Welcome to the first quarter 2021 earnings conference call for Autoliv Inc. I am happy to introduce Anders Trapp, Vice President of Investor Relations. You may begin the meeting.

Thank you, Akwasi. Welcome everyone to our first quarter 2021 financial results earnings presentation. On this call, we have our President and CEO, Mikael Bratt, and our Chief Financial Officer, Fredrik Westin, and I'm Anders Trapp, VP Investor Relations. During today's earnings call, our CEO will provide a brief overview of our fourth quarter results as well as provide an update on our general business and market condition. Following Mikael, Fredrik will provide further details and commentary around the financials. We will then remain available to respond to your questions. And as usual, the slides are available on the homepage of our corporate website. Turning the page. We have the Safe Harbor statement, which is an integrated part of this presentation and includes the Q&A that follows. During the presentation, we will reference some non-US GAAP measures. The reconciliations of historical US GAAP to non-US GAAP measures are disclosed in our quarterly press release and the 10-Q that will be filed with the SEC. Lastly, I should mention that this call is intended to conclude at 3:00 PM Central European Time, so please follow a limit of two questions per person. I now hand it over to our CEO, Mikael Bratt.

Thank you, Anders. Looking now into the Q1 2021 highlights on the next slide. Before we start with the formal presentation, I would like to acknowledge our employees for their hard work and commitment to health and safety, cost control, quality, and delivery precision. Our focus throughout this crisis has been the health and safety of our employees and to come out of it as a stronger company. Although the COVID-19 pandemic is not yet behind us, the performance over the past three quarters shows that we have built a solid platform towards our mid-term targets. The global automotive industry continues to wrestle with the semiconductor shortage and other component supply disruptions, while managing a strong end customer demand for new vehicles. In light of this, light vehicle production in Q1 2021, according to IHS Markit, exceeded expectations from a few months ago. As a consequence of the strong demand and component supply disruption, the industry is facing headwinds from rising raw materials and commodity prices. I am very pleased that our operations reported strong sales growth, profits, and cash flow. We continued to execute on our strong order book and our sales increased organically by 18%, which was more than 4 percentage points better than the increase of global light vehicle production. This was despite negative geographic light vehicle production mix with high growth in lower content for vehicle markets. The solid operating income was a result of strong sales growth, good operation execution, cost control, and effects from the structural efficiency programs. I am pleased that we improved the adjusted operating margin significantly, versus both 2020 and 2019. Our strong free cash flow generation allowed further deleveraging, and our leverage ratio is now back inside our target range of 0.5 times to 1.5 times. We continue to evaluate opportunities for shareholder value creation. Our order intake was at a similar level as last year. Based on expected favorable model mix, the strong performance in the first quarter, and continued tight cost control, we again confirm our full year 2021 guidance. Looking now on the financial highlights on the next slide. Our consolidated net sales increased by almost 400 million US dollars or by 21% compared to Q1 2020. This was the highest passive safety business sales for a first quarter in our history. The Chinese market contributed to more than half of the sales increase as light vehicle production normalized in China, and we continued to gain market share. Adjusted operating income, excluding costs for capacity alignments, increased by more than 70% to 237 million US dollars. The adjusted operating margin increased by 320 basis points to 10.6%. Operating cash flow increased by 30 million to 186 million US dollars. Looking now on sales development on the next slide. I am very pleased that our organic sales growth outperformed the global light vehicle production by more than 4 percentage points. This was achieved despite adverse geographical mix effects, as light vehicle production grew strongly in lower content per vehicle market. It was only in China, India, South Korea, and South America where light vehicle production actually increased. Current light vehicle production forecasts suggest significant positive geographical mix effects in the second quarter. We had a solid sales development in all regions, driven by new launches and positive vehicle mix. All regions outperformed light vehicle production by 6 to 23 percentage points. Sales of replacement inflators is now at a level where its impact on our self-development is insignificant. Looking on the next slide. We had several important product launches during the quarter, including products for high volume vehicles, such as the Jeep Grand Cherokee L, Mitsubishi Outlander, and Peugeot 308. The models shown on this slide have an Autoliv content per vehicle between 130 to almost 600 US dollars. Two of the vehicles are pure EV and most of the models will be available with some sort of electrified powertrain. The long-term trend to higher content vehicle is supported by the introduction of front center airbag, knee airbags, and more advanced seatbelts. For example, the new Mitsubishi Outlander has a front center airbag as well as two knee airbags from Autoliv. I now hand over to our CFO, Fredrik Westin, who will talk about the financials on the next slide.

Thank you, Mikael. This slide highlights our key figures for the first quarter. Our net sales were over 2.2 billion, a 21% increase compared to the same quarter last year. Compared to the first quarter 2019, it was an increase of 3%, despite light vehicle production being 12% lower. Gross profit increased by 127 million and the gross margin increased by 250 basis points. The higher gross margin was primarily driven by the higher sales and direct labor and material efficiency. In the quarter, neither capacity alignments nor antitrust-related matters had an impact on the operating profit. The adjusted operating income increased by 101 million to 237 million due to the higher gross profits. The adjusted operating margin improved by 320 basis points versus Q1 2020 and improved by 290 basis points versus Q1 2019. The operating cash flow was 186 million, the second highest for any first quarter. This was achieved despite adverse effects from changes in working capital. Reported earnings per share more than doubled to $1.79 or adjusted return on capital employed was 26% and return on equity was 25%. The good performance in ROCE and ROE shows our commitment to and focus on capital efficiency. Looking now on the adjusted operating margin bridge on the next slide. Our adjusted operating margin of 10.6% was 320 basis points higher than in the first quarter of 2020. The impact of raw material price changes was small in the first quarter. FX impacted the operating margin negatively by 20 basis points. This is caused by transactional effects from a number of different currency payers, with the most significantly negative impact from a stronger Canadian dollar versus the US dollar. As illustrated by the chart, the adjusted operating margin was positively impacted by lower SG&A and RD&E of 110 basis points, mainly due to lower personnel costs in relation to sales. Operational improvements contributed with 230 basis points. This was the result of higher sales, cost discipline, and effects from our structural efficiency programs, partly offset by the negative impact of direct COVID-19 related costs of around 5 million and indirect COVID-19 related inefficiencies in both supply chain and manufacturing. Support from governments in connection with the pandemic was not material in the quarter. Looking on the next slide. For the first quarter of 2021, operating cash flow was 186 million, an increase of 30 million compared to last year. The increase in operating cash flow was a result of the higher net income, partly offset by cash but for the structural efficiency programs and changes in trade working capital. Trade working capital developed unfavorably with increased inventories and receivables with lower payables. Especially inventories were impacted by the supply chain uncertainties. Capital expenditures amounted to 93 million in the quarter or 4.1% of sales. Compared to last year, capital expenditures increased by 5 million or by 6%. The free cash flow was 93 million, an increase of 25 million year-over-year. The cash conversion in the last 12 months was close to 200%, the result of low CapEx, cost of operating working capital development, and non-cash items. Now looking on the next slide. We have, as you know, a long history of a prudent financial policy and our balance sheet focus remains unchanged. The leverage ratio improved from a peak of 2.8 times at the end of the second quarter 2020 to 1.4 times at the end of Q1 2021. The improved leverage in the quarter was a result of our net debt decreasing by 109 million, while EBITDA over the last 12 months increased by 111 million. It is worth noting that our net debt is now half a billion less than a year ago. Our strong free cash flow generation should allow for further de-leveraging and provide opportunities for shareholder value creation. Note that our EBITDA calculation has been redefined to exclude other non-operating items and income from equity method investments. Historic EBITDA and leverage ratio have been recalculated resulting in minor adjustments. As we are back inside our target range for the leverage ratio, we will no longer guide for this measure. Onto the next slide. During the first quarter, we have seen substantial increases in spot market prices for raw materials and commodities. As we mainly buy components, the effects from changes in spot market prices are mitigated and delayed through longer-term supply contracts. Also, our volatility is normally substantially lower than the volatility in the spot market. Therefore, the impact was relatively small in the first quarter. We also have some, but limited contractual pass-throughs to our customers. We also mitigate raw material impact through consolidation and negotiations with suppliers as well as redesign of products. But based on the current situation, we estimate that for the full year 2021, we will face an operating margin headwind of around 90 basis points from raw material price changes; our previous estimate was 40 basis points. On to the next slide. The recovery in automotive demand and production competes with the increasing demand from the wider consumer electronics sector, creating disruptions to the supply of systems using semiconductors. Chip makers are expanding the production capacity, but long lead times mean supply issues will extend well into the second and third quarters. There are varying estimates as to the length of the semiconductor shortage. Our current assessment is that Q2 would be as exposed as Q1, where stabilization of supply may not emerge until Q4. This pattern will further distort production seasonality and have an effect on the overall level of vehicle output in 2021. We assume a 2 to 3 percentage point negative net impact on 2021 global light vehicle production. Although we are not directly affected by the semiconductor supply issues, it impacted our sales and profitability already in Q1 and is likely to continue to negatively impact LVP and our sales and profitability also in the coming quarters. What is most essential for Autoliv is, as always, to be agile and to efficiently adapt to any sudden changes in our customers' production plans. I now hand over back to you, Mikael.

Thank you, Fredrik. Turning to the next slide. Demand for new vehicles remains high and inventory levels of new vehicles remain at record low levels in some regions. For example, the inventory levels in North America are at an 11-year low, the lowest since the cash for clunkers program in August of 2009. Dealer inventory is at a normal level in China, and we believe that European inventory levels are fairly low, especially for premium vehicles. Assuming that the component availability develops as expected, we expect the good demand and low inventories to support a recovery in light vehicle production in the second half of the year. We think it's worth a reminder that the second quarter last year was a virtual standstill for a number of weeks in most markets, except China; hence the very high growth rates year-over-year expected for the second quarter for 2021. As you can see in the table on the slide, light vehicle production in Europe is expected to more than double in Q2, while North America is expected to almost triple. Globally, light vehicle production is forecasted to grow by around 60% in Q2. The strong light vehicle production growth expected in the high content per vehicle markets, such as Europe and North America, should support our global growth outperformance in the second quarter. On to the next slide. Here we highlight some positive and negative factors behind our 2021 indication. Our full year 2021 indications for organic growth and adjusted operating margin are unchanged despite increased market headwinds. Compared to our previous guidance, the light vehicle production outlook is lowered by almost 2 percentage points due to component shortages. Our estimate of raw material price headwinds has increased from 40 basis points to 90 basis points for 2021. Despite these negative effects, we reiterate our full year guidance as these effects are offset by an improved sales mix and improved cost structure, as evidenced by the first quarter performance. We have the details of our indications on the next slide. These indications exclude costs for capacity alignments and potential antitrust-related matters. We expect sales to increase organically by around 20%, supporting a full year mid-single-digit outperformance versus light vehicle production. Our net sales increase is assumed to be around 23%, including positive currency translation effects of around 3%. We expect an adjusted operating margin of around 10%. Operating cash flow is expected to be in line with 2020. Our strategic initiatives gradually are yielding good results, and we expect 2021 to be a solid stepping stone towards our 2020 to 2024 targets, which include significant growth above light vehicle production as well as a solid operating margin increase. Turning the page. This concludes our formal comments for today's earnings call. And we would like to open the line for questions. I will now turn it back to Akwasi.

Thank you. Our first question comes from Colin Langan from Wells Fargo. Please go ahead. Your line is now open.

Great. Well, thank you very much for taking the question. Maybe just first question, you're now within your target leverage range, sales seem to be holding up relatively well. Why not bring back a dividend or a large buyback, any thoughts there on sort of capital allocation plans going forward?

As you know, this is a board decision regarding dividends or buyback decisions. This is a quarterly call, and we revisit that question with the Board on a quarterly basis in connection with the Board meeting. So this is not the topic for today. We have to come back later when it's time for it.

Okay. And then just looking at the guidance, it implies about 8% over market. I think you're talking about mid-term 4 to 5. I think Q1 was just 4. What's driving the very strong growth over market through the rest of the year? I mean, are launches coming in at higher levels? Are they largely being pulled forward, and what's sort of the driver there? Thank you.

It's at the back of our strong order books that were built over the years and continue to build. So, this is in line with what we'd indicated before, and we continue to deliver on that. And as you said, we have a slight increase of launches here that contributes to that. So I would say it's according to plan. And of course, in the mix, as we talked about, we see the content per vehicle increasing regularly, in line with what we also said in the past.

Okay. Alright. Thank you for taking my question.

Thank you. Our next question comes from Mattias Holmberg from DNB. Please go ahead. Your line is now open.

Thank you. I have two questions. The first one is on the investigation that I see in the US where some faulty airbags of GM vehicles are looked at. Can you make any comments if you're involved in this in any way?

I mean, we are aware of the investigation and GM is an important customer of ours, and we are delivering among other things airbags to different GM models. So, if GM needs our help in the investigation, we will of course support. But based on our understanding, we do not see this as an issue for which we should be responsible.

Thank you. And on the recent announcement that you will make disconnect devices for electric vehicles, can you perhaps elaborate a bit on what type of growth outlook potential you see for this business, if it's something that could become material or sort of more of a small side business?

No, I don't have any numbers to give you at this point. But of course, it's a meaningful effort in terms of growing content per vehicle and our role in electric vehicle development. So we see this as a very interesting opportunity for sure to continue growing that part.

Great. Thank you.

Thank you.

Our next question comes from James Picariello from Key Banc. Please go ahead.

Hey, guys, just on the guide, in the unchanged organic growth and operating margins. Starting on the top line, you're acknowledging the 2-to-3 point headwind from the semiconductor shortage but maintained your organic revenue growth guide. So is that just a function of new launches, the new business backlog, or how much of it is attributed to a favorable mix? Thank you.

No, I think it is several factors. I think, first of all, we had a strong start to the year. We have also seen the improved sales mix. And yeah, I think those are the main factors there. So we believe in the numbers that we're talking about here and see good development in general when it comes to us delivering on our order booking.

Maybe one addition to that the 4% of performance that we achieved here in the first quarter was with a rather significant negative currency mix for us in terms of CPV, and that will have a much more positive impact, especially in the second quarter, as we laid out that both Europe and North America will grow substantially faster. So that would then be a tailwind for us to a much larger extent, especially in the second quarter.

Right. And collectively, 2 to 3 points better than what you expected as of last quarter. Okay. And then on the margin side, the commodities headwind has essentially doubled right from 40 basis points to 90, which is about a 40 million difference. What's the offset to that? Is that - because your top line revenue growth hasn't changed, are the structural savings higher? Just curious on that. Thank you.

I think first of all, that the first quarter shows that we have a very strong foundation to build on. And that the structural efficiency programs are coming through. They were basically 80% through now on the second one and aim to complete that here in the second quarter. Then we see the strategic initiatives paying off as well. And then it is really about the agility to react to the demand changes, which I think we have proven that we can do in both the fourth quarter and the first quarter here. And then we see good progress in productivity improvement, both materials, but also on the direct labor side. So that all combined, then makes it possible for us to offset the higher impact received from raw materials, and that's how we can perform the guidance, also the 10% margin side.

Okay. Thanks, guys.

Thank you. Our next question comes from Joseph Spak from RBC. Please go ahead.

Thank you very much everyone. I guess last quarter, you talked about how this is what I trust is forecasting for the year, but maybe you saw some concern about that forecast. Now you've lowered that right and acknowledged sort of that there's a bigger semiconductor hurdle. So I just want to be clear, like, is your guidance still actually assuming 12% or are you assuming something internally a little bit different? And I'll stop there for a second.

No, I think I mean, as always, we take a view on the visibility that we have and see that. Further out in time it comes, we use then the external references to that. But I think what we have seen here now is that the semiconductor, according to our judgment, would have an impact in the range of 2% to 3% for the full year. And that, of course, is baked into the outlook we are talking about here, and the net effect is what you see in our guidance there when it comes through the full year number.

Okay. And then, as has been alluded to a couple of times, your outgrowth actually, I guess, got better versus your prior guidance. I'm wondering if you could talk a little bit about the convexity of that outgrowth, as you see it to light vehicle production, meaning, if it ends up being, I don't know, 9% or 10%, sort of 12%, like, do you see a meaningful change to your outgrowth there or to organic growth, or should it be pretty linear?

I wouldn't go into any details in terms of the timing and so forth. But I think, once again, here, I mean, what you see is that there is also a strong order book that we are delivering. And also now - and also particularly now, in combination with a good mix, plus that we also have content growth that we see that is coming through nicely with many new models and new development in, I'd say, across the globe with more safety parts coming into the vehicle.

Okay. Yeah, I guess that was sort of the question. Like, it seems like that the - what's keeping the outgrowth is automakers are making a stronger mix of products that sort of help you. So you would expect something similar to continue or seem going that through the balance.

Yes, yes.

Thank you. Our next question comes from Hampus Engellau from Handelsbanken. Please go ahead.

Thank you very much. Two questions for me. Sort of going back on this collaboration with Mersen, but it would be interesting to hear your view on the potential for having this included in the NCAPs for EVs, given the significant step up with potentially 8.5, maybe 11 millimeters by 2025. Second question is, coming back to the semis. I believe we are starting to pick up that some suppliers have said that even if the OEMs are stopping production to balance the semi shortage, they will take delivery from other suppliers because they fear that there could be other shortages for the remainder of the year. Is this something that has impacted you guys, i.e., you will still deliver airbags even if OEMs have stopped production for two weeks or three weeks? Those were my questions. Thank you.

Thank you. Let me address the NCAP question first. I can't say that until we don't see anything in the NCAP pipeline, if I put it like that, that would include this kind of product. But I think there is a growing interest with this kind of product. And I think with higher voltage vehicles, we also have an opportunity here to provide power safety features that integrate into those vehicles. So as I said, we are quite positive about this opportunity, but no numbers or details further than that at this point in time here. On the semiconductor side here and the production, I mean, of course, we are delivering to our customers according to their callouts. We do not have detailed insight into how those vehicles ultimately are ending up either on their yard or fully delivered to the dealers. But it's nothing really that we have heard or seen in a significant extent. So for us, it's all about delivering according to the callouts and expectations from our customers, and we are doing that.

Can I ask that question in this way instead of then? For instance, given the planned stoppage that General Motors has announced, did that change the callouts that they provided to you guys after that announcement?

I can't comment on a specific OEM's call-offs. But I mean, we, once again, are delivering according to their schedules, and we are following our customers' requests there, so we don't see any specific behavior in regards to your comments there.

Thank you.

Our next question comes from Sascha Gommel from Jefferies. Please go ahead.

Good afternoon. Good afternoon. Thanks for taking my question. The first one would actually be on bit color on the second quarter. How that started? Because I think you mentioned that Q2 is as exposed to the same shortage as Q1. Does that mean you're on a run rate in the second quarter that would be similar to the first quarter in terms of top line and earnings?

I mean, as you know, I can't comment on any outlook on the next quarter here.

And how has April started, any color on that?

I mean, if your question is about the related to the semiconductors, I think we are still in the same situation as we were a couple of weeks ago. I think it's not any worse or any better in that regard. So we have to see how it plays out. But I think it will take some time before we are through the semiconductor issue.

Okay. Very clear. And my second question would be, again, on the safety switch. Just technology wise, does every car need one or are there competing technologies available? Is it not very clear that technology will have a broad adoption at all?

No, I think in terms of that particular feature, that's the main solution, I would say. But as their voltage goes up, of course, it becomes even more relevant. So I think we have a role to play there to add safety features into a new type of technology that we see from the EV transformation, so to speak. So I think there’s a good opportunity there to build the business.

Alright. Appreciate it. Thank you.

Thank you.

Thank you. Our next question comes from Erik Golrang from SEB. Please go ahead.

Thank you. I've a few questions. First one, coming back to your organic outperformance guidance. If I'm not wrong, you've guided for mid-single digit outperformance in the last quarter as well. And either you say that 8% outperformance is mid-single digit or you are implicitly assuming a higher LVP figure than 12% growth. Which one is it?

I mean, mid-single digit is mid-single digit, and I think there are no further comments to that. And I mean, we have built it on the same assumptions as we always do.

Okay. So 8%.

Maybe I should clarify that we also say around 20%, so in the calculation, for your help.

Okay, thank you. The two questions on the raw material side, I think last time around you made an assumption of particularly steel prices coming down at some point. Is that still the case? And then the second question is, if there was zero margin impact in Q1, you would have around 120 in the remaining three quarters on a 20 basis points. And I guess it's right to assume given that that's more than 120 in the second half compared to the second quarter.

So the guidance we gave 40 basis points was on the assumption that the raw material prices would not increase further from that point of time on, which they now of course have. And we're basing the 90 basis points on a significantly higher impact on all our steel components that we're buying, but it is not only steel; it is also from - actually, the impact is also from textiles and plastics almost equally large, if you compare guidance to guidance here. But we don't assume any tailwind from reduced raw material prices going forward. So, it's based on that the prices remain at the current levels. And then in terms of the timing, yes, the impact in Q1 was close to zero. And then it will not be a gradual increase Q2, Q3. It would probably peak into the third quarter and then come down a bit from the fourth quarter, if you look at the year-over-year hit.

Very good. Thank you.

Thank you. Our next question comes from Brian Johnson from Barclays. Please go ahead.

Yeah, so I have two questions, a bit more strategic. So first is around the quarter, looking at China, there was very significant growth over market. Is that just a random accident or is there something around either your mix in China or a move to more content in China that could be a more permanent tailwind?

No, I think it's - I mean, it's not random. I think it is that you see content per vehicle growing. I think also we have a good position with strong customers in China, and we are growing our portfolio there. So I think it's a growing market that does support the safety products.

Okay, and speaking of safety, obviously, your mission, and you had a great slide on lives saved. When you talk to ESG investors, how do they view Autoliv as an ESG company, aside from your carbon footprint? And is your contribution to saving lives over the decades, does that come up in the E discussions? Does it come up in the S discussions, or do you think investors with maybe a big focus on green energy and EVs kind of miss the societal improvements you've been driving?

I think we believe that we have a strong position in this, and of course, saving more lives is definitely a sustainability activity, no doubt about it. So I think we are well positioned there. With that said, I think we of course still have more to do altogether in all those areas you mentioned. But I think we are well positioned and you can see that also in our sustainability report, a little bit more details there. But I think we are well positioned and get good feedback.

And do you think that's reflected in your ownership in ESG funds in Europe and North America? My impression is the Europeans understand that better than the American ESG investors?

Yeah, could be like that. Yes.

Thank you. Our next question comes from Bjorn Enarson from Danske Bank. Please go ahead.

Yes, thank you. A little bit on your development now in Q1 gross margin device versus the OpEx. Can you say something about the OpEx level going forward or what will lead you to your margin targets for the year? Are we at a reasonable OpEx level right now or are they a little bit elevated or even low?

Now in terms of the gross margin development in the first quarter, I mean, of course, volume was one major contributing factor. But then, as we highlighted, we also had good both material and labor productivity. On the labor side, we have been struggling in the previous quarters because of the constraints that we had in both from the volatility and the core loss, but also having to operate under COVID restrictions in the factories. But we see that coming through much better in the first quarter than what we've had during the year before. And then the third element is really the Structural Efficiency Programs, where a large part of that is targeted at the production overhead structure in our manufacturing setup. That has been coming through nicely. As I said, there's a little bit left from the Structural Efficiency Program here to come in through the remainder of the year. And then we remain very, very focused on continuing to improve productivity both on the material side and the labor side, but a very, very good development so far. And it's also definitely one of the reasons we can also offset and increase headwinds of materials.

So, it was nothing basically extraordinary in the quite solid gross margin development in the quarter. It is volumes and fewer disturbances in production, as we've seen for quite some time.

I wouldn't call it less disturbances, but I think we're getting our arms around it better and managing it better, yeah, but nothing extraordinary in the quarter that would be of any interest.

Perfect. And if you can say something about potential buybacks and etc. on your gearing situation now, when you are within your guidance range?

No, I think I will refer to my answer earlier here. I mean, when it comes to dividends, it's a Board decision in connection with quarterly reviews with the Board when we have the Board meetings there. And I think when it comes to the buybacks, we announce that one when it happens, so to speak. So nothing to report at this point in time.

Nope. Got it. Thank you.

Thank you.

Thank you. Our next question comes from Vijay Rakesh from Mizuho. Please go ahead.

Yeah. Hey, thanks guys. Just briefly, I know you talked about fiscal '21 LVP about 12% year-on-year. Do you see some push out in fiscal '22? Any thoughts on how fiscal '22 goes up or do you see some of the demand just going away?

If on the same question, the outlook for 2022 when it comes to the LVP, was that your question?

Yeah. Yes, yes.

Yeah. No, I mean, we have no comments on 2022 at this point. I mean, we have commented on 2021, but I mean as we have said here, I think we see a positive demand situation. We have very low inventories in the supply chain, as we mentioned here. And right now, I think it's more of a supply situation which is glaring and how that will carry into 2022, we will have to come back to.

Got it. And on the inventory side, I know you mentioned, you look at auto inventories, US was at an 11-year low in terms of dealership inventories. Any thoughts on where China is trending in terms of dealer inventories and same for Europe? I know you mentioned low but just want to get some - if you had concrete numbers there. Thanks.

I have no numbers. But I mean, what we see here is that China, inventory seems to be stable, nothing dramatic there. And in Europe, it's a little bit on the lower side. I wouldn't say anything dramatic there. And it's primarily geared towards the more luxury cars or more premium cars, I should say, in Europe where you have a little bit of a lower inventory situation. But that's about where we are.

Got it. Thanks.

Thank you. Our next question comes from Emmanuel Rosner from Deutsche Bank. Please go ahead.

Yeah, thank you very much. Sorry to come back to this, but I'm still trying to understand the positive offsets on the top line to the lower LVP outlook and in particular, the improved sales mix. Can you just go back and explain once again, I guess, what is playing out better than you expected a few months ago from the sales mix point of view?

I think, I mean, it's the - I mean, one thing is, of course, the mix. I mean, how it comes out here and we have high content vehicles with premium cars; that's favorable. But otherwise, I think it's, I mean, it's at the back of strong order book that we are delivering here. And it's in, I mean, we have indicated that we should outperform this year as well. So it's really only the mix that is maybe more positive than what you indicated.

Would it be a function of, in the context of chip shortages, automakers essentially fearing there are fewer available chips to some of the highest contented vehicles? And if that's the case, is that something that could be - would be sustainable longer term, or is that something that just lasts during the time where the shortages are there?

As I indicated before, yeah, I mean, it plays out very differently between the different OEMs in terms of how they are impacted. And what we can see is that we have reshuffling in their programs, which in terms where, of course, they need to make their priorities where they get best use for the semiconductors. So that they optimize that from that point of view in a support phase. It could be, but I mean, we don't have the full insights on that.

Okay. And then a question on the order intake. I think you commented in the press release that - and in the slides that it was stable year-over-year. Was this a comment in dollar terms or a win rate? And I guess, what is the expectation for this year compared to last year?

I mean, as you know, we only give the shares, so to speak, once a year when we close the year. What we're indicating here is the order intake was in line with last year's in dollar terms.

Okay. And just to remind us, last year, wasn't impacted by COVID yet. So was it a good result in Q1? Last year Q1.

No, I mean, there was no COVID impact in Q1, no problem in that regard, no.

Thank you. Our next question comes from Chris McNally from Evercore. Please go ahead.

Thank you team. Two quick ones, just one on - the first one on raw material. Given the 90 basis points, you talked a little bit about, it takes some time, 6 to 12 months for the tier twos to pass it through things like steel in belts and fasteners. Would it make sense to think about even if raw materials stayed where they are flat right now, we probably have some raw material pressure into next year, just given the annualization and maybe it takes some one or two price increases to send it through. We should think about this pressure probably continuing into next year?

Sorry. We don't give guidance on 2022. But of course, if you look at the impact, we had in the first quarter, and should the raw material prices remain at the levels where they are currently, then I think it would also be fair to assume that there will be a carryover effect into the next year.

Okay, great. And then the second just on a longer-term question on your content per vehicle growth. Primarily from the market share gain, and I know you don't really comment on '22. Is it possible that we could think about, based on your revenue projections, where you think that puts you in terms of market share for 2021, sort of faculty envelope, it could be sort of 44%, maybe 45%. And it sounds like from your order book over the last three to four years, you'll probably peak out at something 47%, 48%. So I just wanted to kind of have a high-level view that '22 and '23 will still see market share gains, so good content per vehicle growth.

I mean, we don't give market share targets by year, but what we have indicated is that we believe that we will grow into a market share position of around mid-40s, around 45-ish in the years to come here, and the pace there, we have not given. But I mean, we have built a strong order book and we continue to build an order book here. So we will define that market share going forward.

Okay, great.

Thank you. Our next question comes from Agnieszka Vilela from Nordea. Please go ahead.

Thank you. My first question is concerning your headcount situation. When I look at the number of your indirect workers, I can see that the numbers started to increase now in the quarter. Can you share with us how do you think about the money situation? And also, is it a kind of step back from your structural action, given the fact that the car production on a quarterly basis is lower now than what was in Q4, for example?

I mean, first of all, if you compare it year-over-year, the headcount is down, and if you take the support headcount, it is down around 800 employees, and then it's more or less flat versus the end of the year. So we've had some selective additions that we have had, mainly in the area of IT and digitalization to support the strategic initiatives we have ongoing there. But we remain very, very cost-focused and also headcount-focused and very diligent about any additions. And as I said also before, we're not through yet with the second step of the efficiency program, which will most likely be completed here during the second quarter.

Perfect, thank you. And then also, I would like to ask you about the pricing environment right now for your industry. I think that historically, you used to say that you meet a kind of price pressure of 2% to 4% every year. Is the situation now the same and also excluding their own material impact? So in general, do you see similar pricing pressure on your products, or is becoming a bit more positive for you guys?

No, I think it's definitely within that range today and we don't expect to see any changes to that going forward in the interim at least, so 2 to 4 is a good reference point still.

Thank you.

Thank you.

Thank you. There appears to be no further questions registered. So I will now hand it back to the speakers.

Thank you, Akwasi. Before we end today's call, I would like to say that our progress in the past few quarters supports our confidence in our journey towards our mid-term targets, and our opportunities for shareholder value creation. Despite the fact that global light vehicle production is almost back to the 2019 level, we are still in a pandemic, and our first priority remains the health and safety of our employee. Our second quarter earnings call is scheduled for Friday, July 16, 2021. Thank you, everyone, for participating in today's call. We sincerely appreciate your continued interest in Autoliv. Until next time, stay safe.