Autoliv, Inc. ( ALV ) posted a fourth-quarter earnings beat, but margin pressure weighed on shares in Friday’s premarket trade.

CEO Mikael Bratt said Autoliv ( ALV ) recovered nearly all tariff costs in the quarter, while the firm cut headcount by about 900 year over year.

Quarterly Metrics

The company reported fourth-quarter adjusted earnings per share of $3.19, beating the analyst consensus estimate of $2.90. Quarterly sales of $2.817 billion outpaced the Street view of $2.772 billion.

Organic net sales rose 4.2%. Growth was driven mainly by new product launches.

“We reached new record high sales for a quarter and a full year, driven mainly by strong growth in India and with Chinese OEMs,” said Bratt.

“Sales to COEMs grew by almost 40% in the quarter and by 23% for the full year. Our organic sales growth outperformed LVP in all regions in Q4. We recovered close to 100% of the tariff costs in Q4 and more than 80% for the full year,” he added.

Gross profit rose 3.9% year over year to $572 million in the quarter under review.

Operating income decreased by 9.6% to $319 million. Operating margin contracted to 11.3% from 13.5%.

Adjusted operating income decreased by 3.6% to $337 million, mainly from lower out-of-period customer compensations and lower engineering income. Adjusted operating margin contracted to 12% from 13.4% a year ago.

Operating cash flow increased by 30%, to a new quarterly record of $544 million, taking the full year operating cash flow to a new record of $1,157 million. 

As of December 31, 2025, total headcount (Full Time Equivalent) decreased by around 900, or 1.4%, compared to a year earlier.

The company exited the quarter with cash and equivalents worth $604 million.

Market Condition Update

Autoliv ( ALV ) said lingering supply-chain volatility continued to weigh on production efficiency and profitability.

The company said frequent last-minute changes in customer call-offs, still elevated versus pre-pandemic levels, hurt visibility and operational planning, though it expects some improvement in 2026, even as tariff uncertainty remains a risk.

The company added that inflation pressures, mainly from labor and other operating costs, continued to squeeze margins in the quarter, though to a lesser degree than a year earlier.

Autoliv ( ALV ) said most of those cost increases were offset by price hikes and customer compensation, while raw material costs had no meaningful impact on profitability.

On trade policy, Autoliv ( ALV ) said the tariffs imposed in 2025 did not materially hurt fourth-quarter results because it recovered nearly all of the added costs from customers.

The company said it recouped close to 100% of tariff costs in the quarter and more than 80% for the full year, though tariff recovery still diluted operating margins by about 15 basis points in the fourth quarter and roughly 20 basis points in 2025.

Autoliv ( ALV ) warned that shifting geopolitical and trade conditions could create further volatility in costs, customer behavior and future margin recovery.

Outlook

Autoliv ( ALV ) guided for flat organic sales growth in fiscal 2026, implying revenue of roughly $10.8 billion, below Wall Street’s estimate of $11.18 billion, after posting $10.82 billion in sales for fiscal 2025.

The company forecasts about a 1% positive FX effect on net sales.

Autoliv ( ALV ) sees an adjusted operating margin of about 10.5% to 11.0%. It projects about $1.2 billion in operating cash flow.

“We have a solid foundation for continued attractive shareholder returns and a clear path towards our 12% adjusted operating margin target,” Bratt added.

ALV Price Action: Autoliv ( ALV ) shares were down 7.22% at $117.30 during premarket trading on Friday, according to Benzinga Pro data.