organic sales (Non-U.S. GAAP measure) increased by around
3% compared to the LVP decline of around 1% (according to IHS Markit July 2022).
The 4.4pp outperformance was driven by new product launches and price increases.
The Company outperformed LVP by around 14pp in Europe, by around 9pp in Japan,
and by around 5pp in Americas. The Company underperformed by around 3pp in China
and Rest of Asia.

Organic growth 1st half 20221)

                                                                                                                 Rest of
                    Americas               Europe                  China                  Japan                   Asia                   Global
Autoliv                       9.2 %                 1.5 %                  (0.4 )%               (5.1 )%                   4.7 %                  3.2 %
Main growth      Ford, Stellantis           Stellantis,        Toyota, Mercedes           Mitsubishi,      Tata, Honda, Suzuki       Stellantis, Ford
drivers                                    Toyota, Ford                                 Honda, Subaru
Main decline        Honda, Nissan            Volvo, BMW      Great Wall, GM, VW       Toyota, Nissan,             Hyundai/Kia,          Nissan, Great
drivers                                                                                         Mazda       Nissan, Mitsubishi            Wall, Honda



1) Non-U.S. GAAP measure.

                                       25
--------------------------------------------------------------------------------


Light Vehicle Production Development
Change First six months 2022 versus first six months 2021

        Americas       Europe       China      Japan       Rest of Asia      Global
LVP1)         3.8 %        (12 )%      3.0 %      (14 )%             8.0 %      (1.2 )%

1) Source: IHS Markit July 2022.

Earnings

                                                   Six Months Ended June 

30,

(Dollars in millions, except per share data)       2022                 2021            Change
Net Sales                                      $      4,206         $      4,265             (1.4 )%
Gross profit                                            614                  843            (27.1 )%
% of sales                                             14.6 %               19.8 %        (5.2)pp
S, G&A                                                 (227 )               (219 )            4.0 %
% of sales                                             (5.4 )%              (5.1 )%       (0.3)pp
R, D&E, net                                            (219 )               (213 )            2.7 %
% of sales                                             (5.2 )%              (5.0 )%       (0.2)pp
Amortization of Intangibles                              (2 )                 (5 )          (65.1 )%
Other income (expense), net                              92                   (4 )            n/a
Operating income                                        258                  401            (35.6 )%
% of sales                                              6.1 %                9.4 %        (3.3)pp
Adjusted operating income1)                             192                  403            (52.3 )%
% of sales                                              4.6 %                9.4 %        (4.9)pp
Financial and non-operating items, net                  (22 )                (32 )          (31.2 )%
Income before taxes                                     237                  370            (36.0 )%
Income taxes                                            (74 )               (108 )          (31.5 )%
Tax rate                                               31.3 %               29.2 %            2.1 pp
Net income                                              163                  262            (37.9 )%
Earnings per share, diluted2)                          1.85                 2.98            (37.8 )%
Adjusted earnings per share, diluted1),2)              1.36                 2.99            (54.5 )%



1) Non-U.S. GAAP measure, excluding costs for capacity alignment and gain on
sale of property.
2) Assuming dilution, when applicable, and net of treasury shares. Participating
share awards with right to receive dividend equivalents are under the two-class
method excluded from the EPS calculation.

Development of the first half of 2022

Gross profit decreased by $228 million and the gross margin decreased by 5.2pp
compared to the same period 2021. The gross margin decrease was primarily driven
by adverse effects from higher raw material costs and higher costs for premium
freight, partly offset by price increases.

S,G&A costs increased by $9 million compared to the prior year, mainly relating
to investments in personnel and IT and improvement projects partly offset by
positive foreign currency translation effects.

R,D&E, net costs increased by $6 million, mainly due to lower engineering revenues. Net R&D to sales was virtually unchanged at 5.2%.

Other income (expense), net improved by $96 million compared to the prior year,
mainly due to around $80 million gain from the sale of a property in Japan and
around $20 million from a patent litigation settlement partly offset by around
$10 million in capacity alignment provision for the closure of a plant in South
Korea.

Operating income decreased by $143 million compared to the same period in 2021,
mainly as a consequence of the lower gross profit, partly offset by the improved
Other income (expense).

Adjusted operating income (Non-WE under GAAP) decreased by $211 million
compared to the previous year, mainly due to lower gross profit.

                                       26
--------------------------------------------------------------------------------

Financial and non-operating items, net, improved by $10 millionprimarily due to lower interest expense and non-operating items, net.

Pre-tax profit decreased by $133 million compared to the prior year, primarily due to lower operating profit partially offset by improved financial and non-operating items, net.

Tax rate was 31.3%, compared to 29.2% in the same period last year, mainly due
to unfavorable country mix. In addition, discrete tax items, net, increased the
tax rate this year by 1.0%. Discrete tax items were not material last year.

Earnings per share, diluted decreased by $1.13 compared to a year earlier, where
the main drivers were $1.70 from lower adjusted operating income (Non-U.S. GAAP
measure) partly mitigated by $0.50 from capacity alignment and $0.08 from
financial items.

CASH AND CAPITAL RESOURCES

The Company does not have any off-balance sheet arrangements that have, or are
reasonably likely to have, a material current or future effect on its financial
position, results of operations or cash flows. The Company's future contractual
obligations have not changed materially from the amounts reported in the
Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed
with the SEC on February 22, 2022.


Evolution of the second quarter of 2022

Trade working capital (Non-U.S. GAAP measure, see calculation table below) was
reduced by $116 million compared to the same period last year, where the main
drivers were related to $178 million higher accounts payables, partly offset by
$60 million in higher receivables.

Operating cash flow decreased by $114 million to negative $51 million compared
to the same period last year, mainly due to unfavorable changes in operating
working capital related mainly to sales volatility and timing effects.

Net investments increased by $42 million, which primarily reflects investments related to footprint and capacity expansion. Net investments in relation to turnover amounted to 6.7% against 4.8% a year earlier.

Free cash flow (Non-U.S. GAAP measure, see calculation table below) was negative
$190 million, compared to negative $33 million a year earlier. The decline was
due to the lower operating cash flow and higher capital expenditure, net.

Net debt (Non-WE GAAP measure, see reconciliation table below) was $1,318 million of the June 30, 2022what was $118 million higher than a year earlier.

Liquidity position. As of June 30, 2022, the Company's cash balance was around
$0.3 billion, and including committed, unused loan facilities, the Company's
liquidity position was around $1.4 billion.

Leverage ratio (Non-U.S. GAAP measure, see calculation table below). As of June
30, 2022, the Company had a leverage ratio of 1.7x, compared to 1.1x as of June
30, 2021, as both the net debt (Non-U.S. GAAP measure) decreased and the 12
months trailing adjusted EBITDA (Non-U.S. GAAP measure) decreased.

Total equity decreased by $56 million compared to June 30, 2021, mainly due to
dividends paid of $222 million, adverse currency translation effects of $176
million, and $40 million from share repurchases partly offset by $338 million
from net income.

Development of the first half of 2022

Operating cash flow decreased by $230 million to $19 million compared to the
same period last year, mainly due to lower net income and changes in operating
working capital.

Capital expenditure, net decreased by $34 million, which mainly reflects $95
million in proceeds from the sale of property, plant and equipment partly offset
by increased investments related to footprint and capacity expansions. Capital
expenditure, net in relation to sales was 3.7% versus 4.4% a year earlier.

Free cash flow (Non-U.S. GAAP measure, see calculation table below) was negative
$137 million, compared to positive $60 million a year earlier. The decline was
due to the lower operating cash flow, partly offset by the property sale in
Japan.


                                       27
--------------------------------------------------------------------------------

NOPE-WE GAAP MEASURES

The Company believes that comparability between periods is improved through the
exclusion of certain items. To assist investors in understanding the operating
performance of Autoliv's business, it is useful to consider certain U.S. GAAP
measures exclusive of these items. Accordingly, the tables below reconcile from
U.S. GAAP to the equivalent non-U.S. GAAP measure.

Reconciliation of WE GAAP financial measures to “Adjusted operating income”,

     "Adjusted operating margin" and "Adjusted Earnings per share, diluted"

                  (Dollars in millions, except per share data)

                               Three Months Ended June 30, 2022                       Three Months Ended June 30, 2021
                        Reported                                              Reported
                          U.S.                                 Non-U.S.         U.S.                                 Non-U.S.
                          GAAP           Adjustments1)           GAAP           GAAP           Adjustments1)           GAAP
Operating income       $      124       $             0       $      124     $      164       $             1       $       166
Operating margin, %           6.0 %                 0.0 %            6.0 %          8.1 %                 0.1 %             8.2 %
Earnings per share,
diluted                $     0.91       $         (0.01 )     $     0.90     $     1.19       $          0.01       $      1.20


1) Including capacity alignment costs.

                                       Six Months Ended June 30, 2022                       Six Months Ended June 30, 2021
                               Reported                                             Reported
                                 U.S.                                Non-U.S.         U.S.                                Non-U.S.
                                 GAAP           Adjustments1)          GAAP           GAAP           Adjustments1)          GAAP
Operating income              $      258       $           (66 )    $      192     $      401       $             1      $      403
Operating margin, %                  6.1 %                (1.6 )%          4.6 %          9.4 %                 0.0 %           9.4 %
Earnings per share, diluted   $     1.85       $         (0.49 )    $     1.36     $     2.98       $          0.01      $     2.99


1) Including costs for capacity alignment and gain on sale of property in Japan
in 2022.

                  Items included in Non-U.S. GAAP adjustments

                  (Dollars in millions, except per share data)

                                           Three Months Ended June 30, 2022        Three Months Ended June 30, 2021
                                           Millions                Per share         Millions            Per share
Capacity alignment                      $             0           $       0.00     $          1         $      0.02
Total adjustments to operating income                 0                   0.00                1                0.02
Tax on non-U.S. GAAP adjustments1)                    0                   0.00               (0 )             (0.00 )
Total adjustments to net income         $             0           $       

$0.00 1 $0.01

1) Tax is calculated based on the applicable tax laws of the respective jurisdiction(s) of the adjustment(s).

                                           Six Months Ended June 30, 2022   

Semester completed June 30, 2021

                                            Millions            Per share        Millions            Per share
Capacity alignment1)                      $        (66 )       $     (0.76 )   $          1         $      0.02
Total adjustments to operating income              (66 )             (0.76 )              1                0.02
Tax on non-U.S. GAAP adjustments2)                  23                0.27               (0 )             (0.00 )
Total adjustments to net income           $        (43 )       $     (0.49 

) $1 $0.01

1) Including capital gain on the sale of a building Japan of $80 million in March 2022. 2) The tax is calculated on the basis of the tax laws in force in the respective jurisdiction(s) of the adjustment(s).

                                       28
--------------------------------------------------------------------------------


The Company uses the non-U.S. GAAP measure "Trade working capital," as defined
in the table below, in its communications with investors and for management's
review of the development of the trade working capital cash generation from
operations. The reconciling items used to derive this measure are, by contrast,
managed as part of the Company's overall cash and debt management, but they are
not part of the responsibilities of day-to-day operations' management.

                     Calculation of "Trade working capital"
                             (Dollars in millions)

                         June 30, 2022       December 31, 2021       June 30, 2021
Receivables, net        $         1,779     $             1,699     $         1,719
Inventories, net                    903                     777                 901
Accounts payable                 (1,303 )                (1,144 )            (1,125 )
Trade working capital   $         1,379     $             1,332     $         1,495




The non-U.S. GAAP measure "Net debt" is also used in the non-U.S. GAAP measure
"Leverage ratio". Management uses this measure to analyze the amount of debt the
Company can incur under its debt policy. Management believes that this policy
also provides guidance to credit and equity investors regarding the extent to
which the Company would be prepared to leverage its operations. For details on
leverage ratio refer to the table below.

          Reconciliation of U.S. GAAP financial measure to "Net debt"
                             (Dollars in millions)

                                              June 30, 2022       December 31, 2021       June 30, 2021
Short-term debt                              $           559     $               346     $           363
Long-term debt                                         1,060                   1,662               1,712
Total debt                                             1,619                   2,008               2,075
Cash and cash equivalents                               (327 )                  (969 )              (893 )
Debt issuance cost/Debt-related
derivatives, net                                          26                      13                  18
Net debt                                     $         1,318     $             1,052     $         1,200




Management uses the non-U.S. GAAP measure "Leverage Ratio" to analyze the amount
of debt the Company can incur under its debt policy. Management believes that
this policy also provides guidance to credit and equity investors regarding the
extent to which the Company would be prepared to leverage its operations. The
Company's long-term target for the leverage ratio (sum of net debt plus pension
liabilities divided by EBITDA) is 1.0x with the aim to operate within the range
of 0.5x to 1.5x. For details and calculation of leverage ratio, refer to the
table below.

                        Calculation of "Leverage ratio"
                             (Dollars in millions)

                                                                  December 31,
                                               June 30, 2022          2021           June 30, 2021
Net debt1)                                    $         1,318     $       1,052     $         1,200
Pension liabilities                                       155               197                 239
Debt per the Policy                                     1,473             1,248               1,438

Net income2)                                              338               437                 550
Income taxes 2)                                           143               177                 247
Interest expense, net2,3)                                  51                57                  69
Other non-operating items, net2)                            2                 7                  22
Income from equity method investments2)                    (3 )              (3 )                (4 )
Depreciation and amortization of
intangibles2)                                             381               394                 394
Capacity alignments and antitrust related
matters2)                                                 (59 )               8                  37
EBITDA per the Policy (Adjusted EBITDA)       $           854     $       1,077     $         1,313
Leverage ratio                                            1.7               1.2                 1.1



1) Net debt (non-U.S. GAAP measure) is short- and long-term debt and
debt-related derivatives, less cash and cash equivalents.
2) Latest 12-months.
3) Interest expense, net including cost for extinguishment of debt, if any, less
interest income.

                                       29
--------------------------------------------------------------------------------



Management uses the non-U.S. GAAP measure free cash flow to analyze the amount
of cash flow being generated by the Company's operations after capital
expenditure, net. This measure indicates the Company's cash flow generation
level that enables strategic value creation options such as dividends or
acquisitions. For details on the calculation of free cash flow, see the table
below.

                        Calculation of "Free Cash Flow"
                             (Dollars in millions)

                                               Three Months Ended June 30,             Six Months Ended June 30,
                                               2022                  2021              2022                 2021
Net income                                 $          79         $         105     $         163         $       262
Changes in operating working capital                (239 )                (125 )            (257 )              (214 )
Depreciation and amortization                         90                   100               186                 199
Gain on divestiture of property                        -                     -               (80 )                 -
Other, net                                            19                   (16 )               7                   2
Operating cash flow                                  (51 )                  63                19                 249
Capital expenditure, net                            (139 )                 (96 )            (156 )              (189 )
Free cash flow1)                           $        (190 )       $         (33 )   $        (137 )       $        60
1) Operating cash flow less Capital
expenditures, net.




Headcount

                                     June 30, 2022       December 31, 2021       June 30, 2021
Total headcount                              64,700                  60,600              64,500
Whereof:
Direct personnel in manufacturing            46,500                  43,000              46,400
Indirect personnel                           18,200                  17,600              18,000
Temporary personnel                             9.6 %                   7.8 %               9.1 %



By June 30, 2022, total headcount increased by 200 compared to a year earlier.
The indirect workforce increased by 1.1% while the direct workforce increased by
0.2%. Compared to March 31, 2022, total headcount decreased by 100, direct
workforce decreased by 500 and the indirect workforce increased by 400.




                                       30
--------------------------------------------------------------------------------

Indications for the year 2022

The Company's outlook indications for 2022 reflect continuing uncertainty in the
automotive markets and are mainly based on the Company's customer call-offs and
global LVP outlook of a full year 2022 global LVP growth of 2-5% and that the
Company achieves its targeted cost compensation effects along with some market
stabilization.

Financial measure                         Full year indication
Organic sales growth                      Around 13%-16%
FX impact on net sales                    Around 5% negative
Adjusted operating margin 1)              Around 6.0%-7.0%
Tax rate 2)                               Around 30%
Operating cash flow 3)                    Around $750-$850 million
Capex, net % of sales                     Around 5.5%
1) Excluding costs for capacity alignments, antitrust related matters and other
discrete items.
2) Excluding unusual tax items.
3) Excluding unusual items.


This report includes content provided by IHS Markit Automotive; Copyright © Light Vehicle Production Forecast, July 2022. All rights reserved.

The forward-looking non-U.S. GAAP financial measures above are provided on a
non-U.S. GAAP basis. The Company has not provided a U.S. GAAP reconciliation of
these measures because items that impact these measures, such as costs related
to capacity alignments and antitrust matters, cannot be reasonably predicted or
determined. As a result, such reconciliation is not available without
unreasonable efforts and the Company is unable to determine the probable
significance of the unavailable information.

Other recent events

Key launches in the second quarter of 2022

VW ID.Buzz: Steering Wheel, Driver/Passenger Airbags, Side Airbags, Seatbelts
Mercedes-Benz GLC: Steering Wheel, Driver/Passenger Airbags
Mercedes-Benz EQE Steering Wheel, Driver/Passenger Airbags
Mercedes-Benz EQS SUV: Steering Wheel, Driver/Passenger Airbags
Great Wall ORA Ballet Cat: Steering Wheel, Driver/Passenger Airbags, Side
Airbags, Head/Inflatable Curtain Airbags, Seatbelts, Pyrotechnical Safety Switch
Li Xiang L9: Steering Wheel, Driver/Passenger Airbags, Side Airbags,
Head/Inflatable Curtain Airbags, Seatbelts
Range Rover Sport: Driver/Passenger Airbags, Side Airbags, Seatbelts
Opel Astra Sports Tourer: Steering Wheel,Driver/Passenger Airbags, Side Airbags,
Head/Inflatable Curtain Airbags, Seatbelts
Honda HR-V/ZR-V: Steering Wheel, Driver/Passenger Airbags, Side Airbags,
Head/Inflatable Curtain Airbags

Other items

On May 23, 2022, Autoliv announced the refinancing of its $1.1 billion
Revolving credit facility.

On July 11, 2022, Autoliv announced a cooperation with POC to study and develop bicycle and electric bicycle helmets equipped with airbag technology to improve head protection and reduce the consequences of an impact.

Under Autoliv's 2022-2024 stock purchase program, purchases of common stock and
SDRs may be made in open market purchases, privately negotiated transactions,
block purchase techniques, 10b5-1 trading plans or a combination of the
foregoing in accordance with applicable law and the rules and regulations of
both the NYSE and Nasdaq Stockholm. During the second quarter 2022, Autoliv
repurchased 0.30 million shares of common stock at an average price of $73.68.

                                       31

————————————————– ——————————

© Edgar Online, source Previews

Share.

About Author

Comments are closed.