Autoliv, Inc.

Q2 2026 Earnings Call — July 17, 2026

Management: Capital expenditures net for the quarter decreased by 19 million. Capital expenditures net in relation to sales was 3.4% versus 4.2% a year earlier. The lower level of capital expenditures net is mainly related to lower footprint optimization and less capacity expansion. The cash conversion for the last 12 months was 119%, exceeding our target of at least 80%.

Now looking on our debt leverage on the next slide. Autoliv's balanced leverage strategy reflects our prudent financial management, enabling resilience, innovation, and sustained stakeholder value over time. Our leverage ratio improved from 1.3 to 1.2 times during the quarter, despite shareholder returns totaling $264 million. Our net debt decreased by around $75 million in the quarter, while the 12-month trailing adjusted EBTA increased by $33 million.

On to the next slide. I will now hand it back to Mikael.

Executive Name (Title): Thank you, Monika. I will talk about the outlook for 2026 more in detail on the next few slides.

Going to the next slide. Overall, S&P Global expects global light vehicle production to decline by 2.3% in 2026, representing an almost two percentage point downward revision from its general forecast. The downgrade is primarily driven by lower production expectations in China and the Middle East, while many other markets continue to demonstrate notable demand resilience.

In Europe, light vehicle production is expected to decline by nearly 1%, reflecting on growing affordability challenges and increasing competition from Chinese imports. For North America, S&P Global has revised its outlook upward and now expects production to decline by only 1% in 2026. The market continues to display resilience despite uncertainty related to the conflict in the Middle East and the higher fuel prices.

S&P Global has lowered its outlook for China light vehicle production by 4 percentage points since January and now expects a 5% decline in 2026. The weaker outlook reflects a challenging demand environment driven by reduced government incentives, ongoing macroeconomic headwinds, and increasingly cautious consumer sentiment despite continued strength in the vehicle export.

S&P Global has revised its light vehicle production outlook upward for both Japan and South Korea and now expects production to decline by only 1% and 2% respectively. The improved outlook reflects strengthening exports to the US and Europe, supported by robust demand for fuel-efficient hybrid electric vehicles. India's light vehicle production is expected to increase by 9%, driven by a reduction in purchase taxes on new vehicles, which benefits smaller and lower priced models.

However, escalating geopolitical tension in the Persian Gulf continues to increase risks across automotive value chains, with potential implications for energy prices, consumer sentiment, supply sensibility, raw material availability, and overall industry volumes.

Now looking on the second half year development on the next slide. As we look ahead to the second half of the year, we remain focused on managing a dynamic external environment. We are closely monitoring the potential impact of geopolitical development in and around the Persian Gulf, which could affect supply chain raw material costs and overall vehicle demand.

Our 2026 guidance currently assumes a gross raw material headwind of approximately 110 million US dollars and we continue to evaluate multiple scenarios as the situation evolves. Despite these challenges, we expect margin expansion to be supported by FX, engineering income, and customer compensation.

For the third quarter, we expect the adjusted operating margin to be similar to the first half-year level. Importantly, customer compensation, engineering income, and other litigation initiatives are expected to be weighted toward the fourth quarter, resulting in a significant step up in profitability in the fourth quarter. Therefore, the earnings trajectory in 2026 is expected to be similar to that of 2023 and 2024, reflecting both the timing of anticipated conversations and the typical seasonal ramp up in profitability and operating leverage.

Now looking on the updated full year guidance on the next slide. This slide shows our full year guidance which excludes effects from capacity alignment and antitrust related matters. It is based on no material changes to tariffs or trade restrictions that are in effect as of July 9, 2026, as well as no significant changes in the macroeconomic environment or changes in customer quality or significant supply chain disruptions.

We expect to outperform light vehicle production by around 2.5 percentage points as our organic sales is expected to be flat, while global light vehicle production is expected to decline by 2.5%. The net currency translation effects on sales is expected to be around 2.5% positive. The guidance for adjusted operating margin is around 10.5% to 11%. Operating cash flow is expected to be around 1.2 billion US dollars. And we expect capex to be below 5% of sales.

Our positive cash flow and strong balance sheet supports our continued commitment to a high level of shareholder returns. We expect a tax rate of around 30%.

Looking on to the next slide. This concludes our formal comments for today's earnings call, and we would like to open the line for questions from analysts and investors.

Operator: Thank you. We will now take

the first question from the line of Colin Langan from Wells Fargo.

Colin Langan (Wells Fargo): Oh, great. Thanks for taking my questions. You know, if I look at your comments about the cadence of margins, I think you had previously said it'd be more linear. Now it sounds I think the math is something like you need a 15% margin in Q4 to kind of get to the midpoint of your full year guidance. What changed and how maybe we should think about raw material costs? I think year to date, you had 26 million. Is that a similar number in Q3? And is all of that recovered in Q4? And is that a big driver of the Q4 spike, is the recovery of all that raw material in Q4?

Management: Thank you for the question there. I mean, as you said, I mean, when we started this year, our expectation was that we could see more of a, let's say, normal, traditional sequence of how the quarter played out in the year. And now we're talking about the more back-end loaded. And the reason and why it's more back-end loaded is because we see the inflationary pressure here in the value chain as a result of the Persian Gulf.

So I think what has changed is really that upward pressure on the cost side. And for us, you know, we don't buy raw materials directly, so it's through our supply chain and we have a timeline there, but we also have a diluting effect of the hype of it as well. We need to get that through and then enter into the negotiations with our customers here on the price adjustments.

So the way of working is very similar to what we saw, if you put it during the inflationary years, then 23, 24, as we referred to here. So that is really the change compared to when we talked about 24. And let me just say that also that, I mean, I feel very comfortable in how this strategy looks like because I mean first of all we have done it before and secondly we are very focused around the different activities to secure the outcome here meaning that it's a combination of course of our internal work here to drive efficiency and cost improvement in general and here we also as we say in the report we have a good momentum in what we do there and that's why we feel comfortable here to retain and maintain the full year guidance.

And then in combination then with the discussions where you have the lead time with our customers and also here I would say we have well established routines also to manage that. So yeah I mean we have clear activities here to do and have confidence in our ability to work on that.

And we should expect almost 100% of the raw materials recovered, just to clarify, or is there still some exposure net for the year because of timing?

No, I mean, it's a combination of, let's call it self-help, meaning that we need, of course, to do our bit here with making sure that we don't let through everything from our suppliers here. So we're working with our suppliers to make sure that we are as efficient as possible in this environment there. And then we have also cost-out activities internally in the company and then the third leg is the price adjustments with our customers here.

So as you know, the price negotiations with the customers is also very detailed. It's of the general percentage adjustment. It is really down to the components level here to see how the different components have been impacted by customers. So hence the lead time also. There are several levers to work with how to offset the inflation.

Colin Langan (Wells Fargo): Got it. And this last question, you lowered production from one to down two and a half. What is the offset? Is that better growth over market? And where are you seeing that sort of better than expected growth that's offsetting the production weakness? Is that maybe a geographic mix helper?

Management: No, I think, I mean, what we see is that we have a positive mix with how the market is developing. And we also have good growth with our Chinese customers here. India is also contributing here. So I think we are in the right places here to capture the growth that actually is out there.

Colin Langan (Wells Fargo): Got it. All right. Thanks for taking my questions.

Management: Thank you.

Operator: We will now take

the next question from the line of Emmanuel Rosner from Waltham.

Emmanuel Rosner (Waltham): Great. Thank you so much. One follow up on the cadence, please. Are you expecting, just to be clear, are you expecting most of the mitigating impact from the recoveries and from your own self-help to happen in the fourth quarter? I'm just trying to understand the delta between what you're saying for Q3 margins and then what maybe consensus expectations were, that's probably like $35 million delta. Just curious, are these unmitigated headwinds in Q3 and then you get it all back in Q4?

Management: The majority is in Q4. I think that's how you should read it. Of course, we are managing part of it in the third quarter. But as a natural progression also, if you look at the engineering income, it's mainly in the fourth quarter rather than in the third quarter. So I think that's quite natural.

So it's really engineering income. It is also the higher customer compensation that we talk about here for the inflation. And I think also if you look at the sales progression, it's also for the remainder of the year also geared towards the fourth quarter. So that's really the reason for that.

Emmanuel Rosner (Waltham): Understood. And then can you give us a little bit more color around the IEPA refund dynamics? I wasn't able to follow exactly to what extent it helped your EBIT in the quarter and what you expect on a full year basis.

Management: So right now in the quarter, we got back around $12 million from the government, which we largely pass on to our customers, around $9 million. So we retain a positive impact of $3 million in the net results.

Emmanuel Rosner (Waltham): Thank you very much.

Operator: We will now take

the next question from the line of Tom Narayan from RVC.

Tom Narayan (RVC): Yeah, hi, thanks for taking the question. I have a follow-up to Colin's question on the growth of our market. You know, I remember at the investor day in Sweden, we heard a story about how we're going to see, you know, good growth of our market coming from, you know, increasing content per vehicle, especially from emerging markets. You know, you got calling for two and a half percent growth of a market this year. I know there's some offsets, right? Notably, America's in this past quarter was down five percent.

So I just wanted to understand that a little bit more. I know in the report there was a call out of South America, which had, I guess, lower content per vehicle and then on replacement vehicles. But does this mean that the growth in South America were happening in vehicles with no safety content? I just don't understand why it would be down 5%. I know that's versus a very strong market level in South America, but if you have any safety content, I would think it would be up. I just want to understand that better, and then I will follow up.

Management: Yeah, I mean... Let me start to recap here, because I mean, when we talk about the growth and the capital markets that you mentioned here, I mean, it was really three significant buckets we talked about. One was LVP, one to two percent. It was then the content that one to two. So, I mean, if you imagine a flat LVP, you had a content growth that was one to two percent on top of that.

And what we're talking about now here is really that we see a market that is down with two and a half percent, the LVP portion of it. And then, of course, we have mixed effects here connected to the content very much. And what we talk about here is when South America is growing and the U.S., if we stay in America, so to speak, I can simplify a little bit, which is a high content is flat or even would go down.

Of course, even if you have growth in South America content, it's not enough to offset what's going down in the high content markets. So there, of course, you'll get a negative mix effect on the content side. So long story short, we definitely see that the content growth is there and we see... also how both, let's call it, the low content markets are growing in the content as well as the high content over time here.

And when we talk about India specifically, it's very much so that it's a content-driven growth as we see. I mean, the last two years, the content have grown sequentially with 20% two years in a row. So a strong growth there. So what we try to convey there, Kevin, the market definitely still holds there. But unfortunately, you have a mixed effect here that is not moving in the full potential there.

Tom Narayan (RVC): Okay, understood. And then my follow-up, I guess, what was the rationale to move production from Turkey to EMEA? Was it cost saves coming from a plant maybe that wasn't as automated? Was it labor? I guess what was driving that decision? Thanks.

Management: No, I think, I mean, we constantly review our global footprint. And here we talk about EMEA, where we have over the last couple of years taken significant steps to consolidate our activities and optimize them as we move forward and that's something we will have done and we continue to do going forward also to make sure that we have the most competitive setup.

And we saw here now that with the opportunity to continue to consolidate the capacity into other sites in Europe. We have a strong business case to do so and you have seen the numbers and you have the numbers here and that's of course a tough decision to take and painful for our colleagues in Turkey that have done a great job over the years but we need of course to make sure that we maintain our competitiveness.

So we're moving and some to our Tunisian operations that have been growing plants over the last couple of years here and we're also moving into other sites in Europe and Romania for example. So it's to continue to sharpen our position here.

Tom Narayan (RVC): Thank you.

Operator: We will now take

the next question from the line of Winnie Dong from Deutsche Bank.

Winnie Dong (Deutsche Bank): Hi, thanks so much for taking my question. I just wanted to follow up on your production assumption for the full year a little bit more. So now you're assuming 2.5% decline. Previously, you were at 1%. I think lately, I just actually improved the algo a little bit. So I just wanted to understand if there's a mixed situation that's going on and if you can help us triangulate what you're seeing and if you're just truing up to what the market is trending towards. Thank you.

Management: Yeah, thank you for your question. I think, I mean, S&P now is at minus 2.3. We are at 2.5. I would say that's about the same level, it's a marginal difference here. And I mean, the big move you could say here is that we have seen a more weakening, a deeper weakening in China than expected here. To some extent also the Middle East, but Middle East is still a very small part of the total picture.

I think it's less than 2% when you talk about Middle East Africa here. So, I mean, it's really about the weakening in China, domestic sales there and the domestic corporations. That is the change since we talked about that.

Winnie Dong (Deutsche Bank): Okay, gotcha. I think that's helpful. And you do have very good momentum happening in China. And I know it's kind of difficult to delineate the strength between domestic which is seeing a lot of weakness right now, but exports is actually very, very strong. But is there like a general framework on how we can think about how much the exports is actually contributing to your outgrowth in China?

Management: I think it's, I mean, it's not really, I mean, for us, it's all domestic, you could say, that we're delivering in there because we don't have separate value chains or separate markets. Setups if it's an export vehicle or it's a domestic. So we don't really see that split from our perspective.

So for us, it's all domestic sales to domestic plants. But I mean, you're absolutely correct here that the production level is holding up better than what the domestic sales to the end consumer would indicate. So our channel operation is definitely supported by the exports here.

And yeah, I think we will see going forward here, but when we talk about the adjustments we just mentioned here to the minus 2.5, it's the net effect of that, of course.

Winnie Dong (Deutsche Bank): Gotcha. Thank you so much.

Operator: We will now take

the next question from the line of Hampus Engelau from Handelsbanken.

Hampus Engelau (Handelsbanken): Thank you very much. One question for me, it's relegating to the Turkey production closure, but also going back to your capacity line and programs in Europe. I'm not sure exactly, but that initially was about 8,000 people, and this is additional 2,200 people. I'm just trying to understand where you're...

Management: Thank you very much. I think, as I alluded to before, it's a constant review of how to optimize your production facilities. It's not like we had an overcapacity necessary in Turkey, but we had an overcapacity in the whole system here, where we saw opportunities to consolidate even further.

And I mean, you're correct in the way to say that the optimization definitely contributes to our opportunity to put more into the existing plants somewhere else and when you drive the optimization you can also create the flexibility we have talked about before.

And we can also see that with an efficient, optimized, and flexible setup, you need less square meter to produce the same amount. So when you harvest that, so to speak, you come to these kinds of decisions every now and then, where you're actually looking at the complete site by then consolidating it in.

So it's a way of harvesting the continuous improvement or also the step changes that we've seen as a result of new technologies.

Hampus Engelau (Handelsbanken): Thank you very much.

Operator: We will now take

the next question from the line of Itay Mikaeli from TD Cohen.

Itay Mikaeli (TD Cohen): Great, thank you everybody. Just two follow-ups for me. Just first back to the margin guidance, just given the updated cadence for the year, is there any bias at this point towards the lower half or upper half of your full-year margin range?

Management: No, as you see here, we haven't expressed an upper or lower end or any more precision than what we have here, which is within the range of around 10.5 to 11%. And I think I mean if you ask me which I think you do why we are not more precise here it is really that that we see with everything going on here that there is difficult to be more precise than what we are with the interval here and I think the interval here reflects the volatility in the market so to say and uncertainty when it comes to the market in whole and also this inflation pressure here if it's a long-term thing or if it's more of a short-term thing.

But with what we see right now, this is the best judgment we can do now that we should be within that range.

Itay Mikaeli (TD Cohen): Thank you. As a quick follow-up, can you maybe comment on order intake trends in the quarter, if you've seen any improvement there, and maybe how just like order intake the last couple of years just maybe impacts how we should think about your growth over market in Americas and Europe, say over the next 12 to 24 months?

Management: Yeah, I mean, we don't disclose any details around the current order intake. More than I can say that I feel comfortable that we have activities in that area that support, depending on our market share here, which is around 45%.

I would say, as always, you start out the year where you have a lot of indications that it will be at a certain level, and then as the year plays out, some things are then being pushed out to the next year, meaning that the OEMs decide to delay the decisions and so on.

And in this and the circumstances that we have right now with a lot of questions around the sentiment in the market, the driveline issues and so on that we saw taking place maybe a year, year and a half ago and some reshuffling in the model programs to date.

I would say to some extent that it's partly still going on, but it is a reasonable activity level year when it comes to tenders that are out there. So, all in all, I think we are in good shape here to defend our market share and I would say also activity level wise it's a decent year from OEM perspective in terms of activity.

Itay Mikaeli (TD Cohen): Great. That's very helpful. Thank you.

Operator: We will now take

the next question from the line of Agnieszka Vilela from Nordea.

Agnieszka Vilela (Nordea): Thank you. And hi, Michael, Monika and Anders. I have two questions. Starting with your growth with the Chinese OEMs, I mean, you have been very successful increasing your sales towards them and you announced the new cooperation with Xpeng and Great Wall.

Overall, do you expect that the growing China mix in your sales will have neutral, positive or negative impact on your group content per vehicle and on your profitability?

Management: As you know, the profitability part, I can't go into any details here. And I'm going to say it's more of a and many others. But in terms of our growth opportunities here, I definitely see this as a very important and great opportunity to secure our QQ growth here.

As you've seen here, we have grown from 22% of our China sales in 2022 to 55% of our China sales now in Q2, at the same time as the China OEMs have taken their share of the light vehicle production from roughly 43% in 2022 to 72% now in the second quarter of this year.

So the combination here of us increasing with them as well as they increasing theirs, who is the chair of Light Week Production contributes very positively opposed to the growth but also to securing our position in China here as the market leader and also with the opportunities that may be in the future here also when the Chinese OEMs are moving out their footprint to support more locally integrated in the different regions.

But right now you could say it's mainly an export-driven activity here, which also supports us, of course, here in this. In the quarter here, four out of the eight fastest-growing customers are Chinese OEMs. So it's very helpful, absolutely, and important.

And I think also just coming back to the agreements you referred to here, it's, of course, also very interesting opportunities for us also when it comes to driving innovation here because many of these customers are very innovative in terms of their expectations on the future interiors and I would say more advanced products to solve more challenging seating positions, etc. So very interesting from an innovation point of view as well.

Agnieszka Vilela (Nordea): Perfect. Thank you for the caller. And the second question, coming back to growth, looking at your performance in H1, you outperformed the market by 2 percentage points, but just looking at what you guide for the full year, it looks like the outperformance accelerated to 3 percentage points. Can you just give us any reasons why and drivers behind this acceleration in outperformance and growth?

Management: FX is one part of it as well and I think we have also talked here about before a slightly positive effect coming from the mix here because before we talked about more of a flat or neutral regional mix for 26 and now we're looking at let's say 40 basis points contribution coming from that as well and then of course also you have some compensation activities here with our customers.

Operator: Thank you. We will now

take our final question from the line of Dan Levy from Barclays.

Dan Levy (Barclays): Hi. Good afternoon to you. Thank you for taking the questions. I wanted to go back to the question or the point of recovery payments. Can you maybe just put this in context of how the recovery payments that you're getting or that you're planning to get on raw materials how that's at all related to the other recovery payments you'd have on other inflationary measures whether the two are linked and you know, with automakers, you know, you've had a very good track record in the past of getting recoveries, but with automakers, especially in North America, tighter on pricing, is that at all playing any role in the types of conversations you're having, you know, the magnitude of recoveries?

Management: I wouldn't say that there is any difference in the dialogues today compared to what it was, you know, in 25, 24, 23 years ago. It's never easy, and it has never been. But once again, I think here, when it comes to the different buckets you're referring to here, I mean, tariffs, it's fairly straightforward, I would say, because that's something you have to pay when you cross the border, and it's very easily connected to the value flows you have towards the customers.

Now with the 232, I mean, we are mainly talking about the tariffs between Mexico and the U.S. here. With the 232, it will, you know, be almost automized to a large extent when that is fully in effect. Engineering income is also something we're talking about here. That's also something that is, you know, part of ordinary course of business that we have been for years, so there's nothing to change there.

And when it comes to the inflation compensation here we see that the combination here of course that we need to do our part here together with our suppliers and our internal efficiency and then come to the customer so it's a mix of the three here and once again it's a very detailed description down to the component level and also here we are all hands on deck and established routines there so I would almost call it business as usual, but maybe that's too simple.

But we have a good way to deal with that part as well, and we are progressing as we speak here. And no change either improved or deteriorated in terms of ability to do it.

Dan Levy (Barclays): Thank you. And as a follow-up, I wanted to ask about the strategic cooperation framework you signed with Great Wall and Xiaopang. Could you just help us understand if you're aiming to set up additional agreements with other automakers, and to what extent does this position you well as you start to look at potential partnerships? Sourcing opportunities for these automakers in Europe. Does that position you to the front as they start to, you know, give out awards?

Management: No, of course, it's something that we constantly work with together with our customers. And we have had this type of agreement in the past also with Anders, which we also have communicated not that long ago. So they are important.

I would say I connected very much also to, first of all, the innovation opportunities here, because it really means that we get very close to our customers here by working well in advance with new joint challenges here.

So, as I said before, here is the different seating positions that is not traditional, but may come when you see autonomous vehicle increase eventually over time. But already today, comfort is a key factor for many OEMs, meaning that you should be able to sit more relaxed, lean back more than what the current setups allow you to do.

So we call it the zero gravity seat. I think we have spoken about that here also in the two times. It's an opportunity for that. But the further out you go, you could say, with the ambitions that some of the OEMs have here, in terms of creating new interesting vehicles here, you have to have more challenging solutions at the end of the day, which drives also content, I would say.

And it puts us up to be in the forefront of developing this new type of technology that is needed in the future. So very, very interesting and a great opportunity to support our customers in a good way.

Operator: Thank you.

Management: Thank you. All the time we have for questions today. I would now like to turn the conference back to Mikael Bratt for closing remarks.

Executive Name (Title): Thank you, Sandra. Let's look on the next slide here. Before we conclude today's call, I would like to highlight our new innovation center in Vårgårda, Sweden, which was inaugurated in June and represents an important investment in our future growth and technology.

By bringing research, testing, prototyping, and pilot production together in one location, the Center will help accelerate innovation and shorten development cycles. The Center also expands collaboration with industry, academia, and society, creating a strong platform for future innovation.

We believe this investment will support long-term growth and enhance our competitive position and help us save even more lives in the years ahead. Finally, the third quarter call is scheduled for Friday, October 23, 2026. Thank you for your attention and until next time, stay safe.

Q1 2026 Earnings Call — April 17, 2026

Analyst Tom Narayan (RBC): Thanks for taking the questions and welcome, Monica. The first question I have is on the China strength. And I know you called out higher penetration of domestic OEMs. I would think you also benefited from the relative outperformance of non-domestics, which I think come at higher margins than domestics for you guys. Yeah, just curious if that's true. And then if your overall China penetration increase your, boosted your margins and how sustainable that is as the year progresses.

Management: As you know, we don't disclose a breakdown of our earnings profile per customer or regions or countries or anything like that. I mean, we have a total portfolio of a large number of programs, and that's the combined result of that that we are presenting here. But it's not a secret that we have focused on our Chinese OEMs as they are growing in their share of the total markets. Our focus here is to have a market share of around 45% of the global light vehicle production and that's what we are happy to report that we continue to build on that strategy here and it served well in the quarter here and of course we are working hard to improve our earnings profile across the board here in general.

Analyst: For my follow-up, I just it sounds like the tariff policy is as of April 10th in your guidance. I know April 6th there was the rule change on the metal side as it relates to that Section 232 rule change. Is just wondering, is this the current USMCA exemption that you enjoy, is that still the case? And then this only applies I think on the metal side where I guess the OEMs have that MSRP offset, is that your understanding does it meaningfully impact?

Management: I think in general, when it comes to the tariffs, I think it's a lot of moving pieces there. But I think for us, as automotive here, it's to a large degree unchanged. I mean, for us, it's mainly the USMCA structure that is relevant and there we have no changes at this point. So that is what we’re looking at the rule changes that you saw lately here. It's a minor part of our total exposure and not meaningful in this context. But of course, we follow that as well here. But for us, it's all about the USMCA, I would say. That's the key thing here. And no changes there.

Analyst: Understood. Thank you. I'll turn it over.

Analyst Colleen Langan (Wells Fargo): Oh, great. Thanks for taking my questions. One, just trying to clarify, maybe I misunderstood. So, S&P is down two, but your guide is down one. Any, it's based on down production at one. Is that just a mix issue or is that just, why not in line with S&P? And then just a lot of people are worried about if you read even the S&P comments, if the straits don't open, there's more downside. Can you just remind us on the decrementals of production actually continues to trend downward?

Management: I think as you saw when we gave our full year guidance in connection with the Q4 earnings release, we had minus one and S&P had minus 0.5. So at that point, we were more cautious. I think what we have seen now and the change that came yesterday is within the, let's say, the margin of error here in this very, I would say, volatile environment here and of course we are fully aware of what's going on in the straits around the Persian Gulf as we mentioned in the presentation here. But at this point we have no indications, no signals, nothing that indicates something else than what we have in our outlook here. I think it can definitely also change to the better here. I think there's a lot of different scenarios you can play up here and I think we feel comfortable with our outlook here.

Analyst: Sorry? If it gets worse, what are the decrementals that we should expect?

Management: Of course, I mean, as I said, we follow this and are ready to take any measurements that are necessary. So, I mean, if we will see a dramatic change to this outlook, we are of course ready to make necessary adjustments. And I think we have proven that in the past that we have a high degree of flexibility in our system and a strong team here to execute on those changes. So I think it's all about staying close to the development as we always do here.

Analyst: Okay. And then just to follow up on, can you get any color on the drivers of the increase in raw material cost and also any risk of shortfalls, particularly I heard some concerns around nylon that some of the butadiene plants are apparently on short supply and that's an input into nylon. Is there any concern that we actually can't get supply of some of the raw materials like nylon and are there alternatives to swapping if there are shortages?

Management: No, I think, I mean, to your first question there, what's the main drivers here? It's really the oil price that is the main driver for us at this point in time, as it goes into many different types of products. And that's what we're following. That is what's causing the higher prices. We estimate that we have here now of 90 million instead of the 30 we had in the beginning of the year. But with that said we are definitely here focusing on making sure that that becomes lower than what we have said here to manage the situation here. So we'll see and we have offset activities which I explained before. When it comes to the availability we don't really see at this point any main concerns around that. I think we of course have our supply chain team on high alert here and they're working actively to secure supply so I would say so far so good but of course we realize here that if you will have real shortages of oil etc here we have of course, different activities around that. So I feel that we have that under control. Just back to your question there on the sensitivity here, if we have a drop in demand outside our own expectations here at this point in time, I just wanted to remind you here about our normal decrementals we normally reference to, which is between 20 and 30% leverage if we have a dramatic drop in sales going forward. So I just wanted to mention that related to that question.

Analyst: Got it. Very helpful. All right. Thanks for taking my questions.

Analyst Mattias Holmberg (DNB Carnegie): Thank you. I'm interested in the outperformance given that you have a 4% here in Q1 and still guide for just 1% for the full year. Am I off by thinking that you are aiming is perhaps not the right word, but you see no outperformance for the balance of the year? Or what are the moving parts and what would sort of result in this lost momentum? Is it the pull forward from the strength you saw in March that is going to reverse or I'm just trying to understand the dynamics here please.

Management: No, I think I mean it's of course when we give the full year guidance here you take into consideration also the mix development throughout the year and I mean, some quarters it's a little bit in your favor and some it's in the reverse. And what we indicated here in the first quarter, we had a positive mix effect of roughly one and a half percentage point here. And yeah, we still believe that with the development for the year here that we have, for different regions. That's to the best of our knowledge that we should end up where we have indicated here.

Analyst: And a quick follow-up on the raw materials. With the 90 million gross headwind, is it roughly evenly phased, do you think, over the next three quarters? Or is there any quarter in particular that will be more severely impacted? And also, have you made any assumptions on what the net impact will be after mitigations sort of embedded in your margin guidance?

Management: No, I think it's, I mean, the net effect is included in our guidance here. So what we're saying here is that the gross exposure we have here should be mitigated either by price increases and internal, let's say, self-help through other activities here. But the majority is price increases here. And it fits within the guidance there. And when it comes to the sequential development here, I don't know, Monika, if there is anything you would like to add there. But still, we're not guiding per quarter, as you know.

Analyst: Maybe then just a clarification. Do you assume full recovery of those 90 gross?

Management: As I said, we will have a majority through the price mechanisms that we have and the rest we should be offset by internal activities to a large extent as possible. So once again, the net effect is included in our full year guidance. So I have no more granular numbers to give you around that than that. That's clear.

Analyst Hampus and Gelo (Handelsbanken): Thank you very much. Two questions from me. First one is on customer call-offs. If I heard you right, you said that customer call-offs were more stable during the quarter. I'm just thinking, is this some one-off here, or should we expect this trend to continue moving into second quarter?

Management: No, I think, I mean, as we said here, the call of stability was around 95%, which is what it was during last year at the good times. We had some deterioration towards the end of Q4, where we saw some customers pulling the brakes on to reduce inventory at the year end. And then it normalized again in the beginning of the quarter here. And of course, with the increased sales in March here, that also helps to stabilize the situation when you have a little bit of an upward trend there. And we still believe that it should continue to improve under normal circumstances. I think it all depends now on what happens with the supply chains. If we have a positive scenario, meaning that we come to some kind of resolutions here around the Middle East situation and the value chains are connected to that or not. Because it's the disturbances in the value chain here that creates a lot of the volatility, I would say, at this point in time. Long term, it's definitely expectations that it should continue to improve. And with the two weeks into the first quarter, I would say it still holds and we have a stable situation here. And yeah, we will of course follow it closely. So far so good.

Analyst: Fair enough. If I'm looking, when you came out of Q4, one of the main takes was that there were much lower new model launches, especially on the EU side, I guess, partly also in Europe. And it seems like China has had more new model launches than you maybe expected. And given the short lead times we have between a new model and launching a new model in China, can you maybe add some flavor on that one? Or are you surprised about that? And we also hear Volkswagen is clearly stepping up on the bad side, talking about one new model each second week for the remainder of this year for next year. So if you could maybe share some light on that.

Management: Yeah, I think, I mean, I wouldn't say that we have any surprises when it comes to new launches, because, I mean, they are something that you need to be, of course, well prepared and tuned and everything else ready for. So I think we have a very good visibility of that in general. Then we know during last year that we had not connected to China, but connected to the global situation here, a lot of reshuffling in terms of launches of new platforms, especially around EVs in the US and Europe here that changed. But that doesn't really impact the short term, I would say here, and not in China. So I think no, long story short, no real surprises around that.

Analyst Emmanuel Rosner (Woolf Research): Great. Thank you so much. My first question is around the odds performance versus the industry, which was solid in the first quarter. But I wanted to follow up a little bit about what you're assuming for the rest of the year, because it would be basically some sort of deceleration versus this Q1 performance. And you flagged the mix was one and a half point positive in Q1. What are you expecting for mix on the full year over the rest of the year and what would be the drivers of sort of like limited or minimal growth of the market compared to what we've seen in Q1?

Management: No, as I said before here, I mean the mix in this each quarter has of course a meaningful impact on it and this first quarter we had 1.5 percentage points coming from positive mix. When we look at the full year here and basically we have guided them for a 1% outperformance considering flat organic and negative 1% light vehicle production. It's based on a neutral mix compared to 2025. So we have no tailwind or headwind coming from mix in that assumption. And that's, of course, the best estimate we have now. Then you don't know the mix for 100% until you have gone through here. But we still believe that that's the most likely scenario with what we see here and light vehicle production for regions, et cetera, looking ahead.

Analyst: And then, you know, with a lot of moving pieces around the romance and tariffs and etc, I was hoping you could just refresh for us the main drivers of margin expansion for this year. So if we're thinking about 2025 as a starting point and then your reiterated margin guidance for 2026, what are some of the big buckets of margin improvement now, you know, basically marked to market, you know, with the similar sort of like limited organic growth?

Management: So I will start with the negatives that you could already observe in our messages. We have a negative impact from raw materials and from inflationary impact on SG&A and RD&E. That we more than plan to offset with operations and raw material mitigations. Now we are tapping in again in structural cost savings and our known resilience in challenging times. We are going to tap in as well into customer compensations to partly offset or to meaningfully offset the raw material headwinds that we mentioned. And in addition to that, we benefit from positive FX impact across the board that was already visible to some extent in our Q1 results.

Analyst: Okay. So, but you're obviously planning for a decent amount of margin expansion. So, you mentioned headwinds that would be, you know, largely offset and then a bit of FX. Like, what are some of the, you know, main positives?

Management: The main positive is really around the structural cost savings that is coming through and it is in the operational productivity effort here where we talk about optimization, digitalization, etc. to drive efficiency through the value chain. It continues to be very much the same driver, as you could say, for our modern expansion as we go ahead. And as Monica mentioned here, we have short-term expectations on some headwinds around raw materials, which we are planning to offset also through price compensation and additional cost reductions, and then also some positives from the FX.

Analyst Jose Asumendi (JP Morgan): Thank you. Hi, Michael. Welcome, Monica. A couple of questions, please. Michael, can you comment on Chinese OEMs, both in China and Europe, and how you're going to be benefiting in the coming quarters from the product launches? And can you help us a bit more on which customers should we be keeping an eye on in terms of the acceleration in China, you know, Q2 to Q4 or, you know, on a one-year view? And also when it comes to Europe, can you share a bit more how you can benefit also from the, what we're seeing, right? Chinese OEMs taking double-digit markets here in the European market. How is that also going to benefit the utilization of your plants?

Management: So, as you know, we work broadly with the Chinese OEMs and I would say we are on all the different platforms OEMs that you see exporting out of China in different shapes and forms. There are two exceptions which have their own captive solution and that's Zyke and BYD, but the BYD is still a very important customer for us, which we are working with. When you look at the development of Chinese OEMs, I would say we are present in a broad base there. I think the outperformance numbers in the quarter here speaks for itself, where we had 40 percentage points outperformance with the Chinese OEMs. I think that's a really strong and good number there. When we see them coming to Europe, they are normally, I would say, very high level of CPV in those vehicles. It mirrors the position we have in China there, I would say. We have seen not so much local production yet of the Chinese OEMs, but what I can say, and I think we said also in the connection with Q4, that we won the first tender that was issued in Europe by Chinese OEMs. So I would say that we are very happy about that and proud that we were able to meet the COEM's expectations here in Europe. So I think we are in a good position to utilize our European footprint here as well for our Chinese customers.

Analyst: Before we move into working capital, just a quick one. The last time we met Fabian and Sling, we discussed the new R&D center in Wuhan. Is that R&D center, you know, are you getting incremental order backlog from that new R&D center or is that yet to come in your businesses?

Management: I think it helps us to strengthen our presence in China and our closeness to our customers. I mean, over the years, for a long period, our strategy has been to have our D&E centers near our customers and work closely with them early on in the different projects. And this is a step in order to continue to strengthen our presence in China with our customers here by offering a better footprint for our customers here through the second tech center. So I think it's a part of the overall strategy and focus we have.

Analyst: Continuing then with the working capital. We mentioned that cash flow in Q1 was negatively impacted by 349 million increase in operating working capital, mainly due to temporary impact. The increase in the receivable, other one-timers that have as well temporary effects, and then the payables that are more normalized compared to the year end. Our full-year cash flow expectations are unchanged, with the operating cash flow expected at around 1.2 billion and CAPEX below 5%. That implies our expectations that we are normalizing the working capital assumptions. And we are continuing to execute on our working capital improvement program. There are still some actions outstanding that will deliver results through the year.

Analyst Jay Ramnathan (Davaa Capital Markets): Hi, thanks for taking my question here. So just going back to your long-term revenue CAGR of 4% to 6%, the 1% to 2% that was coming from new markets, I know you talked about it being not in the short term. But with the motorcycle product introduction, if you could just talk about what does that do? Does that change the expectation here?

Management: No, it doesn't really change the expectation. I would say this is a part of the expectation, so to speak, that we have stated here that the 4% to 6% under, let's say, 1% to 2% LVP, 1% to 2% content, and 1% to 2% coming from mobility safety solutions should come through towards the end of this period here, which we mean 2030, before it becomes meaningful. And of course, there is a gradual buildup, and we have also talked about that before, that MSS is contributing gradually here, but it's going to get further out there. And this is the first step in the Bag on bike product offering and then also the wearables. So this is more, I would say, a data point that what we have talked about to build the last one to two percent of the four to six really is on its way. That's the way you should read it. And it doesn't really change the expectations beyond that.

Analyst: Thank you. And my follow-up is for Monica. Just as you kind of take a fresh look at shareholder returns, your initial thoughts on share buyback of $300 million to $500 million given net debt to EBITDA target being below the 1.5 times.

Management: I think maybe on the buyback, as we stated here, I mean, we are committed to our program. We are also indicating here that it should be between three to five hundred year by year. And that's like a guidance. Then, of course, we take into consideration the balance sheet. We take into consideration, okay, are we heading into more 2021 positive territory when it comes to overall business cycle or not etc. We have plenty of room in our program that was launched last year here and we are on our way here. We take all those pieces into consideration. We remain committed.

Analyst Bjorn Inarsson (Danske Bank): Thank you. Try to be quick. But you base your guidance on unchanged regional mix. I guess it sounds fair. I would most likely have done it myself. But I mean, your regional mix. Last year, I mean, Q1, Q2, you talked about the significant negative regular mix. And in Q3, Q4, I believe it was 1 to 200 basis point negative as well. Is that a fair assumption on the comps kind of that we are talking about when you say that your mix is going to be unchanged for the year?

Management: As you rightly said, we had some headwind last year. We are not expecting that to be reversed this year here and of course it's much connected to the overall business sentiment that are around the world here. So we're not considering any changes to that. So that's the right consumption assumption.

Analyst: Secondly, you talked a lot about the guidance versus S&P and VB, but most of the revisions were linked to Middle East and connected countries. What is your exposure to that region if you compare it to other regions?

Management: I would say it's very limited. I mean, first of all, the region altogether is a minor part of the, if you look at the light vehicle production, obviously. And I would say the indirect also is, let's say, manageable at this point in time. So not that big.

Management: Thank you very much. This concludes the question and answer session. I will now hand back to Mr. Michael Bradford for closing remarks.

Executive Michael Bradford (Title): Thank you, Raza. Before we conclude today's call, I would like to reiterate my confidence in our strong market position and our growth momentum in Asia, particularly in China and India, which position us well for continued success. At the same time, we remind mindful of the heightened macroeconomic and geopolitical uncertainties. Despite these uncertainties, our proven ability to strengthen profitability, even in a low growth environment, provides a solid foundation for delivering attractive shareholder returns and a clear path towards achieving our 12% adjusted operating margin in targets. Our second quarter call is scheduled for Friday, July 17, 2026. Thank you for your attention. Until next time, stay safe. This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.