Financial highlights Q1 2019

$2,174m consolidated sales

1.8% organic sales growth*

8.0% operating margin

7.7% adj. operating margin*

$1.27 EPS - a decline of 30%

$1.20 adj. EPS* - a decline of 34%

Full Year 2019 indications

Around 5% organic sales growth

Around 3% total sales growth

Around 10.5% adj. operating margin

•

Organic growth outpaced global light vehicle production by 8.6pp mainly due to Americas and China.

•

Profitability impacted by the largest global LVP decline (~7%) in a decade, a labor conflict and rising raw materials costs.

•

The labor conflict in Mexico caused temporary costs of >$20m. Issue resolved and production returning to normal levels.

Key Figures

(Dollars in millions, except per share data)

Q1 2019

Q1 2018

Change

Net sales

$2,174

$2,241

(3.0)%

Operating income

$173

$243

(29)%

Adjusted operating income¹⁾

$166

$245

(32)%

Adjusted operating margin¹⁾

7.7%

10.9%

(3.2)pp

Earnings per share, diluted^{2, 3)}

$1.27

$1.82

(30)%

Adjusted earnings per share, diluted^{1, 2, 3)}

$1.20

$1.83

(34)%

Operating cash flow⁴⁾

$154

$81

90%

Return on capital employed^{5, 6)}

19.6%

n/a

n/a

1) Excluding costs for capacity alignment and antitrust related matters. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 4) For Q1 2018 management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 5) Operating income and income from equity method investments, relative to average capital employed. 6) The Company has decided not to recalculate the prior period since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful.

Comments from Mikael Bratt, President & CEO

Our people did well managing the largest quarterly light vehicle market decline in a decade, and consequently the quarter developed in line with our expectations,

profitability on new launches is initially lower until production is fully ramped up to the designed line capacity.

We saw a clear improvement in launch related costs compared to the fourth quarter of 2018, although we still expect it will take a few more quarters to be back at a normal launch cost level.

excluding the effects of the labor conflict in Mexico.

Our order intake share remained at a good level although OEM

Despite the unforeseen labor conflict related costs and weak LVP trend, we are able to reiterate our full year profitability indication as we aim to meet these challenges with cost reductions, including a hiring freeze and other measures.

Our sales strongly outpaced light vehicle production thanks to our performance in Americas and China. The sharp decline in LVP was more than offset by continued growth from new launches and we were able to grow sales organically* by almost 2%. However, profitability was negatively affected by the mix impact of LVP driven sales decline for established business and sales growth coming from new launches, as

order activity was relatively modest in the quarter.

I am pleased that the labor conflict in Mexico is closed, with only limited production back-log effects remaining, although we are of course never satisfied when disturbances brings negative impacts on us and our customers.

With the EC antitrust decision behind us, we continue to focus on launch effectiveness, productivity and managing light vehicle production volatility while, as always, having quality as our first priority.

Outlook 2019

Full Year Indication

Full Year Indication

Organic sales growth

Around 5%

Tax rate²⁾

Around 28%

Consolidated sales growth

Around 3%

Operating cash flow

Higher than in 2018

Adjusted operating margin¹⁾

Around 10.5%

Capital expenditure, net % of sales

Lower than in 2018

R,D&E, net % of sales

Lower than in 2018

Leverage ratio at year end

Well within 0.5x-1.5x

Sales Development by region

Capex and D&A

Adj. operating income and margin*

Operating Cash Flow

Return on Capital Employed

Cash Conversion*

Capex: Capital Expenditures, net.

D&A: Depreciation and Amortization.

Operating cash flow: Management estimate for Continuing Operations derived from cash flow including Discontinued Operations.

Adj. operating income: Operating income adjusted for capacity alignments, antitrust related matters and separation of our business segments.

Cash conversion: Free cash flow in relation to net income adjusted for EC antitrust accrual.

Consolidated Sales

First quarter

Reported
(U.S. GAAP)

Currency
effects¹⁾

Organic
change*

(Dollars in millions)

2019

2018

Airbag Products and Other²⁾

$1,447.7

$1,439.6

0.6%

(4.3)%

4.9%

Seatbelt Products²⁾

$726.3

$801.3

(9.4)%

(5.6)%

(3.8)%

Total

$2,174.0

$2,240.9

(3.0)%

(4.8)%

1.8%

Asia

$750.7

$792.2

(5.2)%

(4.4)%

(0.8)%

Whereof:              

China

$330.4

$366.4

(9.8)%

(5.8)%

(4.0)%

Japan

$208.1

$214.7

(3.1)%

(1.9)%

(1.2)%

RoA

$212.2

$211.1

0.5%

(4.5)%

5.0%

Americas

$743.1

$667.2

11.4%

(1.3)%

12.7%

Europe

$680.2

$781.5

(13.0)%

(8.1)%

(4.9)%

Total

$2,174.0

$2,240.9

(3.0)%

(4.8)%

1.8%

1) Effects from currency translations. 2) Including Corporate and other sales.

Sales by product - Airbags

Sales by product - Seatbelts

Airbag sales organic growth* was mainly driven by strong performance for steering wheels in North America and Europe. Frontal airbags in North America also contributed to the overall growth. Side airbag sales declined slightly while inflator replacement sales were virtually unchanged compared to a year earlier.

Seatbelt sales organic decline* was mainly driven by weaker sales in Europe, but also in China, partly mitigated by better performance in North America. The trend of higher sales of more advanced and higher value-added seatbelt systems continued, especially in China and Japan, partly offset by weaker sales in Europe.

Sales by region

By growing globally almost 2% organically*, we grew faster than light vehicle production (according to IHS) by 8.6pp. The largest contributor to overall growth was North America, supported by India, South America and

Thailand, partly offset by declines in Europe, China and Japan. We grew sales organically* by around 15pp more than LVP in North America and by about 10pp more in China. We managed to grow faster than LVP in almost all regions.

Organic growth*

Americas

Europe

China

Japan

Rest of Asia

Global

Autoliv

12.7%

(4.9)%

(4.0)%

(1.2)%

5.0%

1.8%

Main growth drivers

Launches with Nissan, Honda, FCA, Tesla, VW

Daimler

Honda, VW

Honda, Subaru

India and Thailand

Americas, India, ASEAN

Main decline drivers

Daimler, Ford

Renault, BMW, JLR, Ford, FCA, VW

LVP in general, Great Wall, Wuling, Baojun

Mitsubishi, Toyota

Ford, Renault

LVP in general, Europe, China

Americas

Europe

China

Japan

Rest of Asia

Global

IHS LVP (April 2019)

(3.0)%

(4.9)%

(13.9)%

0.6%

(1.1)%

(6.8)%

IHS LVP (January 2019)

0.5%

(4.6)%

(9.2)%

4.8%

1.3%

(3.5)%

Mazda 3/Axela

VW T-Cross

DS 3 Crossback

Toyota Corolla

Ram Truck Heavy Duty

VW Sagitar

Range Rover Evoque

Hyundai Sonata

Porsche 911

Driver and/or Passenger airbags

Seatbelts

Side airbags

Knee airbag

Head/Inflatable Curtain airbags

Pyrotechnical Safety Switch

Pedestrian Airbag

Steering Wheel

Condensed income statement

                 First quarter

(Dollars in millions, except per share data)

2019

2018

Change

Net sales

$2,174.0

$2,240.9

(3.0)%

Cost of sales

$(1,795.2)

$(1,780.6)

0.8%

Gross profit

$378.8

$460.3

(17.7)%

S,G&A

$(101.4)

$(101.1)

0.3%

R,D&E, net

$(107.4)

$(108.5)

(1.0)%

Amortization of intangibles

$(2.8)

$(2.8)

0.0%

Other income (expense), net

$6.0

$(4.5)

233.3%

Operating income

$173.2

$243.4

(28.8)%

Adjusted operating income¹⁾

$166.4

$244.5

(31.9)%

Financial and non-operating items, net

$(19.6)

$(14.5)

35.2%

Income before taxes

$153.6

$228.9

(32.9)%

Tax rate

27.4%

30.5%

(3.1)pp

Net income

$111.5

$159.1

(29.9)%

Earnings per share^{2, 3)}

$1.27

$1.82

(30.2)%

Adjusted earnings per share^{1, 2, 3)}

$1.20

$1.83

(34.4)%

Gross margin

17.4%

20.5%

(3.1)pp

S,G&A % of sales

(4.7)%

(4.5)%

0.2pp

R,D&E, net % of sales

(4.9)%

(4.8)%

0.1pp

Operating margin

8.0%

10.9%

(2.9)pp

Adjusted operating margin¹⁾

7.7%

10.9%

(3.2)pp

1) Excluding costs for capacity alignment and antitrust related matters. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.

Selected Balance Sheet items

               First quarter

(Dollars in millions)

2019

2018

Change

Operating working capital¹⁾

$633.2

$767.6

(17.5)%

Operating working capital % of sales²⁾

7.4%

9.2%

(1.8)pp

Cash & cash equivalent

$436.6

$793.9

(45.0)%

Gross Debt³⁾

$2,035.7

$1,370.4

48.5%

Net Debt⁴⁾

$1,607.2

$574.9

179.6%

Total equity

$1,974.0

$4,342.0

(54.5)%

Leverage ratio*

1.6

0.7

128.6%

1) For 2019 excluding the EC antitrust accrual. 2) Latest 12 months of net sales. 3) Short- and long-term interest-bearing debt. 4) Short and long-term debt less cash and cash equivalents and debt-related derivatives.

Selected Cash Flow items

                First quarter

(Dollars in millions)

2019

2018¹⁾

Change

Net income

$111.5

$159.1

(29.9)%

Changes in operating assets and liabilities

$(37.1)

$(184.5)

(79.9)%

Depreciation and amortization

$90.1

$81.5

10.6%

Other, net²⁾

$(10.8)

$24.9

(143.4)%

Operating cash flow

$153.7

$81.0

89.8%

Capital expenditure, net

$(108.0)

$(110.1)

(1.9)%

Free cash flow*³⁾

$45.7

$(29.1)

257.0%

Cash conversion*⁴⁾

41.0%

(18.3)%

59.3pp

Dividends paid

$(54.3)

$(52.4)

3.6%

1) Management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 2) Including legal provision. 3) Operating cash flow less Capital expenditures, net. 4) Free cash flow relative to Net income.

March 31, 2019

December 31, 2018

March 31, 2018

Headcount

66,878

66,764

66,001

Whereof: Direct workers in manufacturing

71%

71%

72%

               Best cost countries

80%

80%

80%

             Temporary personnel

12%

14%

13%

First quarter

Last 12 months

Full Year      

2019

2018

2018

Income

Earnings per share, basic¹⁾

$1.28

$1.82

$3.77

$4.32

Earnings per share, diluted^{1, 2)}

$1.27

$1.82

$3.76

$4.31

Gross margin, %³⁾

17.4

20.5

18.9

19.7

Adjusted operating margin, %⁴⁾

7.7

10.9

9.6

10.5

R,D&E net in relation to sales, %

(4.9)

(4.8)

(4.8)

(4.8)

Balance Sheet

Operating working capital in relation to sales, %⁵⁾

7.4

9.2

7.4

7.9

Capital employed, $ in millions⁶⁾

3,581

4,917

3,581

3,516

Return on total equity, %^{7, 8)}

23.0

n/a

13.4

13.0

Return on capital employed, %^{8, 9)}

19.6

n/a

15.8

16.8

Cash dividend paid per share

$0.62

$0.60

$2.48

$2.46

Net debt, $ in millions¹⁰⁾

1,607

575

1,607

1,619

Leverage ratio¹¹⁾

1.6

0.7

1.6

1.5

Days receivables outstanding¹²⁾

74

77

75

71

Days inventory outstanding¹³⁾

35

32

35

35

Cash flow

Operating cash flow¹⁴⁾

$153.7

$15.6

$728.7

$590.6

Depreciation and amortization¹⁴⁾

$90.1

$109.8

$377.4

$397.1

Capital expenditures, net in relation to sales, %¹⁴⁾

(5.0)

(6.2)

(6.1)

(6.4)

Free cash flow^{14, 15)}

$45.7

$(123.7)

$205.2

$35.8

Cash conversion, %^{14, 16)}

41.0

(101.1)

118.8

19.5

Direct shareholder return¹⁷⁾

$(54.3)

$(52.4)

$(216.2)

$(214.3)

Other

No. of shares at period-end in millions¹⁸⁾

87.2

87.1

87.2

87.1

Average no. of shares in millions²⁾

87.4

87.3

87.4

87.3

1) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 2) Assuming dilution and net of treasury shares. 3) Gross profit relative to sales. 4) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 5) Latest 12 months of net sales. First quarter 2019, latest 12 months & full year 2018 excluding antitrust provision expense. 6) Total equity and net debt. 7) Net income relative to average total equity. 8) The Company has decided not to recalculate prior periods since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful. 9) Operating income and income from equity method investments, relative to average capital employed. 10) Non-U.S. GAAP measure; for reconciliation see section reconciliation of U.S. GAAP to non-U.S. measures. 11) Net debt adjusted for pension liabilities in relation to EBITDA. 12) Outstanding receivables relative to average daily sales. 13) Outstanding inventory relative to average daily sales. 14) Including Discontinued Operations. 15) Operating cash flow less Capital expenditures, net. 16) Free cash flow relative to Net income. 17) Dividends paid and Shares repurchased. 18) Excluding dilution and net of treasury shares.

(Dollars in millions, except per share data)

First quarter

Latest 12 months

Full Year      

(Unaudited)

2019

2018

2018

Airbag and Other products¹⁾

$1,447.7

$1,439.6

$5,706.7

$5,698.6

Seatbelt products¹⁾

726.3

801.3

2,904.6

2,979.6

Total net sales

$2,174.0

$2,240.9

$8,611.3

$8,678.2

Cost of sales

(1,795.2)

(1,780.6)

(6,981.5)

(6,966.9)

Gross profit

$378.8

$460.3

$1,629.8

$1,711.3

Selling, general & administrative expenses

(101.4)

(101.1)

(390.6)

(390.3)

Research, development & engineering expenses, net

(107.4)

(108.5)

(411.5)

(412.6)

Amortization of intangibles

(2.8)

(2.8)

(11.3)

(11.3)

Other income (expense), net

6.0

(4.5)

(200.6)

(211.1)

Operating income

$173.2

$243.4

$615.8

$686.0

Income from equity method investments

1.0

1.3

3.3

3.6

Interest income

1.0

1.7

6.2

6.9

Interest expense

(18.0)

(13.6)

(70.5)

(66.1)

Other non-operating items, net

(3.6)

(3.9)

(17.7)

(18.0)

Income from Continuing Operations before income taxes

$153.6

$228.9

$537.1

$612.4

Income taxes

(42.1)

(69.8)

(207.2)

(234.9)

Net income from Continuing Operations

$111.5

$159.1

$329.9

$377.5

Loss from Discontinued Operations, net of income taxes

-

(36.7)

(157.1)

(193.8)

Net income

$111.5

$122.4

$172.8

$183.7

Less; Net income from Continuing Operations attributable to non-controlling interest

0.1

0.4

1.3

1.6

Less; Net loss from Discontinued Operations attributable to non-controlling interest

-

(4.7)

(3.6)

(8.3)

Net income attributable to controlling interest

$111.4

$126.7

$175.1

$190.4

Amounts attributable to controlling interest:

Net Income from Continuing Operations

$111.4

$158.7

$328.6

$375.9

Net Loss from Discontinued Operations, net of income taxes

-

(32.0)

(153.5)

(185.5)

Net income attributable to controlling interest

$111.4

$126.7

$175.1

$190.4

Earnings per share Continuing Operations^{2, 3)}

$1.27

$1.82

$3.76

$4.31

Earnings per share Discontinued Operations^{2, 3)}

$ -

$(0.37)

$(1.76)

$(2.13)

Earnings per share^{2, 3)}

$1.27

$1.45

$2.00

$2.18

1) Including Corporate and other sales. 2) Assuming dilution and net of treasury shares. 3) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from EPS calculation.

March 31

December 31

September 30

June 30

March 31

(Dollars in millions, unaudited)

2019

2018

2018

2018

2018

Assets

Cash & cash equivalents

$436.6

$615.8

$533.7

$507.5

$793.9

Receivables, net

1,749.6

1,667.1

1,784.5

1,902.0

1,895.1

Inventories, net

741.1

757.9

758.7

709.7

704.3

Other current assets

183.8

244.6

271.2

254.6

238.6

Current assets, Discontinued Operations

–

–

–

–

710.0

Total current assets

$3,111.1

$3,285.4

$3,348.1

$3,373.8

$4,341.9

Property, plant & equipment, net

1,710.9

1,690.1

1,654.8

1,633.4

1,676.4

Investments and other non-current assets

384.3

323.5

331.3

352.4

352.0

Right-of-use assets, operating leases

147.3

–

–

–

–

Goodwill assets

1,388.3

1,389.9

1,391.0

1,391.9

1,400.0

Intangible assets, net

30.7

32.7

35.3

38.3

40.7

Non-current assets, Discontinued Operations

–

–

–

–

1,067.1

Total assets

$6,772.6

$6,721.6

$6,760.5

$6,789.8

$8,878.1

Liabilities and equity

Short-term debt

$437.6

$620.7

$573.0

$605.6

$60.2

Accounts payable

981.7

1,029.0

992.4

1,036.9

970.6

Other current liabilities

1,282.2

1,215.8

1,118.4

1,110.8

1,152.2

Operating lease liabilities, current

37.0

–

–

–

–

Current liabilities, Discontinued Operations

–

–

–

–

626.5

Total current liabilities

$2,738.5

$2,865.5

$2,683.8

$2,753.3

$2,809.5

Long-term debt

1,598.1

1,609.0

1,677.5

1,678.0

1,310.2

Pension liability

200.4

198.2

204.3

203.8

211.5

Other non-current liabilities

151.1

152.1

141.5

147.1

149.7

Operating lease liabilities, non-current

110.5

–

–

–

–

Non-current liabilities, Discontinued Operations

–

–

–

–

55.2

Total non-current liabilities

$2,060.1

$1,959.3

$2,023.3

$2,028.9

$1,726.6

Total parent shareholders’ equity

1,960.5

1,883.7

2,040.4

1,994.5

4,206.2

Non-controlling interest

13.5

13.1

13.0

13.1

135.8

Total equity

$1,974.0

$1,896.8

$2,053.4

$2,007.6

$4,342.0

Total liabilities and equity

$6,772.6

$6,721.6

$6,760.5

$6,789.8

$8,878.1

  First quarter

Latest 12 months¹⁾

Full Year

(Dollars in millions, unaudited)

2019

2018¹⁾

2018¹⁾

Net income Continuing Operations

$111.5

$159.1

$329.9

$377.5

Net loss Discontinued Operations

–

(36.7)

(157.1)

(193.8)

Depreciation and amortization

90.1

109.8

377.4

397.1

Legal provision

(6.8)

–

203.2

210.0

Other, net

(4.0)

6.1

19.0

29.1

Changes in operating assets and liabilities

(37.1)

(222.7)

(43.7)

(229.3)

Net cash provided by operating activities

$153.7

$15.6

$728.7

$590.6

Capital expenditures, net

(108.0)

(139.3)

(523.5)

(554.8)

Acquisitions of businesses and other, net

–

(72.9)

–

(72.9)

Net cash used in investing activities

$(108.0)

$(212.2)

$(523.5)

$(627.7)

Net cash before financing²⁾

$45.7

$(196.6)

$205.2

$(37.1)

Net (decrease) increase in short-term debt

(173.1)

65.4

116.9

355.4

Issuance of long-term debt

–

–

582.2

582.2

Debt issuance costs

–

–

(2.6)

(2.6)

Dividends paid

(54.3)

(52.4)

(216.2)

(214.3)

Common stock options exercised

0.1

4.9

3.4

8.2

Dividend paid to non-controlling interests

–

–

(2.1)

(2.1)

Capital contribution to Veoneer

–

–

(971.8)

(971.8)

Effect of exchange rate changes on cash

2.4

13.1

(72.3)

(61.6)

Decrease in cash and cash equivalents

$(179.2)

$(165.6)

$(357.3)

$(343.7)

Cash and cash equivalents at period-start

615.8

959.5

793.9

959.5

Cash and cash equivalents at period-end

$436.6

$793.9

$436.6

$615.8

1)  Including Discontinued Operations. 2) Non-U.S. GAAP measure comprised of "Net cash provided by operating activities" and "Net cash used in investing activities".

Consolidated Sales

    First quarter

Reported
(U.S. GAAP)

Currency
effects¹⁾

Organic
change*

(Dollars in millions)

2019

2018

Airbag Products and Other²⁾

$1,447.7

$1,439.6

0.6%

(4.3)%

4.9%

Seatbelt Products²⁾

$726.3

$801.3

(9.4)%

(5.6)%

(3.8)%

Total

$2,174.0

$2,240.9

(3.0)%

(4.8)%

1.8%

Asia

$750.7

$792.2

(5.2)%

(4.4)%

(0.8)%

Whereof:              

China

$330.4

$366.4

(9.8)%

(5.8)%

(4.0)%

Japan

$208.1

$214.7

(3.1)%

(1.9)%

(1.2)%

RoA

$212.2

$211.1

0.5%

(4.5)%

5.0%

Americas

$743.1

$667.2

11.4%

(1.3)%

12.7%

Europe

$680.2

$781.5

(13.0)%

(8.1)%

(4.9)%

Total

$2,174.0

$2,240.9

(3.0)%

(4.8)%

1.8%

1) Effects from currency translations. 2) Including Corporate and other sales.

March 31

December 31

September 30

June 30

March 31

(Dollars in millions)

2019

2018

2018

2018

2018

Total current assets

$3,111.1

$3,285.4

$3,348.1

$3,373.8

$3,631.9

Total current liabilities¹⁾

(2,535.3)

(2,655.5)

(2,683.8)

(2,753.3)

(2,183.0)

Working capital

$575.8

$629.9

$664.3

$620.5

$1,448.9

Cash and cash equivalents

(436.6)

(615.8)

(533.7)

(507.5)

(793.9)

Short-term debt

437.6

620.7

573.0

605.6

60.2

Derivative asset and liability, current

2.4

(0.8)

1.8

2.9

(1.5)

Dividends payable

54.0

54.0

54.0

54.0

53.9

Operating working capital

$633.2

$688.0

$759.4

$775.5

$767.6

1) March 2019 and December 2018 excluding the EC antitrust accrual.

March 31

December 31

September 30

June 30

March 31

(Dollars in millions)

2019

2018

2018

2018

2018

Short-term debt

$437.6

$620.7

$573.0

$605.6

$60.2

Long-term debt

1,598.1

1,609.0

1,677.5

1,678.0

1,310.2

Total debt

$2,035.7

$2,229.7

$2,250.5

$2,283.6

$1,370.4

Cash & cash equivalents

(436.6)

(615.8)

(533.7)

(507.5)

(793.9)

Debt issuance cost/Debt- related derivatives, net

8.1

4.9

7.6

8.6

(1.6)

Net debt

$1,607.2

$1,618.8

$1,724.4

$1,784.7

$574.9

March 31

December 31

March 31

(Dollars in millions)

2019

2018

2018

Net debt¹⁾

$1,607.2

$1,618.8

$574.9

Pension liabilities

200.4

198.2

211.5

Debt per the Policy

$1,807.6

$1,817.0

$786.4

Net income²⁾

172.8

183.7

283.3

Less; Net loss, Discontinued Operations²⁾

157.1

193.8

315.5

Net income, Continuing Operations²⁾

$329.9

$377.5

$598.8

Income taxes²⁾

207.2

234.9

222.8

Interest expense, net^{2, 3)}

64.3

59.2

51.4

Depreciation and amortization of intangibles²⁾

350.1

342.0

314.8

Antitrust related matter²⁾

205.7

212.0

18.0

EBITDA per the Policy

$1,157.2

$1,225.6

$1,205.8

Leverage ratio

1.6

1.5

0.7

March 31

December 31

March 31

March 31

(Dollars in millions)

2019

2018¹⁾

2018¹⁾

2018²⁾

Net income

$111.5

$183.7

$122.4

$159.1

Changes in operating assets and liabilities

(37.1)

(229.3)

(222.7)

(184.5)

Depreciation and amortization

90.1

397.1

109.8

81.5

Other, net³⁾

(10.8)

239.1

6.1

24.9

Operating cash flow

$153.7

$590.6

$15.6

$81.0

Capital expenditure, net

(108.0)

(554.8)

(139.3)

(110.1)

Free cash flow⁴⁾

$45.7

$35.8

$(123.7)

$(29.1)

Cash conversion⁵⁾

41.0%

19.5%

(101.1)%

(18.3)%

1) Including Discontinued Operations. 2) Management estimate for Continuing Operations derived from cash flow including Discontinued Operations. 3) Including legal provision. 4) Operating cash flow less Capital expenditures, net. 5) Free cash flow relative to Net income.

First quarter 2019

First quarter 2018

(Dollars in millions, except per
share data)

Reported
U.S. GAAP

Adjustm-ents¹⁾

Non-U.S.
GAAP

Reported
U.S. GAAP

Adjustm-ents¹⁾

Non-U.S.
GAAP

Operating income

$173.2

$(6.8)

$166.4

$243.4

$1.1

$244.5

Operating margin, %

8.0

(0.3)

7.7

10.9

0.0

10.9

Income before taxes from Continuing Operations

$153.6

$(6.8)

$146.8

$228.9

$1.1

$230.0

Net income attributable to controlling interest from Continuing Operations

$111.4

$(6.8)

$104.6

$158.7

$0.7

$159.4

Capital employed

$3,581

$(7)

$3,574

$4,917

$1

$4,918

Return on capital employed, %^{2, 6)}

19.6

(0.7)

18.9

n/a

n/a

n/a

Return on total equity, %^{3, 6)}

23.0

(1.3)

21.7

n/a

n/a

n/a

Earnings per share, Continuing Operations^{4, 5)}

$1.27

$(0.07)

$1.20

$1.82

$0.01

$1.83

Total parent shareholders' equity per share

$22.48

$(0.07)

$22.41

$48.29

$0.01

$48.30

1) Excluding costs for capacity alignment and antitrust related matters. 2) Operating income and income from equity method investments, relative to average capital employed. 3) Net income relative to average total equity. 4) Assuming dilution and net of treasury shares. 5) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 6) The Company has decided not to recalculate the prior period since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful.

Items included in Non-U.S. GAAP adjustments

First quarter 2019

First quarter 2018

Adjustment
Millions

Adjustment
Per share

Adjustment
Millions

Adjustment
Per share

Capacity alignment

.              $(0.1)

…...     $(0.00)

……              $1.1

………..     $0.01

Antitrust related matters

(6.7)

(0.07)

(0.0)

(0.00)

Total adjustments to operating income

$(6.8)

$(0.07)

$1.1

$0.01

Tax on non-U.S. GAAP adjustments¹⁾

0.0

0.00

(0.4)

0.00

Total adjustments to net income

$(6.8)

$(0.07)

$0.7

$0.01

Weighted average number of shares outstanding - diluted

                  87.4

                  87.3

Return on capital employed^{2, 3, 6)}

$(27.2)

n/a

Adjustment return on capital employed

  (0.7)%

n/a

Return on total equity^{4, 5, 6)}

$(27.2)

n/a

Adjustment return on total equity

  (1.3)%

n/a

1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s). 2) After adjustment for annualized Q4 non-U.S. GAAP EBIT adjustment. 3) Operating income and income from equity method investments, relative to average capital employed. 4) Income relative to average total equity. 5) After adjustment for annualized Q4 non-U.S. GAAP Net income adjustment.  6) The Company has decided not to recalculate the prior period since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful.

(Dollars in millions, except per share data)

2018

2017

2016

2015

Sales and Income    

Net sales

$8,678

$8,137

$7,922

$7,636

Airbag sales¹⁾

5,699

5,342

5,256

5,036

Seatbelt sales

2,980

2,794

2,665

2,599

Operating income

686

860

831

708

Net income attributable to controlling interest

376

586

558

443

Earnings per share (US$) – basic²⁾

4.32

6.70

6.33

5.03

Earnings per share (US$) – assuming dilution^{2, 3)}

4.31

6.68

6.32

5.02

Gross margin, %⁴⁾

19.7

20.6

20.6

20.5

R,D&E net in relation to sales, %

(4.8)

(4.6)

(4.5)

(4.1)

S,G &A net in relation to sales, %

(4.5)

(5.0)

(5.0)

(4.8)

Operating margin, %⁵⁾

7.9

10.6

10.5

9.3

Adjusted operating margin, %^{6, 7, 8)}

10.5

11.1

10.9

11.5

Balance Sheet

Operating working capital

478

581

488

525

Days receivables outstanding⁹⁾

71

76

70

71

Days inventory outstanding¹⁰⁾

35

35

32

31

Total equity

1,897

4,169

3,926

3,468

Total parent shareholders’ equity per share (US$)

21.63

46.38

41.69

39.22

Current assets excluding cash

2,670

2,598

2,269

2,259

Property, plant and equipment, net

1,690

1,609

1,329

1,265

Intangible assets (primarily goodwill)

1,423

1,440

1,430

1,445

Capital employed

3,516

4,538

4,225

3,670

Net debt⁸⁾

1,619

368

299

202

Total assets

6,722

6,947

6,565

6,518

Long-term debt

1,609

1,311

1,313

1,499

Operating working capital in relation to sales, %

5.5

7.1

6.2

6.9

Return on capital employed, %^{11, 12)}

17

n/a

n/a

n/a

Return on total equity, %^{12, 13)}

13

n/a

n/a

n/a

Total equity ratio, %

28

49

48

46

Cash flow

Operating cash flow¹⁴⁾

591

936

868

751

Depreciation and amortization¹⁴⁾

397

426

383

319

(Dollars in millions, except per share data)

2018

2017

2016

2015

Capital expenditures, net¹⁴⁾

555

570

499

450

Capital expenditures, net in relation to sales, %¹⁴⁾

5.7

5.5

4.9

4.9

Free cash flow^{6, 8, 14, 15)}

36

366

369

301

Cash conversion, %^{6, 8, 14, 16)}

19.5

120.8

65.7

65.8

Direct shareholder return^{14, 17)}

(214)

(366)

(203)

(300)

Cash dividends paid per share (US$)

2.46

2.38

2.30

2.22

Other data

Number of shares outstanding (million)¹⁸⁾

87.1

87.0

88.2

88.1

Number of employees, December 31

57,700

56,700

55,800

51,300

1) Including steering wheels, inflators and initiators. 2) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation. 3) Assuming dilution and net of treasury shares. 4) Gross profit relative to sales. 5) Operating income relative to sales. 6) Unaudited. 7) Excluding costs for capacity alignment, antitrust related matters and separation of our business segments. 8) Non-US GAAP measure, for reconciliation see tables above. 9) Outstanding receivables relative to average daily sales. 10) Outstanding inventory relative to average daily sales. 11) Operating income and income from equity method investments, relative to average capital employed. 12) The Company has decided not to recalculate prior periods since the distribution of Veoneer had a significant impact on total equity and capital employed making the comparison less meaningful. 13) Income relative to average total equity. 14) Including Discontinued Operations. 15) Operating cash flow less Capital expenditures, net. 16) Free cash flow relative to Net income. 17) Dividends paid and Shares repurchased. 18) At year end, excluding dilution and net of treasury shares.