===== SIDA 1 ===== Kvartalsrapport oktober - december 2023 Stockholm, Sverige, 26 januari, 2024 (NYSE: ALV och SSE: ALIV.sdb) ===== SIDA 2 ===== Kvartalsrapport oktober - december 2023 2 Q4 2023: Rekordförsäljning och stark lönsamhet Finansiell sammanfattning Kv4 $2 751 miljoner försäljning 18% försäljningsökning 16% organisk försäljningsökning* 8,6% rörelsemarginal 12,1% justerad röreslemarginal* $2,71 vinst/aktie, 51% ökning $3,74 justerad vinst/aktie*, 105% ökning Utsikter för helåret 2024 Cirka 5% organisk försäljningsökning Cirka 0% valutaeffekt på försäljningen Cirka 10,5% justerad rörelsemarginal Cirka $1,2 miljarder operativt kassaflöde Alla förändringstal i denna rapport jämför med motsvarande period året innan, om inte annat anges. Viktiga händelser i verksamheten under det fjärde kvartalet 2023 Rekordförsäljning med en organisk* ökning om 16%, vilket var 7%-enheter bättre än tillväxten för den globala fordonsproduktion på 9% (S&P Global januari 2024). Vi överträffade fordonsproduktionen i alla regioner, förutom i Kina, främst på grund av nya produktlanseringar och högre priser. I Kina ökade fordonsproduktionen med 31% för inhemska tillverkare med generellt lägre säkerhetsinnehåll medan den endast ökade med 7% för globala tillverkare med generellt högre säkerhetsinnehåll. Lönsamheten ökade kraftigt, med positiv påverkan av prisökningar, organisk tillväxt, och våra besparingsåtgärder. Rörelseresultatet uppgick till 237 MUSD och rörelsemarginalen 8,6%. Justerat rörelseresultat* förbättrades från 233 MUSD till 334 MUSD och justerad rörelsermarginal* ökade från 10,0% till 12,1%. Avkastining på sysselsatt kapital uppgick till 24% och justerad avkastning på sysselsatt kapital* till 33%. Operativt kassaflöde var fortsatt starkt, och uppgick till 447 MUSD. Fritt kassaflöde* var oförändrat 297 MUSD. Skuldkvoten* förbättrades till 1,2x från 1,3x i tredje kvartalet 2023, trots aktieägaravkastning på 207 MUSD i form av utdelningar och aktieåterköp. Utbetald utdelning uppgick till 0,68 USD per aktie (3% ökning), och 1,51 miljoner aktier återköptes och makulerades i kvartalet. *För ej U.S. GAAP se jämförelsetabell. Nyckeltal MUSD, förutom aktiedata Kv4 2023 Kv4 2022 Förändring År 2023 År 2022 Förändring Försäljning $2 751 $2 335 18% $10 475 $8 842 18% Rörelseresultat 237 230 3,1% 690 659 4,7% Justerat röreseresultat1) 334 233 43% 920 598 54% Rörelsemarginal 8,6% 9,8% -1,2 6,6% 7,5% -0,9 Justerad rörelsemarginal1) 12,1% 10,0% 2,2 8,8% 6,8% 2,0pp Vinst per aktie2) 2,71 1,80 51% 5,72 4,85 18% Justerad vinst per aktie1,2) 3,74 1,83 105% 8,19 4,40 86% Operativt kassaflöde $447 $462 -3,4% $982 $713 38% Avkastning på sysselsatt kapital3) 24,4% 24,3% 0,1 17,7% 17,5% 0,2 Justerad avkastning på sysselsatt kapital1,3) 32,9% 24,9% 8,1 23,1% 16,0% 7,1 1) Exklusive effekter från kapacitetsanpassningar, kartellrelaterade ärenden och för helår 2023 Andrewsförlikningen. Ej U.S. GAAP, se jämförelsetabell. 2) Efter utspädning när tillämpligt och exkl. återköpta aktier. 3) Annualiserat rörelseresultat och vinstandelar i minoritetsbolag i förhållande till genomsnittligt sysselsatt kapital. Kommentar från Mikael Bratt, VD & koncernchef Som vi indikerat under hela året avslutade vi 2023 starkt. Vi uppnådde eller överträffade alla våra indikationer för 2023. Försäljning och justerat rörelseresultat slog nya rekord medan det operativa kassaflödet fortsatt var starkt. Jag är nöjd med att bruttomarginalen förbättrades väsentligt. Vår marknadsandels- position på 45% understöds av att orderingången 2023 var den högsta Vi fortsätter att leverera gällande våra planer för strukturella kostnadsbesparingar, med cirka 75% av de planerade indirekta personalminskningarna detaljerade och kommunicerade. Vi ser också positiva effekter på produktiviteten i tillverkningen. Vårt resultat för 2023 utvecklades i hög grad som vi indikerade med en kraftig kostnadsmotvind i början av året, vilket ledde till ett svagt första kvartal. Kvartal för kvartal förbättrades dock vårt resultat, drivet av inflationskompensation från våra kunder, effektiviseringar och organisk tillväxt, vilket ledde till en betydande lönsamhetsförbättring för helåret. Vår hållbarhetsagenda ger resultat med goda framsteg när det gäller utsläpp av växthusgaser, användning av förnybar el och incidentfrekvens. Säsongsvariationerna från tidigare år kommer sannolikt att upprepas under 2024, med en förväntad justerad rörelsemarginal för första kvartalet på cirka 7%, följt av gradvisa kvartalsvisa förbättringar, vilket leder till en justerad rörelsemarginal för helåret 2024 på cirka 10,5%. Viktiga drivkrafter för marginalutvecklingen för helåret är fortsatt förbättring av avropsstabiliteten, att vi växer snabbare än fordonsproduktionen och positiva effekter från våra strategiska och strukturella initiativ. Det förbättrade resultat som vi förväntar oss under 2024 bör ta oss ett viktigt steg närmare vårt mål om cirka 12% justerad rörelsemarginal. under de senaste fem åren, med en bra mix av både nya och traditionella fordonstillverkare med bra blanding av plattformar för elbilar och förbränningsmotorer. Vi ökade aktieägaravkastningen till mer än 200 MUSD under kvartalet samtidigt som vi fortsatte att förbättra vår skuldkvot. I slutet av 2023 hade vi återköpt aktier för nära 0,5 miljarder USD inom ramen för vårt återköpsprogram på 1,5 miljarder USD. Vi överträffade fordonsproduktionen i alla regioner förutom Kina, som hade en mycket stark fordonsproduktion för inhemska fordonstillverkare med generellt lägre säkerhetsinnehåll. Vi stärkte vår marknadsposition i Kina och vår orderingång var stark på en snabbrörlig marknad, där inhemska fordonstillverkare nu står för drivkraften bakom fordonsproduktionensutvecklingen. ===== SIDA 3 ===== Kvartalsrapport oktober - december 2023 3 Full year 2024 guidance Our 2024 guidance 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. Full Year Indication Full Year Indication Organic sales growth Around 5% Tax rate2) Around 28% FX impact on net sales Around 0% Operating cash flow3) Around $1.2 billion Adjusted operating margin1) Around 10.5% Capex, 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 un usual items. The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. Autoliv has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs and gains related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and Autoliv is unable to determine the probable significance of the unavailable information. Conference call and webcast The earnings conference call will be held at 2:00 p.m. CET today, January 26, 2024. Informat ion regarding how to participate is available on www.autoliv.com. The presentation slides for the conference call will be available on our website shortly after the publication of this financial report. ===== SIDA 4 ===== Kvartalsrapport oktober - december 2023 4 Business and market condition update Supply Chain Global light vehicle production growth year-over-year was around 9% (according to S&P Global January 2024) in the fourth quarter, with all major regions growing. We saw continued gradual improvement in call -off volatility as supply chains are less strained compared to a year earlier. However, volatility is still higher than pre-pandemic levels, and low customer demand visibility and changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability in the quarter. Fourth quarter industry-wide supply chain disruptions improved compared to the average 2023 situation, with the expectation that disruptions will remain unchanged from current situation for 2024. We thereby expect that call-off volatility through 2024 will be lower than in 2023 but remain higher than the pre-pandemic level. The unfolding situation in the Red Sea has not yet had any measurable impact on our own operations but we note near-term trends of extended transit times and increased freight tariffs and surcharges has led to some customers lowering their near term production plans. However, it is too early to estimate what impact this situation will have on our operations, directly or through our customers, going forward. Inflation In Q4 2023, cost pressures from labor, logistics, utilities, and other items had a negative impact on our profitability. Most of the inflationary cost pressure was offset by customer price and other compensations in the quarter. Raw material costs had a slightly positive impact on our profitability in Q4 2023. We expect the raw material price changes in 2024 to be largely reflected in price changes in our products, albeit with delays of several months. We also expect continued cost pressure from inflation relating mainly to labor, but also to a lesser extent to utilities and other items, especially in Europe and the Americas. We continue to execute on productivity and cost reduction activities to offset these cost pressures, and we continue to seek inflation compensation from our customers. Other matters In June 2023, Autoliv communicated a cost reduction framework which included the intent to reduce our indirect headcount by up to 2,000, and to improve direct labor productivity equivalent to up to a 6,000 direct workforce reduction. We announced more details on these initiatives on July 13, 2023, October 5, 2023, and on October 30, 2023. Based on the intended indirect workforce reductions in these three announcements, we estimate that the annual cost reductions wi ll amount to around $130 million in total annual savings when fully implemented, with around $50 million in savings in 2024, which is expected to increase to around $100 million in 2025. Total accrual for capacity alignment in 2023 amounted to $218 million. We do not expect to announce further major reduction initiative details. Further reduction of global headcount as part of the structural initiative will be through minor actions and natural attrition with limited accruals. At the end of 2023, around 75% of the planned indirect reductions were detailed and announced. We already see positive impact on direct labor efficiency as a result. The UAW strike had only a limited impact on our sales and profitability in the fourth quarter. This report includes content supplied by S&P Global; Copyright © Light Vehicle Production Forecast, October 2023 and January 2024. All rights reserved. ===== SIDA 5 ===== Kvartalsrapport oktober - december 2023 5 Key Performance Trends Net Sales Development by region Operating and adjusted operating income and margins Capex and D&A Operating and adjusted operating Cash Flow Return on Capital Employed Cash Conversion Key definitions ------------------------------------------------------------------------------------------------------------ Capex, net: Capital Expenditure, net. D&A: Depreciation and Amortization. Adj. operating income and margin*: Operating income adjusted for capacity alignments, antitrust related matters and for FY 2023 the Andrews litigation settlement. Capacity alignments include non-recurring costs related to our structural efficiency and business cycle management programs Operating cash flow excluding EC antitrust payment*: Adjusted for EC antitrust payment of $203 million in 2019. Cash conversion*: Free cash flow* in relation to net income adjusted for EC antitrust payment in 2019. Free cash flow defined as operating cash flow less capital expenditure, net. ===== SIDA 6 ===== Kvartalsrapport oktober - december 2023 6 Consolidated sales development Fourth quarter 2023 Consolidated sales Fourth quarter Reported change Currency Organic (Dollars in millions) 2023 2022 (U.S. GAAP) effects1) change* Airbags, Steering Wheels and Other2) $1,864 $1,581 18% 1.9% 16% Seatbelt Products and Other2) 887 754 18% 2.7% 15% Total $2,751 $2,335 18% 2.2% 16% Asia $1,135 $977 16% (1.4)% 18% Whereof: China 617 536 15% (1.5)% 17% Asia excl. China 519 441 18% (1.4)% 19% Americas 861 742 16% 3.4% 13% Europe 755 616 23% 6.4% 16% Total $2,751 $2,335 18% 2.2% 16% 1) Effects from currency translations. 2) Including Corporate sales. Sales by product – Airbags, Steering Wheels and Other Sales for all major product categories increased organically* in the quarter. The largest contributor to the increase was steering wheels, followed by inflatable curtains, side airbags, and passenger airbags. Sales by product - Seatbelt Products and Other Sales for Seatbelt Products and Other increased organically* in all major regions in the quarter. The largest contributor to the increase was the Americas, followed by Asia excluding China, China and Europe. Sales by region Our global organic sales* increased by 16% compared to the global LVP increase of 9.1% (according to S&P Global, January 2024). The 7pp outperformance was mainly driven by price increases and new product launches. Autoliv organic sales growth outperformed LVP growth by 17pp in Asia excluding China, by 10pp in Europe and by 8pp in the Americas, while we underperformed LVP by around 2pp in China due to adverse LVP mix in the quarter as LVP growth in China was heavily tilted to domestic OEMs with typically lower safety content. Q4 2023 organic growth* Americas Europe China Asia excl. China Global Autoliv 13% 16% 17% 19% 16% Main growth drivers Honda, Mercedes, Toyota Mercedes, Stellantis, BMW Honda, VW, Great Wall Toyota, Hyundai, Honda Honda, Mercedes, Toyota Main decline drivers GM, Stellantis, BMW Renault, VW BMW, Renault, Hyundai Renault, Nissan Renault Light vehicle production development Change vs same period last year according to S&P Global Q4 2023 Americas Europe China Asia excl. China Global LVP (Jan 2024) 4.2% 6.6% 18 % 2.5% 9.1% LVP (Oct 2023) (5.6)% 6.2% 6.8% 3.1% 3.6% ===== SIDA 7 ===== Kvartalsrapport oktober - december 2023 7 Consolidated sales development Full year 2023 Consolidated sales Full year Reported change Currency Organic (Dollars in millions) 2023 2022 (U.S. GAAP) effects1) change* Airbags, Steering Wheels and Other2) $7,055 $5,807 21% 0.1% 21% Seatbelt Products and Other2) 3,420 3,035 13% 0.7% 12% Total $10,475 $8,842 18% 0.3% 18% Asia $4,072 $3,521 16% (4.3)% 20% Whereof: China 2,105 1,883 12% (4.8)% 17% Asia excl. China 1,968 1,638 20% (3.8)% 24% Americas 3,526 2,967 19% 3.5% 15% Europe 2,877 2,355 22% 3.1% 19% Total $10,475 $8,842 18% 0.3% 18% 1) Effects from currency translations. 2) Including Corporate sales. Sales by product – Airbags, Steering Wheels and Other Sales for all major product categories increased organically* for the full year. The largest contributor to the increase was steering wheels and inflatable curtains, followed by side airbags and passenger airbags. Sales by product – Seatbelt Products and Other Sales for seatbelt products and other increased organically* in all major regions for the full year. The main contributor to organic sales growth* was Europe, followed by Asia excluding China, the Americas and China. Sales by region Our global organic sales* increased by 18% compared to the global LVP increase of 9.4% (according to S&P Global, January 2024). The 9pp outperformance was mainly driven by new product launches and price increases. Autoliv outperformed LVP by around 15pp in Asia excluding China, by 8pp in China, by 7pp in Europe and 7pp in the Americas. FY 2023 organic growth* Americas Europe China Asia excl. China Global Autoliv 15% 19% 17% 24% 18% Main growth drivers Honda, Nissan, Mercedes Stellantis, VW, Mercedes Honda, Great Wall, Mercedes Toyota, Hyundai, Subaru Honda, Toyota, Mercedes Main decline drivers Ford, BMW, Renault Mitsubishi Nissan, Renault, BMW Renault Ford Light vehicle production development Change vs same period last year according to S&P Global Full year 2023 Americas Europe China Asia excl. China Global LVP (Jan 2024) 8.7% 13% 9.1% 8.6% 9.4% LVP (Jan 2023) 5.6% 5.3% 0.5% 4.0% 3.5% ===== SIDA 8 ===== Kvartalsrapport oktober - december 2023 8 Key launches in the fourth quarter 2023 Zeekr 007 Zeekr 001 FR Lynk & Co 08 Suzuki Swift Xpeng X9 Mini Countryman Lexus GX Polestar 4 Toyota Century Driver/Passenger Airbags Seatbelts Side Airbags Head/Inflatable Curtain Airbags Steering Wheel Knee Airbag Front Center Airbag Bag-in-Belt Pyrotechnical Safety Switch Pedestrian Airbag Hood Lifter Available as EV/PHEV ===== SIDA 9 ===== Kvartalsrapport oktober - december 2023 9 Financial development Selected Income Statement items Condensed income statement Fourth quarter Full year (Dollars in millions, except per share data) 2023 2022 Change 2023 2022 Change Net sales $2,751 $2,335 18% $10,475 $8,842 18% Cost of sales (2,221) (1,937) 15% (8,654) (7,446) 16% Gross profit 530 399 33% 1,822 1,396 30% S,G&A (119) (105) 14% (498) (437) 14% R,D&E, net (81) (65) 24% (425) (390) 8.8% Amortization of intangibles (1) (0) 29% (2) (3) (24)% Other income (expense), net (92) 2 n/a (207) 93 n/a Operating income 237 230 3.1% 690 659 4.7% Adjusted operating income1) 334 233 43% 920 598 54% Financial and non-operating items, net (18) (16) 9.3% (77) (56) 39% Income before taxes 219 214 2.7% 612 603 1.5% Income taxes 8 (57) n/a (123) (178) (31)% Net income $227 $156 45% $489 $425 15% Earnings per share2) $2.71 $1.80 51% $5.72 $4.85 18% Adjusted earnings per share1,2) $3.74 $1.83 105% $8.19 $4.40 86% Gross margin 19.3% 17.1% 2.2pp 17.4% 15.8% 1.6pp S,G&A, in relation to sales (4.3)% (4.5)% 0.2pp (4.8)% (4.9)% 0.2pp R,D&E, net in relation to sales (3.0)% (2.8)% (0.2)pp (4.1)% (4.4)% 0.4pp Operating margin 8.6% 9.8% (1.2)pp 6.6% 7.5% (0.9)pp Adjusted operating margin1) 12.1% 10.0% 2.2pp 8.8% 6.8% 2.0pp Tax Rate (3.7)% 26.8% (30.4)pp 20.1% 29.5% (9.4)pp Other data No. of shares at period-end in millions3) 82.6 86.2 (4.1)% 82.6 86.2 (4.1)% Weighted average no. of shares in millions4) 83.5 86.5 (3.5)% 85.0 87.1 (2.4)% Weighted average no. of shares in millions, diluted4) 83.7 86.7 (3.4)% 85.2 87.2 (2.3)% 1) Non-U.S. GAAP measure, excluding effects from capacity alignments, antitrust related matters and for FY 2023 the Andrews litigati on settlement. See reconciliation table. 2) Assuming dilution when applicable and net of treasury shares. 3) Excluding dilution and net of treasury shares. 4) Net of treasury shares. Fourth quarter 2023 development Gross profit increased by $132 million, and the gross margin increased by 2.2pp compared to the same quarter 2022. The gross profit increase was primarily driven by price increases, volume growth, lower costs for material and premium freight. This was partly offset by increased costs for personnel related to volume growth and wage inflation. S,G&A costs increased by $14 million compared to the prior year, mainly due to increased costs for personnel as well as adverse FX translation effects. S,G&A costs in relation to sales decreased from 4.5% to 4.3%. R,D&E, net costs increased by $16 million compared to the prior year, mainly due to lower engineering income and higher costs for personnel. R,D&E, net, in relation to sales increased from 2.8% to 3.0%. Other income (expense), net was negative $92 million compared to positive $2 million in the same period last year. The difference was mainly related to higher capacity alignment accruals in Q4 2023. Operating income increased by $7 million compared to the same period in 2022, mainly due to the increase in gross profit, partly offset by higher costs for S,G&A and higher capacity alignment accruals. Adjusted operating income* increased by $101 million compared to the prior year, mainly due to higher gross profit, partly offset by the higher costs for R,D&E, net and S,G&A. Financial and non-operating items, net, was negative $18 million compared to negative $16 million a year earlier. The difference was mainly due to increased interest expense as an effect of higher debt and higher interest rates. Income before taxes increased by $6 million compared to the prior year, mainly due to the increase in operating income, partly offset by a larger Financial and non-operating items, net. Tax rate was positive 3.7% compared to negative 26.8% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 47.2pp. The decrease is mainly related to a net deferred tax asset recognized in the fourth quarter due to the transfer of certain assets and operations as part of restructuring activities. Discrete tax items increased the tax rate by 9.1pp in the same period last year. Earnings per share, diluted increased by $0.91 compared to a year earlier. The main drivers were $1.09 from lower income taxes and $0.75 from higher adjusted operating income, partly offset by $1.01 from higher capacity alignment accruals. ===== SIDA 10 ===== Kvartalsrapport oktober - december 2023 10 Full year 2023 development Gross profit increased by $425 million, and the gross margin increased by 1.6pp compared to the prior year. The gross profit increase was primarily driven by price increases, volume growth and lower costs for premium freight. This was partly offset by increased costs for personnel related to higher volumes and wage inflation as well as higher costs for energy. S,G&A costs increased by $61 million compared to the prior year, mainly due to increased costs for personnel and projects. S,G&A costs in relation to sales decreased from 4.9 % to 4.8%. R,D&E, net costs increased by around $35 million compared to the prior year, mainly due to higher costs for personnel and lower engineering income. R,D&E, net, in relation to sales decreased from 4.4% to 4.1%. Other income (expense), net was negative $207 million compared to positive $93 million in the prior year. The 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. Operating income increased by $31 million compared to the prior year, mainly due to higher gross profit, partly offset by the changes in Other income (expense), net and the higher costs for S,G&A and R,D&E, net. Adjusted operating income* increased by $322 million compared to the prior year, mainly due to higher gross profit, partly offset by the higher costs for S,G&A and R,D&E, net. Financial and non-operating items, net, was negative $77 million compared to negative $56 million a year earlier, mainly due to increased interest expense as an effect of higher debt and higher interest rates. Income before taxes increased by $9 million compared to the prior year, mainly due to the higher operating income partly offset by the increased interest expense. Tax rate was 20.1% compared to 29.5% last year. Discrete tax items, net, decreased the tax rate this year by 17.3pp. The decrease is mainly related to a net deferred tax asset recognized in the fourth quarter due to the transfer of certain assets and operations as part of restructuring activities. Discrete tax items, net decreased the tax rate last year by 2.5pp. Earnings per share, diluted increased by $0.87 compared to a year earlier. The main drivers behind the increase were $2.51 from higher adjusted operating income and $1.31 from lower income taxes, partly offset by $2.91 from higher capacity alignment accruals and $0.18 from financial items. ===== SIDA 11 ===== Kvartalsrapport oktober - december 2023 11 Selected Balance Sheet and Cash Flow items Selected Balance Sheet items Fourth quarter (Dollars in millions) 2023 2022 Change Trade working capital1) $1,232 $1,183 4.2% Trade working capital in relation to sales2) 11.2% 12.7% (1.5)pp - Receivables outstanding in relation to sales3) 20.0% 20.4% (0.4)pp - Inventory outstanding in relation to sales4) 9.2% 10.4% (1.2)pp - Payables outstanding in relation to sales5) 18.0% 18.1% (0.2)pp Cash & cash equivalents 498 594 (16)% Gross Debt6) 1,862 1,766 5.5% Net Debt7) 1,367 1,184 16% Capital employed8) 3,937 3,810 3.3% Return on capital employed9) 24.4% 24.3% 0.1pp Total equity $2,570 $2,626 (2.1)% Return on total equity10) 36.0% 24.5% 11.5pp Leverage ratio11) 1.2 1.4 (0.2)pp 1) Outstanding receivables and outstanding inventory less outstanding payables. 2) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales. 3) Outstanding receivables relative to annualized quarterly sales. 4) Outstanding inventory relat ive to annualized quarterly sales. 5) Outstanding payables relative to annualized quarterly sales. 6) Short - and long-term interest-bearing debt. 7) Short- and long-term debt less cash and cash equivalents and debt -related derivatives. Non-U.S. GAAP measure. See reconciliation table. 8) Total equity and net debt. 9) Annualized operating income and income from equity method investments, relative to average capital employed. 10) Annualized net income relative to average total equity. 11) Net debt adjusted for p ension liabilities in relation to EBITDA. Non-U.S. GAAP measure. See reconciliation table. Selected Cash Flow items Fourth quarter Full year (Dollars in millions) 2023 2022 Change 2023 2022 Change Net income $227 $156 45% $489 $425 15% Changes in operating working capital 243 226 7.4% 235 58 303% Depreciation and amortization 97 90 7.7% 378 363 4.1% Gain on divestiture of property - - - - (80) (100)% Other, net (120) (10) n/a (119) (54) 123% Operating cash flow 447 462 (3.4)% 982 713 38% Capital expenditure, net (150) (165) (9.4)% (569) (485) 17% Free cash flow1) $297 $297 (0.0)% $414 $228 81% Cash conversion2) 131% 190% (59.2)pp 85% 54% 30.9pp Shareholder returns - Dividends paid (57) (57) (0.6)% (225) (224) 0.4% - Share repurchases (150) (55) 173% (352) (115) 206% Cash dividend paid per share $(0.68) $(0.66) 3.0% $(2.66) $(2.58) 3.3% Capital expenditures, net in relation to sales 5.4% 7.1% (1.6)pp 5.4% 5.5% (0.1)pp 1) Operating cash flow less Capital expenditure, net. Non-U.S. GAAP measure. See enclosed reconciliation table. 2) Free cash flow relative to Net income. Non -U.S. GAAP measure. See reconciliation table. Fourth quarter 2023 development Other, net was $120 million negative in the fourth quarter 2023 and $119 million negative for the full year 2023, mainly related to a net deferred tax asset recognized in the fourth quarter due to the transfer of certain assets and operations as part of restructuring activities. Operating cash flow decreased by $15 million to $447 million compared to the same period last year, mainly due to that higher net income was more than offset by increased deferred taxes. Capital expenditure, net decreased by $15 million compared to the same period the previous year. Capital expenditure, net in relation to sales was 5.4% versus 7.1% a year earlier. Free cash flow* was $297 million, unchanged compared to the same period prior year. Cash conversion* defined as free cash flow* in relation to net income, was 131% in the period. ===== SIDA 12 ===== Kvartalsrapport oktober - december 2023 12 Full year 2023 development Trade working capital* increased by $49 million compared to the same period last year, where the main drivers were $291 million in higher receivables and $43 million in higher inventories, partly offset by $284 million in higher accounts payable. In relation to sales, trade working capital decreased from 12.7% to 11.2%. Operating cash flow increased by $269 million, compared to the same period last year, to $982 million, mainly due to higher adjusted operating income and more positive working capital effects. Capital expenditure, net increased by $84 million, mainly due to the impact on the prior year of $95 million from the sale of property, plant and equipment in Japan. Capital expenditure, net in relation to sales was 5.4% versus 5.5% for the prior year period. Free cash flow* was $414 million, compared to $228 million in the same period last year. The improvement was due to the higher operating cash flow partly offset by higher capital expenditure, net. Cash conversion* defined as free cash flow* in relation to net income, was 85% in the period. Net debt* was $1,367 million as of December 31, 2023, which was $184 million higher than a year earlier. Leverage ratio*. As of December 31, 2023, the Company had a leverage ratio of 1.2x compared to 1.4x as of December 31, 2022, as the 12 months trailing adjusted EBITDA* increased more than the net debt* increased. Liquidity position. As of December 31, 2023, our cash balance was around $0.5 billion, and including committed, unused loan facilities, our liquidity position was around $1.6 billion. Total equity as of December 31, 2023, decreased by $56 million compared to December 31, 2022. This was mainly due to $226 million in dividend payments and stock repurchases including taxes of $356 million, partly offset by $489 million from net income and $20 million in positive currency translation effects. Headcount Dec 31 Sep 30 Dec 31 2023 2023 2022 Headcount 70,300 71,200 69,100 Whereof: Direct headcount in manufacturing 52,400 52,900 50,600 Indirect headcount 17,800 18,200 18,400 Temporary personnel 11% 11% 11% At December 31, 2023, total headcount (Full Time Equivalent) increased by 1,200 compared to a year earlier. The indirect workforce decreased by 600, or by 3%, reflecting our structural reduction initiatives. The direct workforce increased by 4%, reflecting that sales grew organically by 18% in 2023 compared to a year earlier. Compared to September 30, 2023, total headcount (FTE) decreased 1%. Indirect headcount decreased by 400, or by 2% while direct headcount decreased by 500, or by 1%. ===== SIDA 13 ===== Kvartalsrapport oktober - december 2023 13 2023 Sustainability Development Sustainability is an integral part of our business strategy and a an important driver for market differentiation and stakeholder value creation. Our sustainability approach is based on four focus areas, with broad ambitions and more specific short-term targets defined for each area. We are a signatory of the UN Global Compact and our work and policies, such as our Code of Conduct, are aligned with international frameworks such as the ILO core conventions and the OECD Guidelines. In 2023, our sustainability agenda continued to yield results. Highlighting our core business of Saving More Lives, we are pioneering the emerging area of equity in vehicle safety by broadening test models to include more body shapes and parameters such as age and gender. Within health and safety, we saw continued improvement on our KPIs. Focus during the year continued to be on addressing high-risk areas, where we have global standards and extensive training in place. Renewable electricity and GHG emissions: Despite an increase in total energy consumption as a result of increased production, our efforts in particular in increasing renewable electricity use and SF6 phase-out combined with revised emission factors lead to a 17% decrease in GHG emissions from own operations(Scope 1+2). Also this year we carried out a climate survey to a large number of direct material suppliers, to better understand their readiness to meet our requirements and contribute to meeting Autoliv’s net-zero climate ambitions. Low carbon material: Work continued to assess and increase the use of low-carbon materials in our products. As an example, we made strong progress in increasing the share of recycled magnesium. Corporate compliance and integrity: We launched a number of internal e-learning programs targeted at emphasizing our policies and practices, and further improving the skills of those working in areas with elevated risk. ===== SIDA 14 ===== Kvartalsrapport oktober - december 2023 14 Other Items • On October 30, 2023, Autoliv announced an update on its ongoing initiatives to reduce its global headcount, to include a downsizing of about 20%, or 320, of its employees in France. • On January 16, 2024, Autoliv announced upcoming changes to the general terms and conditions, ISIN code and Withholding Agent for the Swedish Depository Receipts. The SDRs will receive a new ISIN code as of February 29, 2024, with updated terms and conditions. Skandinaviska Enskilda Banken (SEB) will assume the role as Withholding Agent in its capacity as issuer of Autoliv SDRs. As of the date the new ISIN is effective, it will no longer be possible to hold Autoliv SDRs as owner registered holdings in a CSD account (Swedish: VP konto) with Euroclear Sweden. Such owner registered holdings in CSD accounts must be transferred to a custody account with a bank, or securities institution, which holds the role as nominee in Euroclear Sweden prior to February 29, 2024. If they are not transferred, such Autoliv SDRs will automatically be converted to Autoliv Common Stock which is denominated in U.S. dollars and traded on the New York Stock Exchange. • In Q4 2023, Autoliv repurchased and retired 1.51 million shares of common stock at an average price of $99.21 per share under the Autoliv 2022-2024 stock purchase program. • The Company set May 10, 2024 as the date for its 2024 annual meeting of stockholders. The meeting will be a hybrid meeting, conducted virtually and in-person in the Detroit metropolitan area. Only the stockholders of record at the close of business on March 15, 2024 will be entitled to be present and vote at the meeting. Next Report Autoliv intends to publish the quarterly earnings report for the first quarter of 2024 on Friday, April 26, 2024. Footnotes *Non-U.S. GAAP measure, see enclosed reconciliation tables. Inquiries: Investors and Analysts Anders Trapp Vice President Investor Relations Tel +46 (0)8 5872 0671 Henrik Kaar Director Investor Relations Tel +46 (0)8 5872 0614 Inquiries: Media Gabriella Etemad Senior Vice President Communications Tel +46 (0)70 612 6424 Denna information är sådan information som Autoliv, Inc. är skyldigt att offentliggöra enligt EUs marknadsmissbruksförordning. Informationen lämnades, genom ovanstående kontaktpersons försorg, för offentliggörande den 26 januari 2024 kl 12.00 CET. Definitions and SEC Filings Please refer to www.autoliv.com or to our Annual Report for definitions of terms used in this report. Autoliv’s annual report to stockholders, annual report on Form 10-K, quarterly reports on Form 10Q, proxy statements, management certifications, press releases, current reports on Form 8-K and other documents filed with the SEC can be obtained free of charge from Autoliv at the Company’s address. These documents are also available at the SEC’s website www.sec.gov and at Autoliv’s corporate website www.autoliv.com. This report includes content supplied by S&P Global; Copyright © Light Vehicle Production Forecast, October 2023 and January 2024. All rights reserved. S&P Global is a global supplier of independent industry information. The permission to use S&P Global copyrighted reports, data and information does not constitute an endorsement or approval by S&P Global of the manner, format, context, content, conclusion, opinion or viewpoint in which S&P Global reports, data and information or its derivations are used or referenced herein. ===== SIDA 15 ===== Kvartalsrapport oktober - december 2023 15 “Safe Harbor Statement” This report 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. 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. 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. 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. 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 Red Sea crisis; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment, 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; 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 medium term financial targets; and other risks and uncertainties identified under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q and any amendments thereto. 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. ===== SIDA 16 ===== Kvartalsrapport oktober - december 2023 16 Consolidated Statements of Income Fourth quarter Full year (Dollars in millions, except per share data, unaudited) 2023 2022 2023 2022 Airbags, Steering Wheels and Other1) $1,864 $1,581 $7,055 $5,807 Seatbelt products and Other1) 887 754 3,420 3,035 Total net sales $2,751 $2,335 $10,475 $8,842 Cost of sales (2,221) (1,937) (8,654) (7,446) Gross profit $530 $399 $1,822 $1,396 Selling, general & administrative expenses (119) (105) (498) (437) Research, development & engineering expenses, net (81) (65) (425) (390) Amortization of intangibles (1) (0) (2) (3) Other income (expense), net (92) 2 (207) 93 Operating income $237 $230 $690 $659 Income from equity method investments 1 1 5 3 Interest income 3 2 13 6 Interest expense (25) (19) (93) (60) Other non-operating items, net 3 0 (3) (5) Income before income taxes $219 $214 $612 $603 Income taxes 8 (57) (123) (178) Net income $227 $156 $489 $425 Less: Net income attributable to non-controlling interest 0 0 1 2 Net income attributable to controlling interest $227 $156 $488 $423 Earnings per share2) $2.71 $1.80 $5.72 $4.85 1) Including Corporate sales. 2) Assuming dilution when applicable and net of treasury shares. ===== SIDA 17 ===== Kvartalsrapport oktober - december 2023 17 Consolidated Balance Sheets Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 (Dollars in millions, unaudited) 2023 2023 2023 2023 2022 Assets Cash & cash equivalents $498 $475 $475 $713 $594 Receivables, net 2,198 2,179 2,189 2,106 1,907 Inventories, net 1,012 982 947 986 969 Prepaid expenses 173 180 166 166 160 Other current assets 93 63 120 90 84 Total current assets $3,974 $3,879 $3,898 $4,061 $3,714 Property, plant & equipment, net 2,192 2,067 2,047 2,045 1,960 Operating leases right-of-use assets 176 162 149 169 160 Goodwill 1,378 1,372 1,375 1,376 1,375 Intangible assets, net 7 6 6 7 7 Investments and other non-current assets 606 500 484 528 502 Total assets $8,332 $7,987 $7,959 $8,185 $7,717 Liabilities and equity Short-term debt 538 590 481 577 711 Accounts payable 1,978 1,858 1,844 1,683 1,693 Accrued expenses 1,135 1,093 1,122 969 915 Operating lease liabilities - current 39 37 35 41 39 Other current liabilities 345 274 274 258 283 Total current liabilities $4,035 $3,851 $3,756 $3,529 $3,642 Long-term debt 1,324 1,277 1,290 1,601 1,054 Pension liability 159 152 152 159 154 Operating lease liabilities - non-current 135 125 113 127 119 Other non-current liabilities 109 96 91 128 121 Total non-current liabilities $1,728 $1,649 $1,645 $2,015 $1,450 Total parent shareholders’ equity 2,557 2,473 2,545 2,627 2,613 Non-controlling interest 13 13 13 14 13 Total equity $2,570 $2,486 $2,557 $2,641 $2,626 Total liabilities and equity $8,332 $7,987 $7,959 $8,185 $7,717 ===== SIDA 18 ===== Kvartalsrapport oktober - december 2023 18 Consolidated Statements of Cash Flow Fourth quarter Full year (Dollars in millions, unaudited) 2023 2022 2023 2022 Net income $227 $156 $489 $425 Depreciation and amortization 97 90 378 363 Gain on divestiture of property - - - (80) Other, net (120) (10) (119) (54) Changes in operating working capital, net 243 226 235 58 Net cash provided by operating activities $447 $462 $982 $713 Expenditures for property, plant and equipment (152) (168) (572) (585) Proceeds from sale of property, plant and equipment 3 2 4 101 Net cash used in investing activities $(150) $(165) $(569) $(485) Net cash before financing1) $297 $297 $414 $228 Decrease (increase) in short term debt (54) (25) 61 167 Increase in long-term debt 2 - 559 - Decrease in long-term debt - (4) (533) (357) Dividends paid (57) (57) (225) (224) Share repurchases (150) (55) (352) (115) Common stock options exercised 0 0 1 0 Dividend paid to non-controlling interests (0) (1) (1) (2) Net cash used in financing activities $(258) $(142) $(490) $(531) Effect of exchange rate changes on cash (16) (44) (20) (73) Increase (decrease) in cash and cash equivalents $23 $111 $(96) $(375) Cash and cash equivalents at period-start 475 483 594 969 Cash and cash equivalents at period-end $498 $594 $498 $594 1) Non-U.S. GAAP measure comprised of "Net cash provided by operating activities" and "Net cash used in investing activities". See reconciliation table. ===== SIDA 19 ===== Kvartalsrapport oktober - december 2023 19 RECONCILIATION OF U.S. GAAP TO NON-U.S. GAAP MEASURES In this report we sometimes refer to non-U.S. GAAP measures that we and securities analysts use in measuring Autoliv's performance. We believe that these measures assist investors and management in analyzing trends in the Company's business for the reasons given below. Investors should not consider these non -U.S. GAAP measures as substitutes, but rather as additions, to financial reporting measures prepared in accordance with U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies. Components in Sales Increase/Decrease Since the Company historically generates approximately 75% of sales in currencies other than in the reporting currency (i.e., U.S. dollars) and currency rates have been volatile, we analyze the Company's sales trends and performance as changes in organic sales growth. This presents the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates. The tables on pages 6 and 7 present changes in organic sales growth as reconciled to the change in the total U.S. GAAP net sales. Trade Working Capital Due to the need to optimize cash generation to create value for shareholders, management focuses on operationally derived trade working capital as defined in the table below. The reconciling items used to derive this measure are, by contrast, managed as part of our overall management of cash and debt, but they are not part of the responsibilities of day-to-day operations' management. Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 (Dollars in millions) 2023 2023 2023 2023 2022 Receivables, net $2,198 $2,179 $2,189 $2,106 $1,907 Inventories, net 1,012 982 947 986 969 Accounts payable (1,978) (1,858) (1,844) (1,683) (1,693) Trade Working capital $1,232 $1,303 $1,292 $1,409 $1,183 Net Debt Autoliv from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore we provide this non -U.S. GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values. Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 (Dollars in millions) 2023 2023 2023 2023 2022 Short-term debt $538 $590 $481 $577 $711 Long-term debt 1,324 1,277 1,290 1,601 1,054 Total debt $1,862 $1,867 $1,771 $2,179 $1,766 Cash & cash equivalents (498) (475) (475) (713) (594) Debt issuance cost/Debt-related derivatives, net 3 (17) 4 12 12 Net debt $1,367 $1,375 $1,299 $1,477 $1,184 Dec 31 Dec 31 Dec 31 (Dollars in millions) 2021 2020 2019 Short-term debt $346 $302 $368 Long-term debt 1,662 2,110 1,726 Total debt $2,008 $2,411 $2,094 Cash & cash equivalents (969) (1,178) (445) Debt issuance cost/Debt-related derivatives, net 13 (19) 0 Net debt $1,052 $1,214 $1,650 ===== SIDA 20 ===== Kvartalsrapport oktober - december 2023 20 Leverage ratio The non-U.S. GAAP measure “net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses this measure to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. Autoliv’s policy is to maintain a leverage ratio commensurate with a strong investment grade credit rating. The Company measures its leverage ratio as net debt* adjusted fo r pension liabilities in relation to adjusted EBITDA*. The long-term target is to maintain a leverage ratio of around 1.0x within a range of 0.5x to 1.5x. Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 (Dollars in millions) 2023 2023 2023 2023 2022 Net debt1) $1,367 $1,375 $1,299 $1,477 $1,184 Pension liabilities 159 152 152 159 154 Debt per the Policy $1,527 $1,527 $1,451 $1,636 $1,338 Net income2) 489 418 390 416 425 Income taxes2) 123 188 168 176 178 Interest expense, net2, 3) 80 75 67 60 54 Other non-operating items, net2) 3 5 1 4 5 Income from equity method investments2) (5) (4) (4) (4) (3) Depreciation and amortization of intangibles2) 378 371 363 359 363 Adjustments2), 4) 230 136 127 10 (61) EBITDA per the Policy (Adjusted EBITDA) $1,297 $1,189 $1,112 $1,021 $961 Leverage ratio 1.2 1.3 1.3 1.6 1.4 1) Short- and long-term debt less cash and cash equivalents and debt-related derivatives. 2) Latest 12 months. 3) Interest expense including cost for extinguishment of debt, if any, less interest income. 4) Capacity alignments, antitrust related matters and the Andrews litigation settlement. See Items Affecting Comparability below. ===== SIDA 21 ===== Kvartalsrapport oktober - december 2023 21 Free Cash Flow, Net Cash Before Financing and Cash Conversion Management uses the non-U.S. GAAP measure “free cash flow” to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on free cash flow, see the reconciliation table below. Management uses the non-U.S. GAAP measure “net cash before financing” to analyze and disclose the cash flow generation available for servicing external stakeholders such as shareholders and debt stakeholders. For details on net cash before financing, see the reconciliation table below. Management uses the non -U.S. GAAP measure “cash conversion” to analyze the proportion of net income that is converted into free cash flow. The measure is a tool to evaluate how efficiently the Company utilizes its resources. For details on cash conversion, see the reconciliation table below. Fourth quarter Full year (Dollars in millions) 2023 2022 2023 2022 Net income $227 $156 $489 $425 Changes in operating working capital 243 226 235 58 Depreciation and amortization 97 90 378 363 Gain on divestiture of property - - - (80) Other, net (120) (10) (119) (54) Operating cash flow $447 $462 $982 $713 Capital expenditure, net (150) (165) (569) (485) Free cash flow1) $297 $297 $414 $228 Net cash before financing $297 $297 $414 $228 Cash conversion2) 131% 190% 85% 54% 1) Operating cash flow less Capital expenditure, net. 2) Free cash flow relative to Net income. Full year Full year Full year (Dollars in millions) 2021 2020 2019 Net income $437 $188 $463 Changes in operating assets and liabilities (63) 277 47 Depreciation and amortization 394 371 351 Other, net1) (15) 13 (220) Operating cash flow $754 $849 $641 EC antitrust payment - - (203) Operating cash flow excl antitrust $754 $849 $844 Capital expenditure, net (454) (340) (476) Free cash flow2) $300 $509 $165 Free cash flow excl antitrust payment3) $300 $509 $368 Net cash before financing $300 $509 $165 Cash conversion4) 69% 270% 36% Cash conversion excl antitrust5) 69% 270% 79% 1) Including EC antitrust payment 2019. 2) Operating cash flow less Capital expenditure, net. 3) For 2019, Operating cash flow excluding EC antitrust payment less Capital expenditures, net. 4) Free cash flow relative to Net income. 5) For 2019, Free cash flow excluding EC antitrust payment relat ive to Net income. ===== SIDA 22 ===== Kvartalsrapport oktober - december 2023 22 Items Affecting Comparability We believe that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items. The following table reconciles Income before income taxes, Net income attributable to controlling interest, capital employed, which are inputs utilized to calculate Return on Capital Employed (“ROCE”), adjusted ROCE and Return on Total Equity (“ROE”). The Company believes this presentation may be useful to investors and industry analysts who utilize these adjusted non-U.S. GAAP measures in their ROCE and ROE calculations to exclude certain items for comparison purposes across periods. Autoliv’s management uses the ROCE, adjusted ROCE and ROE measures for purposes of comparing its financial performance with the financial performance of other companies in the industry and providing useful information regarding the factors and trends affecting the Company’s business. As used by the Company, ROCE is annualized operating income and income from equity method investments, relative to average capital employed. Adjusted ROCE is annualized operating income and income from equity method investments, relative to average capital employed as adjusted to exclude certain non-recurring items. The Company believes ROCE and adjusted ROCE are useful indicators of long-term performance both absolute and relative to the Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its peers. ROE is the ratio of annualized income (loss) relative to average total equity for the periods presented. The Company’s management believes that ROE is a useful indicator of how well management creates value for its shareholders through its operating activities and its capital management. With respect to the Andrews litigation settlement, the Company has treated this specific settlement as a non -recurring charge because of the unique nature of the lawsuit, including the facts and legal issues involved. Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non -U.S. GAAP measure. Fourth quarter 2023 Fourth quarter 2022 (Dollars in millions, except per share data) Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Operating income $237 $97 $334 $230 $3 $233 Operating margin 8.6% 3.5% 12.1% 9.8% 0.1% 10.0% Income before taxes 219 97 316 214 3 217 Net income attributable to controlling interest 227 86 313 156 2 158 Return on capital employed2) 24.4% 8.5% 32.9% 24.3% 0.6% 24.9% Return on total equity3) 36.0% 10.6% 46.6% 24.5% 0.7% 25.2% Earnings per share4) $2.71 $1.03 $3.74 $1.80 $0.02 $1.83 1) Effects from capacity alignments and antitrust related matters. 2) Annualized operating income and income from equity method investments, relative to average capi tal employed. 3) Annualized income relative to average total equity. 4) Assuming dilution and net of treasury shares. Full year 2023 Full year 2022 Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Reported U.S. GAAP Adjust- ments1) Non-U.S. 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 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 employed2) 17.7% 5.3% 23.1% 17.5% (1.5)% 16.0% Return on total equity3) 19.0% 7.2% 26.2% 16.3% (1.3)% 15.0% Earnings per share4, 5) $5.72 $2.46 $8.19 $4.85 $(0.45) $4.40 1) Effects from capacity alignments, antitrust related matters and for FY 2023 the Andrews litigation settlement. 2) Annualized operating income and income from equity method investments, relative to average capital employed. 3) Annualized income relative to average total equity. 4) Assuming dilution and net of treasury shares. ===== SIDA 23 ===== Kvartalsrapport oktober - december 2023 23 Full year 2021 Full year 2020 Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Operating income $675 $8 $683 $382 $99 $482 Operating margin 8.2% 0.1% 8.3% 5.1% 1.4% 6.5% 1) Costs for capacity alignments and antitrust related matters. Full year 2019 (Dollars in millions, except per share data) Reported U.S. GAAP Adjust- ments1) Non-U.S. GAAP Operating income $726 $49 $774 Operating margin, % 8.5% 0.6% 9.1% 1) Costs for capacity alignments and antitrust related matters . Items included in non-U.S. GAAP adjustments Fourth quarter 2023 Fourth quarter 2022 Adjustment Million Adjustment Per share Adjustment Million Adjustment Per share Capacity alignments $96 1.13 $3 $0.04 Antitrust related matters 1 0.01 - - Total adjustments to operating income $97 $1.14 $3 $0.04 Tax on non-U.S. GAAP adjustments1) (10) (0.12) (1) (0.00) Total adjustments to net income $86 1.01 $2 $0.02 Average number of shares outstanding - diluted2) 85.2 87.2 Annualized adjustment on return on capital employed 388 12 Adjustment on return on capital employed 8.5% 0.6% Annualized adjustment on return on total equity $346 $8 Adjustment on return on total equity 10.6% 0.7% 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 Items included in non-GAAP adjustments Full year 2023 Full year 2022 Adjustment Million Adjustment Per share Adjustment Million Adjustment Per share Capacity alignments $218 2.56 $(61) $(0.70) The Andrews litigation settlement 8 0.09 - - Antitrust related matters 4 0.05 - - Total adjustments to operating income $230 $2.70 $(61) $(0.70) Tax on non-U.S. GAAP adjustments1) (20) (0.24) 22 0.25 Total adjustments to net income $210 2.46 $(39) $(0.45) Average number of shares outstanding - diluted2) 85.2 87.2 Annualized adjustment on return on capital employed 230 (61) Adjustment on return on capital employed 5.3% (1.5)% Annualized adjustment on return on total equity $210 $(39) Adjustment on 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 ===== SIDA 24 ===== Kvartalsrapport oktober - december 2023 24 (Dollars in millions, except per share data, unaudited) 2023 2022 2021 2020 2019 Sales and Income Net sales $10,475 $8,842 $8,230 $7,447 $8,548 Airbag sales1) 7,055 5,807 5,380 4,824 5,676 Seatbelt sales 3,420 3,035 2,850 2,623 2,871 Operating income 690 659 675 382 726 Net income attributable to controlling interest 488 423 435 187 462 Earnings per share – basic 5.74 4.86 4.97 2.14 5.29 Earnings per share – assuming dilution2) 5.72 4.85 4.96 2.14 5.29 Gross margin3) 17.4% 15.8% 18.4% 16.7% 18.5% S,G&A in relation to sales (4.8)% (4.9)% (5.3)% (5.2)% (4.7)% R,D&E net in relation to sales (4.1)% (4.4)% (4.7)% (5.0)% (4.7)% Operating margin4) 6.6% 7.5% 8.2% 5.1% 8.5% Adjusted operating margin5,6) 8.8% 6.8% 8.3% 6.5% 9.1% Balance Sheet Trade working capital7) 1,232 1,183 1,332 1,366 1,417 Trade working capital in relation to sales8) 11.2% 12.7% 15.7% 13.6% 16.2% Receivables outstanding in relation to sales9) 20.0% 20.4% 20.0% 18.1% 18.6% Inventory outstanding in relation to sales10) 9.2% 10.4% 9.2% 7.9% 8.5% Payables outstanding in relation to sales11) 18.0% 18.1% 13.5% 12.5% 10.8% Total equity 2,570 2,626 2,648 2,423 2,122 Total parent shareholders’ equity per share 30.93 30.30 30.10 27.56 24.19 Current assets excluding cash 3,475 3,119 2,705 3,091 2,557 Property, plant and equipment, net 2,192 1,960 1,855 1,869 1,816 Intangible assets (primarily goodwill) 1,385 1,382 1,395 1,412 1,410 Capital employed 3,937 3,810 3,700 3,637 3,772 Net debt6) 1,367 1,184 1,052 1,214 1,650 Total assets 8,332 7,717 7,537 8,157 6,771 Long-term debt 1,324 1,054 1,662 2,110 1,726 Return on capital employed12) 17.7% 17.5% 18.3% 10.0% 20.0% Return on total equity13) 19.0% 16.3% 17.1% 9.0% 23.0% Total equity ratio 31% 34% 35% 30% 31% Cash flow and other data Operating Cash flow 982 713 754 849 641 Depreciation and amortization 378 363 394 371 351 Capital expenditures, net 569 485 454 340 476 Capital expenditures, net in relation to sales 5.4% 5.5% 5.5% 4.6% 5.6% Free Cash flow6,14) 414 228 300 509 165 Cash conversion6,15) 85% 54% 69% 270% 36% Direct shareholder return16) 577 339 165 54 217 Cash dividends paid per share 2.66 2.58 1.88 0.62 2.48 Number of shares outstanding (millions)17) 82.6 86.2 87.5 87.4 87.2 Number of employees, December 31 62,900 61,700 55,900 61,000 58,900 1) Including steering wheels, inflators and initiators. 2) Assuming dilution and net of treasury shares. 3) Gross profit relative to sales. 4) Operating income relative to sales. 5) Excluding effects from capacity alignments, antitrust related matters and Andrews litigation settlement. 6) Non -US GAAP measure, for reconciliation see tables above. 7) Outstanding receivables and outstanding inventory less outstanding payables. 8) Outstanding receivables and outstanding inventory less outstanding paya bles relative to annualized fourth quarter sales. 9) Outstanding receivables relative to annualized fourth quarter sales. 10) Outst anding inventory relative to annualized fourth quarter sales. 11) Outstanding payables relative to annualized fourth quarter sales. 12) Operating income and income from equity method inve stments, relative to average capital employed. 13) Income relative to average total equity. 14) Operating cash flow less Capital expenditures, net. 15) Free cash flow relative to Net income. 16) Dividends paid and Shares repurchased. 17) At year end, excluding dilution and net of treasury shares.