By Marie Mannes
STOCKHOLM (Reuters) -Sweden's Autoliv said on Friday it expects margins to rise this year, after the world's largest producer of airbags and seatbelts reported higher-than-expected fourth-quarter operating profit.
The firm said it expected its adjusted operating margin to rise to around 10.5% in 2024 from the 6.6% achieved in 2023, with organic sales growth of around 5%.
"The seasonality of past years is likely to be repeated in 2024, with an expected Q1 adjusted operating margin of around 7%, followed by gradual quarterly improvements," CEO Mikael Bratt said.
Operating profit adjusted for litigation and other non-recurring costs was $334 million in the three months to end December against $233 million a year before, beating estimates from analysts polled by LSEG of $321 million.
While suppliers in the automotive industry like Autoliv have faced high price inflation in recent years, they have been generally successful in passing on a significant portion of these costs to their customers.
The steadying of raw material prices and improved availability of semiconductors have also allowed for a gradual recovery of light vehicle production (LVP), in which the company outperformed in all regions in the quarter, except China.
Autoliv said it had seen an easing of supply chain constraints while Bratt told Reuters the company had no issues with its own value chain or sourcing when it came to potential disruptions in the Red Sea.
However, some of Autoliv's customers have seen their production affected, impacting the company indirectly, Bratt said, with some pushing volumes to later in the quarter.
Earlier in January, Volvo Cars and Tesla had to pause production in some of their European factories as deliveries of equipment and components were delayed due to the attacks on shipping in the Red Sea.
Shares in Autoliv were up more than 3% at 1223 GMT.