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 am Anders Trapp, VP Investor Relations. During today's earnings call, our CEO will provide a brief overview of our first quarter results, as well as provide an update on our general business and market conditions. 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 through a link 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-U.S. GAAP measures.
The reconciliations of historical U.S. GAAP to non-U.S. 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 P.M. Central European Time, so please follow a limit of two questions per person. I now hand 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 midterm 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 four 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 per 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 x - 1.5 x. 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, 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 cost for capacity alignments, increased by more than 70% to $237 million. The adjusted operating margin increased by 320 basis points to 10.6%. Operating cash flow increased by $30 million to $186 million. 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 four percentage points. This was achieved despite adverse geographical mix effects as light vehicle production grows strongly in lower content per vehicle markets. It was only in China, India, South Korea, and South America where light vehicle production actually increased. Current light vehicle production forecast suggests a significant positive geographical mix effect 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 6-23 percentage points.
Sales of replacement inflators is now on a level where its impact on our sales 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. Two of the vehicles are pure EVs, and most of the models will be available with some sort of electrified powertrain. The long-term trend to higher content per vehicle is supported by an introduction of front center airbag, knee airbags, and more advanced seat belts. 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 slides.
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 profit. 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. Our 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 pairs, the most significantly negative impact from a stronger Canadian dollar versus the U.S. 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 a 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 out for the structural efficiency programs and changes in trade working capital.
Trade working capital developed unfavorably with increased inventories and receivables, but 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% as a result of the low CapEx, positive 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 x at the end of the second quarter 2020, to 1.4 x 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 dollars lower than a year ago. Our strong free cash flow generation should allow further deleveraging 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 has 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. On to 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. Our volatility is normally substantially lower than the volatility in the spot market. The impact was relatively small in the first quarter. We also have some, but limited contractual passthroughs to our customers. We also mitigate raw material impacts through consolidation of and negotiations with suppliers, as well as redesign of products. 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 the automotive demand and production compete with 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 that 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, while 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 two to three percentage points 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 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, inventory levels of new vehicles remains at a record low level 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. Dealers inventory are at the normal level in China, 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 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 two percentage points due to component shortage. Our estimate of raw material price headwinds is 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, our indications on the next slide. These indications exclude cost 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. We expect 2021 to be a solid stepping stone towards our 2022/2024 targets, which include a 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. If you wish to register for an audio question, please press zero one on your telephone keypad. If you wish to withdraw from your question, you may do so by pressing zero two to cancel from the polling process. Once again, please press the zero one on your telephone keypad if you wish to ask an audio question. There will be a brief pause while we wait for questions to be registered. Our first question comes from Colin Langan from Wells Fargo. Please go ahead. Your line is now open.
Oh, great. Well, thank you very much for taking the question. Maybe just first question, you are 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 capital allocation plans going forward?
As you know, this is a board decision and a dividend or buyback decisions there. This is a quarterly call, and we revisit that question with the board on a quarterly basis, so in connection with the board meeting. This is not a topic for today. We have to come back later when it's time for it.
Okay. Just looking at the guidance, it implies about 8% over market. I think you're talking about midterm 4% - 5%. I think Q1 was just 4%. What's driving the very strong growth over market through the rest of the year? Are launches coming in at higher levels or are launches being pulled forward? What's sort of the driver there? Thank you.
It's at the back of our strong order book that we have built over the years and continuing to build. This is in line with what we have indicated before, and we continue to deliver on that. As you said, we have a slight increase of launches here that contributes to that. I would say according to plan. Of course, also in the mix as we have talked a bit, and we see the content per vehicle increasing gradually also all the time, in line with what we also said in the past.
Okay. All right. 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've seen in the U.S. where some faulty airbags of GM vehicles are looked at. Can you make any comments if you're involved in this in any way?
We are aware of the investigation. GM is an important customer of us, and we are delivering, among other things, airbags to different GM models. If GM needs our help in the investigation, we will of course support. Based upon our understanding, we do not see this is an issue for which we should be responsible.
Thank you. 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 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 also role in the electrical vehicle development. 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 KeyBanc. Please go ahead.
Hey, guys. Just on the guide, the unchanged organic growth and operating margins. Starting on the top line. You're acknowledging the two to three-point headwind from the semiconductor shortage, but maintained your organic revenue growth guide. Is that just a function of new launches, the new business backlog, or how much of it is attributable to favorable mix?
I think it is several factors. I think, first of all, we had a strong start of the year. We have also seen the improved sales mix and, yeah, I think that's the main factors there. We believe in the numbers that we're talking about here, and then see a good development in general when it comes to us delivering on our order book.
Okay.
And maybe one addition-
And then-
Sorry, maybe one addition to that. In the 4% outperformance that we achieved here in the first quarter was with a rather significant negative country mix for us in terms of CPV. 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. That will then be a tailwind for us to a much larger extent, especially in the second quarter.
Collectively, two to three points better than what you expected as of last quarter. Okay. On the margin side, the commodities headwind has essentially doubled, right, from 40 basis points to 90. That's about $40 million difference. What's the offset to that? Is it because your top-line revenue growth hasn't changed? Are the structural savings higher? Just curious on that. Thank you.
Well, I think first of all, the first quarter shows that we have a very strong foundation to build on, and that the structural efficiency programs are coming through. We were basically 80% through now on the second one, aim to complete that here in the second quarter. We see the strategic initiatives paying off as well. It is really about the agility to react to the demand changes, which I think we've proven that we do in both the fourth quarter and the first quarter here. We see good progress on productivity improvement, both on material but also on the direct labor side. That all combined makes it possible for us to offset the higher impact we see from raw materials. That's how we can confirm the guidance also on 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, right, you talked about how this is what IHS is forecasting for the year, but maybe you saw some concern to that forecast. Now you've lowered that, right? And acknowledged sort of that there's a bigger semiconductor headwind. I just want to be clear, 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.
I think, as always, we take a view on the visibility that we have and see that, before routing time you come, we use then the external references to that. I think what we have seen here now is that the semiconductor, according to our judgment, would have impact in the range of 2%-3% for the full year. That, of course, is baked into the outlook we are talking about here, the net effect is what you see in our guidance there.
Okay
The complete numbers.
Okay. Then as has been alluded to a couple of times, right, 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% instead of 12%, do you see a meaningful change to your outgrowth or to organic growth? Or it should be pretty linear?
I wouldn't go into any details in terms of the timing and so forth. I think once again here, what you see is the result of a strong order book that we are delivering, and also particularly now in combination with the 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 would say, across the globe here with more safety parts coming into the vehicle.
Okay. Yeah, I guess that was sort of the question. It seems like what's keeping the outgrowth is automakers are making a stronger mix of product that's sort of helping you. You would expect something similar to continue, it would seem, going.
Yeah
Through the balance of the year.
Yes.
Okay. Thank you.
Thank you. Our next question comes from Hampus Engellau from Handelsbanken. Please go ahead.
Thank you very much. Two questions from me. I'm sorry for coming 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 that it's a quite significant step up with potentially 8.5, maybe 11 million EVs by 2025. Second question is coming back to the semis. At least we are starting to pick up that some suppliers have said that even if the OEMs are stopping the production to balancing semi shortage, they will take delivery from other suppliers because they fear that it 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 are my questions. Thank you.
Thank you. The NCAP question first. I can't say that, or we don't see anything in the NCAP pipeline, if I put it like that would include this kind of product. I think there is a growing interest for this kind of product, and I think with the higher voltage vehicles also, we have an opportunity here to provide Pyro Safety Switch into those vehicle with this collaboration here. 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, of course, we are delivering to our customers according to their call-offs. We do not have detailed insight in how those vehicles ultimately are ending up either on the yard or fully delivered to the dealers.
It's nothing really that we have heard or seen in a meaningful extent. For us, it's all about delivering according to the call-offs and expectations from our customers, and we are doing that.
Can I ask that question in this way instead, then? For instance, given the plant stoppage that General Motors has announced, did that change the call-offs that they provided to you guys after that announcement?
I can't comment any specific OEM's call-offs. Once again, we are delivering according to their schedules, and we are following our customers' requests there. 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. Thanks for taking my questions. The first one would actually be on a bit color on the second quarter, how that started, because I think you mentioned that Q2 is as exposed to semi 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?
As you know, I can't comment any outlook on the next quarter here.
How has April started? Any color on that?
If your question is 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. We have to see how it plays out, but I think it will take some time before we are through the semiconductor issue, if I put it like that.
Okay, very clear. My second question would be again on the Safety Switch. Just technology-wise, does every car need one? Or are there competing technology, or every EV needs one? Or are there competing technologies that are available? It's not very clear if that technology will have broad adoption at all.
I think in terms of that particular feature, that's the main solution, I would say. As the voltage goes up, of course, it becomes even more relevant. I think we have a role to play there to add safety features into new type of technology that we see from the EV transformation, so to speak. I think a good opportunity there to build for the business.
Great. Appreciate it. Thank you.
Thank you.
Thank you. Our next question comes from Erik Golrang from SEB. Please go ahead.
Thank you. I have a few questions. First one, coming back to your organic outperformance guidance. If I'm not wrong, you guided for mid-single digit outperformance in the last quarter as well. 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?
Mid-single digit is mid-single digit, I think it's no further comments to that. We have built it on the same assumptions as we always do.
Okay. 8% would fit within mid-single digit, simply?
Maybe I should just clarify that we also say around 20 in the calculation there for your help.
Okay. Thank you. 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? The second question is, if there was zero margin impact in Q1, you would have around 120 in the remaining three quarters, 120 basis points. I guess I try to assume, given the value, that's more than 120 than in the second half compared to the second quarter.
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. We're basing now the 90 basis points on a significantly higher impact on our steel components that we're buying. It's not only steel. Actually, the impact also from textile and plastics is almost equally large if you compare guidance to guidance here. We don't assume any tailwind from, let's say, reduced raw material prices going forward. It's based on that the prices remain at the current levels. In terms of the timing, yes, the impact in Q1 was close to zero.
It will now be a gradual increase Q2, Q3, with probably the peak in the third quarter and then come down a bit in the fourth quarter if you look at the year-over-year hit.
Good. Thank you.
Thank you. Our next question comes from Brian Johnson from Barclays. Please go ahead.
Yes, I have two questions, a bit more strategic. First is around the quarter. Looking at China, it was very significant growth over market. Is that just a random accident? 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 not random. I think it is that you see content per vehicle are growing. I think also we have a good position with strong customers in China, and we're growing our portfolio there. I think it's a growing market there that support the safety products.
Okay. 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? 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. I think we're well positioned there. With that said, I think we of course still have more to do altogether in all those areas you mentioned. I think we are well positioned, and you can see that also in our sustainability report, a little bit more details there. I think we are well positioned and get good feedback.
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.
Okay, thank you.
Thank you. Our next question comes from Björn Enarson from Danske Bank. Please go ahead.
Yes. Thank you. A little bit on your development now in Q1 gross margin wise versus the OpEx. Can you say something about at the OpEx level going forward? What will drive or lead you to your margin targets for the year? Are we at the reasonable OpEx level right now, or are they a little bit elevated or even low?
In terms of the gross margin development in the first quarter, of course, the volume was one major contributing factor. 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've had, both from the volatility in the call-offs, but also having to operate under COVID restrictions in the factories. We see that coming through now much better in the first quarter than what we've had during the year before. 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 throughout the remainder of the year. We remain very focused on continuing to improve productivity, both on the material side and the labor side. A very good development so far. It is also definitely one of the reasons we can also offset the increased headwinds here for raw materials.
As it was nothing basically extraordinary in the quite solid gross margin development in the quarter. It is volumes and less of disturbances in production that we have seen for quite some time.
Yeah. I wouldn't call it less disturbances, but I think we're getting our arms around it better and then managing it better. Nothing extraordinary in the quarter that would be of any interest.
Perfect. If you can say something about potential buybacks and et cetera, and on your gearing situation now when you are within your guidance range.
I think I refer to my answer earlier here. When it comes to dividends, it's a board decision in connection with the quarterly reviews with the board, when we have the board meetings there. I think when it comes to buybacks, we announce them when it happens, so to speak. Nothing to report at this point in time.
No, got you. Thank you.
Thank you.
Our next question comes from Vijay Rakesh from Mizuho. Please go ahead.
Yeah. Hi. Thanks, guys. Just briefly, I know you talked about fiscal 2021 LVP, about 12% year-over-year. Do you see some push-out in fiscal 2022? Any thoughts on how fiscal 2022 goes up, or do you see some of the demand just going away?
If I understand your question, the outlook for 2022 when it comes to LVP?
Yeah.
Was that your question? Yeah.
Yes.
We have no comments on 2022 at this point. We have commented around 2021. As we have said here, I think we see a positive demand situation. We have very low inventories in the supply chain with dealers, et cetera, as we mentioned here. Right now, I think it's more of a supply situation which we are in, and how that will carry into 2022, we will have to come back to.
Got it. On the inventory side, I know you mentioned when you look at auto inventories, U.S. was at an 11-year low in terms of dealership inventories. Any thoughts on where China is trending in terms of dealer inventories? Same for Europe, I know you mentioned low, but just want to get if you had a quantitative number there. Thanks.
I have no numbers for you. What we see here is that China inventory seems to be stable, nothing dramatic there. In Europe, little bit on the lower side. I wouldn't say anything dramatic there. 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. That's about where we are.
Got it. Thanks. Thank you.
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 a sales mix point of view?
One thing is of course the mix, how it comes out here, and we have high content vehicles with the premium cars. That's favorable. Otherwise, as we said here, it's the back of strong order book that we are delivering here, and we have indicated that we should outperform this year as well. It's really only the mix that is maybe more positive than what indicated.
Would it be a function of, in the context of chip shortages, automakers essentially steering their fewer available chips to some of the highest content vehicles? If that's the case, is that something that would be sustainable longer term, or is that something that just lasts during the time where the shortages are there?
As I indicated before here, it plays out very different between the different OEMs in terms of how they are impacted. What we can see is that we have reshuffling in the programs with short terms, where of course, they need to make their priorities where they get best use for the semiconductors that they get. It's not hard to imagine that they optimize that from that point of view and support this. Could be, but we don't have the full insight on that.
Okay. A question on the order intake. I think you commented in the press release and in the slides that it was stable year-over-year. Was this a comment in dollar term or win rate? I guess, what is the expectation for this year compared to last year?
As you know, we only give the share, 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. Just remind us, last year, was it impacted by COVID yet, or was it a good result in Q1?
Sorry, Q4?
Last year, Q1.
No, it was no COVID impact in Q1 from on that regard, no.
All right. Thank you.
Thank you. Our next question comes from Chris McNally from Evercore. Please go ahead.
Thanks, team. Two quick ones. The first one on raw mats. Given the 90 basis points, you talked a little bit about it takes some time, 6- 12 months, for the Tier 2s to pass it through things like steel and belt 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 them one or two price increases to send it through? We should think about this pressure probably continuing into next year?
Sorry. Yeah, we don't give guidance yet on 2022. 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 would be a carryover effect into next year.
Okay. Great. The second, just on a longer-term question on your content per vehicle growth, primarily from the market share gains, I know you don't comment on 2022. 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 back of the envelope, it could be sort of 44%, maybe 45%? It sounds like from your order book over the last three to four years, you'll probably peak out at something 47%, 48%. You just wanted to kind of have a high-level view that 2022 and 2023, we'll still see market share gains, so good content per vehicle growth.
We don't give market share targets by year. 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, so to speak. We have built a strong order book, and we continue to build the order book here. We will defend that market share going forward.
Okay, great.
Thank you. Just as a quick reminder, if you wish to ask an audio question, please press zero one on your telephone keypad. Once again, that's zero one on your telephone keypad if you wish to ask an audio question. 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 they think about the manning situation, and also is it a kind of step back from your structural action, given the fact that car production quarterly basis is lower now than what it was in Q4, for example?
First of all, if you compared year-over-year, your headcount is down, if you take the support, headcount is down around 800 employees. It's more or less flat versus end of year. 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. We remain very cost focused and also headcount focused and are very diligent about any additions. 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. 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 the kind of price pressure of 2% - 4% every year. Is the situation now the same, and now also excluding the raw material impact? In general, do you see similar pricing pressure on your products, or is it 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 near term, at least. Two to four is a good reference point still.
Thank you.
Thank you.
Thank you. There appears to be no further questions registered. I'll now hand it over 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 midterm 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 employees. Our second quarter earnings call is scheduled for Friday, July 16, 2021. Thank you, everyone, for participating on today's call. We sincerely appreciate your continued interest in Autoliv. Until next time, stay safe.