Autoliv, Inc. (NYSE:ALV) posted a fourth-quarter earnings beat, but margin pressure weighed on shares in Friday’s premarket trade.
CEO Mikael Bratt said Autoliv recovered nearly all tariff costs in the quarter, while the firm cut headcount by about 900 year over year.
Quarterly Metrics
The company reported fourth-quarter adjusted earnings per share of $3.19, beating the analyst consensus estimate of $2.90. Quarterly sales of $2.817 billion outpaced the Street view of $2.772 billion.
Organic net sales rose 4.2%. Growth was driven mainly by new product launches.
“We reached new record high sales for a quarter and a full year, driven mainly by strong growth in India and with Chinese OEMs,” said Bratt.
“Sales to COEMs grew by almost 40% in the quarter and by 23% for the full year. Our organic sales growth outperformed LVP in all regions in Q4. We recovered close to 100% of the tariff costs in Q4 and more than 80% for the full year,” he added.
Gross profit rose 3.9% year over year to $572 million in the quarter under review.
Operating income decreased by 9.6% to $319 million. Operating margin contracted to 11.3% from 13.5%.
Adjusted operating income decreased by 3.6% to $337 million, mainly from lower out-of-period customer compensations and lower engineering income. Adjusted operating margin contracted to 12% from 13.4% a year ago.
Operating cash flow increased by 30%, to a new quarterly record of $544 million, taking the full year operating cash flow to a new record of $1,157 million.
As of December 31, 2025, total headcount (Full Time Equivalent) decreased by around 900, or 1.4%, compared to a year earlier.
The company exited the quarter with cash and equivalents worth $604 million.
Market Condition Update
Autoliv said lingering supply-chain volatility continued to weigh on production efficiency and profitability.
The company said frequent last-minute changes in customer call-offs, still elevated versus pre-pandemic levels, hurt visibility and operational planning, though it expects some improvement in 2026, even as tariff uncertainty remains a risk.
The company added that inflation pressures, mainly from labor and other operating costs, continued to squeeze margins in the quarter, though to a lesser degree than a year earlier.
Autoliv said most of those cost increases were offset by price hikes and customer compensation, while raw material costs had no meaningful impact on profitability.
On trade policy, Autoliv said the tariffs imposed in 2025 did not materially hurt fourth-quarter results because it recovered nearly all of the added costs from customers.
The company said it recouped close to 100% of tariff costs in the quarter and more than 80% for the full year, though tariff recovery still diluted operating margins by about 15 basis points in the fourth quarter and roughly 20 basis points in 2025.
Autoliv warned that shifting geopolitical and trade conditions could create further volatility in costs, customer behavior and future margin recovery.
Outlook
Autoliv guided for flat organic sales growth in fiscal 2026, implying revenue of roughly $10.8 billion, below Wall Street’s estimate of $11.18 billion, after posting $10.82 billion in sales for fiscal 2025.
The company forecasts about a 1% positive FX effect on net sales.
Autoliv sees an adjusted operating margin of about 10.5% to 11.0%. It projects about $1.2 billion in operating cash flow.
“We have a solid foundation for continued attractive shareholder returns and a clear path towards our 12% adjusted operating margin target,” Bratt added.
ALV Price Action: Autoliv shares were down 7.22% at $117.30 during premarket trading on Friday, according to Benzinga Pro data.
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