Welcome to the Kongsberg Automotive First Quarter 2022 Earnings Call. I would now like to introduce our CEO, Joerg Buchheim.
Thank you very much, Jacob. Yeah, welcome as well from my side. I would like to lead you as usual today together with my colleague, our CFO, Frank Heffter, through the Q1 Earnings Call presentation. If you're going to have a look on the agenda as usual, I'm going to start with an executive summary, referring to financial highlights, our new business wins. Looking into the market summary, which is certainly challenging as everybody knows. Then we're looking into the performance of our segments and walking through the group financial update through to our outlook. As usual, you're more than welcome everybody here in the round, to participate actively on our Q&A session. Having said that, I would like to start with the executive summary.
Overall, we had a reasonably good quarter, even from a production volume perspective. We have seen a market-driven drop compared to the previous year's Q1. We have maintained our revenue with roughly EUR 290 million, and that's on a level of a strong Q1 2021. The revenue, I have to say, was positively impacted by currency effects as well as sustainable price increases to our customer. As well, positive to state our order books are filled up to EUR 965 million as of May 10, which is certainly keeping us confident to maintain our revenues over the rest of the years. However, the quarter also provided additional challenges, which impacted our production volume and earnings.
These are in particular the unexpected lockdown in economically important regions of China, which is for us as a Kongsberg an above-average profitable region, as well continuously high cost for semiconductors, which has impacted our Off-Highway area strongly in Q1, and which apparently last longer into the year. In addition, the industry as well, KOA as well faces extended raw material and freight costs as general inflation costs combined with labor shortage driven by the geopolitical situation. Looking into the cash flow, then we're talking about still negative cash flow in this quarter, and this was largely driven by a preventive increase in inventories on one side and by a higher revenue in the previous quarter, which translated into higher accounts receivable. We will elaborate that in the financial section a little bit more.
With the next slide, so with the at-a-glance view, we do see that the nature and impact of disruptions vary across geographies and products. The good thing is our diversification across the industry and markets have given us, in the meantime, some additional balance to offset variations, as you could see. Looking into the supply chain situation, that has certainly impacted the entire automotive industry strongly in the Q1. Not only Kongsberg, but likewise Kongsberg's peers. Both in production volume and in our earnings, which has arrived as well more and more in the specialty product segments, in particular on Off-Highway and there in Powersports when it comes to availability of components.
On the other side, our Shift Gear one operational improvement program continued with high dedication and full speed to counter these effects and could contribute in Q1 a EUR 7.5 million positive impact, which is limiting the external, impacts of the market. Looking then into the next slide, when it comes to our discontinued business, I am glad to emphasize that we have successfully closed the divestment and handed over our Interior Comfort Systems to Lear on February 28, as reported. With this we received the net proceeds of EUR 165.9 million on our accounts.
To mention as well, after the balance sheet date, we completed the sale of Light Duty Cables, our second divestment to Suprajit Engineering from India, for an enterprise value of, as well known, EUR 37.7 million, which will be reported within the Q2 result. I would like to go to provide you a market overview, which is certainly currently strongly influencing, in particular the automotive, but not limited to the automotive market, the entire industry. In this following chapter, I would like to briefly refer to this market situation more precisely. Starting with looking into an analysis done by McKinsey Global Economics Intelligence team, we see that the major three disruptive triggers are COVID-19, the Ukraine war, and the ongoing semiconductor shortage, which has strongly impacted the global market environment.
With a 13%, which you can see on the right side, with a 13% up on raw material prices compared to 2021. With a $46 billion daily impact in China, driven by the lockdown in Shanghai majorly, which disrupt the global supply chain. An over-demanding behavior in the semiconductor area and which consequently delays supply chains and, as well, inflation, which are at an almost recessionary level, with slightly falling consumer confidence index levels. A strong impact, and that has certainly provided here the results or fueled the results in Q1 as well for Kongsberg. If we're looking into more facts and figures on the next slide.
We see that overall, looking into the upscale passenger vehicle market, from a Q1 to Q1 perspective, there was a drop of 4.5% in global passenger car production. In comparison, KA was at a level of 3.5%, so not in this extent impacted, with a limited more and more limiting exposure to passenger vehicle as a positive aspect. If you're looking into how was that driven, we see majorly in the passenger vehicle, the impact coming out of Europe due to the war situation. When it comes to the global truck, China is by far the major reason for a significant Q1 drop with a 53% exposure.
The reason for that is huge 2021 remaining inventory on one side, which is a major driver for this drop in Q1, but it's combined as well with the lockdown situation, which has hit the commercial vehicle by far more than the passenger vehicle, as a commercial vehicle doesn't have this diversified footprint in China. When it comes then to the next slide, looking forward, and here we would like to share with you again the upper part, which is referring to the passenger vehicle, including China, excluding China, and underneath the global truck production outlook.
If you're looking here into the starting at 2021 in a five-year view, we still see here a moderate growth of 22% over this time period in the passenger vehicle, including China, and a similar rate, excluding China. A pretty stable global market perspective. If you're looking then from the growth rate, 2022 towards 2023, we see in the passenger vehicle an almost 9% growth, which is a good value and indicating an expected recovery here. If you're looking at the global truck production, there is a significant difference in the relative growth rate. We see in the 5-year perspective, including China on a global perspective, a 14% growth, still on a good level, but looking then, excluding China, we're seeing a 29% growth level.
Positively here as well is a number when we're looking more in a short-term view, 2022-2023, where we seeing here very promising a level of 13, almost 13% global truck production increase. With our more and more stronger exposure to commercial vehicle and Off-Highway, this is certainly very positively in the outlook for the outer years for Kongsberg. When we then move to the financial highlights and new business wins, we starting with the quarterly revenue perspective and, yeah, we talking about, as mentioned in the initial slide, about a solid Q1.
If we're looking into the comparison of the last four years, so at a level of 219, similar or slightly higher than 2021, and looking into this five years perspective on a second high level, that's positive. Again, I mean, we had some tailwind here as well, as mentioned, and later we are going to refer to that on FX effects. Looking into our adjusted EBIT slide on the next slide. We see here our quarterly view on our profits.
Here we see in the dot on the right side on Q1 with 3.5%, certainly the impact of the industry and certainly the Q1 is a quarter which is certainly remarkable in the industry by this combination, which is certainly unique to see with the war in Europe and lockdown still in China, where we're hoping that this is going to recover soon. Looking then into the next slide, 14, we're seeing the free cash flow development and yeah, Q1 2021 to Q3 2021 was very positively in the free cash flow development and in Q4, we saw the impacts of the combined crisis in its full extent.
The positive news is here that even if we still are negative in Q1 2021, but from a tendency point of view, we are on an upswing and going to recover, looking at the trend. If you're looking at the number of EUR 11 million in total, let me share a couple of details for the Q1 free cash flow. We have an operating activity here of -EUR 1.1 million, which is including a net working capital of EUR 13.9 million. Then if you're looking into the investing activities combined with the financial activities, where the payments and interest, for instance, for our bond, but as well, these liabilities are included.
As you know, we repaid our revolver by EUR 20 million, and as well we reduced our exposure on our bonds by EUR 75 million, which then, positively, as mentioned before, is fueled by an FX impact. Which then on the financial activities here, we ended up at a combined EUR 108 million roughly. If looking then into our net drawn and repayment of debt, we ending up at this 10.8 or roughly EUR 11 million on free cash flow in Q1. Bridging that in the next slide towards our Q4.
You see, if you're gonna look here in the total cash flow and, referring to continued and discontinued operations, we see here in the green marked the discontinued operations, where we're seeing two effects, certainly the net proceeds, but as well the proceeds for inventory and other net working capital out of this divestments. We're seeing on the right side the financing activities, plus a positive FX effect, which I referred in the previous slide, which ended up then in EUR 110.7 million in Q1 compared to EUR 58 million in Q4. We doubled here our total cash flow. Looking in how does the future looks like, and I'm referring to the next slide, where we're looking into our book-to-bill performance.
This is as well favorable in terms of the future outlook. We continuously are stabilizing here currently our book-to-bill performance at a level of one. If I refer to the current consumer index, which is dropping and the whole industry is currently more sensitive and careful in terms of booking new business, this is still a very good level. Certainly this is continuously stabilizing our outlook to the future. Let me please go to the next chapter, which is the segment highlights. Here I would like to start with the revenue overview in our two business units, the Powertrain and Chassis, and the specialty products as you well know.
Yeah, in a nutshell, the revenue gets stabilized, and that's supported again by the certainly FX impact, but as well by our operational improvement and our Shift Gear impact. Certainly here it's as well positives that we have, as mentioned before, more and more exposure in our Off-Highway and industrial area. Looking in the underneath, EBIT and, yeah, I think it's clear we see here the EBIT is still impacted by the macroeconomic and automotive crisis, which is certain. The good thing is here, if you're looking on the specialty products, the trend up from Q4 to Q1, but where it apparently looks like we are confident that here the bottom is passed.
In the next slide then, I would like to refer quickly on a couple of highlights if it comes to these segments at all. Here you have the view on the Powertrain and Chassis segment. The revenues in P&C slightly increased by roughly EUR 0.8 million, and we ended up at roughly EUR 111 million in the first quarter of 2022. This is including a positive currency translation effect of roughly EUR 5.3 million as a certain tailwind. When it comes to the production volume, we saw a decrease in the European passenger vehicle market and the Chinese commercial vehicle market, where we have a strong exposure in China. This was partially offset by great revenues in the passenger car area in North America.
Looking in the operations, P&C operations in Q1 were strongly impacted by material cost premiums. As you well know that in particular in this area, we have a strong exposure to steel and to energy and aluminum. Increases in these cost areas in energy and freight cost, as well as delays in sales price increases, were the reason that we couldn't even come out stronger here in operations in P&C. The productivity improvements continue to be good as well as sales price increases to our customers started to positively hit in, and we are confident to see that throughout the following quarters. The adjusted EBIT came in at EUR 4.4 million in the first quarter.
A significant decline if you compare that to the previous year first quarter by roughly 3.1% or respectively 48.8%, and that was mainly driven by the high material cost increases with a strong exposure, as I said, to steel and aluminum. New business wins. Within this quarter, Powertrain and Chassis was awarded two significant contracts. One was the gearshift system to a French automotive supplier, which provided us a EUR 41 million lifetime revenue. The second one was in China with a very good win in terms of electric actuators for electric vehicle application with a lifetime revenue here of EUR 17.4 million. This was the positive outlook in terms of new business.
When we are heading then to the next slide on specialty products, looking there on the revenue. Keep in mind, excluding the cable related part of Off-Highway which has been divested. We're talking about here an increase of EUR 0.7 million, so a more stabilized outlook compared to the Q1 of previous year. We ended up at EUR 105.9 million. There as well, we had an FX tailwind effect of roughly EUR 5 million, with the 4.9 mentioned. On the constant currency basis, revenues also Off-Highway business declined by roughly EUR 7 million compared to the previous year.
The Fluid Transfer Systems revenues came in strongly, while the Off-Highway, as I've mentioned, due to the non-availability of parts in the powersports, particularly in the powersports area, was very much reduced, while the Fluid Systems came in very strong. This is another good sign because due to the increasing exposure in industries and other areas. When it comes to operations, Couplings plant in Norway were impacted by several COVID cases at the beginning of the quarter, which actually generated backlog, which was hard to recover due to the supply chain challenges, which were continuously increasing throughout the months in the Q1.
Positively to mention here in that area, capacity expansion in facilities in Mexico and in Poland, in particular on Fluid Transfer Systems, are on track and providing us space and room for our ambitious growth perspective. Looking here in the adjusted EBIT, we came in with EUR 9.1 million in the first quarter. As well here, that's almost half of what we did the year before. Similar well-known crisis reasons like we had in the P&C area, with an above-average impact in Off-Highway and in particular, as mentioned, in the Powersports segments, due to the availability or limited availability of semiconductors. If it comes to the new business wins, very positively, this is one of our growth areas in fueling our runway towards our five years plan.
We see here an excellent order intake during the first quarter of 2022, which is at a significantly higher level compared to the previous year quarter, and that's certainly the payoff of our increase in resources and dedication here in the business development and engineering area. I would like to hand over to Frank, who's guiding us through the group financial update. Frank, it's all yours.
Thank you, Joerg. Also a warm welcome from my end. If we start again looking at the revenue bridge from Q1 2021 to Q1 2022, then we see that the decline in volume was evenly distributed more or less on the two segments, P&C and Specialty Products. In P&C, the China impact as mentioned, and in SPP, the Off-Highway impact in Powersports only partially offset by growth in Fluid Transfer Systems. The tailwind from FX led to the reported EUR 218.8 million. On the adjusted EBIT side, we see as well the decline in P&C of EUR 3.9 million. Therein, basically effects of EUR 1.6 million attributable to the semiconductor and supply chain crisis.
This is predominantly spot buys. On SPP, we see even more pronounced impact from this supply chain situation here. It is not only spot buys, but also inability at the end to deliver to the customer that impacted the numbers on top of it. A drop of EUR 10.4 million compared to the prior year, significantly in Off-Highway and to a certain extent, also in Couplings due to the China lockdown. FX is more or less unchanged, which then brought us to the EUR 7.6 million reported. Taking into account the impacts from the supply chain situation, we would have reported EUR 16.5 million adjusted EBIT or a 7.9% margin compared to the 3.5% reported.
If we look at the next slide on the net income development, then we see the level of EUR 17.2 million in the last quarter of last year. The drop in adjusted EBIT is the biggest contributor to the decline. There was a smaller release of restructuring provisions that contributed positively. Interest almost unchanged. We had to take the special effects from the repurchasing of our outstanding bond to pay the premium and to expense certain capitalized arrangement fees. This is the EUR 2.8 million here. We had some EUR 3.4 million of FX losses, predominantly intercompany activities.
Finally, an improved or lower tax on the lower earnings compared to the last year, which contributed positively EUR 3.9 million, making us end up at EUR 1.8 million for the quarter. If we look on the next slide on the non-adjusted EBIT, as we only had small restructuring effects in the first quarter, it's basically in line with the adjusted EBIT, EUR 8 million, and comparable to the 2020 Q1, obviously lower than the very strong Q1 2021. Net income of the year, EUR 2 million as just reported. We stay on the positive side. That certainly is positive overall.
When we look at the liquidity development, we ended the year 2021 with a headroom of EUR 148 million, and this now significantly increased to more than EUR 220 million. The contributor here to just name a few larger ones here, the change in net working capital obviously impacted by the divestment of the ICS business, where we reduced the respective net working capital related to it, got the proceeds for it. Same with the proceeds from the sale of the tangible and intangible assets, a EUR 130 million swing here.
We have used a good portion of that EUR 75 million, including the premium EUR 76.9 million, to redeem the bond and paid back the EUR 20 million revolving credit facility that we had drawn end of last year, to come to a Q1 headroom before adjustments of EUR 200 million. As we now have an undrawn RCF again of EUR 50 million, plus the accounts receivable securitization facility, and a doubled cash position of EUR 110.7 million, we have now the headroom of EUR 220.7 million. A very comfortable position to be in, which certainly then also supports the announced share buyback.
When we look at the net financial items here for the quarter, then FX gains and losses, mainly unrealized, in the quarter of a total EUR 4.4, and only a realized loss of EUR 100,000, again mainly intercompany related.
The EUR 3.1 million negative other financial items are related to the bond repayment, and the interest are more or less in line with the previous quarters, as they contain the accrued interest for the bond, and the RCF that was still drawn in the first two months of the quarter that contributed also some additional interest here. When we look at the financial key ratios, then we see a significant improvement in our gearing, from 3.8 at the end of the year 2021 to 2.4. Obviously, the proceeds from the sale had a positive effect.
The deleveraging that we executed and the even strengthened equity on the back of the gain from the sale of the ICS business made us improve here, despite smaller last twelve months EBITDA, given the deterioration of the EBITDA compared to the previous year's quarter one. On the ROCE side, here we see the impact of the EBIT decline. Despite a lower asset base, the ROCE declined to 4.3%, on the back of the lower EBIT. The equity ratio, as I mentioned, increased to 33.2%, on the gain from the sale of ICS. Obviously the capital employed declined by more than EUR 100 million, again, on the divestment of ICS predominantly.
These are the four key ratios to highlight for the quarter. With that, I'm handing it back to you Joerg for the outlook.
Thank you very much, Frank, for the overview here. Yeah. Let me walk to the outlook, and I would like to come to our Shift Gear program. Our portfolio transformation Shift Gear Two initiative is underway, despite increased allocated resources on Shift Gear one to counter the market challenges. We continue to focus on our roadmap to improve and turn our business units in regard to competitiveness and attractiveness. Ensuring to be among the top three in their operative fields. In going along with this, we continuously looking into supporting actions to get there, like divestments or investments, as well as investing in organic growth and certainly into our innovation when it comes, for instance, to our thermal management system. We are here on track.
As reported before, you saw that we are executing in the sale of our ICS and LDC business. That's going on. Yeah, now I would like to come into the outlook. If we're looking into the global situation and which then at the end of the day looks into our guidance, even that is a cautious guidance. Coming to the global situation, please let me emphasize again that certainly the impact of the war, the lockdown in China, which was certainly unpredicted, both events, when we looked from the beginning of the year, it certainly remains difficult to disentangle in its full extent what is the impact on the entire supply chain and raw material price situation. That's one of the topics which we need to consider when we're talking about guidance.
We see that this effect certainly continues to impact across all sectors, in particular our volumes, but then as well relates automatically into our revenues and earnings. This certainly is generating variances, and that's what we're seeing and what you could see as well in the Q1 result. Even if Kongsberg performed here better than a lot of peers, it has its impact, and it's going to have the impacts. That's what we're expecting throughout the year. However, what we're seeing here. This is different from before our latest earnings call. We definitely have here gained more information, more insights, more market intelligence, and got a much better picture in the meantime, which allows us to quantify and qualify this year at this stage in a much more confident way.
Having said that, considering the underlying disclaimer here that our guidance is cautious and certainly is somehow dynamic, depends on further probably unexpected developments in this crisis situation. What I'm talking about, the extension of a lockdown in China or an extraordinarily long time in the war could certainly influence here the geopolitical situation, but as well the consequent macroeconomic and as well the automotive area, again, including Kongsberg. Nevertheless, looking at today, we would like to announce here our guidance for the full year 2022 on an expected level when it comes to the revenue between EUR 900 million and EUR 935 million. An adjusted EBIT in the range of EUR 38 million to EUR 44 million.
This is based on the latest automotive industry production forecast of IHS and, combined certainly with our inside intelligence, which led to this modeling on these two KPI guidance ranges. Needless to say, we will continue certainly to monitor the development very closely and will keep you updated. Looking then in the next slide and keeping in mind we gained much more intelligence now. We have a better feeling in how the entire year looks like and even our modeling beyond that is pretty stable and very qualified. That lets us to as well sharing with you here the good news that we are going to go into our share buyback from now onwards.
In addition to that, besides more intelligence in our confidence of forecasting and numbers, we saw as well that the current cash position protects in the outlook with our liquidity headroom and the cash on hand, even with the share buyback now. Our operations, which is important, we see that the net proceeds out of our successful divestments had entered our account with the second divestment by end of, let's say within April. Again, this has led to the decision by the board of directors, by full support of the board of directors here, to start with our share buyback. We're staying firm as announced before. We intend to buy up to 10% of the outstanding shares in the open market.
In terms of timing, we're going to engage an advisor who's going to conduct these share buybacks. The purchases are expected to begin once the documentation is completed, but very soon. An initial notice has been sent out, and we are going to update certainly according to the obligation and transparency requirements here about our purchasing volumes and prices at the Oslo Bourse. With this good news, I would like to close the overview. Would like to hand over to Jacob, who is guiding us, as usual, to the Q&A. Jacob?
Thanks very much, Joerg. We've had some interesting questions come in from some of our listeners. The first question comes from Louis Reynolds, who asks a number of questions on the Chinese truck market. What is our sales exposure to China on the truck side, and when do we see the Chinese truck market returning to growth?
Our exposure to the truck market in China is higher than the passenger vehicle, that's for sure. That's a very promising, good market, I have to admit. Again, let me emphasize, the reason why the truck market is in a delay, and I'm not talking about a crisis. It's not a crisis, it's a delay. The major reason here is that there was a change in Euro 5 emission regulation. In the truck market, there was a new regulation that from beginning of this year, there's a Euro 6 emission regulation launched in China.
There was a last buy opportunity on the Euro 5, which is certainly from an overall cost perspective lower than the increased regulation on the Euro 6 standard. What happened is that truck fleets still bought trucks from the Euro 5, and there was a sell-off in Q1 of the inventory of Q4. Talking to experts and talking to our own teams in China, everybody is very confident that we're seeing here recovery on the level of previously on this Euro 6 trucks from the second half of Q2, and then throughout the years. This is, at the end of the day as well, underlined when we saw the perspective of 13% global increase on 2022 to 2023.
That's why I'm talking about the delay. We are quite confident that the recovery in this new truck area starts soon. I hope that answered the question.
Yeah. No, but that's great. There's a related question from Mats at Kepler Cheuvreux. You indicate that the guidance is cautious, but you still expect a gradual improvement throughout the year. Could you say something about the main contributors to the cautiously positive outlook?
Yeah, for sure. I mean, the main contributors here, on one side we are cautious. On the other side, we certainly expecting as well certain recoveries on one side. From a market perspective, as I said, we are more on a cautious level looking into Ukraine war. Obviously it looks like that this is going to last longer. If you're looking at the China lockdown, that's probably has potential to end up towards June. That's how it looks like. It's very, very difficult to predict, and even we don't have any crystal ball. From a market perspective, it's a cautious view. On the other side, we know as well how to fuel here the countermeasures, and this is our Shift Gear one project.
Looking into that, we contributed here in Q1 with EUR 7.05 Million out of our Shift Gear one improvement project. We assume that this will be throughout the coming quarters, in particular the second half of the year, significantly increased in supporting our guidance. That's what I mean. On one side it's cautious from a market perspective. On the other side, we are confident on our initiatives. That's why we added here as well the disclaimer, as long as we don't have the crystal ball, we need to really observe the market and the geopolitical trends.
Right. There's another question that's come up from a couple of people. You mentioned some issues specifically around semiconductor in specialty products and in Powersports. Could you elaborate a bit on this? If possible, can we quantify a little bit the cost headwinds from materials and specialty products?
The cost headwinds is these are the typical pattern what we saw already on the automotive. In the industry at all, we have a shortage on semiconductors caused by over demands. The semiconductor industry is. That's a trend prioritizing here certain huge customers. Certainly in a priority of consumer gaming and then automotive customers passenger vehicle and truck areas and less currently industrial and on-highway area. That has caused certain supply interruptions in terms of semiconductor allocation in this Powersports area.
The additional cost came in very naturally as we saw as well in automotive. By we have to look into the spot buy market, beyond the normal channels, and this is causing an increase of cost. On one side, we see a disruption because of a lower allocation, which is then as well what you could see in a drop of revenue. On the other side, you see here the higher cost in the supply chain in order to purchase demands from the irregular market.
If I may add here from a quantification point of view, in specialty products in the first quarter, the impact overall was in excess of EUR 7 million, of which EUR 3 million roughly relate to spot buys, and the remainder is the impact on lost revenues.
Great. We have another question that is quite closely related. Do you see certain raw material prices having peaked already? Do you expect the availability of components, including semiconductors, to gradually improve from here and into 2023?
Yeah, that's a very good question. I think that if I could answer that, I would have probably different exposure, but it's very hard to say. We see a fluctuation, so we see here an up and down in the raw material cost and index development. What I can assure you, we are monitoring that on a daily or sometimes on an hourly rate in order to lock in volumes whenever we see here a good chance to catch a lower level. That's certain, but how that is going to develop depends obviously, as I said, on how long the crisis last and how the availability of raw materials and the exposure including Russia is going to develop. It's hard to say.
I think the industry hopes that it's getting better. We're getting more prepared that it is a longer lasting topic. So we are careful on that. On the semiconductor, again, there is more and more capacity coming in the market, and we see that the problem is actually less and less available capacity. It's more the over-demand. The entire global demand, this is, here gaming and consumer competing with white goods and automotive, and there's a natural over-demand. So these industries booking more demand than they actually need. I think there will be, in the coming months, or at least in 2023, a continuously better environment. How long that lasts, there's different views. It's gonna take until 2024. It's gonna get resolved in 2023. There are different prognoses.
Difficult to say, but I personally think that the semiconductors going better and better. Yeah, the real demand wash out the bubbles more and more. While on the raw material and energy cost, we are more cautious that this is a longer-lasting circumstances.
Okay, great. You mentioned earlier, the emissions regulations on commercial vehicles in China being one of the factors. We have another question. Are there any new emissions regulations in either, Europe, Middle East and Africa or in the Americas that you think will influence commercial vehicle demand over the next, year or two years?
No, I don't think so. No. They are on a level of six and seven already in certain areas, and these, the special circumstances what has caused here the China situation is a more China typical area. Where certain discounts, politics, fueling such behaviors, which we don't normally see in, let's say, the Western or mature markets.
Okay, great. There's a question that's perhaps best for Frank. Could you say something about what the net working capital movement was for continuing operations during the quarter?
Yes, certainly. On the free cash flow slide, we already showed the negative EUR 13 million overall impact from net working capital. That is composed of the higher accounts receivable on the back of the higher sales in Q1 compared to Q4 2021, of around EUR 14 million. We also mentioned already the higher inventory level, in order to secure our supply that is in the similar magnitude, around EUR 13 million. But this was kind of financed, also through an increase in accounts payable, in the same amount. All in all, net it brings you to the minus EUR 13 million impact.
Great. We are coming towards the end of the questions. Another question which I believe may also be answered by some of the slides, but could you say something about what percentage growth assumption we have for the 2022 passenger car and commercial vehicle production that we used in our outlook?
We used one-to-one, the IHS data, as mentioned before. We're adopting that in our outlook with the recent data from April. Therefore it's certainly a reduced outlook for passenger vehicle and commercial vehicles. We downsized, we downgraded that accordingly in the scope of the available IHS data.
Great. Finally, you mentioned this during the discussion in the presentation about the share buyback. Could you elaborate a little bit on the risk management aspects that the board emphasized in postponing the share buyback?
Certainly. That was mainly this topic at our last earnings call, and when we had the discussion with the board here to go for the share buyback immediately or not. There were two major drivers which we have been very transparent on. The first one was we certainly wanted to close and get the net proceeds of our divestments in order to have as well the financial headroom here to go for a share buyback. That was one of the topics. The second topic was that at this stage we were just starting to see these geopolitical tensions and the start of the Ukraine war. We saw a global downturn, which to an extent was at that time completely intransparent for each and everybody.
We saw that in the guidance of a lot of companies at that time who didn't guide or had huge disclaimers. The uncertainty was much too high and much too big, which allowed us to make a reliable quantification and qualification in terms of our cash flow perspective throughout this year, but as well not only throughout this year, pretending as well that the crisis probably takes longer. The Q1 results, not at Kongsberg only, but even more accelerated in the industry, has, at the end of the day, underlined that is cautious, and taking time to quantify and qualify our data, our numbers was, at the end of the day, good to do, if you're now looking in the extent of the war impact, and the additional China unexpected lockdown impact.
That was, let's say, the rationale behind the decision of the management board and board of directors here at the time of the last earnings call. That's why now, again, let me emphasize, now we have a better picture. We have a much higher visibility. We have net proceeds from both divestments, and we have a higher confidence in terms of outlook, which allows us now, as well as the support of the board of directors here, to go for the share buyback. We are glad to do so.
Great. I think we've only got time for one or two more questions. There's Mats at Kepler Cheuvreux is asking whether we are satisfied with the current structure after the ICS and LDC divestments. Or do we see further divestment or whether we see acquisition opportunities that would add value? If you could say something in general about that.
Sure. Good question, Mats. I mean, as I mentioned in my outlook slide on our Shift Gear Two initiative, we're looking into all opportunities to say it in this way. Clear focus on bringing the company to a second-to-none level in whatever we are doing. To this extent, we're looking into all opportunities, if it is investments, acquisitions, divestments, certainly operational improvements, but as well as mentioned in becoming here really competitive in processes, in structure of organization. That's our clear roadmap. We're staying firm on our capital market exposure from ninth of December.
Great. In that case, let's take the final question. On a related note, are there any further plans for bond redemptions, going forward with the proceeds from the sales? Frank?
Yes. I would say no, at the moment not. We have significantly delevered with the EUR 75 million. Now, the bond still has a decent size of EUR 200 million. We have used additional money for the RCF. We will use some more funds for the share buyback. We want to continue to have sufficient headroom, even in this still uncertain and volatile times, to be sure that we can fund our operations, provide enough CapEx, be flexible on the net working capital. Currently, no concrete plans.
Great. Thank you, Frank. With that, I'm afraid that we have to round off and conclude the first quarter presentation of Kongsberg Automotive. I would like to thank you all for participating and look forward to seeing you on the ninth of August for our second quarter earnings presentation.
Thank you.