Autoliv Reports Q4 Earnings Beat Amid Margin Pressures
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3h ago
0mins
Source: Benzinga
- Earnings Beat: Autoliv reported adjusted Q4 EPS of $3.19, surpassing the analyst consensus of $2.90, with quarterly sales reaching $2.817 billion, exceeding the expected $2.772 billion, indicating strong performance driven by new product launches.
- Margin and Operating Pressure: Despite a 3.9% year-over-year increase in gross profit to $572 million, operating income fell by 9.6% to $319 million, with operating margin contracting from 13.5% to 11.3%, reflecting ongoing supply chain volatility and inflationary pressures impacting profitability.
- Cost Recovery and Layoffs: The company recovered nearly 100% of tariff costs in Q4 and over 80% for the full year, while reducing headcount by about 900 (1.4%), highlighting challenges in managing cost pressures and market fluctuations.
- Cautious Future Outlook: Autoliv guided for flat organic sales growth in 2026, projecting revenue of approximately $10.8 billion, below Wall Street's estimate of $11.18 billion, with an adjusted operating margin forecast of 10.5% to 11.0%, reflecting a cautious stance amid market uncertainties.
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Analyst Views on ALV
Wall Street analysts forecast ALV stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ALV is 141.20 USD with a low forecast of 125.00 USD and a high forecast of 152.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
8 Buy
2 Hold
0 Sell
Strong Buy
Current: 126.430
Low
125.00
Averages
141.20
High
152.00
Current: 126.430
Low
125.00
Averages
141.20
High
152.00
About ALV
Autoliv, Inc. is a developer, manufacturer, and supplier of safety systems to the automotive industry with a range of product offerings, primarily passive safety systems. Passive safety systems include modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies and battery cut-off switches. 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 one operating segment, which includes Autoliv’s airbag and seatbelt products and components. Its subsidiaries include Autoliv AB and Autoliv ASP, Inc. The Company operates its business in geographical regions, such as Europe, the Americas, China, Japan, and the Rest of Asia (ROA). The Company has approximately 62 production facilities in 25 countries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Autoliv Reports Strong Q4 2025 Earnings with Strategic Outlook
- Significant Sales Growth: In Q4 2025, Autoliv reported net sales of approximately $2.8 billion, an 8% year-over-year increase, with nearly 40% sales growth from Chinese OEMs, indicating strong performance in rapidly expanding markets and likely reinforcing its market position.
- Cash Flow and Shareholder Returns: The company achieved operating cash flow of $544 million in Q4, a 30% increase from last year, while repurchasing $150 million in shares and paying a dividend of $0.87 per share, reflecting robust cash flow management and commitment to shareholders.
- New Product Strategy: Autoliv's collaboration with Tensor on the first foldable steering wheel is targeted for volume production by late 2026, which could open new market opportunities and enhance future sales growth potential through innovation.
- Cautious Future Outlook: Management anticipates flat organic sales for 2026, with growth in China, India, and South America offsetting declines in North America and Europe, while setting an adjusted operating margin target of 10.5% to 11%, demonstrating a cautiously optimistic view of the market ahead.
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Autoliv Achieves Record Quarterly Gross Profit Amid Challenges
- Record Gross Profit: Autoliv (ALV) achieved its highest quarterly gross profit driven by robust sales in India and new product launches, with Q4 sales reaching $2.82 billion, exceeding expectations by $50 million, demonstrating resilience amid challenges.
- Operational Challenges: Despite reporting adjusted earnings of $3.19 per share, beating expectations by $0.31, the company faces negative impacts on production efficiency and profitability due to low customer demand visibility and high call-off volatility, with 2026 expected to remain above pre-pandemic levels.
- Future Outlook: Autoliv anticipates organic sales to remain unchanged in 2026, with an adjusted operating margin forecasted between 10.5% and 11.0%, while navigating geopolitical risks and potential tariff changes that could impact operations.
- Cash Flow and Capex: The company expects operating cash flow of approximately $1.2 billion in 2026, with capital expenditures as a net percentage of sales projected to be below 5%, indicating ongoing efforts to control costs and optimize resource allocation.
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