A Strategy Built on a Strong Foundation
2021 marked another challenging year. As in 2020, we continued to see both direct and indirect effects from COVID-19 impacting the world, the automotive industry, and our business. Headwinds related to raw materials, component shortages, logistics, and utilities resulted in volatile and lower than expected light vehicle production (LVP). Despite a tough market environment, we continued to respond effectively, keeping the health and safety of our employees as our first priority. Despite continued challenges in the year, our strategic initiatives continue to yield good results and we look to the future with confidence.
The World's Largest Automotive Safety Supplier
Autoliv, Inc. (NYSE: ALV; Nasdaq Stockholm: ALIV.sdb) is the worldwide leader in automotive safety systems. At Autoliv, we challenge and redefine the standards of mobility safety to sustainably deliver leading solutions. In 2021, our products saved close to 35,000 lives.
Every year, our products prevent more than 300,000 severe injuries.
The Company develops, manufacturers and supply passive safety systems for the automotive industry as well as mobility safety solutions. Passive safety systems are primarily meant to improve safety for occupants in a vehicle, and include modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels and inflator technologies. To extend into new markets areas beyond light vehicles and occupant safety, the Company has formed Mobility Safety Solutions. By combining our core competence and industry experience, MSS develops and manufactures mobility safety solutions such as pedestrian protection, battery cut-off switches, connected safety services and safety solutions for riders of powered two-wheelers.
2021 in Summary
Our sales increased organically by 8%, while global LVP increased by around 3%. This was the fourth consecutive year that we outperformed global LVP by 5 to 7 pp, driven by increased market shares and higher safety content per vehicle. Our adjusted operating profit* increased by 40% mainly driven by higher sales, and the adjusted operating margin improved to 8.3%. Return on capital employed increased to around 18%.
Operating cash flow and cash conversion was solid, although below the 2020 levels as effects from changes in operating working capital were more positive in 2020. Our net debt decreased in 2021 and the debt leverage ratio improved from 1.7x to 1.2x.
Strict cost control measures in 2021 include footprint and capacity alignment in Europe, moving overhead functions to Best-Cost Countries in Americas and initiation of footprint adjustments in Japan and in the Rest of Asia. As a result total headcount was reduced by 11% during the year.
Towards our Targets
Our strategic roadmap, business priorities and targets are deeply rooted in the growing demand for traffic safety and a strong belief that the need for our products will continue to grow. To enhance shareholder value over the long term, our focus is on visible near-term and sustainable long-term growth, profitability improvement and over-the-cycle resilience, cash flow generation for shareholder returns and a strong balance sheet and prudent leverage policy. We have set short- and long-term sustainability targets in the key areas to make sure we measure and manage our negative impacts and maximize our positive impacts.
More Lives Saved – More Life Lived
Autoliv’s communication concept is anchored in our fundamental vision that has driven Autoliv’s success to date: Saving More Lives. The new communication concept connects all the innovation, technology, and quality standards inside Autoliv’s business with what we know is most important to people outside our business.
Innovating for a Safer Society
We are committed to creating a safer society by designing products that will one day protect people in the future multi-modal transport system. We are combining our core competence to make products for new market areas outside our traditional passive safety for light vehicles.
Autoliv’s Sustainability Approach
Our sustainability approach is based on four focus areas, each consisting of broad ambitions and more specific short-term targets. These areas represent the strongest links to business risks and opportunities as well as impacts on key stakeholder groups, society and the environment. All areas represent global challenges where we believe that our work can make a positive difference, through our ways of working or by inspiring and collaborating with others.
Updated climate strategy - Industry-leading long-term ambitions
In 2021, we launched an update climate strategy with industry-leading long-term ambitions. These industry-leading climate ambitions are aligned with a 1.5°C trajectory and represent a serious step-up in ambition level from earlier short-term climate targets. They position us as the supplier of choice for the most progressive customers, helping to ensure our competitiveness now and in the future.
Saving More Lives – Close to 35,000 lives saved per year
Saving More Lives is our core business and our most important contribution to sustainable development and the realization of UN Sustainable Development Goal 3: Good health and well-being. According to our estimations, our products in use already save close to 35,000 lives per year and prevent more than 300,000 severe injuries.
