Autoliv, Inc.

Thank you, Raffia. Welcome everyone to our first quarter 2023 earnings call. On this call, we have our president and CEO, Mikael Brass, and our chief financial officer, Fredrik Rustin, and key and VP, Investor Relations. During today's earnings call, Mikael and Fredrik will, among other things, provide an overview of the strong sales development in the first quarter, discuss operating leverage and outline the expected sequential margin improvement for 2023, As well as provide an update on our general business and market condition. We will then remain available to respond to your questions. And as usual, the slides are available at outtoleave.com. Turning to the next slide, we have the Safe Harbor Statement, which is an integrated part of this presentation. And of course, includes the Q&A that follows. During the presentation, we will reference some non-US GAAP measures. of the conciliations of historical US GAAP to non-US GAAP measures in our quarterly press release available on moultony.com and in the 10Q that we line with the SEC. Lastly, I should mention that this call is intended to conclude at 3 p.m. Central European time, so please follow a limit of two questions per person. I now hand over to our CEO, Nica Drapp.

Thank you, Anders. Looking on the next slide. I would like to start by thanking our employees for good execution, supporting our strong growth in a challenging environment. The safe performance and strong profit recovery was in line with our earlier communicated expectations. Thanks to a strong ending of the quarter, our organic sales grew by more than 20%, outperforming light vehicle production significantly. The strong growth was a result of product launches, higher prices, and higher safety content for vehicles, and also supported by a positive regional mix. Our profit development was as expected, considering that market conditions continued to be challenging, especially in Europe, with significant inflationary pressure and continued customer call-off volatility. Mainly due to strong sales growth, adverse working capital development led to a negative cash flow in the quarter. We expect a more positive cash flow trend for the rest of the year. Our leverage ratio increased to 1.6 times to 1.4 times three months ago. In the quarter, we paid 66 cents per share in dividends and repurchased and retired 450,000 shares. We issued our first green bond that allows us to reach new investors and at the same time help fund our climate targets. We have a strong commitment to climate action and this is a milestone in supporting our customers in achieving their sustainability ambition. We are expanding to Vietnam, investing in increased production capacity of airbag cushions in Asia for Asia. We saw updates to crash test standards and safety regulations in the US and in India, which will support continued increase in safety content for vehicle already this year as well as coming years. We also continue to look for ways to improve our footprint and reduce our costs structurally. The first quarter development affected and we continued to expect a gradual improving adjusted operating margin during the year. This should allow us to reach the full year indications we set at the beginning of the year. Now looking at the expected adjusted operating margin progression for 2023 on the next slide. For 2023, we expect a gradual improvement of the adjusted operating margin quarter by quarter, similar to the trajectory in 2022. We expect continued high sales growth supported by launches, higher light vehicle production, and content per vehicle increase. We anticipate price adjustments will gradually, throughout the year, offset cost inflation that affects us in the first quarter. The positive trajectory will be further supported by improvements from cost reduction, footprint optimization, as well as expected gradual improvement of the supply chain and light vehicle production stability. Effects are limited in the first half of the year and significantly larger in the second half of the year. Our undertaking makes me confident in a gradual improving performance, which should allow us to deliver a significant full year increase in cash flow and adjusted operating income. Looking now on our sales growth in more detail on the next slide. Our consolidated net sales increased by $2.5 billion, a record for the first quarter. This was close to $370 million, or 17% higher than a year earlier, despite the 77 million, or four percentage points, currency headwinds. Price-volume mix contributed with $444 million. Looking on the regional sales split, Asia accounted for 38%, America for 33% and Europe for 29%. The China share decreased from 21% a year ago to 18% now. as light vehicle production grew in all regions in the quarter, except in China, where it declined significantly. We outlined our organic sales growth compared to light vehicle production on the next slide. I am very pleased that our organic sales growth significantly outperformed global light vehicle production growth in the first quarter. This was achieved as we continued to execute on our strong order books. According to S&P Global, light vehicle production increased by around 6% year-over-year in the quarter. This was slightly higher than expectations in the beginning of the quarter. Based on the latest light vehicle production numbers, we outperformed global light vehicle production by around 15 percentage points in the quarter. In the quarter, we outperformed in Japan by 17 percentage points, in China by 16 percentage points, and in Europe by 14 percentage points. Compared to the fourth quarter last year, light bakery production in the first quarter fell by around 4%. Despite this, our sales increased by 7%, sequentially supported by new launches. market share gains, and content for vehicle growth. We expect this positive sales trend to continue, and we expect to outperform light vehicle production by around 12 percentage points for the full year 2023. Looking now on financials in more detail on the next slide. The strong sales increase led to substantial improvement in adjusted operating income including effects of capacity alignment and antitrust-related matters, which increased from 68 million to 131 million. The adjusted operating margin was 5.3% in the quarter, an increase to 5.1 percentage points from the same period last year. Operating cash flow was negative, 446 million, which was 116 million lower than the same period last year, mainly from adverse working capital as an effect of significantly higher sales level towards the end of the quarter. Fredrik will provide further comments on cash flow later in the presentation. On the next slide, we see some key model launches from the first quarter. In the quarter, we have a high number of product launches, especially in China and Europe. The models shown on this slide have an output of content per vehicle from approximately 140 to close to 550 US dollars. These models reflect the changes seen in the automotive industry in recent years, with several relative new OEMs represented and that six out of nine are available as pure EV. In terms of Autoliv sales potential the Subaru launches are the most significant. The long-term trend to higher content for vehicle is supported by front center airbags, more advanced seat belts and pedestrian protection airbags. I will now hand it over to our CFO Fredrik Vislin who will talk about the financials on the next

Thank you, Mikael. This slide highlights our figures for the first quarter of 2023 compared to the first quarter of 2022. Our net sales were 2.5 billion. This was 17 percent higher in the first quarter of 2022. The gross profit increased by 32 percent to 379 million, while the gross margin increased to 15.2 percent. The gross profit increase was primarily driven by price increases, volume growth, and lower costs for premium freight. In the quarter, we made 4 million in provisions for capacity alignment activities and antitrust-related matters. The adjusted operating income increased from 68 million to 131 million. The adjusted operating margin increased from 3.2% to 5.3%. We do recognize that the operating leverage on the strong sales growth was limited in the quarter, and I will explain more when we go through the operating income bridge. The operating cash flow was negative 46 million. Earnings per share diluted, decreased by 8 cents, where the main driver was 52 cents from capacity alignments and 5 cents from taxes, partly offset by 51 cents from higher adjusted operating income. Our adjusted return on capital employed and return on equity increased to 13% and 12% respectively. We paid a dividend of 66 cents per share in the quarter and repurchased and retired around 450,000 shares for $42 million under our stock repurchase program. Looking now on the adjusted operating income bridge on the next slide. In the first quarter of 2023, our adjusted operating income of 131 million was 63 million higher than the same quarter last year. The impact of raw material price changes was negative 12 million in the quarter. Foreign exchange impacted the operating profit negatively by 25 million. This was mainly a result of transaction effects from the Mexican peso. Costs for SG&E and RD&E net combined was 26 million higher, mainly due to higher personnel costs and projects. Our operations were positively impacted by improved pricing, higher volumes, lower cost for premium freight, as well as our strategic initiatives, partly offset by the significant headwinds from general cost inflation. The impact of the strong sales growth was relatively low in the quarter, as new product have a lower operating leverage initially. As a result, the leverage on the higher sales, excluding currency effects, was in the low end of our typical 22% operational leverage range. The actions we are now taking, that Mikael talked about previously, should lead to significantly higher operating leverage, profitability, and cash flow as the year progresses, very much like last year. Looking now on the cash flow on the next slide. For the first quarter of 2023, operating cash flow decreased by $116 million to a negative $46 million due to higher working capital and lower net income. During the quarter, trade working capital increased by $226 million, essentially from higher receivables. The higher receivables were the results of high sales towards the end of the quarter. The inefficiencies in inventories did not materially improve as light vehicle production continued to be volatile. For the first quarter, capital expenditures net increased to 143 million from 17 million in the previous year's quarter. The first quarter last year was positively affected by the sales of a property in Japan for 95 million. Excluding the property sale, capex in relation to sales This quarter increased to 5.7 percent from 5.3 percent a year ago. The current high level of investment is related to the ongoing footprint activities and capacity expansion for growth, especially in China. For the first quarter of 2023, free cash flow was negative 189 million, 242 million lower than a year earlier. Although our cash flow was temporarily weaker in the first quarter, we expect a gradual positive cash flow development for the rest of the year from higher net income and a more stable sales level. Our full year indication is for an operating cash flow of 900 million, and that is unchanged. Now looking on our leverage ratio development on the next slide. The leverage ratio at the end of March 2023 was 1.6 times. This was 0.2 higher than in the previous quarter, as the net debt increased proportionally more than the 12 months trailing adjusted EBITDA increased. We do remain committed to our 2022-2024 share repurchase program. And as you know, we are considering several factors when executing the program. As we have mentioned many times, we are not only considering the debt leverage ratio when deciding on the pace of the repurchases. We're also considering our balance sheet, cash flow outlook, the debt rating, and the general business outlook. We always strive for the balance that is best for our shareholders, both long and short term. Now looking at the next slide. Sustainability is integrated into everything we do. By reducing the number of road fatalities and making transportation systems safer for everyone, our core business directly contributes to the United Nations Sustainable Development Goals, SDGs. During the first quarter, we successfully issued a first 500 million euros green bond using Autoliv's sustainable financing framework aligned with the ICMA green bond principles. The issuance drew significant interest from debt investors, leading to a successful pricing of the bond, resulting in a coupon of 4.25 percent. The proceeds of our first green bond were used exclusively for financing green projects, including clean transportation, renewable energy, energy efficiency, and decarbonization of operations and products. With the projects financed by the Green Bond, we believe we can further contribute to sustainable society. Now looking at the liquidity position on to the next slide. At the end of the quarter, we had a strong liquidity position with approximately 1.8 billion in cash and unutilized committed credit facility. With the sustainable financing framework, we have diversified our long-term funding We also have a maturity profile that is well spread out over the coming years. Note that none of our credit facilities are subject to financial covenants. With a leverage ratio of 0.6 times, a BBB S&P rating with stable outlook, a balanced maturity profile, and the strong liquidity position, we are well positioned to operate in any environment. I now hand it back to you, Mikael.