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AUTOLIV INC

AUTOLIV INCALVEarnings & Financial Report

NYSE · automotive supplier

Autoliv is an American-Swedish automotive safety supplier headquartered in Stockholm, Sweden, and incorporated in Delaware, United States as Autoliv, Inc. It is the world’s largest automotive safety system supplier, producing systems such as airbags, seatbelts, and steering wheels for automotive manufacturers. Autoliv's name combines auto for automobiles, and "liv" {‘li:v} the Swedish word for "life".

What changed in AUTOLIV INC's 10-K — 2022 vs 2023

Top changes in AUTOLIV INC's 2023 10-K

348 paragraphs added · 356 removed · 297 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+4 added−6 removed39 unchanged
Other competitors include Nihon Plast and Ashimori of Japan, Yanfeng and Jinheng of China, Samsong in South Korea, and Chris Cintos de Seguranca in South America. Collectively, these competitors account for the majority of the remaining market share in passive safety.
Other competitors include Nihon Plast and Ashimori in Japan, Yanfeng and Jinheng in China, Samsong in South Korea, and Chris Cintos de Seguranca in South America. Collectively, these competitors account for the majority of the remaining market share in passive safety.
Major unions to which some of the Company's employees belong in Europe include: IG Metall in Germany; Unite the union in the United Kingdom; Confédération Générale des Travailleurs (CGT), Confédération Française Démocratique du Travail (CFDT), Confédération Française de l’Encadrement Confédération Générale des cadres (CFE-CGC), Force Ouvrière (FO), Confédération Française des Travailleurs Chrétiens (CFTC), Solidaires, Unitaires, Démocratiques (SUD) and Conféderation Autonome du Travail (CAT) in France; Union General de Trabajadores (UGT), Union Sindical Obrera (USO), Comisiones Obereras (CCOO) and Confederacion General de Trabajadores (CGT) in Spain; IF Metall, Unionen, Sveriges Ingenjörer and Ledarna in Sweden; Industriaal- ja Metallitöötajate Ametiühingute Liit (IMTAL) in Estonia; Vasas Szakszervezeti Szövetség (Hungarian Metallworkers‘ Federation) in Hungary; Samorzadny NiezalezĪny Zwiazek Zawodowy Pracownikow and Zakladowa Organizacja Związkowa NSZZ Solidarnosc in Poland; National Union of Metal Workers South Africa (NUMSA) in South Africa; Union Générale des Travailleurs Tunisiens (UGTT) and Union des travailleurs Tunisiens (UTT) in Tunisia and Türk Metal Sendikasi in Turkey.
Major unions in Europe to which some of the Company's employees belong include: IG Metall in Germany; Unite the union in the United Kingdom; Confédération Générale des Travailleurs (CGT), Confédération Française Démocratique du Travail (CFDT), Confédération Française de l’Encadrement Confédération Générale des cadres (CFE-CGC), Force Ouvrière (FO), Confédération Française des Travailleurs Chrétiens (CFTC), Solidaires, Unitaires, Démocratiques (SUD) and Conféderation Autonome du Travail (CAT) in France; Union General de Trabajadores (UGT), Union Sindical Obrera (USO), Comisiones Obereras (CCOO) and Confederacion General de Trabajadores (CGT) in Spain; IF Metall, Unionen, Sveriges Ingenjörer and Ledarna in Sweden; Industriaal- ja Metallitöötajate Ametiühingute Liit (IMTAL) in Estonia; Vasas Szakszervezeti Szövetség (Hungarian Metallworkers‘ Federation) in Hungary; Samorzadny NiezalezĪny Zwiazek Zawodowy Pracownikow and Zakladowa Organizacja Związkowa NSZZ Solidarnosc in Poland; National Union of Metal Workers South Africa (NUMSA) in South Africa; Union Générale des Travailleurs Tunisiens (UGTT) and Union des travailleurs Tunisiens (UTT) in Tunisia, and Türk Metal Sendikasi in Turkey.
Furthermore, the Company believes its continued quality improvements further enhance the Company's reputation among its customers, employees, and governmental authorities. Although quality has always been paramount in the automotive industry, especially for safety products, automobile manufacturers have become increasingly focused on quality with even less tolerance for any deviations.
The Company believes its continued quality improvements further enhance the Company's reputation among its customers, employees, and governmental authorities. Although quality has always been paramount in the automotive industry, especially for safety products, automobile manufacturers have become increasingly focused on quality with even less tolerance for any deviations.
While there have been a small number of minor labor disputes historically, such disputes have not had a significant or lasting impact on the Company's relationship with its employees, customer perception of its employee practices or its business results.
While there have been a small number of minor labor disputes historically, such disputes have not had a significant or lasting impact on the Company's relationship with its employees, and customer perception of its employee practices or its business results.
Some of the Company's subsidiaries in Europe, Canada, Mexico, Brazil and Korea must negotiate with the applicable local unions with respect to important changes in operations, working and employment conditions.
Some of the Company's subsidiaries in Europe, Canada, Mexico, Brazil and South Korea must negotiate with the applicable local unions with respect to important changes in operations, working and employment conditions.
The table below show the Company's workforce by age group and gender in % at the end of 2022. % of Men Age group % of Women 1% >60 1% 5% 51-60 5% 10% 41-50 11% 18% 31-40 16% 15% 21-30 14% 2% 2% Talent Attraction, Development, and Retention The Company believes that attraction, development, and retention of talent is essential to its success, especially in today's environment.
The table below show the Company's workforce by age group and gender in % at the end of 2023. % of Men Age group % of Women 1% >60 1% 5% 51-60 5% 10% 41-50 11% 18% 31-40 16% 15% 21-30 14% 2% 2% Talent Attraction, Development, and Retention The Company believes that attraction, development, and retention of talent is essential to its success, especially in today's environment.
The Company's overall purpose, Code of Conduct, talent development strategies and employment policies support the principles in the United Nations Universal Declaration of Human Rights, and the International Labor Organization’s Fundamental Principles and Labor Standards. The Company considers its relationship with its personnel to be good.
The Company's overall purpose, Code of Conduct, talent development strategies, and employment policies support the principles in the United Nations Universal Declaration of Human Rights, and the International Labor Organization’s Fundamental Principles and Labor Standards. The Company considers its relationship with its employees to be good.
Seatbelts are the primary life-saving safety product globally and are also an important requirement in low-end vehicles in the Growth Markets. This provides the Company with an excellent opportunity to benefit from the expected growth in this segment of the market.
Seatbelts are the primary life-saving safety product globally and are also an important requirement in low-end vehicles in the medium- and low-income markets. This provides the Company with an excellent opportunity to benefit from the expected growth in this segment of the market.
The highest growth rate is expected in steering wheels, where Autoliv has a global market share of around 37%, generated by the trend toward higher-value steering wheels with leather and additional features.
The highest growth rate is expected in steering wheels, where Autoliv has a global market share of around 40%, generated by the trend toward higher-value steering wheels with leather and additional features.
The Company's ability to consistently outperform market growth is rooted in a steady flow of new safety technologies, a strong focus on quality, and a superior production and engineering footprint. The Company's competitors Autoliv is the clear market leader in passive safety components and systems for the automotive industry with an estimated global market share of 43%.
The Company's ability to consistently outperform market growth is rooted in a steady flow of new safety technologies, a strong focus on quality, and a superior production and engineering footprint. The Company's competitors Autoliv is the clear market leader in passive safety components and systems for the automotive industry with an estimated global market share of around 45%.
As the Company moves forward its workforce strives to respond with agility to new possibilities to grow and improve the Company's business whilst delivering with excellence to its customers. The Company builds a winning team by focusing on creating a work environment that attracts, retains, and engages its employees.
As the Company moves forward its workforce (employees plus temporary personnel) strives to respond with agility to new possibilities to grow and improve the Company's business whilst delivering with excellence to its customers. The Company builds a winning team by focusing on creating a work environment that attracts, retains, and engages its employees.
JSS is a Chinese owned company and is the result of the merger between Key Safety Systems (KSS) and Takata Corporation after KSS acquired Takata in 2018. In Japan, Brazil, South Korea, and China, there are a number of local suppliers that have close ties with the domestic vehicle manufacturers.
JSS is the result of the merger between Key Safety Systems (KSS) and Takata Corporation after KSS acquired Takata in 2018. In Japan, Brazil, South Korea, and China, there are a number of local suppliers that have close ties with the domestic vehicle manufacturers.
Autoliv has for many years emphasized a “zero-defect” proactive quality policy and continues to strive to improve its working methods. This means that Autoliv’s products are expected to always meet performance expectations and be delivered to its customers at the right times and in the right amounts.
Autoliv has for many years emphasized a “zero-defect” proactive quality policy and continues to strive to improve its working methods. Autoliv’s products are expected to always meet performance expectations and be delivered to its customers at the right times and in the right amounts.
The goal of Q5 is to firmly tie together quality with value within all of the Company's processes and for all of its employees, thereby leading to the best value for its customers. Since 2010, the Company has continually expanded this quality initiative to provide additional skills training to more employees and suppliers.
The goal of Q5 is to firmly tie together quality with value within all of the Company's processes and for all of its employees, thereby leading to the best value for its customers. Since 2010, the Company has continually focused on this quality initiative to provide additional skills training to more employees and suppliers.
These defense lines consist of: 1) robust product designs, 2) flawless components from suppliers and the Company's own in-house component companies, 3) manufacturing flawless products with a system for verifying that the Company's products conform with specifications, and 4) an advanced traceability system in the event of a recall.
The defense lines are: 1) robust product designs, 2) flawless components from suppliers and the Company's own in-house component companies, 3) manufacturing flawless products with a system for verifying that the Company's products conform with specifications, and 4) an advanced traceability system in the event of a recall.
The market for airbags, where Autoliv has a global market share of around 44%, is expected to grow mainly as result of higher installation rates of inflatable curtains, side airbags, and knee airbags. Additionally, the new front center airbag is expected to start to contribute to the market growth.
The market for airbags, where Autoliv has a global market share of around 47%, is expected to grow mainly as result of higher installation rates of inflatable curtains, side airbags, and knee airbags. Additionally, the front center airbag is expected to start to contribute to the market growth.
Unlike LVP, where Autoliv can only aim to be on the best-selling platforms, Autoliv can influence CPV more directly by continuously developing and introducing new technologies with higher value-added features. Over the long term, this increases average safety CPV and has caused the markets where the Company does business to grow faster than the LVP.
Unlike LVP, where Autoliv can only aim to be on the best-selling platforms, Autoliv can influence CPV more directly by continuously developing and introducing new technologies with higher value-added features. Over the long term, this increases average safety CPV and has caused the Company's markets to grow faster than the LVP.
By combining its core competence and industry experience, the Company also develops and manufactures mobility safety solutions such as pedestrian protection, battery cut-off switches, connected safety services, and safety solutions for riders of powered two wheelers. The Company has approximately 62 production facilities in 27 countries and its customers include the world’s largest car manufacturers.
By combining its core competence and industry experience, the Company also develops and manufactures mobility safety solutions such as pedestrian protection, battery cut-off switches, connected safety services, and safety solutions for riders of powered two-wheelers. The Company has 63 production facilities in 23 countries and its customers include the world’s largest car manufacturers.
In the U.S., federal legislation requires frontal airbags on the driver-side and the passenger-side of all new passenger cars since 1998 and in all sport utility vehicles, pickup trucks, and vans since 1999.
In the U.S., federal legislation requires frontal airbags on the driver-side and the passenger-side of all new passenger cars, sport utility vehicles, pickup trucks, and vans.
In the Developed Markets (Western Europe, North America, Japan, and South Korea) the CPV is around $320. CPV growth in these regions mainly come from new safety systems such as active seatbelts, knee airbags, and front-center airbags along with improved protection for pedestrians and rear-seat occupants like bag-in-belt or more advanced seatbelts.
In high-income markets (Western Europe, North America, Japan, and South Korea) the average CPV is around $330. CPV growth in these regions mainly come from new safety systems such as active seatbelts, knee airbags, and front-center airbags along with improved protection for pedestrians and rear-seat occupants like bag-in-belt or more advanced seatbelts.
The Company's outperformance is a result of a steady flow of new passive safety technologies, strong focus on quality and a superior global footprint both in products and engineering. This has enabled Autoliv to increase its global market share in passive safety from 27% in 1997 to 43% in 2022.
The Company's outperformance is a result of a steady flow of new passive safety technologies, strong focus on quality and a superior global footprint both in products and engineering. This has enabled Autoliv to increase its global market share in passive safety from 27% in 1997 to around 45% in 2023.
In many European countries, Canada, Mexico, Brazil and Korea, wages, salaries and general working conditions are negotiated with local unions and/or are subject to centrally negotiated collective bargaining agreements. The terms of the Company's various agreements with unions typically range between 1-3 years.
In many European countries, Canada, Mexico, Brazil and South Korea, wages, salaries and general working conditions are negotiated with local unions and/or are subject to centrally negotiated collective bargaining agreements. The terms of the Company's various agreements with unions typically range between one to three years.
Since 1997, the Company’s sales compound annual growth rate (CAGR) for passive safety has been around 5% compared to the market rate of around 2.4% which includes an LVP growth of around 1.6%.
Since 1997, the Company’s sales compound annual growth rate (CAGR) for passive safety has been around 5% compared to the market rate of around 2.8% which includes an LVP growth of around 1.9%.
Implementation of the system as well as the ISO 45001 health and safety management system is monitored through internal and external audits. At the end of 2022, 71% of production facilities were certified according to ISO 45001.
Implementation of the system as well as the ISO 45001 health and safety management system is monitored through internal and external audits. At the end of 2023, 61% of production facilities were certified according to ISO 45001.
All of the Company's facilities that ship products to OEMs are regularly certified according to the International Automotive Task Force (IATF) standards.
All Autoliv facilities that ship products to OEMs are regularly certified according to the International Automotive Task Force (IATF) standards.
The table below shows the Company's total workforce as of December 31, 2022 and 2021. 2022 2021 Total workforce 69,100 60,600 Whereof: Direct workforce in manufacturing 50,600 43,000 Indirect workforce 18,500 17,600 Temporary workforce 11 % 8 % Diversity and Inclusion When attracting, developing and retaining talent, the Company seeks individuals who hold varied experiences and viewpoints to create an inclusive and diverse workplace that allows each employee to do their best work and drive the Company's collective success.
The table below shows the Company's total workforce as of December 31, 2023, and 2022. 2023 2022 Total workforce 70,300 69,100 Whereof: Direct workforce in manufacturing 52,500 50,600 Indirect workforce 17,800 18,500 Temporary workforce 11 % 11 % Diversity and Inclusion When attracting, developing and retaining talent, the Company seeks individuals who hold varied experiences and viewpoints to create an inclusive and diverse workplace that allows each employee to do their best work and drive the Company's collective success.
The Company's workforce reflects the diversity of the countries and cultures in which it operates. At the end of 2022, 49% of the Company's workforce and 18% of the Company's senior management positions were held by women.
The Company's workforce reflects the diversity of the countries and cultures in which it operates. At the end of 2023, 49% of the Company's workforce and 20% of the Company's senior management positions were held by women.
Item 1. Business General Autoliv, Inc. (“Autoliv”, the “Company” or “we”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal subsidiaries, Autoliv AB and Autoliv ASP, Inc. The Company's fiscal year ends on December 31.
Item 1. Business General Autoliv, Inc. (“Autoliv”, the “Company” or “we”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden where it currently employs approximately 105 people. The Company functions as a holding corporation and owns two principal subsidiaries, Autoliv AB and Autoliv ASP, Inc. The Company's fiscal year ends on December 31.
Market and Competition Consumer research clearly shows that consumers want safe vehicles, and several significant trends are likely to have a positive influence on overall safety content per vehicle.
Market and Competition Consumer research clearly shows that consumers want safe vehicles, and several significant trends are likely to positively influence overall safety content per vehicle.
ZF, one of the Company's largest competitors, is a global leader in driveline and chassis technology as well as in passive safety technologies, and is one of the largest global automotive suppliers. Another of the Company's largest competitors is Joyson Safety Systems (JSS).
ZF, one of the Company's largest competitors, is a global leader in driveline and chassis technology as well as in passive safety technologies and is one of the largest global automotive suppliers. Another large competitor is Joyson Safety Systems (JSS), a subsidiary of Ningbo Joyson Electronic Corp.
These activities have significantly improved the Company's quality performance. In the Company's pursuit of excellence in quality, the Company has developed a chain of four “defense lines” against potential quality issues.
These activities have significantly improved the Company's quality performance. In the Company's pursuit of quality excellence, the Company developed a chain of four “defense lines” to deal with potential quality issues.
The purpose of the airbag is to provide the occupants a cushioning and restraint during a crash event to prevent any impact or impact-caused injuries between the occupant and the interior of the vehicle.
It consists of the container, an airbag cushion, and an inflator. The purpose of the airbag is to provide the occupants a cushioning and restraint during a crash event to prevent any impact or impact-caused injuries between the occupant and the interior of the vehicle.
For more information, see Item 1A – “Risk Factors” in this Annual Report. Quality Management Autoliv believes that superior quality is a prerequisite to being considered a leading global supplier of automotive safety systems and is key to the Company's financial performance, because quality excellence is critical for winning new orders, preventing recalls, and maintaining low scrap rates.
Quality Management Autoliv believes that superior quality is a prerequisite to being considered a leading global supplier of automotive safety systems and is key to the Company's financial performance, because quality excellence is critical for winning new orders, preventing recalls, and maintaining low scrap rates.
The local Chinese OEMs as a group accounted for around 5% of the Company's global sales in 2022, with Great Wall representing more than 1% of the Company's global sales. European based brands accounted for 30% of the Company's global sales in 2022.
The Chinese OEMs as a group accounted for around 6% of the Company's global sales in 2023, with Great Wall representing more than 1% of the Company's global sales. European based brands accounted for 29% of the Company's global sales in 2023.
In addition, the Company’s employees in other regions are represented by the following unions: Unifor in Canada; Sindicato de Jornaleros y Obreros Industriales y de la Industria Maquiladora de H.Matamoros, Tamaulipas (CTM); Sindicato Nacional de Trabajadores de la Industria Metalúrgica y Similares (CTM); Sindicato Nacional de Trabajadores de la Industria Arnesera, Eléctrica, Automotriz y Aeronáutica de la República Mexicana; “Nueva Cultura Laboral” “de trabajadores de la fabricación, manufactura, ensamble de autopartes mecánicas y eléctricas y componentes de la industria Automotriz (CROC); Sindicato Nacional de Trabajadores de la Industria de Autopartes en General y/o Similares, Conexos y sus Servicios de la República Mexicana, in Mexico; Sindicato dos Metalúrgicos de Taubaté e Região in Brazil; Autoliv India Employees Association, Bangalore & Mysore in India; the Korean Metal Workers Union (FKTU) in Korea and Autoliv Japan Roudou Kumiai in Japan; Shanghai General Labor Union in China.
In addition, the Company’s employees in other regions are represented by the following unions: Unifor in Canada; Sindicato de Jornaleros y Obreros Industriales y de la Industria Maquiladora de H.Matamoros, Tamaulipas (CTM); Sindicato Nacional de Trabajadores de la Industria Metalúrgica y Similares, Federación Valle de Toluca (CTM); Sindicato Nacional “Nueva Cultura Laboral” de trabajadores de la fabricación, manufactura, ensamble de autopartes mecánicas y eléctricas y componentes de la Industria Automotriz, C.R.O.C.; Sindicato Nacional de Trabajadores de la Industria Arnesera, Eléctrica, Automotriz y Aeronáutica de la República Mexicana; “Nueva Cultura Laboral” “de trabajadores de la fabricación, manufactura, ensamble de autopartes mecánicas y eléctricas y componentes de la industria Automotriz (CROC); Sindicato Nacional de Trabajadores de la Industria de Autopartes en General y/o Similares, Conexos y sus Servicios de la República Mexicana, in Mexico; Sindicato Industrial de Trabajadores de la Transformación, Construcción, Automotriz, Agropecuaria, Plásticos y de la Industria en General, del Comercio y Servicios, Similares, anexos y conexos del Estado de Querétaro “Ángel Castillo Resendiz”; Sindicato dos Metalúrgicos de Taubaté e Região in Brazil; Autoliv India Employees Association, Bangalore & Mysore in India; Korean Metal Workers Union (FKTU) in South Korea; Autoliv Japan Roudou Kumiai in Japan, and All-China Federation of Trade Unions in China.
As a result of higher installation rates of airbags, more advanced seatbelt products, and more complex steering wheels, CPV is expected to increase at a similar pace in both Developed and Growth Markets over the next three years. LVP in the Developed Markets is expected to increase faster than in the Growth Markets during the same period.
As a result of higher installation rates of airbags, more advanced seatbelt products, and more complex steering wheels, CPV is expected to increase at a similar pace in both high-income and medium- and low-income markets over the next three years.
Supported by a positive LVP mix effect from higher growth in higher CPV markets, the annual passive safety market (seatbelts and airbags, including steering wheels), is expected to grow from around $20 billion in 2022 to more than $25 billion over the next three years, based on the current macro-economic outlook and the Company's internal market intelligence and estimates.
Despite this negative regional LVP mix effect, the annual passive safety market (seatbelts and airbags, including steering wheels), is expected to grow from around $23 billion in 2023 to more than $25 billion over the next three years, based on the current macro-economic outlook and the Company's internal market intelligence and estimates.
The Company has operations in 27 different countries, with 17% of its workforce located in Asia (excluding China), 31% in the Americas, 13% in China, and 39% in Europe (including South Africa, Tunisia, Russia, and Turkey).
The Company has operations in 25 countries, with 18% of its workforce located in Asia (excluding China), 31% in the Americas, 14% in China, and 37% in Europe (including South Africa, Tunisia and Turkey).
A delivery contract is typically for the lifetime of a vehicle model, which is normally between five and seven years depending on customer platform sourcing preferences and strategies.
The five largest OEMs in 2023 accounted for around 46% of global LVP, and the ten largest OEMs accounted for around 66% of global LVP. A delivery contract is typically for the lifetime of a vehicle model, which is normally between five and seven years depending on customer platform sourcing preferences and strategies.
Net of this income, R,D&E expenditures in 2022 was $390 million, virtually unchanged compared to 2021. Of the R,D&E, net expense in 2022, 79% was for projects and programs where the Company has customer orders, typically related to vehicle models in development. The remaining 21% was mainly for new innovations, products and standardizations that will yield greater benefits over time.
Of the R,D&E, net expense in 2023, 85% was for projects and programs where the Company has customer orders, typically related to vehicle models in development. The remaining 15% was mainly for new innovations, products and standardizations that will yield benefits over time.
The successful execution of the Company's strategies relies on its ability to shape a quality and performance-oriented culture, and to adapt quickly to sudden shifts in its circumstances, such as the COVID-19 pandemic, supply chain disruptions, and geopolitical instability experienced in 2022. A turbulent external environment presents many challenges but also opportunities.
The successful execution of the Company's strategies relies on its ability to shape a quality and performance-oriented culture, and to adapt quickly to sudden shifts in its circumstances, such as supply chain disruptions and geopolitical instability.
The products manufactured by Autoliv’s consolidated subsidiaries in 2022 consisted of 134 million complete seatbelt systems (of which 87 million were fitted with pretensioners), 102 million side airbags (including curtain airbags and front center airbags), 56 million frontal airbags, 13 million other airbags and 19 million steering wheels.
The products manufactured by Autoliv’s consolidated subsidiaries in 2023 consisted of 148 million complete seatbelt systems (of which 100 million were fitted with pretensioners), 127 million side airbags (including curtain airbags and front center airbags), 63 million frontal airbags, 6 million other airbags and 22 million steering wheels.
For information on the Company's dependence on customers, see “Risk Factors – Our business could be materially and adversely affected if we lost any of our largest customers or if they were unable to pay their invoices” in Item 1A of this Annual Report, and “Dependence on Customers” under the section “Strategic Risks” in Item 7 of this Annual Report, and Note 20 to the Consolidated Financial Statements.
For information on the Company's dependence on customers, see “Risk Factors – Our business could be materially and adversely affected if we lost any of our largest customers or if they were unable to pay their invoices” in Item 1A of this Annual Report, and “Dependence on Customers” under the section “Strategic Risks” in Item 7 of this Annual Report, and Note 19 “Segment Information” to the Consolidated Financial Statements Customer sales trends Asian vehicle producers have steadily become increasingly important, mainly driven by growth with Japanese and Chinese OEMs.
In the Growth Markets (all markets other than the Developed Markets), the Company sees great opportunities for CPV growth from more airbags and advanced seatbelt products. Average CPV in the Growth Markets is around $200, approximately $120 less than in the Developed Markets.
In medium- and low-income markets (all markets other than the markets above), the Company sees great opportunities for CPV growth from more airbags and advanced seatbelt products. Average CPV in these markets is around $200 or almost $130 less than in the high-income markets.
The Company’s sales in 2022 were $8.8 billion, approximately 66% of which consisted of airbag and steering wheel products and approximately 34% of which consisted of seatbelt products. The Company's business is conducted in the following geographical regions: Europe, the Americas, China, Japan and the Rest of Asia (ROA).
The Company’s sales in 2023 were $10.5 billion, approximately 67% of which consisted of airbag and steering wheel products and approximately 33% of which consisted of seatbelt products. The Company's business is conducted in the following geographical regions: The Americas, Europe, China, and Asia, excluding China.
These include: 1) Society becoming increasingly focused on Vision Zero, which includes a goal of reducing traffic fatalities and their associated costs; 2) Demographic trends of increased urbanization, aging driver populations, and increased safety focus in growth markets; 3) Evolving government regulations and test rating systems to improve the safety of vehicles in various markets, such as the updated Euro New Car Assessment Program (NCAP), China NCAP, and USNCAP; and 4) The trend towards more electrical vehicles will potentially drive additional solutions to reduce noise and to cut the electrical power in case of an accident. 3 The automotive safety market is driven by two primary factors: light vehicle production (LVP) and content per vehicle (CPV).
These include: 1) Society becoming increasingly focused on Vision Zero and its goal of reducing traffic fatalities and their associated costs; 2) Demographic trends of increased urbanization, aging driver populations, and increased safety focus in growth markets; 3) Evolving government regulations and test rating systems to improve the safety of vehicles in various markets, such as the updated European New Car Assessment Program (Euro NCAP), China NCAP, and USNCAP; and 4) The trend towards more electrical vehicles may lead to roomier interiors that may require more advanced passive safety systems, as well as products to cut the electrical power in case of an accident.
In June 2021, the Company launched an updated climate strategy including new long-term climate ambitions: • Carbon neutrality in own operations by 2030 • Net-zero emissions across our supply chain by 2040 These industry-leading climate ambitions are aligned with a 1.5°C trajectory and represent a serious step-up in ambition level from earlier short-term climate targets.
In June 2021, the Company launched an updated climate strategy including new long-term climate ambitions: • Carbon neutrality in own operations by 2030, and • Net-zero emissions across our supply chain by 2040 These industry-leading climate ambitions are aligned with a 1.5°C trajectory and should position the Company as the supplier of choice for the most climate-focused customers, helping to ensure the Company's competitiveness now and in the future.
When dramatic shifts in LVP occur, as we seen in 2022 due to component shortages, or when there is a shift in regional LVP, the capacity adjustments can take more time and be more costly.
However, these types of adjustments can be costly and can impact Autoliv's operating margin. When significant volatility in LVP occur, as we have seen in 2022 and 2023 due to supply disruptions, or when there is a shift in regional LVP, the capacity adjustments can take more time and be more costly.
The Company's safety systems such as seatbelts and airbags substantially mitigate human consequences of traffic accidents. The airbag module is designed to inflate extremely rapidly then quickly deflate during a collision or impact. It consists of the container, an airbag cushion, and an inflator.
To meet this challenge, the Company develops safety solutions for both mobility and society that work in real life situations. The Company's passive safety systems such as seatbelts and airbags substantially mitigate human consequences of traffic accidents. The airbag module is designed to inflate extremely rapidly and then quickly deflate during a collision or impact.
The first growth driver, LVP, has increased at an average annual growth rate of around 1.6% since the start of Autoliv in 1997 despite the substantial headwinds from supply chain disruptions and semiconductor shortages.
The automotive passive safety market is driven by two primary factors: light vehicle production (LVP) and content per vehicle (CPV). 3 The first growth driver, LVP, has increased at an average annual growth rate of around 1.9% since the start of Autoliv in 1997 despite the substantial headwinds from recent supply chain disruptions and semiconductor shortages, including in 2022.
Backlog The Company has frame contracts with automobile manufacturers and such contracts are typically entered into up to three years before the start of production of the relevant car model or platform and provide for a term covering the life of such car model or platform including service parts after a vehicle model is no longer produced.
For information on the Company's use of intellectual property and its importance to the Company, see “Risk Factors – If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability to compete may be impaired” in Item 1A of this Annual Report. 6 Backlog The Company has frame contracts with automobile manufacturers and such contracts are typically entered into up to three years before the start of production of the relevant car model or platform and provide for a term covering the life of such car model or platform including service parts after a vehicle model is no longer produced.
Customer sales trends Asian vehicle producers have steadily become increasingly important, mainly driven by growth with Japanese OEMs. As a group they represent around 43% of global sales in 2022, of which Japanese OEMs accounts for approximately two thirds. This is a result of the Company's stronger market position based on its local presence in Japan.
As a group they represented around 44% of global sales in 2023, of which Japanese OEMs accounts for more than two thirds. This is a result of the Company's stronger market position based on its local presence in Japan.
The Company's employees may join associations in accordance with local legislation and rules, although the level of unionization varies significantly throughout its operations. Key Performance Indicators (KPIs) The table below reflects certain KPIs on which the Company is particularly focused on with respect to the management of its workforce.
The Company's employees may join associations in accordance with local legislation and rules, although the level of unionization varies significantly throughout its operations.
Products, Market, and Competition Products Providing life-saving solutions is a key priority as the world population grows and develops. However, population expansion in growth markets and the rise of megacities creates new complexities. To meet this challenge, the Company develops safety solutions for both mobility and society that work in real life situations.
For more information regarding the Company’s segment reporting, see Note 1, Basis of Presentation, to the Consolidated Financial Statements in this Annual Report. Products, Market, and Competition Products Providing life-saving solutions is a key priority as the world population grows and develops. However, population expansion in growth markets and the rise of megacities creates new complexities.
These contracts, however, do not typically provide minimum quantities, firm prices, or exclusivity but instead permit the automobile manufacturer to resource the relevant products at given intervals (or at any time) from other suppliers. 6 Dependence on Customers In 2022, the Company's top five customers represented around 49% of its consolidated sales and the Company's top ten customers represented around 80% of its consolidated sales.
These contracts, however, do not typically provide minimum quantities, firm prices, or exclusivity but instead permit the automobile manufacturer to resource the relevant products at given intervals (or at any time) from other suppliers. We sometimes refer to this backlog as our order intake or order book.
To fuel Autoliv’s product portfolio, additional expertise is brought in-house via technology partnerships and licensing agreements. During 2022, gross expenditures for R,D&E amounted to $595 million compared to $596 million in 2021. Of these amounts, $205 million in 2022 and $205 million in 2021 were related to customer-funded engineering projects and crash tests reimbursed by the customers.
Research, Development and Engineering, net (R,D&E) No single customer project accounted for more than 4% of Autoliv’s total R,D&E, net spending during 2023. To support Autoliv’s product portfolio, additional expertise is brought in-house via technology partnerships and licensing agreements. During 2023, gross expenditures for R,D&E amounted to $618 million compared to $595 million in 2022.
Additionally, when there is significant demand for a given product due to a major recall of a competitor’s product, like certain of the Company's customers have experienced, capacity adjustments may take time. The Company could experience disruption in its supply or delivery chain, which could cause one or more of its customers to halt or delay production.
Currently, the volatility of LVP and orders from the Company, while more stable, continue to be more volatile than prior to the Covid-19 pandemic. Additionally, when there is significant demand for a given product due to a major recall of a competitor’s product, like certain of the Company's customers have experienced, capacity adjustments may take time.
The U.S. based OEMs (including Chrysler and new EV manufactures) accounted for 25% of the Company's global sales in 2022. Globally one of the Company's strongest growing customers from 2021 to 2022 was Stellantis. Research, Development and Engineering, net (R,D&E) No single customer project accounted for more than 5% of Autoliv’s total R,D&E, net spending during 2022.
The U.S. based OEMs (including Chrysler and new EV manufactures) accounted for 23% of the Company's global sales in 2023. Globally one of the Company's strongest growing customers from 2022 to 2023 was Honda, closely followed by Toyota.
Throughout the COVID-19 pandemic, the Company has protected its employees’ health and well-being by providing the technology and communication equipment necessary to allow many of its employees to work remotely.
The Company further supports employees’ health and well-being by providing the means necessary to allow many of its employees to work remotely. 8 Labor Relations The Company offers fair terms and conditions of employment.
Additional information required by this Item 1 regarding developments in the Company’s business during 2022 is contained under Item 7 in this Annual Report. Reportable Segment The Company has one reportable segment based on the way the Company evaluates its financial performance and manages its operations.
On December 31, 2023, the Company had approximately 70,300 personnel worldwide, with 11% being temporary personnel. Additional information required by this Item 1 regarding developments in the Company’s business during 2023 is contained under Item 7 in this Annual Report.
The targets were approved in January 2022 and are available at the SBTi website. For more information about how climate change impacts the Company's business, see "Operational Risks - Climate impact" in Item 7 and "Risk factors – Global climate change could negatively affect our business” in Item 1A of this Annual Report.
For more information about how climate change impacts the Company's business, see "Risk factors – Global climate change could negatively affect our business” in Item 1A of this Annual Report. Raw Materials Direct material purchased from external suppliers represents approximately 55% of the Company's net sales in 2023. The Company mainly purchases manufactured components and raw materials for its operations.
They should position the Company as the supplier of choice for the most progressive climate-focused customers, helping to ensure the Company's competitiveness now and in the future. In addition to these ambitions, the Company adopted Science Based Targets (SBT) for 2030 covering its own operations as well as the supply chain.
In addition to these ambitions, the Company adopted Science Based Targets (SBTs) for 2030 covering its own operations as well as the supply chain. The targets were approved in January 2022 and are available at the SBTi website.
This reflects the concentration of manufacturers in the automotive industry. The five largest OEMs in 2022 accounted for around 48% of global LVP, and the ten largest OEMs accounted for around 70% of global LVP.
Dependence on Customers In 2023, the Company's top five customers represented around 48% of its consolidated sales and the Company's top ten customers represented around 78% of its consolidated sales. This reflects the concentration of manufacturers in the automotive industry.
The Company's business is comprised of passive safety products - principally airbags (including steering wheels and inflators) and seatbelts. For more information regarding the Company’s segment reporting, see Note 1, Basis of Presentation, to the Consolidated Financial Statements in this Annual Report.
Reportable Segment The Company has one reportable segment based on the way the Company evaluates its financial performance and manages its operations. The Company's business is comprised of passive safety products –principally airbags (including steering wheels and inflators) and seatbelts.
According to S&P Global, LVP is forecasted to grow to close to 87 million by 2025 from approximately 79 million in 2021, as the market is expected to recover from the effects of the COVID-19 pandemic and component shortages.
According to S&P Global, LVP is forecasted to grow to close to 90 million by 2026 from approximately 87 million in 2023, due to growing demand and export in medium- and low-income markets.
Raw Materials Direct material purchased from external suppliers represents approximately 52% of the Company's net sales in 2022. The Company mainly purchases manufactured components and raw materials for its operations. The Company takes several actions to manage the raw material fluctuations, such as competitive sourcing and looking for alternative materials.
The Company takes several actions to manage the raw material fluctuations, such as competitive sourcing and looking for alternative materials. The Company is also taking necessary actions to gradually implement raw materials with a lower carbon emission footprint.
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The Company’s head office is located in Stockholm, Sweden, where it currently employs approximately 98 people. At December 31, 2022, the Company had a total number of personnel of approximately 69,100 worldwide, whereof 11% were temporary personnel.
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In the next three years all LVP growth is expected to come in medium- and low-income regions with lower CPV, leading to a dilution of the average global CPV.
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This is because the Developed Markets are expected to recover from the negative effects of supply chain disruptions and semiconductor shortages experienced in 2022.
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The Company could experience disruption in its supply or delivery chain, which could cause one or more of its customers to halt or delay production. For more information, see Item 1A – “Risk Factors” in this Annual Report.
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For information on the Company's use of intellectual property and its importance to the Company, see “Risk Factors – If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability to compete may be impaired” in Item 1A of this Annual Report.
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For more information about order intake see “Risk Factors – The cyclical nature of automotive sales and production can adversely affect our business. Our business is directly related to LVP in the global market and by our customers, and automotive sales and LVP are the most important drivers for our sales” in Item 1A of this Annual Report.
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The Company's employees take great pride in working together to provide safety solutions for mobility and society that work in real life situations, and the Company is always looking for new team members who share this passion.
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Of these amounts, $193 million in 2023 and $205 million in 2022 were related to customer-funded engineering projects and crash tests reimbursed by the customers. Net of this income, R,D&E expenditures in 2023 was $425 million compared to $390 million in 2022.
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For those who cannot effectively do their jobs remotely, the Company has put protocols in place to ensure a safe working environment. 8 Labor Relations The Company offers fair terms and conditions of employment.
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KPI 2022 2021 % of Autoliv facilities certified (OHSAS 18001 or ISO 45001) 71 % Not available Incident rate 1) 0.32 0.41 Severity rate 2) 3.31 5.84 % women in workforce 49 % 47 % % women in senior management positions 18 % 17 % % PDD rate 3) 99 % 99 % No. of employees attended at least one training program 4,100 4,400 1) Number of reportable injuries per 200,000 employee hours of exposure. 2) Total days away from work due to a work-related reportable injury and/or illness per 200,000 employee hours of exposure. 3) Percentage of total employees participating in Autoliv's annual Performance and Development Dialogue (PDD).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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In addition, the OSHA hazard communication standard requires that we maintain information about hazardous materials used or produced in our operations and that we provide this information to employees, state and local governmental authorities and local residents. We are also subject to occupational safety regulations in other countries.
In addition, the OSHA hazard communication standard requires that we maintain information about hazardous materials used or produced in our operations and that we provide this information to employees, state and local governmental authorities and residents. We are also subject to occupational safety regulations in other countries.
Significant judgment and estimation is required in determining our effective tax rate and in evaluating our tax positions, in many cases where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, the final determination of our tax liability may be different from what is reflected in our historical income tax provisions and accruals.
Significant judgment and estimation are required in determining our effective tax rate and in evaluating our tax positions, in many cases where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, the final determination of our tax liability may be different from what is reflected in our historical income tax provisions and accruals.
Even where we are able to pass price increases along to our customer, there may be (i) a lapse of time before we are able to do so such that we must absorb the cost increase, and (ii) a negative impact on our relationships with such customers and suppliers which may limit our success in securing future awards from customers and securing acceptable supplies from suppliers.
Even where we are able to pass price increases along to our customer, there may be (i) a lapse of time before we are able to do 12 so such that we must absorb the cost increase, and (ii) a negative impact on our relationships with such customers and suppliers which may limit our success in securing future awards from customers and securing acceptable supplies from suppliers.
Accordingly, these rules and customer requirements may adversely affect our business prospects, operating results, cash flows or financial condition. 13 Our business could be materially and adversely affected if we lost any of our largest customers or if they were unable to pay their invoices We are dependent on a few large customers with strong purchasing power.
Accordingly, these rules and customer requirements may adversely affect our business prospects, operating results, cash flows, or financial condition. Our business could be materially and adversely affected if we lost any of our largest customers or if they were unable to pay their invoices We are dependent on a few large customers with strong purchasing power.
In the future, we may pursue acquisitions of businesses or products that are complementary to our business but for which we have historically had little or no direct experience. These transactions can involve significant challenges and risks as well as significant time and resources that may divert management’s attention from other business activities.
In the future, we may pursue acquisitions of businesses or products that are 18 complementary to our business but for which we have historically had little or no direct experience. These transactions can involve significant challenges and risks as well as significant time and resources that may divert management’s attention from other business activities.
We continue to invest in technology and innovation which we believe will be critical to our long-term growth. Our ability to maintain and improve existing products, while successfully developing and introducing distinctive new and enhanced products that anticipate changing customer and consumer preferences and capitalize upon emerging technologies will be a significant factor in our ability to remain competitive.
We continue to invest in technology and innovation which we believe will be 10 critical to our long-term growth. Our ability to maintain and improve existing products, while successfully developing and introducing distinctive new and enhanced products that anticipate changing customer and consumer preferences and capitalize upon emerging technologies will be a significant factor in our ability to remain competitive.
Our ability to obtain unsecured funding at a reasonable cost is dependent on our credit ratings or our perceived creditworthiness. Our current credit rating could be lowered as a result of us experiencing significant negative cash flows, increasing our indebtedness and leverage, or a dire financial outlook, which may affect our ability to procure financing.
Our ability to obtain unsecured funding at a reasonable cost is dependent on our credit ratings or our perceived creditworthiness. Our current 14 credit rating could be lowered as a result of us experiencing significant negative cash flows, increasing our indebtedness and leverage, or a dire financial outlook, which may affect our ability to procure financing.
In addition, as our products more frequently use global designs and are based on or utilize the same or similar parts, components or solutions, there is a risk that the number of vehicles affected globally by a failure or defect will increase significantly with a corresponding increase in our costs.
In addition, as our products more frequently use 11 global designs and are based on or utilize the same or similar parts, components or solutions, there is a risk that the number of vehicles affected globally by a failure or defect will increase significantly with a corresponding increase in our costs.
Some of these are based on our internal scenario analysis, which may not prove to be accurate and carries inherent uncertainties. Statements related to these goals, targets, ambitions and objectives reflect our current plans and do not constitute a guarantee that they will be achieved.
Some of these are based on our internal scenario analysis, which may not prove to be accurate and carries inherent uncertainties. Statements related to these goals, targets, ambitions 16 and objectives reflect our current plans and do not constitute a guarantee that they will be achieved.
No assurance can be given that we will be able to or will choose to pay any dividends or repurchase any shares in the foreseeable future. 16 Cybersecurity incidents or other damage to our technology infrastructure could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and operating results We rely extensively on information technology (“IT”) networks and systems, our global data centers and services provided over the internet to process, transmit and store electronic information, and to manage or support a variety of business processes or activities across our facilities worldwide.
No assurance can be given that we will be able to or will choose to pay any dividends or repurchase any shares in the foreseeable future. 15 Cybersecurity incidents or other damage to our technology infrastructure could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and operating results We rely extensively on information technology (“IT”) networks and systems, our global data centers and services provided over the internet to process, transmit and store electronic information, and to manage or support a variety of business processes or activities across our facilities worldwide.
These matters may include, without limitation, disputes with our suppliers and customers, intellectual property claims, shareholder litigation, government investigations, class action lawsuits, personal injury claims, product liability claims, environmental issues, antitrust, customs and VAT disputes and employment and tax issues.
These matters may include, without limitation, disputes with our suppliers and customers, intellectual property claims, shareholder litigation, government investigations, class action lawsuits, personal injury claims, product liability claims, environmental issues, antitrust, 13 customs and VAT disputes, and employment and tax issues.
Although the length and impact of the ongoing war is highly unpredictable, it exacerbated volatility in commodity prices, energy prices, inflationary pressures, credit markets, foreign exchange rates and supply chain disruptions.
Although the length and impact of the ongoing war/conflicts is highly unpredictable, it exacerbated volatility in commodity prices, energy prices, inflationary pressures, credit markets, foreign exchange rates and supply chain disruptions.
Similarly, any recall or warranty issue we face due to a product defect or failure is now more likely to involve a larger number of units in several geographic areas. Exchange rate risks As a result of our global presence, a significant portion of our revenues and expenses are denominated in currencies other than the U.S. dollar.
Similarly, any recall or warranty issue we face due to a product defect or failure is now more likely to involve a larger number of units in several geographic areas. Our business faces exchange rate risks As a result of our global presence, a significant portion of our revenues and expenses are denominated in currencies other than the U.S. dollar.
Any accident or injury to our employees could result in litigation, manufacturing delays and harm to our reputation, which could negatively affect our business, operating results, and financial condition. 21 Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market Government vehicle safety regulations are a key driver in our business.
Any accident or injury to our employees could result in litigation, manufacturing delays and harm to our reputation, which could negatively affect our business, operating results, and financial condition. 20 Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market Government vehicle safety regulations are a key driver in our business.
It may also result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations.
It may also result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and materially disrupt our operations.
As passive safety content per vehicle is also an indicator of our sales development, should these trends continue, the average value of passive safety systems per vehicle could decline. We operate in a highly competitive market The market for occupant restraint systems is highly competitive. We compete with a number of other companies that produce and sell similar products.
As passive safety content per vehicle is also an indicator of our sales development, should these trends continue, the average value of passive safety systems per vehicle could decline. We operate in a highly competitive market The market for passive safety systems is highly competitive. We compete with a number of other companies that produce and sell similar products.
Changes in currency exchange rates, earnings mix among taxing jurisdictions, or the ability of our subsidiaries to pay dividends could impact our reported effective tax rates, or cause fluctuations in the tax rate from quarter to quarter. Certain anti-trust judgements or settlements may not be tax deductible, which could have a material negative impact to our annual tax rate.
Changes in currency exchange rates, earnings mix among taxing jurisdictions, or the ability of our subsidiaries to pay dividends could impact our reported effective tax rates, or cause fluctuations in the tax rate from quarter to quarter. Certain anti-trust judgments or settlements may not be tax deductible, which could have a material negative impact to our annual tax rate.
Our sales are also affected by inventory levels of our customers. We cannot predict when our customers will decide to either increase or reduce inventory levels or whether new inventory levels will approximate historical inventory levels. This may exacerbate variability in our order intake and, as a result, our revenues and financial condition.
Our sales are also affected by inventory levels of our customers. We cannot predict when our customers will decide to either increase or reduce inventory levels or whether new inventory levels will approximate historical inventory levels. This may exacerbate variability in our production schedules and order intake and, as a result, our revenues and financial condition.
Our ability to compete successfully depends, in large part, on our success in continuing to innovate and manufacture products that have commercial success with consumers, differentiating our products from those of our competitors, continuing to deliver quality products in the time frames required by our customers, and maintaining best-cost production.
Our ability to compete successfully depends, in large part, on our success in continuing to innovate and manufacture products that have commercial success with our customer and end-consumers, differentiating our products from those of our competitors, continuing to deliver quality products in the time frames required by our customers, and maintaining best-cost production.
Our industry may be affected from time to time by limited supplies or price fluctuations of certain key components and materials. Strong worldwide demand for certain raw materials has had a significant impact on prices and short-term availability in recent years, including in 2022.
Our industry may be affected from time to time by limited supplies or price fluctuations of certain key components and materials. Strong worldwide demand for certain raw materials has had a significant impact on prices and short-term availability in recent years.
Our intellectual property plays an important role in maintaining our competitive position in a number of the markets we serve. At present, we hold more than 6,600 patents and patent applications covering a large number of innovations and product ideas, mainly in the fields of seatbelt and airbag technologies.
Our intellectual property plays an important role in maintaining our competitive position in a number of the markets we serve. At present, we hold more than 6,500 patents and patent applications covering a large number of innovations and product ideas, mainly in the fields of seatbelt and airbag technologies.
Due to the majority of the growth in global LVP over time being concentrated in growth markets, our operating results may be impacted if the passive safety content per vehicle remains low and if the penetration of more advanced automotive safety systems does not increase in these regions.
Due to the majority of the growth in global LVP over time being concentrated in growth markets, our operating results may be impacted if the passive safety content per vehicle remains low and if the penetration of automotive safety systems does not increase in these regions.
Additionally, various government regulators require companies that manufacture products containing certain minerals and their derivatives that are known as “conflict minerals”, originating from the Democratic Republic of Congo or adjoining countries to diligence and report the source of such materials.
Additionally, various government regulators require companies that manufacture products containing certain minerals and their derivatives that are known as “conflict minerals”, originating from the Democratic Republic of Congo or adjoining countries to perform due diligence and report the source of such materials.
Disruptions and attacks on our IT systems or the systems of third parties storing our data or employee malfeasance or human or technological error could result in the misappropriation, loss, destruction or corruption of our critical data and confidential or proprietary information, personal information of our employees, the leakage of our or our customers’ confidential information, improper use of our systems and networks, production downtimes and both internal and external supply shortages, which could have an adverse effect on our results of operations.
Disruptions and attacks on our IT systems or the systems of third parties storing our data or employee malfeasance or human or technological error could result in the misappropriation, loss, destruction or corruption of our critical data and confidential or proprietary information, personal information of our employees, the leakage of our or our customers’ confidential information, improper use of our systems and networks, production downtimes and both internal and external supply shortages, which could have a material adverse effect on our results of operations.
Restructuring, efficiency, and strategic initiatives and capacity alignments are complex and difficult and at any time additional restructuring steps may be necessary, possibly on short notice and at significant cost Our restructuring, efficiency, and strategic initiatives and capacity alignments include efforts to adjust our manufacturing capacity and cost structure to meet current and projected operational and market requirements, including plant closures, transfer of sourcing to best cost countries, consolidation of our supplier base, and standardization of products to reduce our overhead costs and consolidate our operational centers.
Restructuring, efficiency, and strategic initiatives and capacity alignments are complex and difficult and at any time additional restructuring steps may be necessary, possibly on short notice and at significant cost Our restructuring, efficiency, and strategic initiatives and capacity alignments include efforts to adjust our manufacturing capacity, direct and indirect labor workforce, and cost structure to meet current and projected operational and market requirements, including plant closures, transfer of sourcing to best cost countries, consolidation of our supplier base, and standardization of products to reduce our overhead costs and consolidate our operational centers.
Uncertainty regarding inventory levels may be exacerbated by consumer financing programs initiated or terminated by our customers or governments as such changes may affect the timing of their sales. Changes in automotive sales and LVP and/or customers’ inventory levels will have an impact on our mid- and long-term financial targets, earnings guidance, and estimates.
Uncertainty regarding inventory levels may be exacerbated by consumer financing programs initiated or terminated by our customers or governments as such changes may affect the timing of their sales. Changes in automotive sales and LVP and/or customers’ inventory levels will have an impact on our financial targets, earnings guidance, and estimates.
Such price increases have and could materially increase our operating costs and materially and adversely affect our profit margin, as direct material costs amounted to approximately 52% of our net sales in 2022, of which approximately half is the raw material cost portion. Inflation is currently high world-wide and may continue for some time.
Such price increases have and could materially increase our operating costs and materially and adversely affect our profit margin, as direct material costs amounted to approximately 55% of our net sales in 2023, of which approximately half is the raw material cost portion. Inflation is currently high world-wide and may continue for some time.
Our financial performance can be impacted depending on the mix of products we sell during a given period. Our earnings guidance, estimates and mid- and long-term financial targets assume a certain geographic sales mix as well as a product sales mix.
Our financial performance can be impacted depending on the mix of products we sell during a given period. Our earnings guidance, estimates, and financial targets assume a certain geographic sales mix as well as a product sales mix.
Additional information concerning our major customers is included in Note 20, Segment Information, of the Consolidated Financial Statements in this Annual Report.
Additional information concerning our major customers is included in Note 19, Segment Information, of the Consolidated Financial Statements in this Annual Report.
In addition to our in-house research and development efforts, we seek to acquire rights to new intellectual property through corporate acquisitions, asset acquisitions, licensing and joint venture arrangements. Our patents and licenses expire on various dates during the period from 2023 to 2042.
In addition to our in-house research and development efforts, we seek to acquire rights to new intellectual property through corporate acquisitions, asset acquisitions, licensing and joint venture arrangements. Our patents and licenses expire on various dates during the period from 2024 to 2043.
To the extent that any disruption or security breach results in a misappropriation, loss, destruction or corruption of our customer’s information, it could affect our relationships with our customers, create significant expense for us to investigate and remediate damage, lead to claims against the Company and ultimately harm our business.
To the extent that any disruption or security breach results in a misappropriation, loss, destruction or corruption of our customer’s information, it could affect our relationships with our customers, create significant expense for us to investigate and remediate damage, lead to claims against the Company and ultimately harm our business, strategy, result of operations, or financial condition.
The potential consequences of a material cybersecurity incident include reputational damage, theft of intellectual property, litigation with third parties, diminution in the value of our investment in research, development and engineering, diversion of the attention of management away from the operation of our business and increased cybersecurity protection and remediation costs, legal claims and liability, regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of sensitive and/or confidential information, increases in operating expenses, or lost revenues which in turn could adversely affect our competitiveness and results of operations.
The potential consequences of a material cybersecurity incident include reputational damage, damaged customer relationships, loss of revenue, lower order intake in the future, theft of intellectual property, litigation with third parties, diminution in the value of our investment in research, development and engineering, diversion of the attention of management away from the operation of our business and increased cybersecurity protection and remediation costs, legal claims and liability, regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of sensitive and/or confidential information, increases in operating expenses, or lost revenues which in turn could adversely affect our competitiveness and results of operations.
Disruptions in our supply chain may result for many reasons, including closures of one of our own or one of our suppliers’ facilities or critical manufacturing lines due to strikes or other labor disputes, mechanical failures, electrical outages, fires, explosions, critical pollution levels, critical health and safety and other working conditions issues (including epidemics and pandemics, such as the coronavirus (COVID-19)), natural disasters political upheaval, as well as logistical complications due to labor disruptions, weather or natural disasters, acts of terrorism, mechanical failures, and legislation or regulation regarding the transport of hazardous goods.
Disruptions in our supply chain may result for many reasons, including closures of one of our own or one of our suppliers’ facilities or critical manufacturing lines due to strikes or other labor disputes, mechanical failures, electrical outages, fires, explosions, critical pollution levels, critical health and safety and other working conditions issues (including epidemics and pandemics), natural disasters, war, political upheaval, as well as logistical complications due to labor disruptions, weather or natural disasters, acts of terrorism or violence (such as the conflict in the Red Sea), mechanical failures, and legislation or regulation regarding the transport of hazardous goods.
The net exposure can be significant and creates a transaction exposure risk for the Company. The Company does not hedge translation exposure. However, we do engage in foreign exchange rate hedging from time to time related to foreign currency transactions. For additional information, see Part II, Item 7A.
The net exposure can be significant and creates a transaction exposure risk for the Company. The Company does not hedge translation exposure. However, we do engage in foreign exchange rate hedging from time to time related to foreign currency transactions. For additional information, see Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk - Currency risks.
Other countries including the United Kingdom, Switzerland, Canada, Australia and South Korea are also actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. The timing or impact of these proposals and recommendations is unclear at this point.
Other countries including Canada and Australia are also actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. The timing or impact of these proposals and recommendations is unclear at this point.
Although we currently carry product liability and product recall insurance in excess of our self-insured amounts, no assurance can be made that such insurance will provide adequate coverage against potential claims, such insurance is available or will continue to be available in the appropriate markets, or that we will be able to obtain such insurance on acceptable terms in the future as the cost of such insurance has risen in recent years and the cost of our self-insurance program has risen as well.
Although we currently carry product liability and product recall insurance in excess of our self-insured amounts, no assurance can be made that such insurance will provide adequate coverage against potential claims, such insurance is available or will continue to be available in the appropriate markets, or that we will be able to obtain such insurance on acceptable terms in the future.
Such contracts range from one year to the life of the model, which is generally four to seven years. These contracts are often subject to renegotiation, sometimes as frequent as on an annual basis, which may affect product pricing, and generally may be terminated by our customers at any time.
Such contracts range from one year to the life of the model, which is generally four to seven years. These contracts are often subject to renegotiation, sometimes as frequently as annually, which may affect product pricing, and generally may be terminated by our customers at any time.
If we fail to be awarded business on electric vehicle models, it will harm our future business prospects. Our competitive environment continues to change, including increased competition from entrants outside the traditional automotive industry, creating uncertainty about the future competitive landscape.
If we fail to be awarded business on electric vehicle models, or these electric vehicles are not successful commercially, it will harm our future business prospects. Our competitive environment continues to change, including increased competition from entrants outside the traditional automotive industry, creating uncertainty about the future competitive landscape.
This is the result of customer consolidation in the last few decades. In 2022, our top five customers represented around 49% of our consolidated sales, and our largest customer contract accounted for around 2% of our consolidated sales.
This is the result of customer consolidation in the last few decades. In 2023, our top five customers represented around 48% of our consolidated sales, and our largest customer contract accounted for around 2.8% of our consolidated sales.
Customers may put us on a “new business hold,” which would limit our ability to quote or be awarded all or part of their future vehicle contracts if quality or other issues arise in the vehicles for which we were a supplier.
Customers may put us on a “new business hold,” which would limit our ability to quote or be awarded all or part of their future vehicle contracts if quality or other issues arise in the vehicles for which we were a supplier. This could have a significant negative impact on our order intake.
Quantitative and Qualitative Disclosures about Market Risk - Currency risks. 19 RISKS RELATED TO ACQUISITIONS We face risks in connection with acquisitions, joint ventures, partnerships, and other strategic transactions Our growth has been enhanced through strategic transactions, including acquisitions of businesses, products and technologies, partnerships, strategic alliances, and joint development agreements that we believe will complement our business.
RISKS RELATED TO ACQUISITIONS We face risks in connection with acquisitions, joint ventures, partnerships, and other strategic transactions Our growth has been enhanced through strategic transactions, including acquisitions of businesses, products and technologies, partnerships, strategic alliances, and joint development agreements that we believe will complement our business.
Given the competitive nature of our business, the amount of awards we are awarded relative to our peers may decrease over time. Additionally, OEMs rigorously evaluate our performance and products against those of our competitors on the basis of product quality, reliability and cost-effectiveness.
Given the competitive nature of our business, the amount of awards we are awarded relative to our peers may decrease over time and our past order intake is not an indicator of future levels or order intake. Additionally, OEMs rigorously evaluate our performance and products against those of our competitors on the basis of product quality, reliability and cost-effectiveness.
Although we have minimal operations in Russia, we face risks related to the war in Ukraine, which has had, and is expected to continue to have, an adverse impact on our business and financial performance The macro-economic uncertainty has been exacerbated by the war in Ukraine.
RISKS RELATED TO GEOPOLITICAL DEVELOPMENTS Although we have minimal operations in Russia no operations in the Middle East, we face risks related to the war in Ukraine and the Red Sea Conflict, which has had, and is expected to continue to have, an adverse impact on our business and financial performance The macro-economic uncertainty has been exacerbated by the war in Ukraine, the war in Israel/Gaza and the Red Sea Conflict.
Additionally, greenhouse gas emissions, particular emissions that come from individuals and entities up and down the value chain (otherwise known as Scope 3 emissions), are very difficult to estimate and our estimates may be materially different than actual emissions.
Additionally, greenhouse gas emissions, particular emissions that come from individuals and entities up and down the value chain (otherwise known as Scope 3 emissions), are very difficult to estimate and our estimates may be materially different than actual emissions. Additionally, accepted methodologies or regulatory requirements for estimating emissions, particularly Scope 3 emissions, continue to evolve.
Our business in Asia is sensitive to economic and market conditions that drive automotive sales volumes in China, South Korea, and India and may be impacted if there are reductions in vehicle demand in those markets.
Our business in Asia is sensitive to economic and market conditions that drive automotive sales volumes in China, South Korea, and India and may be impacted if there are reductions in vehicle demand in those markets. There are also trade and political tensions between China and other countries in the western world.
There are also trade and political tensions between China and other countries in the western world. If we are unable to maintain our position in the Asian markets, the pace of growth slows, or vehicle sales in these markets decrease, our business prospects, operating results and financial condition could be materially adversely affected.
If we are unable to maintain our position in the Asian markets, the pace of growth slows, or vehicle sales in these markets decrease, our business prospects, operating results and financial condition could be materially adversely affected.
To date we have seen no material impact on our business from these attacks or events. Although we seek to deploy comprehensive security measures to prevent, detect, address and mitigate these threats, there has been an increased level of activity, and an associated level of sophistication, in cyber-attacks against large multinational companies.
Although we seek to deploy comprehensive security measures to prevent, detect, address and mitigate these threats, there has been an increased level of activity, and an associated level of sophistication, in cyber-attacks against large multinational companies.
If we are not successful in expanding our product offerings or if it takes longer or costs are more than expected, it could negatively impact our financial results, competitive position, and future business prospects. 11 RISKS RELATED TO OUR BUSINESS We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against us or our customers We face risks related to product liability claims, warranty claims, and recalls in the event that any of our products actually or allegedly are defective, fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage.
RISKS RELATED TO OUR BUSINESS We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against us or our customers We face risks related to product liability claims, warranty claims, and recalls in the event that any of our products actually or allegedly are defective, fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage.
On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax at a rate of 15% on companies with revenues of at least $790 million, which would go into effect in 2024.
On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax at a rate of 15% on companies with revenues of at least $790 million, which went into effect in 2024. The Pillar 2 rules are also in effect in the United Kingdom, Switzerland, and South Korea, among others.
As a result, our exposure to the risks described above may be greater in the future, and our exposure to risks associated with developing countries, such as the risk of political upheaval and reliability of local infrastructure, may increase. 18 Our foreign operations may subject us to risks relating to laws governing international relations Due to our global operations, we are subject to many laws governing international relations (including, but not limited to, the Foreign Corrupt Practices Act, and other anti-bribery regulations in foreign jurisdictions where we do business), which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries and what information we can provide to authorities in governmental authorities.
Our foreign operations may subject us to risks relating to laws governing international relations Due to our global operations, we are subject to many laws governing international relations (including, but not limited to, the Foreign Corrupt Practices Act, and other anti-bribery regulations in foreign jurisdictions where we do business), which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries 17 and what information we can provide to authorities in governmental authorities.
Due to the record recall of airbag inflators of one of our competitors, NHTSA has become more active in requesting information from suppliers and vehicle manufactures regarding potential product defects and we expect that to continue or increase under the current U.S. presidential administration.
Due to the record recall of airbag inflators of one of our competitors, NHTSA has become more active in requesting information from suppliers and vehicle manufactures regarding potential product defects.
Some of our products and technologies may use “open source” software, which may restrict how we use or distribute our products or require that we release the source code of certain products subject to those licenses Some of our products and technologies may incorporate software licensed under so-called “open source” licenses.
We may experience problems integrating acquired technologies into our existing technologies and products, and such acquired intellectual property may be subject to known or contingent liabilities such as infringement claims. 19 Some of our products and technologies may use “open source” software, which may restrict how we use or distribute our products or require that we release the source code of certain products subject to those licenses Some of our products and technologies may incorporate software licensed under so-called “open source” licenses.
Such an endeavor requires the innovation and collaboration with a number of partners and is subject to certain inherent risks, including the timetable in which it is achieved.
For example, we have announced that we are collaborating with Polestar to develop a climate neutral car. Such an endeavor requires the innovation and collaboration with a number of partners and is subject to certain inherent risks, including the timetable in which it is achieved.
We take steps to ensure that our proprietary software is not combined with, and does not incorporate, open source software in ways that would require our proprietary software to be subject to an open source license.
We take steps to ensure that our proprietary software is not combined with, and does not incorporate, open source software in ways that would require our proprietary software to be subject to an open source license. However, few courts have interpreted open source licenses; therefore, the way these licenses may be interpreted and enforced is subject to some uncertainty.
However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information. 20 We may not be able to respond quickly enough to changes in technology and technological risks and to develop our intellectual property into commercially viable products Changes in legislative, regulatory, or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive to our customers.
We may not be able to respond quickly enough to changes in technology and technological risks and to develop our intellectual property into commercially viable products Changes in legislative, regulatory, or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive to our customers.
For example, in developed markets such as Western Europe and North America, the premium segment has an average passive safety content values of over $350 per vehicle, whereas in growth markets such as China and India the average passive safety content per vehicle is approximately $210 and $100, respectively.
Vehicles produced in different markets may have various passive safety content values. For example, in high-income markets, the premium vehicle segment has an average passive safety content values of over $350 per vehicle, whereas in growth markets such as China and India the average passive safety content per vehicle is approximately $209 and $104, respectively.
Information concerning our credit facilities and other financings are included in Item 7 in this Annual Report in the section headed “Treasury Activities” and in Note 13, Debt and Credit Agreements, to the Consolidated Financial Statements in this Annual Report. 15 Our indebtedness may harm our financial condition and results of operations As of December 31, 2022, we have outstanding debt of $1.8 billion.
Information concerning our credit facilities and other financings are included in Item 7 in this Annual Report in the section headed “Treasury Activities” and in Note 13, Debt and Credit Agreements, to the Consolidated Financial Statements in this Annual Report.
If we are unable to offset continued price reductions through improved operating efficiencies and reduced expenditures, these price reductions may have a material adverse effect on our business prospects, operating results, cash flows or financial condition. 12 We could experience disruption in our supply or delivery chain, which could cause one or more of our customers to halt or delay production We, as with other component manufactures in the automotive industry, ship our products to customer vehicle assembly facilities throughout the world on a “just-in-time” basis in order for our customers to maintain low inventory levels.
We could experience disruption in our supply or delivery chain, which could cause one or more of our customers to halt or delay production We, as with other component manufactures in the automotive industry, ship our products to customer vehicle assembly facilities throughout the world on a “just-in-time” basis for our customers to maintain low inventory levels.
The ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire. There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data.
The ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire.
The manner in which we estimate and disclose Scope 3 emissions may differ from other companies, and currently, we do not include downstream Scope 3 emissions in our targets and ambitions. If future governmental regulations require us to modify the basis of our Scope 3 emissions disclosure, our historically disclosed Scope 3 emissions may change materially.
The manner in which we estimate and disclose Scope 3 emissions may differ from other companies and may be different than future regulatory requirements, and currently, we do not include downstream Scope 3 emissions in our targets and ambitions.
As a result, severe weather or a natural disaster that results in a prolonged disruption to our operations, or the operations of our customers or suppliers, could have a material adverse effect on our operating results, cash flows or financial condition. 17 Our goals, targets and ambitions related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks We have developed, and will continue to develop and set, goals, targets, ambitions and other objectives related to sustainability matters, including our net-zero emission targets both for ourselves and our supply chain.
Our goals, targets and ambitions related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks We have developed, and will continue to develop and set, goals, targets, ambitions and other objectives related to sustainability matters, including our net-zero emission targets both for ourselves and our supply chain.
No assurances can be given that such proceedings and claims will not have a material adverse impact on our profitability and consolidated financial position or that our established reserves or our available insurance will mitigate such impact. 14 We may be subject to civil antitrust litigation that could negatively impact our business The Company may be subject to civil antitrust lawsuits in the future in countries that permit such civil claims, including lawsuits or other actions by our customers.
No assurances can be given that such proceedings and claims will not have a material adverse impact on our profitability and consolidated financial position or that our established reserves or our available insurance will mitigate such impact.
Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. We may not be able to protect our proprietary technology and intellectual property rights, which could result in the loss of our rights or increased costs.
We may not be able to protect our proprietary technology and intellectual property rights, which could result in the loss of our rights or increased costs Although we believe that our products and technology do not infringe the proprietary rights of others, third parties may assert infringement claims against us in the future.
Any significant reduction in automotive sales and/or LVP by our customers, whether due to general economic conditions or any other factors relevant to sales or LVP, could have a material adverse effect on our business, results of operations and financial condition. 10 Growth rates in safety content per vehicle, which can be impacted by changes in consumer trends and political decisions, could affect our results in the future The Company estimates that the average global content of passive safety systems per light vehicle increased in 2022 to around $255.
Any significant reduction in automotive sales and/or LVP by our customers, whether due to general economic conditions or any other factors relevant to sales or LVP, could have a material adverse effect on our business, results of operations, and financial condition.
Although we believe that our products and technology do not infringe the proprietary rights of others, third parties may assert infringement claims against us in the future. Additionally, we license from third parties proprietary technology covered by patents, and we cannot be certain that any such patents will not be challenged, invalidated, or circumvented.
Additionally, we license proprietary technology, from third parties, that is covered by patents, and we cannot be certain that any such patents will not be challenged, invalidated, or circumvented. Such licenses may also be non-exclusive, meaning our competition may also be able to access such technology.
Our ability to achieve any stated goal, target, ambition or objective, including with respect to emissions reduction, is subject to numerous factors and conditions, some of which are outside of our control. For example, we have announced that we are collaborating with Polestar to develop a climate neutral car.
If future governmental regulations require us to modify the basis of our Scope 3 emissions disclosure, our historically disclosed Scope 3 emissions may change materially. Our ability to achieve any stated goal, target, ambition or objective, including with respect to emissions reduction, is subject to numerous factors and conditions, some of which are outside of our control.
We may incur additional debt for a variety of reasons.
Our indebtedness may harm our financial condition and results of operations As of December 31, 2023, we have outstanding debt of $1.9 billion. We may incur additional debt for a variety of reasons.
Removed
RISKS RELATED TO ADVERSE GLOBAL HEALTH AND GEOPOLITICAL DEVELOPMENTS We face risks related to the novel coronavirus (COVID-19) pandemic that have, and are expected to continue to have, an adverse impact on our business and financial performance The COVID-19 pandemic has created significant volatility in the global economy and led to reduced economic activity and employment and has disrupted, and may continue to disrupt, the global automotive industry and customer sales, production volumes and purchases of light vehicles by end-consumers.
Added
Growth rates in safety content per vehicle, which can be impacted by changes in consumer trends, political decisions, crash test ratings and safety regulations could affect our results in the future The Company estimates that the average global content of passive safety systems per light vehicle increased in 2023 to around $261.
Removed
The spread of COVID-19 has also caused disruptions in the manufacturing, delivery, and overall supply chains of automobile manufacturers and suppliers. Global light vehicle production ("LVP") has been lower than expected and is expected to continue to be volatile.
Added
If we are not successful in expanding our product offerings or if it takes longer or costs are more than expected, it could negatively impact our financial results, competitive position, and future business prospects.
Removed
If the global economic effects caused by the pandemic continue or increase, overall customer demand may decrease, which could have a material and adverse effect on our business, results of operations, and financial condition.
Added
The cost of such insurance has risen in recent years and our self-insured amounts have risen as well.
Removed
The full extent of the effect of the pandemic on us, our customers, our supply chain or the global supply chain and our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, subsequent outbreaks or the extent of any recession resulting from the pandemic.
Added
If we are unable to offset continued price reductions through improved operating efficiencies and reduced expenditures, these price reductions may have a material adverse effect on our business prospects, operating results, cash flows or financial condition.
Removed
We may continue to experience the effects of the pandemic even after it has waned, and our business, results of operations and financial condition could continue to be affected.
Added
Furthermore, if costs for raw materials go down, the price for our products may decrease as well as the price is indexed to the cost of raw materials.
Removed
In addition to the risks specifically described above, the impacts of the pandemic are likely to implicate and exacerbate other risks disclosed in Item 1A of this Annual Report, any of which could have a material effect on our operating results, cash flows, or financial condition.
Added
We may be subject to civil antitrust litigation that could negatively impact our business The Company may be subject to civil antitrust lawsuits in the future in countries that permit such civil claims, including lawsuits or other actions by our customers.
Removed
Vehicles produced in different markets may have various passive safety content values.

… 18 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

10 edited+1 added−1 removed8 unchanged
Changchun Airbags and seatbelts Owned Autoliv (China) Steering Wheel Co., Ltd. Fengxian/Shanghai Steering wheels Owned Autoliv (Guangzhou) Vehicle Safety Systems Co., Ltd. Guangzhou Airbags and seatbelts Owned Autoliv (Nanjing) Vehicle Safety Systems Co., Ltd. Nanjing Seatbelts Owned Autoliv Shenda (Nanjing) Automotive Components Co., Ltd. Nanjing Seatbelt webbing Owned Autoliv (Shanghai) Vehicle Safety Systems Co., Ltd.
Collingwood Seatbelt webbing Owned China Autoliv (Baoding) Vehicle Safety Systems Co., Ltd Baoding Airbags Leased Autoliv (Changchun) Vehicle Safety Systems Co., Ltd. Changchun Airbags and seatbelts Owned Autoliv (China) Steering Wheel Co., Ltd. Fengxian/Shanghai Steering wheels Owned Autoliv (Guangzhou) Vehicle Safety Systems Co., Ltd. Guangzhou Airbags and seatbelts Owned Autoliv (Nanjing) Vehicle Safety Systems Co., Ltd.
Shanghai Airbags Owned Autoliv Shenda (Tai Cang) Automotive Safety Systems Co., Ltd. Shanghai Seatbelt webbing Owned Autoliv (Jiangsu) Automotive Safety Components Co., Ltd. Jintan Propellant, Airbag initiators and Airbag inflators Owned Autoliv (China) Automotive Safety Systems Co., Ltd. Nantong Airbag cushions Owned Mei-An Autoliv Co., Ltd.
Nanjing Seatbelts Owned Autoliv Shenda (Nanjing) Automotive Components Co., Ltd. Nanjing Seatbelt webbing Owned Autoliv (Shanghai) Vehicle Safety Systems Co., Ltd. Shanghai Airbags Owned Autoliv Shenda (Tai Cang) Automotive Safety Systems Co., Ltd. Shanghai Seatbelt webbing Owned Autoliv (Jiangsu) Automotive Safety Components Co., Ltd. Jintan Propellant, Airbag initiators and Airbag inflators Owned Autoliv (China) Automotive Safety Systems Co., Ltd.
AUTOLIV MANUFACTURING FACILITIES Country/Company Location of Facility Items produced at Facility Owned/Leased Brazil Autoliv do Brasil Ltda. Taubaté Seatbelts, airbags, steering wheels and seatbelt webbing Owned Canada Autoliv Canada, Inc. Tilbury Airbag cushions Owned VOA Canada, Inc. Collingwood Seatbelt webbing Owned China Autoliv (Baoding) Vehicle Safety Systems Co., Ltd Baoding Airbags Leased Autoliv (Changchun) Vehicle Safety Systems Co., Ltd.
AUTOLIV MANUFACTURING FACILITIES Country/Company Location of Facility Items produced at Facility Owned/Leased Brazil Autoliv do Brasil Ltda. Taubaté Seatbelts, airbags, steering wheels and seatbelt webbing Owned Nova Goiana Seatbelts and steering wheels Leased Canada Autoliv Canada, Inc. Tilbury Airbag cushions Owned VOA Canada, Inc.
Atsugi Steering wheels Leased Hiroshima Airbags and steering wheels Owned Taketoyo Airbag inflators Leased Tsukuba Airbags and seatbelts Owned Malaysia Autoliv-Hirotako Sdn Bhd Kuala Lumpur Seatbelts, airbags and steering wheels Owned 24 Mexico Autoliv Mexico East S.A. de C.V. Matamoros Steering wheels Owned Autoliv Mexico S.A. de C.V. Lerma Seatbelts Owned Autoliv Safety Technology de Mexico S.A. de C.V.
Autoliv Indonesia Jakarta Seatbelts, airbags and steering wheels Owned Japan Autoliv Japan Ltd. Chubu Airbags and steering wheels Owned Hiroshima Airbags Owned Taketoyo Airbag inflators Leased Tsukuba Airbags, seatbelts and steering wheels Owned 24 Malaysia Autoliv-Hirotako Sdn Bhd Kuala Lumpur Seatbelts, airbags and steering wheels Owned Mexico Autoliv Mexico East S.A. de C.V.
Gebze-Subesi Gebze-Kocaeli Airbags, Steering wheels and Seatbelt components Leased United Kingdom Airbags International Ltd Congleton Airbag cushions Owned USA Autoliv ASP, Inc.
Gebze-Kocaeli Seatbelts Owned Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret A.S. Gebze-Subesi Gebze-Kocaeli Airbags, Steering wheels and Seatbelt components Leased United Kingdom Airbags International Ltd Congleton Airbag cushions Owned USA Autoliv ASP, Inc.
Chonburi Seatbelts, Airbags and Steering wheels Owned Chonburi Seatbelt components Leased Tunisia STE ASW3 Nadour El Fahs Steering wheels Owned & Leased STE ASW3 Nadour Nadhour Steering wheels Owned Turkey Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret A.S. Gebze-Kocaeli Seatbelts Owned Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret A.S.
Valencia Airbags Owned Sweden Autoliv Sverige AB Vårgårda Airbag inflators Owned Thailand Autoliv Thailand Ltd. Chonburi Seatbelts, Airbags and Steering wheels Owned Chonburi Seatbelt components Leased Tunisia STE ASW3 Nadour El Fahs Steering wheels Owned & Leased STE ASW3 Nadour Nadhour Steering wheels Owned Turkey Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret A.S.
Taipei Seatbelts and airbags Leased Estonia AS Norma Tallinn Seatbelts and belt components Owned France Autoliv France SNC Gournay-en-Bray Airbags Owned Autoliv Isodelta SAS Chiré-en-Montreuil Steering wheels and covers Owned Livbag SAS Pont-de-Buis Airbag inflators Owned N.C.S. Pyrotechnie et Technologies SAS Survilliers Airbag initiators and seatbelt micro gas generators Owned Germany Autoliv B.V. & Co.
Nantong Airbag cushions Owned Mei-An Autoliv Co., Ltd. Taipei Seatbelts and airbags Leased Estonia AS Norma Tallinn Seatbelts and belt components Owned France Autoliv France SNC Gournay-en-Bray Airbags Owned Autoliv Isodelta SAS Chiré-en-Montreuil Steering wheels and covers Owned Livbag SAS Pont-de-Buis Airbag inflators Owned N.C.S.
Tijuana Seatbelts Leased Autoliv Steering Wheels Mexico S. de R.L. de C.V. Querétaro Airbag cushions Leased Autoliv Steering Wheels Mexico S. de R.L. de C.V. Querétaro Airbags Leased Autoliv Mexico S.A. de C.V. Aguascalientes Steering wheels Owned Philippines Autoliv Cebu Safety Manufacturing, Inc. Cebu Steering wheels Owned Poland Autoliv Poland Sp. zo.o.
Matamoros Steering wheels Owned Autoliv Mexico S.A. de C.V. Lerma Seatbelts Owned Autoliv Safety Technology de Mexico S.A. de C.V. Tijuana Seatbelts Leased Autoliv Steering Wheels Mexico S. de R.L. de C.V. Querétaro Airbag cushions Leased Autoliv Steering Wheels Mexico S. de R.L. de C.V. Querétaro Airbags Leased Autoliv Mexico S.A. de C.V.
KG Elmshorn Seatbelts Owned Hungary Autoliv Kft. Sopronkövesd Seatbelts Owned India Autoliv India Private Ltd. Bangalore Seatbelts, airbags Owned Mysore Seatbelt webbing and Airbag Cushions Owned Badli Airbags and steering wheels Leased Indonesia P.T. Autoliv Indonesia Jakarta Seatbelts and steering wheels Owned Japan Autoliv Japan Ltd.
Pyrotechnie et Technologies SAS Survilliers Airbag initiators and seatbelt micro gas generators Owned Hungary Autoliv Kft. Sopronkövesd Seatbelts Owned India Autoliv India Private Ltd. Bangalore Seatbelts, airbags Owned Mysore Seatbelt webbing and Airbag Cushions Owned Badli Airbags and steering wheels Leased Pune Airbag and Airbag cushions Leased Chennai Airbag inflators Owned Indonesia P.T.
Olawa Airbag cushions Owned Jelcz-Laskowice Airbags Owned Romania Autoliv Romania S.R.L. Brasov Seatbelts, seatbelt webbing, seatbelt components, airbag inflators, steering wheels Owned Lugoj Airbag cushions Owned Resita Airbag cushions Owned Sfantu Georghe Steering wheels Owned Onesti Steering wheels Leased Rovinari Seatbelts Owned Russia OOO Autoliv Togliatti Airbags, seatbelts and steering wheels Leased South Africa Autoliv Southern Africa (Pty) Ltd.
Brasov Seatbelts, seatbelt webbing, seatbelt components, airbag inflators, steering wheels Owned Lugoj Airbag cushions Owned Resita Airbag cushions Owned Sfantu Georghe Steering wheels Owned Onesti Steering wheels Leased Rovinari Seatbelts Owned South Africa Autoliv Southern Africa (Pty) Ltd. Krügersdorp Seatbelts and airbags Owned South Korea Autoliv Corporation Hwasung Airbags Owned Spain Autoliv BKI S.A.U.
Removed
Krügersdorp Seatbelts and airbags Owned South Korea Autoliv Corporation Hwasung Airbags Owned Spain Autoliv BKI S.A.U. Valencia Airbags Owned Sweden Autoliv Sverige AB Vårgårda Airbag inflators Owned Thailand Autoliv Thailand Ltd.
Added
Aguascalientes Steering wheels Owned Philippines Autoliv Cebu Safety Manufacturing, Inc. Cebu Steering wheels Owned Poland Autoliv Poland Sp. zo.o. Olawa Airbag cushions Owned Jelcz-Laskowice Airbags Owned Romania Autoliv Romania S.R.L.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+1 added−5 removed4 unchanged
(3) On November 16, 2021, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million common shares, whichever comes first, between January 2022 and the end of 2024. Item 6. [RESERVED] 30
(3) On November 16, 2021, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million common shares, whichever comes first, between January 2022 and the end of 2024. Item 6. [RESERVED] 29
Stock Performance Graph The graph and table below show the cumulative total shareholder return for our common stock since December 31, 2017. The graph compares our performance to that of the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones US Auto Parts Index.
Stock Performance Graph The graph and table below show the cumulative total shareholder return for our common stock since December 31, 2018. The graph compares our performance to that of the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones US Auto Parts Index.
Dividends Autoliv has a history of paying quarterly cash dividends. Declared dividends are announced in press releases and published on Autoliv’s corporate website. The Board of Directors revisits dividends on a quarterly basis. There can be no assurance that the Board of Directors will declare dividends in the future. See Autoliv’s corporate website for additional details regarding historical dividends.
Declared dividends are announced in press releases and published on Autoliv’s corporate website. The Board of Directors revisits dividends on a quarterly basis. There can be no assurance that the Board of Directors will declare dividends in the future. See Autoliv’s corporate website for additional details regarding historical dividends.
Stock options (if exercised) and granted Restricted Stock Units (RSUs) and Performance Shares (PSs) could increase the number of shares outstanding as of December 31, 2022 by 0.3 million shares in the aggregate. Combined, this would add 0.4% to the number of shares outstanding as of December 31, 2022.
Stock options (if exercised) and granted Restricted Stock Units (RSUs) and Performance Shares (PSs) could increase the number of shares outstanding as of December 31, 2023 by 0.3 million shares in the aggregate. Combined, this would add 0.4% to the number of shares outstanding as of December 31, 2023. On December 31, 2023, the Company had 4.9 million treasury shares.
In November 2021, the Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million shares (whichever comes first) between January 2022 and the end of 2024. On December 15, 2022, the Board of Directors approved the retirement of 10.0 million treasury shares.
Stock repurchase program On November 16, 2021, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million shares, whichever comes first, between January 2022 and the end of 2024.
During 2022, the weighted average number of shares outstanding (excluding dilution and treasury shares) decreased to 87.1 million from 87.5 million in 2021. Assuming dilution, the weighted average number of shares outstanding for the full year 2022 decreased to 87.2 million from 87.7 million in 2021.
Approximately 3.7 million shares were retired during 2023. During 2023, the weighted average number of shares outstanding (excluding dilution and treasury shares) decreased to 85.0 million from 87.1 million in 2022. Assuming dilution, the weighted average number of shares outstanding for the full year 2023 decreased to 85.2 million from 87.2 million in 2022.
For accounting purposes, shares repurchased under our stock repurchase programs are recorded based upon the settlement date of the applicable trade. (2) Average price paid per share includes costs associated with the repurchases.
For accounting purposes, shares repurchased under our stock repurchase programs are recorded based upon the settlement date of the applicable trade. (2) The average price paid per share in U.S. dollars exclude brokerage commissions and other costs of execution.
Stock repurchase program The following table provides information with respect to common stock repurchases by the Company during the three months period ended December 31, 2022.
The table in Exhibit 26 provides information with respect to total common stock repurchases made by the Company during the three months period ended December 31, 2023 on NYSE.
The comparison assumes $100 was invested at the closing price of our common stock on the NYSE on December 31, 2017.
The comparison assumes $100 was invested at the closing price of our common stock on the NYSE on December 31, 2018. Each of the returns shown assumes that all dividends paid were reinvested.
New York Stock Exchange (NYSE) Period Total Number of Shares Purchased (1) Average Price Paid per Share (USD) (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3) October 1-31, 2022 249,090 $ 80.31 1,039,981 15,960,019 November 1-30, 2022 400,591 $ 87.38 1,440,572 15,559,428 December 1-31, 2022 — $ — 1,440,572 15,559,428 (1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
New York Stock Exchange (NYSE) Period Total Number of Shares Purchased (1) Average Price Paid per Share (USD) (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Aggregate Maximum Number of Shares that Yet May Be Purchased Under the Plans or Programs (3) October 1-31, 2023 258,925 $ 94.07 3,858,816 13,141,184 November 1-30, 2023 859,965 $ 99.14 4,718,781 12,281,219 December 1-31, 2023 393,043 $ 102.76 5,111,824 11,888,176 (1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
On December 31, 2022, the Company had 5.0 million treasury shares. Shareholders Of the shares held by institutional investors, Autoliv estimates that around 47% were held by Sweden-based shareholders, around 31% by US-based shareholders and around 9% by UK-based shareholders. Most of the remaining Autoliv shares were held in Switzerland, Norway, Germany and France.
The Company intends to retire treasury shares following repurchases on a regular basis. Shareholders Of the shares held by institutional investors, Autoliv estimates that around 33% were held by Sweden-based shareholders, around 43% by US-based shareholders and around 10% by UK-based shareholders. Dividends Autoliv has a history of paying quarterly cash dividends.
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The Dow Jones US Auto Parts Index is our newly chosen and replaces the OMX Auto Index we used in prior reports. We believe the Dow Jones US Auto Parts Index is a better representation of our peer companies than the OMX Auto Index which is composed of a smaller number of public Swedish companies.
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(USD) 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 12-31-2023 Autoliv, Inc. $ 100.00 $ 124.38 $ 136.81 $ 156.65 $ 119.99 $ 177.63 SP500TR 100.00 131.49 155.68 200.37 164.08 207.21 Dow Jones US Auto Parts Index 100.00 125.27 145.34 174.14 126.42 124.70 28 Number of shares As of December 31, 2023, the number of shares outstanding, net of treasury shares, was 82.6 million, compared to 86.2 million as of December 31, 2022.
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Each of the returns shown assumes that all dividends paid were reinvested. 12-31-2017 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Autoliv, Inc. $ 100 $ 78.45 $ 97.57 $ 107.32 $ 122.89 $ 94.13 SP500TR 100 95.62 125.72 148.85 191.58 156.88 Dow Jones US Auto Parts Index 100 68.30 85.56 99.27 118.94 86.35 28 The following graph and table below show the cumulative total shareholder return for our Swedish Depository Receipts ("SDRs") since December 31, 2017.
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The graph compares our performance to that of the Nasdaq OMX All Share Index ("OMX Index") and the OMX Auto Component Index ("OMX Auto Index"). The comparison assumes 100 Swedish Kronor was invested at the closing price of our SDRs on the OMX on December 31, 2017. Each of the returns shown assumes that all dividends paid were reinvested.
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This graph and table will be discontinued in the future.
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(SEK) 12-31-2017 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Autoliv SDRs 100 85.92 111.65 108.86 136.43 119.53 OMX Index 100 95.84 128.98 147.75 206.01 159.87 OMX Auto Index 100 77.52 83.18 89.35 134.26 82.92 29 Number of shares As of December 31, 2022, the number of shares outstanding, net of treasury shares, was 86.2 million, compared to 87.5 million as of December 31, 2021.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 50 Item 8. Financial Statements and Supplementary Data 52 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 90 Item 9A. Controls and Procedures 90
Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 49 Item 8. Financial Statements and Supplementary Data 51 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 88 Item 9A. Controls and Procedures 88 Item 9B.
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Other Information 89 PART III Item 10. Directors, Executive Officers and Corporate Governance 90 Item 11. Executive Compensation 90 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 90 Item 13. Certain Relationships and Related Transactions, and Director Independence 90 Item 14. Principal Accountant Fees and Services 90 PART IV Item 15.
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Exhibit and Financial Statement Schedules 91 1 NOTE ABOUT FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc.
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(“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them.
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However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements.
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In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words.
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Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation: general economic conditions, including inflation; changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier; global supply chain disruptions including port, transportation and distribution delays or interruptions; supply chain disruptions and component shortages specific to the automotive industry or the Company; disruptions and impacts relating to the ongoing war between Russia and Ukraine and the ongoing conflict in the Red Sea; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignments: restructuring, cost reduction, and efficiency initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel, and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing and other negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation, civil judgments or financial penalties and customer reactions thereto; higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims, and the availability of insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; our ability to meet our sustainability targets, goals and commitments; political conditions; dependence on and relationships with customers and suppliers; the conditions necessary to hit our financial targets; and other risks and uncertainties identified in Item 1A -“Risk Factors” of this Annual Report on Form 10-K, Item 1A, and Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report.
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For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law. 2 PAR T I

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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To maintain the Company's competitiveness and position as a market leader, it is important to focus on all of these aspects of supplier evaluation and selection. Although the market for occupant restraint systems has undergone a significant consolidation during the past ten years, the passive safety market remains very competitive.
To maintain the Company's competitiveness and position as a market leader, it is important to focus on all these aspects of supplier evaluation and selection. Although the market for occupant restraint systems has undergone a significant consolidation during the past ten years, the passive safety market remains very competitive.
See discussions of income taxes under Significant Accounting Policies in this section, Note 2, Summary of Significant Accounting Policies, and Note 5, Income Taxes, to the Consolidated Financial Statements included herein. 40 PENSION ARRANGEMENTS The Company has defined benefit pension plans covering nearly half of the U.S. employees.
See discussions of income taxes under Significant Accounting Policies in this section, Note 2, Summary of Significant Accounting Policies, and Note 5, Income Taxes, to the Consolidated Financial Statements included herein. PENSION ARRANGEMENTS The Company has defined benefit pension plans covering nearly half of the U.S. employees.
Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the year ended December 31, 2021, which was filed with the United States Securities and Exchange Commission on February 22, 2022. Autoliv, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the year ended December 31, 2022, which was filed with the United States Securities and Exchange Commission on February 22, 2022. Autoliv, Inc.
Customer % of Autoliv sales % of Global LVP 1) Renault/Nissan/Mitsubishi 11 % 8 % Stellantis 11 % 7 % VW 10 % 11 % Toyota 9 % 13 % Honda 8 % 5 % Ford 8 % 4 % Hyundai 7 % 9 % General Motors 7 % 6 % Major EV maker 5 % 2 % BMW 4 % 3 % 1) Source: S&P Global Although business with every major customer is split into at least several contracts (usually one contract per vehicle platform) and although the customer base has become more balanced and diversified as a result of the Company's significant expansion in China and other rapidly-growing markets, the loss of all business from a major customer (whether by a cancellation of existing contracts or not awarding Autoliv new business), the consolidation of one or more major customers or a bankruptcy of a major customer could have a material adverse effect on the Company.
Customer % of Autoliv sales % of Global LVP 1) Renault/Nissan/Mitsubishi 10 % 8 % Stellantis 10 % 7 % VW 9 % 10 % Honda 9 % 5 % Toyota 9 % 13 % Hyundai 7 % 8 % Ford 7 % 4 % General Motors 6 % 5 % Major EV maker 5 % 2 % Mercedes 4 % 3 % 1) Source: S&P Global Although business with every major customer is split into at least several contracts (usually one contract per vehicle platform) and although the customer base has become more balanced and diversified as a result of the Company's significant expansion in China and other rapidly-growing markets, the loss of all business from a major customer (whether by a cancellation of existing contracts or not awarding Autoliv new business), the consolidation of one or more major customers or a bankruptcy of a major customer could have a material adverse effect on the Company.
Adjusted operating margin and adjusted EPS, as shown in the table below, should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. GAAP, including operating margin and EPS. Items affecting comparability 2022 2021 (DOLLARS IN MILLIONS, EXCEPT EPS) Reported Adjust- ments 1) Non- U.S.
Adjusted operating margin and adjusted EPS, as shown in the table below, should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. GAAP, including operating margin and EPS. Items affecting comparability 2023 2022 (DOLLARS IN MILLIONS, EXCEPT EPS) Reported Adjust- ments 1) Non- U.S.
This is supporting higher installation rates of airbags and more advanced seatbelts, impacting CPV positively. Commercial customer recoveries compensating for increased raw material costs also added to CPV in 2022, partly offset by negative effects from continued productivity related pricing pressure from vehicle manufacturers.
This is supporting higher installation rates of airbags and more advanced seatbelts, impacting CPV positively. Commercial customer recoveries compensating for increased raw material costs also added to CPV in 2023, partly offset by negative effects from continued productivity related pricing pressure from vehicle manufacturers.
Due to inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. DEFINED BENEFIT PENSION PLANS The Company has defined benefit pension plans in thirteen countries. The most significant plans exist in the U.S. These U.S. plans represent approximately 54% of the Company’s total pension benefit obligation.
Due to inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. DEFINED BENEFIT PENSION PLANS The Company has defined benefit pension plans in thirteen countries. The most significant plans exist in the U.S. These U.S. plans represent approximately 51% of the Company’s total pension benefit obligation.
In determining whether a loss should be accrued management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact the Company's consolidated financial statements. 49
In determining whether a loss should be accrued management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact the Company's consolidated financial statements. 48
Factoring agreements did not have any material impact on receivables outstanding for 2022 or 2021. Inventory in relation to sales (see Glossary and Definitions for definition) was 10% at December 31, 2022, compared to 9% at December 31, 2021.
Factoring agreements did not have any material impact on receivables outstanding for 2023 or 2022. Inventory outstanding in relation to sales (see Glossary and Definitions for definition) was 9% at December 31, 2023, compared to 10% at December 31, 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Important Trends The discussions and analysis in this section are focused on the Company’s results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Important Trends The discussions and analysis in this section are focused on the Company’s results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
For information about specific financial risks, see Item 7A – Quantitative and Qualitative Disclosures about Market Risk. 46 Significant Accounting Policies and Critical Accounting Estimates NEW ACCOUNTING STANDARDS The Company has considered all applicable recently issued accounting standards.
For information about specific financial risks, see Item 7A – Quantitative and Qualitative Disclosures about Market Risk. 45 Significant Accounting Policies and Critical Accounting Estimates NEW ACCOUNTING STANDARDS The Company has considered all applicable recently issued accounting standards.
In addition, the Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent based on our prior claims experience.
In addition, the Company maintains a program of insurance, which includes commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent based on our prior claims experience.
As of October 2022 the Company concluded that there were no impairments of goodwill. For further information, see Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements. 47 RECALL PROVISIONS AND WARRANTY OBLIGATIONS The Company records liabilities for product recalls when probable claims are identified and when it is possible to reasonably estimate costs.
As of October 2023, the Company concluded that there were no impairments of goodwill. For further information, see Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements. 46 RECALL PROVISIONS AND WARRANTY OBLIGATIONS The Company records liabilities for product recalls when probable claims are identified and when it is possible to reasonably estimate costs.
Discussions of the Company's results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found in Part II, Item 7.
Discussions of the Company's results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in Part II, Item 7.
GAAP Performance Measures) of around 1.0x and to be within the range of 0.5x to 1.5x. At December 31, 2022, the current leverage ratio is 1.4x. The Company monitors its capital structure and the financial markets closely and intends to maintain a high level of financial flexibility while being shareholder friendly.
GAAP Performance Measures) of around 1.0x and to be within the range of 0.5x to 1.5x. At December 31, 2023, the current leverage ratio is 1.2x. The Company monitors its capital structure and the financial markets closely and intends to maintain a high level of financial flexibility while being shareholder friendly.
Quality has been and always will be the Company's number one priority, and the Company continues to sharpen its focus in this area. The Company now holds a global market share in passive safety of around 43%, while the Company has been involved in less than 2% of recalls in the industry in the past ten years.
Quality has been and always will be the Company's number one priority, and the Company continues to sharpen its focus in this area. The Company now holds a global market share in passive safety of around 45%, while the Company has been involved in around 2% of recalls in the industry in the past ten years.
During this period the products are engineered into the vehicle to provide the expected protection for occupants in case of a crash and to meet legal and regulatory requirements, as well as other requirements from the vehicle manufacturer. This investment in new products is the main reason for the high level of RD&E expenses, net.
During this period the products are engineered into the vehicle to provide the expected protection for occupants in case of a crash and to meet legal and regulatory requirements, as well as other requirements from the vehicle manufacturer. This investment in new products is the main factor of RD&E expenses, net.
During 2022 and 2021 the Company paid dividends of $224 million and $165 million, respectively. It is the Company’s policy to maintain a financial leverage commensurate with a “strong investment grade credit rating”. The long-term target is to have a leverage ratio (see section Non-U.S.
During 2023 and 2022 the Company paid dividends of $225 million and $224 million, respectively. It is the Company’s policy to maintain a financial leverage commensurate with a “strong investment grade credit rating”. The long-term target is to have a leverage ratio (see section Non-U.S.
These shares were acquired between 2008 and 2014 under the prior stock repurchase program. After the retirement, the Company continues to hold around 5 million shares of common stock in treasury.
These shares were acquired between 2008 and 2014 under the prior stock repurchase program. After the retirement, the Company continues to hold around 4.9 million shares of common stock in treasury.
See also Note 20, Segment Information, to the Consolidated Financial Statements included herein. 45 CUSTOMER PAYMENT RISK Another risk related to the Company's customers is the risk that one or more of its customers will be unable to pay their invoices that become due.
See also Note 19, Segment Information, to the Consolidated Financial Statements included herein. 44 CUSTOMER PAYMENT RISK Another risk related to the Company's customers is the risk that one or more of its customers will be unable to pay their invoices that become due.
As part of the adjustment of the capital structure, the Company historically has repurchased shares of its common stock. During 2022, the Company repurchased and retired 1.44 million shares, under the stock repurchase program authorized by the Board of Directors in November 2021.
As part of the adjustment of the capital structure, the Company historically has repurchased shares of its common stock. During 2023 and 2022, the Company repurchased and retired 3.67 million and 1.44 million shares, respectively, under the stock repurchase program authorized by the Board of Directors in November 2021.
The facility, syndicated among 11 banks, matures in May 2027 and has two extension options, each for an additional year. The Company pays a commitment fee on the undrawn amount of 0.15%, representing 35% of the applicable margin, which is 0.425% (given the Company’s rating of “BBB” from S&P Global Ratings). Borrowings under the facility are unsecured.
The facility, syndicated among 11 banks, matures in May 2028 and has an extension option for an additional year. The Company pays a commitment fee on the undrawn amount of 0.15%, representing 35% of the applicable margin, which is 0.425% (given the Company’s rating of “BBB” from S&P Global Ratings). Borrowings under the facility are unsecured.
These initiatives are key drivers to the Company's medium-term targets and building the foundation to continue to create shareholder value. 33 IMPROVED EFFICIENCIES THROUGH OPERATIONAL EXCELLENCE Pricing pressure is an inherent part of the automotive supplier business.
These initiatives are key drivers to the Company's targets and building the foundation to continue to create shareholder value. 32 IMPROVED EFFICIENCIES THROUGH OPERATIONAL EXCELLENCE Pricing pressure is an inherent part of the automotive supplier business.
In the ordinary course of a global business, there are many transactions for which the ultimate tax outcome is uncertain. Many of these uncertainties arise as a consequence of intercompany transactions.
In the ordinary course of a global business, there are many transactions for which the ultimate tax outcome is uncertain. Many of these uncertainties arise because of intercompany transactions.
For the U.S. plans, the assumptions used for calculating the 2022 pension expense were a discount rate of 2.77% and an expected long-term rate of return on plan assets of 5.05%. The assumptions used in calculating the U.S. benefit obligations disclosed as of December 31, 2022 were a discount rate of 5.41%.
For the U.S. plans, the assumptions used for calculating the 2023 pension expense were a discount rate of 5.41% and an expected long-term rate of return on plan assets of 5.05%. The assumptions used in calculating the U.S. benefit obligations disclosed, as of December 31, 2023 were a discount rate of 5.13%.
DEPENDENCE ON CUSTOMERS As a result of this highly consolidated market, the Company is dependent on a relatively small number of customers with strong purchasing power. In 2022, the five largest vehicle manufacturers accounted for around 48% of global LVP and the ten largest manufacturers accounted for around 70% of global LVP.
DEPENDENCE ON CUSTOMERS As a result of this highly consolidated market, the Company is dependent on a relatively small number of customers with strong purchasing power. In 2023, the five largest vehicle manufacturers accounted for around 46% of global LVP and the ten largest manufacturers accounted for around 66% of global LVP.
Payables outstanding in relation to sales (see Glossary and Definitions for definition) were 18% at December 31, 2022 compared to 14% at December 31, 2021. NET CASH USED IN INVESTING ACTIVITIES In 2022 and 2021, net cash used in investing activities amounted to $485 million and $454 million, respectively.
Payables outstanding in relation to sales (see Glossary and Definitions for definition) were 18% at December 31, 2023 compared to 18% at December 31, 2022. NET CASH USED IN INVESTING ACTIVITIES In 2023 and 2022, net cash used in investing activities amounted to $569 million and $485 million, respectively.
India requires frontal airbags for the driver from July 2019, and passenger airbags from 2021 for all new passenger vehicles (M1), moreover has announced that side airbags shall become mandatory in 2023. In addition, India has announced that its Bharat NCAP shall start in 2023.
India requires frontal airbags for the driver from July 2019, and passenger airbags from 2021 for all new passenger vehicles (M1), moreover has announced that side airbags shall become mandatory in 2023.
In 2018, Joyson substantially acquired all of Takata's global assets and operations and combined it with KSS, forming the new company JSS. 34 CAPITAL STRUCTURE The Company’s net debt stood at $1,184 million on December 31, 2022. This was an increase of $132 million compared to December 31, 2021.
In 2018, KSS substantially acquired all of Takata's global assets and operations and combined it with KSS, forming the new company Joyson Safety Systems (JSS). 33 CAPITAL STRUCTURE The Company’s net debt stood at $1,367 million on December 31, 2023. This was an increase of $184 million compared to December 31, 2022.
The most important regulations are the seatbelt installation laws that exist in all vehicle-producing countries. Many countries also have strict enforcement laws on the wearing of seatbelts. Another significant vehicle safety regulation is the U.S. federal law that, since 1997, requires frontal airbags for both the driver and the front-seat passenger in all new vehicles sold in the U.S.
Many countries also have strict enforcement laws on the wearing of seatbelts. Another significant vehicle safety regulation is the U.S. federal law that, since 1997, requires frontal airbags for both the driver and the front-seat passenger in all new vehicles sold in the U.S.
The risk of fluctuating sales has also been mitigated by Autoliv’s rapid expansion in Asia and other growth markets, which has reduced the Company’s former high dependence on sales in Europe to a diversified mix with Europe, the Americas and Asia each accounting for roughly 27%, 33% and 40%, respectively, of the Company's 2022 total sales.
The risk of fluctuating sales has also been mitigated by Autoliv’s rapid expansion in Asia and other growth markets, which has reduced the Company’s former high dependence on sales in Europe to a diversified mix with Europe, the Americas and Asia each accounting for approximately 27%, 34% and 39%, respectively, of the Company's 2023 total sales.
GAAP adjustments 1) 22 0.25 (3 ) (0.04 ) Total adjustments to Net Income $ (39 ) $ (0.45 ) $ 5 $ 0.06 Weighted average number of shares outstanding - diluted 2) 87.2 87.7 Adjustment Return on capital employed $ (61 ) $ 8 Adjustment Return on capital employed, % (1.5 ) 0.2 Adjustment Return on total equity $ (39 ) $ 5 Adjustment Return on total equity, % (1.3 ) 0.2 1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) Annualized average number of outstanding shares. 39 Liquidity, Capital Resources, and Financial Position Years ended December 31 (DOLLARS IN MILLIONS) 2022 2021 Net cash provided by operating activities $ 713 $ 754 Net cash used in investing activities (485 ) (454 ) Net cash used in financing activities (531 ) (469 ) Effect of exchange rate changes on cash and cash equivalents (73 ) (39 ) Decrease in cash and cash equivalents (375 ) (209 ) Cash and cash equivalents at beginning of year 969 1,178 Cash and cash equivalents at end of year $ 594 $ 969 NET CASH PROVIDED BY OPERATING ACTIVITIES Cash flow from operations, together with available financial resources and credit facilities, are expected to be sufficient to fund the Company’s anticipated working capital requirements, capital expenditures and future dividend payments.
GAAP adjustments 1) (20 ) (0.24 ) 22 0.25 Total adjustments to Net Income $ 210 $ 2.46 $ (39 ) $ (0.45 ) Weighted average number of shares outstanding - diluted 2) 85.2 87.2 Adjustment Return on capital employed $ 230 $ (61 ) Adjustment Return on capital employed, % 5.3 % (1.5 )% Adjustment Return on total equity $ 210 $ (39 ) Adjustment Return on total equity, % 7.2 % (1.3 )% 1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) Annualized average number of outstanding shares. 38 Liquidity, Capital Resources, and Financial Position Years ended December 31 (DOLLARS IN MILLIONS) 2023 2022 Net cash provided by operating activities $ 982 $ 713 Net cash used in investing activities (569 ) (485 ) Net cash used in financing activities (490 ) (531 ) Effect of exchange rate changes on cash and cash equivalents (20 ) (73 ) Decrease in cash and cash equivalents (96 ) (375 ) Cash and cash equivalents at beginning of year 594 969 Cash and cash equivalents at end of year $ 498 $ 594 NET CASH PROVIDED BY OPERATING ACTIVITIES Cash flow from operations, together with available financial resources and credit facilities, are expected to be sufficient to fund the Company’s anticipated working capital requirements, capital expenditures and future dividend payments.
GAAP measure to “Trade working capital” (dollars in millions) DECEMBER 31 2022 2021 Receivables, net $ 1,907 $ 1,699 Inventories, net 969 777 Accounts payable (1,693 ) (1,144 ) Trade working capital $ 1,183 $ 1,332 Net debt As part of efficiently managing the Company’s overall cost of funds, the Company routinely enter into “debt-related derivatives” (DRD) as part of its debt management.
GAAP measure to “Trade working capital” (dollars in millions) DECEMBER 31 2023 2022 Receivables, net $ 2,198 $ 1,907 Inventories, net 1,012 969 Accounts payable (1,978 ) (1,693 ) Trade working capital $ 1,232 $ 1,183 Net debt As part of efficiently managing the Company’s overall cost of funds, the Company routinely enter into “debt-related derivatives” (DRD) as part of its debt management.
Assumption (in millions) Change 2022 net periodic benefit cost increase (decrease) 2022 projected benefit obligation increase (decrease) Discount rate 1pp increase $ 2 $ (18 ) Discount rate 1pp decrease (1 ) 21 Return on plan assets 1pp decrease 3 n/a 48 INCOME TAXES Significant judgment is required in determining the worldwide provision for income taxes.
Assumption (in millions) Change 2023 net periodic benefit cost increase (decrease) 2023 projected benefit obligation increase (decrease) Discount rate 1pp increase $ 1 $ (17 ) Discount rate 1pp decrease (1 ) 20 Return on plan assets 1pp decrease 2 n/a 47 INCOME TAXES Significant judgment is required in determining the worldwide provision for income taxes.
It is the Company’s strategy to reduce the risks associated with fluctuating LVP by using temporary personnel in direct production, when appropriate. During 2022 and 2021, the level of temporary personnel in relation to total personnel in direct production was 13% and 9%, respectively.
It is the Company’s strategy to reduce the risks associated with fluctuating LVP by using temporary personnel in direct production, when appropriate. During 2023 and 2022, the level of temporary personnel in relation to total personnel in direct production remained flat at 41 13%.
In the year ended December 31, 2022, a number of factors influenced the Company’s results of operations, including: • Industry supply chain disruptions and the global semiconductor shortage limited the light vehicle production (LVP) recovery and caused high customer call-off volatility • Raw material price increases and corresponding inflation compensation negotiations with customers • COVID-19 pandemic • Continued growth above LVP driven by price, higher content per vehicle, and execution of strong order book • Order intake adding to an already strong customer base • Strategic and structural initiatives • Continued focus on operational excellence and quality 2022 2021 YEARS ENDED DEC. 31 (DOLLARS IN MILLIONS, EXCEPT EPS) Reported 1) change Reported 1) change Global light vehicle production (in thousands) 79,289 6.9 % 74,136 3.6 % Consolidated net sales $ 8,842 7.4 % $ 8,230 11 % Operating income 659 (2.3 ) % 675 77 % Operating margin, % 7.5 (0.7 ) pp 8.2 3.1 pp Net income attributable to controlling interest 423 (2.8 ) % 435 133 % Earnings per share 2) 4.85 (2.2 ) % 4.96 132 % Net cash provided by operating activities 713 (5.4 ) % 754 (11 ) % Return on capital employed, % 17.5 (0.7 ) pp 18.3 7.9 pp 1) Reported figures impacted by costs for capacity alignments and antitrust related matters.
In the year ended December 31, 2023, a number of factors influenced the Company’s results of operations, including: • Industry supply chain disruptions caused high customer call-off volatility • Cost inflation, especially for labor, logistics and utilities, and corresponding inflation compensation negotiations with customers • Continued growth above LVP driven by price, higher content per vehicle, and execution of strong order book • Order intake adding to an already strong customer base • Strategic and structural initiatives • Continued focus on operational excellence and quality 2023 2022 YEARS ENDED DEC. 31 (DOLLARS IN MILLIONS, EXCEPT EPS) Reported 1) change Reported 1) change Global light vehicle production (in thousands) 87,323 9.4 % 79,818 7.7 % Consolidated net sales $ 10,475 18 % $ 8,842 7.4 % Operating income 690 4.7 % 659 (2.3 ) % Operating margin, % 6.6 (0.9 ) pp 7.5 (0.7 ) pp Net income attributable to controlling interest 488 15 % 423 (2.7 ) % Earnings per share 2) 5.72 18 % 4.85 (2.2 ) % Net cash provided by operating activities 982 38 % 713 (5.4 ) % Return on capital employed, % 17.7 0.2 pp 17.5 (0.8 ) pp 1) Reported figures impacted by costs for capacity alignments and antitrust related matters.
The Company expects to contribute $9 million to these plans in 2023 and is currently projecting a yearly funding at approximately the same level in the subsequent years. For further information about retirement plans see Note 18, Retirement Plans, to the Consolidated Financial Statements included herein. SHAREHOLDER RETURNS In 2022, the Company paid cash dividends of $224 million.
The Company expects to contribute $16 million to these plans in 2024 and is currently projecting a yearly funding at approximately the same level in the subsequent years. For further information about retirement plans see Note 18, Retirement Plans, to the Consolidated Financial Statements included herein.
The Company's productivity improvement target is to achieve at least 5% savings per year. To meet this target, Autoliv has developed a set of strategies to reduce costs in manufacturing: • Autoliv production system (APS) is based on lean manufacturing methodology which aims to continuously increase output with less resources.
To meet this target, Autoliv has developed a set of strategies to reduce costs in manufacturing: • Autoliv production system (APS) is based on lean manufacturing methodology which aims to continuously increase output with less resources.
Vehicles with automated driving systems (ADS) are expected to provide additional opportunities through integration of protective safety systems with ADAS technologies, as well as new vehicle interior layouts and seating configurations. This development is likely to become subject to legal requirements.
In addition, India has announced that its Bharat NCAP shall start in 2023. 43 Vehicles with automated driving systems (ADS) are expected to provide additional opportunities through integration of protective safety systems with ADAS technologies, as well as new vehicle interior layouts and seating configurations. This development is likely to become subject to legal requirements.
Depreciation and amortization totaled $363 million in 2022 compared to $394 million in 2021. During the years 2022 and 2021, a majority of the Company's investments were for production capacity to support new product launches and automation projects for improved efficiency. Major investments were mainly made in China, Europe, and North America.
Depreciation and amortization totaled $378 million in 2023 compared to $363 million in 2022. During the years 2023 and 2022, a majority of the Company's investments were for production capacity to support new product launches and automation projects for improved efficiency.
Legal Proceedings and Note 17 Contingent Liabilities to the Consolidated Financial Statements in this Annual Report. 35 results of operations Consolidated net sales in 2022 increased by 7.4% compared to 2021. Excluding negative currency translation effects of 6.1%, the organic sales increased (Non-U.S. GAAP measure, see reconciliation table below) by 14.0%.
Legal Proceedings and Note 17 Contingent Liabilities to the Consolidated Financial Statements in this Annual Report. 34 results of operations Consolidated net sales in 2023 increased by 18.5% compared to 2022. Excluding positive currency translation effects of 0.3%, the organic sales increased (Non-U.S. GAAP measure, see reconciliation table below) by 18.2%.
PATENTS AND PROPRIETARY TECHNOLOGY The Company’s strategy is to protect its innovations with patents, and to vigorously protect and defend its patents, trademarks, and know-how against infringement and unauthorized use. At the end of 2022, the Company held more than 6,600 patents and patents applications. These patents expire on various dates during the period from 2023 to 2042.
PATENTS AND PROPRIETARY TECHNOLOGY The Company’s strategy is to protect its innovations with patents, and to vigorously protect and defend its patents, trademarks, and know-how against infringement and unauthorized use. At the end of 2023, the Company held more than 6,500 patents and patents applications.
The Company foresees opportunities for further productivity on gains from LVP recovery and increased call-off stability when supply of semiconductors eventually improves, but also from increasing use of automation in its assembly for lean manufacturing processes. Additionally, automated cells typically perform the manufacturing process with reduced variability. This results in greater control and consistency of product quality.
The Company foresees opportunities for further productivity on organic sales growth and increased call-off stability when global supply chains have stabilized at pre-pandemic levels, but also from increasing use of automation in its assembly for lean manufacturing processes. Additionally, automated cells typically perform the manufacturing process with reduced variability. This results in greater control and consistency of product quality.
In addition to the structural improvements outlined above, the Company continues to implement the strategic initiatives to improve the efficiency of its value chain from end to end, not least through the Autoliv Production System and increased digitalization and automation.
For more information, see Note 11, Restructuring, to the Consolidated Financial Statements included herein. In addition to the structural improvements outlined above, the Company continues to implement the strategic initiatives to improve the efficiency of its value chain from end to end, not least through the Autoliv Production System and increased digitalization and automation.
The amortization of the loss is expected to be $1 million in 2023. Pension expense associated with the defined benefit plans was $11 million in 2022 and $24 million in 2021, and is expected to be $19 million in 2023.
The amortization of the loss is expected to be $2 million in 2024. Total pension expense associated with the defined benefit plans was $21 million in 2023 and $11 million in 2022, and is expected to be $18 million in 2024.
At December 31, 2022, trade working capital (see section Non-U.S. GAAP Performance Measures above) amounted to $1,183 million corresponding to 13% of net sales compared to $1,332 million and 16% at December 31, 2021. Receivables outstanding in relation to sales (see Glossary and Definitions for definition) were 20% at December 31, 2022, compared to 20% at December 31, 2021.
GAAP Performance Measures above) amounted to $1,232 million corresponding to 11% of net sales compared to $1,183 million and 13% at December 31, 2022. Receivables outstanding in relation to sales (see Glossary and Definitions for definition) were 20% at December 31, 2023, compared to 20% at December 31, 2022.
GAAP measure to “Net debt” (dollars in millions) DECEMBER 31 2022 2021 Short-term debt $ 711 $ 346 Long-term debt 1,054 1,662 Total debt 1,766 2,008 Cash and cash equivalents (594 ) (969 ) Debt issuance cost/Debt-related derivatives, net 12 13 Net debt $ 1,184 $ 1,052 38 Adjusted operating income, adjusted operating margin and adjusted EPS Adjusted operating margin and adjusted EPS are non-U.S.
GAAP measure to “Net debt” (dollars in millions) DECEMBER 31 2023 2022 Short-term debt $ 538 $ 711 Long-term debt 1,324 1,054 Total debt 1,862 1,766 Cash and cash equivalents (498 ) (594 ) Debt issuance cost/Debt-related derivatives, net 3 12 Net debt $ 1,367 $ 1,184 37 Adjusted operating income, adjusted operating margin and adjusted EPS Adjusted operating margin and adjusted EPS are non-U.S.
No assurances can be given that such proceedings and claims will not have a material adverse impact on the Company’s profitability and consolidated financial position, or that reserves or insurance will mitigate such impact.
No assurances can be given that such proceedings and claims will not have a material adverse impact on the Company’s profitability and consolidated financial position, or that reserves or insurance will mitigate such impact. See Note 17, Contingent Liabilities, to the Consolidated Financial Statements included herein and Item 3 – Legal Proceedings.
The expected rate of long-term return on plan assets are determined based on a number of factors and must take into account long-term expectations and reflect the financial environment in the respective local markets. At December 31, 2022, 23% of the U.S. plan assets were invested in equities, which is below the target of 40%.
The expected rate of long-term return on plan assets are determined based on several factors and must consider long-term expectations and reflect the financial environment in the respective local markets. At December 31, 2023, 31% of the U.S. plan assets were invested in equities, which is close to the target of 32%.
The Company took action including pricing discussions with customers and suppliers, competitive sourcing and exploring alternative materials. LEGAL The Company is involved from time to time in regulatory, commercial, and contractual legal proceedings that may be significant, and the Company’s business may suffer as a result of adverse outcomes of current or future legal proceedings.
LEGAL The Company is involved from time to time in regulatory, commercial, and contractual legal proceedings that may be significant, and the Company’s business may suffer as a result of adverse outcomes of current or future legal proceedings.
The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. Government safety regulators also have policies and practices with respect to recalls.
Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. Government safety regulators also have policies and practices with respect to recalls.
The change was mainly due to dividends paid of $224 million, share repurchases of $115 million and negative foreign exchange effects of $136 million, partly offset by $425 million from net income. TREASURY ACTIVITES DEBT AND CREDIT ARRANGEMENTS The Company's total debt as of December 31, 2022 and 2021 was $1,766 million and $2,008 million, respectively.
The change was mainly due to dividends paid to shareholders of $226 million, share repurchases of $356 million, partly offset by $489 million from net income and positive foreign exchange effects of $20 million. TREASURY ACTIVITES DEBT AND CREDIT ARRANGEMENTS The Company's total debt as of December 31, 2023 and 2022 was $1,862 million and $1,766 million, respectively.
Other income (expense), net decreased by $96 million in 2022 compared to the previous 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.
Other income (expense), net decreased by $300 million in 2023 compared to the previous year, mainly due to that t he prior year was positively impacted by around an $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 provisions for the closure of a plant in South Korea while 2023 was negatively impacted by around $218 million in accrual for capacity alignment.
Earnings per share, diluted decreased by $0.11 compared to a year earlier, where the main driver was $0.19 from lower operating income, partly mitigated by $0.04 from financial items. The weighted average number of shares outstanding assuming dilution in 2022 was 87.2 million compared to 87.7 million in 2021. 37 Non-U.S.
Earnings per share, diluted increased by $0.87 compared to a year earlier, where the main drivers was $0.35 from higher operating income and $0.63 from lower income tax, partly mitigated by $0.27 from financial items. The weighted average number of shares outstanding assuming dilution in 2023 was 85.2 million compared to 87.2 million in 2022. Non-U.S.
These discussions resulted in a net positive price development, gradually implemented throughout the year. A key strategy for Autoliv to be and to remain cost competitive is to reduce labor costs, through continuously implementing productivity improvement programs, optimizing the Company's production footprint, and instituting restructuring and capacity alignment activities as well as other actions to address the Company's cost structure.
A key strategy for Autoliv to be and to remain cost competitive is to reduce labor costs, through continuously implementing productivity improvement programs, optimizing the Company's production footprint, and instituting restructuring and capacity alignment activities as well as other actions to address the Company's cost structure. The Company's productivity improvement target is to achieve at least 5% savings per year.
NET CASH USED IN FINANCING ACTIVITIES Net cash used in financing activities amounted to $(531) million and $(469) million for the years 2022 and 2021, respectively. In 2022, the Company paid dividends of $224 million. In 2021, the Company paid dividends of $165 million after reinstating the dividends in the second quarter of 2021.
NET CASH USED IN FINANCING ACTIVITIES Net cash used in financing activities amounted to $490 million and $531 million for the years 2023 and 2022, respectively. In 2023, the Company paid dividends of $225 million. In 2022, the Company paid dividends of $224 million.
To reduce the financial risks and to take advantage of economies of scale, the Company has a central treasury department supporting operations and management. The treasury department handles external financial transactions and functions as the Company’s in-house bank for its subsidiaries. The Board of Directors monitors compliance with the financial risk policy on an on-going basis.
The treasury department handles external financial transactions and functions as the Company’s in-house bank for its subsidiaries. The Board of Directors monitors compliance with the financial risk policy on an on-going basis.
However, this was not the case in the past three years due to the COVID-19 pandemic related decline in LVP in 2020 and the high volatility in customer call-offs in 2021 and 2022 driven by the industry wide supply chain instability, especially for semiconductors.
However, the Company has not achieved its 5% productivity target since the COVID-19 pandemic in 2020, due to the related decline in LVP in 2020 and the high volatility in customer call-offs in 2021, 2022 and 2023 driven by the industry wide supply chain instability, especially for semiconductors.
Global LVP is an indicator of the Company’s sales development. Ultimately, however, sales are determined by the production levels for the individual vehicle models for which Autoliv is a supplier (see Dependence on Customers). The Company’s sales are split over several hundred contracts covering more than 1,300 vehicle models.
Ultimately, however, sales are determined by the production levels for the individual vehicle models for which Autoliv is a supplier (see Dependence on Customers). The Company’s sales are split over several hundred contracts covering more than 1,300 vehicle models. This moderates the effect of changes in vehicle demand of individual countries and regions as well as production issues.
In 2022, the Company’s five largest customers accounted for around 49% of consolidated sales and the ten largest customers accounted for around 80% of consolidated sales. The Company's largest customer contract accounted for around 2% of consolidated sales in 2022.
In 2023, the Company’s five largest customers accounted for around 48% of consolidated sales and the ten largest customers accounted for around 78% of consolidated sales. The Company's largest customer contract accounted for around 3% of consolidated sales in 2023.
In addition, discrete tax items, net, decreased the tax rate this year by 2.5pp. Discrete tax items, net increased the tax rate last year by 0.6pp. Net Income and Earnings Per Share Net income in 2022 decreased by $12 million compared to 2021.
Discrete tax items, net decreased the tax rate in 2022 by 2.5pp. 36 Net Income and Earnings Per Share Net income in 2023 increased by $64 million compared to 2022.
Total interest-bearing debt at December 31, 2022 amounted to $1,766 million, a decrease of $242 million compared to December 31, 2021. Cash flow from operations was $713 million in 2022 and $754 million in 2021. Capital expenditures, net amounted to $485 million in 2022 and $454 million in 2021.
Total interest-bearing debt at December 31, 2023 amounted to $1,862 million, an increase of $96 million compared to December 31, 2022. Cash flow from operations was $982 million in 2023 and $713 million in 2022. Capital expenditures, net amounted to $569 million in 2023 and $485 million in 2022.
The order intake in 2022 supports the Company's estimate that the Company's sales market share is moving towards around 45% in the next few years. The Company estimates that its sales market share was unchanged at around 43% in 2022. The lead time from order intake to start of production is typically 1-3 years.
The order intake in 2023 supports the Company's ability to defend its around 45% sales market share in the near and medium term. The Company estimates that its market share increased from around 43% in 2022 to around 45% in 2023. The lead time from order intake to start of production is typically 1-3 years.
Sales by Product Components of Change in Net Sales 2022 2021 Reported change Currency effects 1) Organic Airbags, Steering Wheels and Other 2) $ 5,807 $ 5,380 7.9 % (5.9 )% 14.0 % Seatbelt products 2) 3,035 2,850 6.5 % (6.4 )% 13.0 % Total $ 8,842 $ 8,230 7.4 % (6.1 )% 14.0 % 1) Effects from currency translations. 2) Including Corporate and Other sales.
Sales by Product Years ended December 31, Components of change in net sales 2023 2022 Reported change Currency effects 1) Organic 3) Airbags, Steering Wheels and Other 2) $ 7,055 $ 5,807 21 % 0.1 % 21 % Seatbelt products and Other 2) 3,420 3,035 13 % 0.7 % 12 % Total $ 10,475 $ 8,842 18 % 0.3 % 18 % 1) Effects from currency translations. 2) Including Corporate and Other sales.
Funding for the Company's pension plans in other countries is based upon plan provisions, actuarial recommendations and/or statutory requirements. Due to volatility associated with future changes in interest rates and plan asset returns, the Company cannot predict with reasonable reliability the timing and amounts of future funding requirements.
Due to volatility associated with future changes in interest rates and plan asset returns, the Company cannot predict with reasonable reliability the timing and amounts of future funding requirements.
GAAP Operating income $ 659 $ (61 ) $ 598 $ 675 $ 8 $ 683 Operating margin, % 7.5 (0.7 ) 6.8 8.2 0.1 8.3 Income before income taxes 603 (61 ) 542 614 8 622 Net income attributable to controlling interest 423 (39 ) 384 435 5 440 Capital employed 3,810 (39 ) 3,771 3,700 5 3,705 Return on capital employed, % 2) 17.5 (1.5 ) 16.0 18.3 0.2 18.5 Return on total equity, % 3) 16.3 (1.3 ) 15.0 17.1 0.2 17.3 Earnings per share, diluted 4, 5) $ 4.85 $ (0.45 ) $ 4.40 $ 4.96 $ 0.06 $ 5.02 1) Represents costs for capacity alignments and antitrust related matters.
GAAP Operating income $ 690 $ 230 $ 920 $ 659 $ (61 ) $ 598 Operating margin, % 6.6 % 2.2 % 8.8 % 7.5 % (0.7 )% 6.8 % Income before income taxes 612 230 842 603 (61 ) 542 Net income attributable to controlling interest 488 210 697 423 (39 ) 384 Capital employed 3,937 210 4,147 3,810 (39 ) 3,771 Return on capital employed, % 2) 17.7 % 5.3 % 23.1 % 17.5 % (1.5 )% 16.0 % Return on total equity, % 3) 19.0 % 7.2 % 26.2 % 16.3 % (1.3 )% 15.0 % Earnings per share, diluted 4 $ 5.72 $ 2.46 $ 8.19 $ 4.85 $ (0.45 ) $ 4.40 1) Represents costs for capacity alignments, antitrust related matters and the Andrews litigation settlement.
This negative regional mix effect was more than offset by the overall increase in global CPV of more than 6% and the execution of the Company's strong order book, which supported an organic growth (see section Non-U.S. GAAP Performance Measures) of 6.6 percentage points above growth in global LVP.
The overall increase in global CPV in 2023 was around 3% which together with the execution of the Company's strong order book, supported an organic growth (see section Non-U.S. GAAP Performance Measures) of around 9 percentage points above growth in global LVP.
Financial measure Full year indication Organic sales growth Around 15% Foreign exchange impact on net sales Around 1% negative Adjusted operating margin 1) Around 8.5-9% Tax rate 2) Around 32% Operating cash flow 3) Around $900 million Capital expenditures, net % of sales Around 6% 1) Excluding costs for capacity alignments, anti-trust related matters and other discrete items. 2) Excluding unusual tax items. 3) Excluding unusual items.
Financial measure Full year indication Organic sales growth Around 5% Foreign currency impact on net sales Around 0% Adjusted operating margin 1) Around 10.5% Tax rate 2) Around 28% Operating cash flow 3) Around $1.2 billion Capital expenditures, net % of sales Around 5.5% 1) Excluding effects from capacity alignments, antitrust related matters and other discrete items. 2) Excluding unusual tax items. 3) Excluding unusual items.
The Company has a €3,000 million Euro Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of Euronext Dublin. On December 31, 2022, no notes had been issued under this program. At December 31, 2022, Autoliv’s long-term credit rating from S&P Global Ratings was BBB with stable outlook.
As of December 31, 2023, $767 million remains outstanding from the 2014 issuance. The Company has a €3,000 million Euro Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of Euronext Dublin. At December 31, 2023, €500 million had been issued under this program.
ORDER INTAKE ADDING TO AN ALREADY STRONG CUSTOMER BASE The Company's order intake in 2022, with high win rates for new EV platforms with both new and traditional OEMs, added to the Company's already strong base, which includes supplying products to more than 1,300 vehicle models and around 100 car brands.
The balanced regional sales mix has been achieved through timely investments and strengthening of technical and support capabilities in growth markets. 31 ORDER INTAKE ADDING TO AN ALREADY STRONG CUSTOMER BASE The Company's order intake in 2023, with high win rates for new EV platforms with both new and traditional OEMs as well as for ICE platforms, added to the Company's already strong base, which includes supplying products to more than 1,300 vehicle models and around 100 car brands.
At December 31, 2022, the Company had received $174 million for sold receivables without recourse and discounted notes with a discount cost of $2 million during the year, compared to $159 million at December 31, 2021 with a discount cost of $2 million recorded in Other non-operating items, net.
At December 31, 2023, the Company had received $209 million for sold receivables without recourse and discounted notes with a discount cost of $3 million during the year, compared to $174 million at December 31, 2022 with a discount cost of $2 million recorded in Other non-operating items, net. 40 NUMBER OF SHARES At December 31, 2023, 82.6 million shares were outstanding (net of 4.9 million treasury shares), a 4.1% decrease from 86.2 million one year earlier.
Autoliv’s global sales increased organically (Non-U.S. GAAP measure, see reconciliation table above) by 14.0% compared to 2021, which was 6.6 percentage points better than global LVP (according to S&P Global, January 2023). Sales increased organically in all regions. The 6.6pp outperformance was driven by price increases and new product launches, partly offset by negative geographical mix effects.
GAAP measure, see reconciliation table above) by 18.2% compared to 2022, which was around 9 percentage points better than global LVP (according to S&P Global, January 2024). Sales increased organically in all regions. The around 9pp outperformance was driven by new product launches and price increases.
Outlook for 2023 The Company's outlook indications for 2023 are mainly based on our customer call-offs, a full year 2023 global LVP growth of around 3%, that we achieve our targeted cost compensation effects and that customer call-off volatility is reduced.
Outlook for 2024 The Company's guidance for 2024 is mainly based on our customer call-offs, a full year 2024 global LVP decline of around 1%, our achievement of our targeted cost compensation effects and a reduction in customer call-off volatility.
The main raw materials being used as input material for the Company's operations are steel, textiles, plastic and non-ferrous metals. The Company still sees effects coming from import tariffs and trade barriers across borders. These barriers are impacting the raw material market and creating pricing and availability uncertainties. Inflation was significant across raw materials and services in 2022.
COMPONENT COSTS AND RAW MATERIAL PRICES The cost of direct materials was approximately 55% of sales in 2023. The main raw materials being used as input material for the Company's operations are steel, textiles, plastic and non-ferrous metals. The Company still sees effects coming from import tariffs and trade barriers across borders.
Additionally, the Company has to build up production capacity, in the form of new lines, to meet future product launches. The Company's order intake share for 2022 continued on a high level.
Additionally, the Company has to build up production capacity, in the form of new lines, to meet future product launches. The Company's order intake share for 2023 continued on a high level. The estimated life-time sales for all orders booked in 2023 is around $11.8 billion, an increase compared to around $10.7 billion in 2022.
As of December 31, 2021, the main U.S defined benefit plan was frozen for further benefits. Many of the Company’s non-U.S. employees are also covered by pension arrangements. At December 31, 2022, the Company’s net pension liability (i.e. the actual funded status) for its U.S. and non-U.S. plans was $154 million compared to $197 million at December 31, 2021.
As of December 31, 2021, the main U.S defined benefit plan was frozen for further benefits. Many of the Company’s non-U.S. employees are also covered by pension arrangements.
See section Items affecting comparability and Note 11 to the Consolidated Financial Statements included herein. 2) Assuming dilution and net of treasury shares. Supply Chain LVP in 2022 was limited by the global semiconductor shortage and other industry supply chain disruptions. 2022 saw global LVP growth year-over-year by around 6.9% (according to S&P Global January 2023).
See section Items affecting comparability and Note 11 to the Consolidated Financial Statements included herein. 2) Assuming dilution and net of treasury shares. Supply Chain 2023 saw global LVP growth year-over-year by around 9.4% (according to S&P Global January 2024). We saw an improvement in call-off volatility in 2023 as supply chains were less strained compared to a year earlier.
Such claims may result in costs and other losses to the Company even where the relevant product is eventually found to have functioned properly. If a product (actually or allegedly) fails to perform as expected or is defective, we may face warranty and recall claims.
PRODUCT WARRANTY AND RECALLS If our products are alleged to fail to perform as expected or are defective, the Company may be exposed to various claims for damages and compensation. Such claims may result in costs and other losses to the Company even where the relevant product is eventually found to have functioned properly.
This interrelationship makes it difficult to isolate the impact of costs on any single program, therefore, the Company monitors key measures such as costs in relation to sales and productivity.
This interrelationship makes it difficult to isolate the impact of costs on any single program, therefore, the Company monitors key measures such as costs in relation to sales and productivity. In 2023, due to cost pressures from labor, logistics, utilities, and other items the Company engaged in extensive negotiations with its customers regarding compensations.
See table below for a disaggregation of these costs. 2) Operating income and income from equity method investments, relative to average capital employed. 3) Net Income relative to average total equity for the year. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.
See table below for a disaggregation of these costs. 2) Operating income and income from equity method investments, relative to average capital employed. 3) Net Income relative to average total equity for the year. 4) Assuming dilution and net of treasury shares. Items included in Non-U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The Company also has a lending facility with the Swedish Export Credit Corporation. The Company has Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of Euronext Dublin.
The Company also has a lending facility with the Swedish Export Credit Corporation. The Company has a Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of Euronext Dublin.
Autoliv is committed to maintain a “strong investment grade credit rating." As of December 31, 2022, the Company had a long-term credit rating from S&P Global Ratings (“S&P”) of BBB. The amount of interest-bearing debt held impacts the future financial flexibility as well as the credit rating. Management uses the non-U.S.
Autoliv is committed to maintain a “strong investment grade credit rating." As of December 31, 2023, the Company had a long-term credit rating from S&P Global Ratings (“S&P”) of BBB. The amount of interest-bearing debt held impacts the future financial flexibility as well as the credit rating. Management uses the non-U.S.
GAAP measure). 2) Latest 12 months. 3) Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income. 51 CREDIT RISK IN FINANCIAL MARKETS Credit risk refers to the risk of a financial counterparty being unable to fulfill an agreed-upon obligation.
GAAP measure). 2) Latest 12 months. 3) Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income. 50 CREDIT RISK IN FINANCIAL MARKETS Credit risk refers to the risk of a financial counterparty being unable to fulfill an agreed-upon obligation.
IMPAIRMENT RISK Impairment risk refers to the risk that the Company will write down a material amount of its goodwill of close to $1.4 billion as of December 31, 2022. This risk is assessed at least annually in the fourth quarter each year when the Company performs its impairment testing.
IMPAIRMENT RISK Impairment risk refers to the risk that the Company will write down a material amount of its goodwill of close to $1.4 billion as of December 31, 2023. This risk is assessed at least annually in the fourth quarter each year when the Company performs its impairment testing.
Consequently, changes in currency rates relating to funding and foreign currency accounts normally have a small impact on the Company’s income. In 2022 and 2021, the impact from the Company’s currency exposure were not material. INTEREST RATE RISK Interest rate risk refers to the risk that interest rate changes will affect the Company’s borrowing costs.
Consequently, changes in currency rates relating to funding and foreign currency accounts normally have a small impact on the Company’s income. In 2023 and 2022, the impact from the Company’s currency exposure were not material. INTEREST RATE RISK Interest rate risk refers to the risk that interest rate changes will affect the Company’s borrowing costs.
In 2022, the Company performed a quantitative impairment testing by calculating the fair value of its goodwill. The estimated fair market value of goodwill is determined by the discounted cash flow method. The Company discounts projected operating cash flows using its weighted average cost of capital.
In 2023, the Company performed a quantitative impairment testing by calculating the fair value of its goodwill. The estimated fair market value of goodwill is determined by the discounted cash flow method. The Company discounts projected operating cash flows using its weighted average cost of capital.
The Company's interest rate risk policy states that the average interest rate fixing period should be minimum 1 year and maximum 5 years. At December 31, 2022, the average interest rate fixing period for the Company’s outstanding debt was 1.6 years, and at December 31, 2021, the average interest rate fixing period for the Company’s outstanding debt was 2.1 years.
The Company's interest rate risk policy states that the average interest rate fixing period should be minimum 1 year and maximum 5 years. At December 31, 2023, the average interest rate fixing period for the Company’s outstanding debt was 2.1 years, and at December 31, 2022, the average interest rate fixing period for the Company’s outstanding debt was 1.6 years.
Autoliv’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. At December 31, 2022, the leverage ratio (non-U.S. GAAP measure, see calculation table below) was 1.4x. For details and calculation of leverage ratio, refer to the table below.
Autoliv’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. At December 31, 2023, the leverage ratio (non-U.S. GAAP measure, see calculation table below) was 1.2x. For details and calculation of leverage ratio, refer to the table below.
Estimating the fair value requires the Company to make judgments about appropriate discount rates, growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows. It has been concluded that presently the Company is not “at risk” of failing the goodwill impairment test.
Estimating the fair value requires the Company to make judgments about appropriate discount rates, growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows. It has been concluded that presently the Company's goodwill is not “at risk”.
In addition, deposits can be made in U.S. and Swedish government short-term notes and certain AAA rated money market funds, as approved by the Company’s Board of Directors. At December 31, 2022, the Company held $237 million in AAA rated money market funds.
In addition, deposits can be made in U.S. and Swedish government short-term notes and certain AAA rated money market funds, as approved by the Company’s Board of Directors. At December 31, 2023, the Company held $290 million in AAA rated money market funds.
The four largest net exposures are U.S. dollars (sell) against the Mexican Peso, U.S. dollars (sell) against Canadian dollar, Romanian Lei (buy) against the Euro and U.S. dollars (buy) against Korean Won. Together these currencies accounted for approximately 50% of the Company’s net currency transaction exposure.
The four largest net exposures are U.S. dollars (sell) against the Mexican Peso, Romanian Lei (buy) against the Euro, U.S. dollars (buy) against Korean Won and U.S. dollars (buy) against Japanese Yen. Together these currencies accounted for approximately 50% of the Company’s net currency transaction exposure.
This is based on the capital structure at the end of 2022 when the gross fixed-rate debt was $767 million while the Company had a net debt position of $1,184 million (see section Non-U.S. GAAP Performance Measures). Thus, a change in the interest rate environment would not have a notable impact on the Company’s interest expense.
This is based on the capital structure at the end of 2023 when the gross fixed-rate debt was $1,024 million while the Company had a net debt position of $1,367 million (see section Non-U.S. GAAP Performance Measures). Thus, a change in the interest rate environment would not have a notable impact on the Company’s interest expense.
The Company’s policy is not to hedge this type of translation exposure. A translation exposure also arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars. The policy of the Company is to finance major subsidiaries in the country’s local currency and to minimize the amounts held by subsidiaries in foreign currency accounts.
A translation exposure also arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars. The policy of the Company is to finance major subsidiaries in the country’s local currency and to minimize the amounts held by subsidiaries in foreign currency accounts.
As of December 31, 2022, the Company had $594 million in cash and cash equivalents of which the majority were subject to a floating interest rate.
As of December 31, 2023, the Company had $498 million in cash and cash equivalents of which the majority were subject to a floating interest rate.
Per December 31, 2022, 40% corresponding to $711 million of the Autoliv Group’s total debt had maturity less than 12 months. This amount was fully covered by unutilized committed credit facilities with maturity in excess of 12 months.
Per December 31, 2023, 29% corresponding to $538 million of the Autoliv Group’s total debt had maturity less than 12 months. This amount was fully covered by unutilized committed credit facilities with maturity in excess of 12 months.
The Company estimates that 26% of its consolidated net sales will be denominated in Euro or other European currencies during 2023, while 21% of its consolidated net sales are estimated to be denominated in U.S. dollars.
The Company estimates that 28% of its consolidated net sales will be denominated in Euro or other European currencies during 2024, while 19% of its consolidated net sales are estimated to be denominated in U.S. dollars.
Revaluation effects come from valuation of assets denominated in other currencies than the reporting currency of each unit. The Company's net transaction exposure in 2022 was approximately $2.1 billion.
Revaluation effects come from valuation of assets and liabilities denominated in other currencies than the reporting currency of each unit. The Company's net transaction exposure in 2023 was approximately $1.8 billion.
CALCULATION OF LEVERAGE RATIO (DOLLARS IN MILLIONS) December 31, 2022 2021 Net debt 1) $ 1,184 $ 1,052 Pension liabilities 154 197 Debt per the Policy 1,338 1,248 Net income 2) 425 437 Income taxes 2) 178 177 Interest expense, net 2,3) 54 57 Other non-operating items, net 2) 5 7 Income from equity method investments 2) (3 ) (3 ) Depreciation and amortization of intangibles 2) 363 394 Capacity alignments costs and antitrust related matters 2) (61 ) 8 EBITDA per the Policy (Adjusted EBITDA) $ 961 $ 1,077 Leverage ratio 1.4 1.2 1) Net debt is short- and long-term debt and debt-related derivatives less cash and cash equivalents (non-U.S.
CALCULATION OF LEVERAGE RATIO (DOLLARS IN MILLIONS) December 31, 2023 2022 Net debt 1) $ 1,367 $ 1,184 Pension liabilities 159 154 Debt per the Policy 1,527 1,338 Net income 2) 489 425 Income taxes 2) 123 178 Interest expense, net 2,3) 80 54 Other non-operating items, net 2) 3 5 Income from equity method investments 2) (5 ) (3 ) Depreciation and amortization of intangibles 2) 378 363 Capacity alignments costs and antitrust related matters 2) 230 (61 ) EBITDA per the Policy (Adjusted EBITDA) $ 1,297 $ 961 Leverage ratio 1.2 1.4 1) Net debt is short- and long-term debt and debt-related derivatives less cash and cash equivalents (non-U.S.
Taking the cash and cash equivalents of $594 million (which is primarily subject to floating interest rates) minus the portion of debt carrying floating interest rates, the Company estimated that a one-percentage point interest rate increase would decrease net interest expense by approximately $4 million, both in 2023 and 2024.
Taking the cash and cash equivalents of $498 million (which is primarily subject to floating interest rates) minus the portion of debt carrying floating interest rates, we estimated that a one-percentage point interest rate increase would decrease net interest expense by approximately $0.4 million on an annual basis.
Given the Company’s current capital structure, the Company estimates that a one-percentage point interest rate increase would decrease net interest expense by approximately $4 million in 2023.
Given the Company’s current capital structure, we estimate that a one-percentage point interest rate increase would decrease net interest expense by approximately $0.4 million on an annual basis.
The Company estimates that a 1% increase in the value of the U.S. dollar versus European currencies will decrease reported U.S. dollar annual net sales in 2023 by $27 million or by 0.3%, while operating income for 2023 will decline by approximately 0.3% or by about $2 million, assuming reported corporate average margin.
The Company estimates that a 1% increase in the value of the U.S. dollar versus European currencies will decrease reported U.S. dollar annual net sales in 2024 by $31 million, while operating income for 2024 will decline by $3 million, assuming reported corporate average margin. The Company’s policy is not to hedge this type of translation exposure.
For additional information, see Note 13, Debt and Credit Agreements, to the Consolidated Financial Statements included herein. 50 FINANCING RISK Financing risk refers to the risk that it will be difficult and/or expensive to finance new or existing debt to meet the financing needs of the Autoliv Group.
The most notable debt carrying fixed interest rates is the €500 million bond issued in 2023, see Note 13 to the Consolidated Financial Statements included herein. 49 FINANCING RISK Financing risk refers to the risk that it will be difficult and/or expensive to finance new or existing debt to meet the financing needs of the Autoliv Group.
Fixed interest rate debt is achieved both by issuing fixed rate notes and through interest rate swaps. The most notable debt carrying fixed interest rates is the $767 million U.S. private placement notes issued in 2014.
Fixed interest rate debt can be achieved both by issuing fixed rate notes and through interest rate swaps.

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