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STOCKHOLM, April 16, 2025 /PRNewswire/ -- (NYSE: ALV) (SSE: ALIV.sdb)
Q1 2025: Good sales and execution of cost reduction programs
Financial highlights Q1 2025
$2,578 million net sales
1.4% net sales decrease
2.2% organic sales growth*
9.9% operating margin
9.9% adjusted operating margin*
$2.14 diluted EPS, 41% increase
$2.15 adjusted diluted EPS*, 37% increase
Full year 2025 guidance
Around 2% organic sales growth
Around 3% negative FX effect on net sales
Around 10-10.5% adjusted operating margin
Around $1.2 billion operating cash flow
All change figures in this release compare to the same period of the previous year except when stated otherwise.
Key business developments in the first quarter of 2025
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First quarter sales increased organically* by 2.2%, which was 2.6pp higher than the global LVP decrease of 0.4% (S&P Global March 2025). A strong LVP in March resulted in a stronger than expected global LVP in the quarter. Regional and customer LVP mix is estimated to have contributed to about 3pp underperformance. Compared to March S&P Global LVP data, we outperformed Europe, Americas and in Asia excl. China, mainly due to product launches and positive pricing. Our sales to domestic Chinese OEMs grew by 19%, in line with their LVP growth. As lower content vehicles in China outgrew higher content vehicles, we underperformed in China overall. We expect that our record number of new launches will significantly improve our relative sales performance in China in 2025.
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Profitability improved, mainly due to organic sales growth and successful execution of cost reductions. Total headcount decreased by 6%. Impacts from the U.S. tariffs and counter tariffs in Q1 had a negligible impact on operating profit in the quarter as we managed to pass on the costs of tariff increases to our customers. Operating income was $254 million and adjusted operating income* was $255 million. Operating margin and adjusted operating margin* were both 9.9%.ROCE and adjusted ROCE* were both 25.6%.
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Free operating cash flow* was in line with last year, despite that operating cash flow was slightly lower than last year. A larger working capital build up reflecting higher sales at the end of the quarter was offset by lower capex, net. The leverage ratio* of 1.3x is within our target range. In the quarter, a dividend of $0.70 per share was paid and 0.5 million shares were repurchased and retired.
*For non-U.S. GAAP measures see enclosed reconciliation tables.
Key Figures
| (Dollars in millions, except per share data) | Q1 2025 | Q1 2024 | Change |
| Net sales | $2,578 | $2,615 | (1.4) % |
| Operating income | 254 | 194 | 31 % |
| Adjusted operating income1) | 255 | 199 | 28 % |
| Operating margin | 9.9 % | 7.4 % | 2.4pp |
| Adjusted operating margin1) | 9.9 % | 7.6 % | 2.3pp |
| Earnings per share - diluted | 2.14 | 1.52 | 41 % |
| Adjusted earnings per share - diluted1) | 2.15 | 1.58 | 37 % |
| Operating cash flow | 77 | 122 | (37) % |
| Return on capital employed2) | 25.6 % | 19.7 % | 5.9pp |
| Adjusted return on capital employed1,2) | 25.6 % | 20.2 % | 5.4pp |
| 1) Excluding effects from capacity alignments and antitrust related matters. Non-U.S. GAAP measure, see reconciliation table. | |||
Comments from Mikael Bratt, President & CEO
"I am pleased that we delivered good sales and profitability in the first quarter. Thanks to our adaptability and resilience, driven by our diverse product portfolio and strong customer relationships, we successfully navigated through the first month of North American tariffs. It is encouraging that we, based on LVP data from March, outperformed global LVP despite continued significant headwinds from LVP mix shifts, particularly in China. Based on a record high number of new launches we look forward to a significantly improved sales performance in China in 2025.