Welcome to the Q4 2021 Autoliv, Inc. earnings conference call. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. I'll now hand the floor to VP of Investor Relations, Anders Trapp. Please begin your meeting. Thank you, Mark. Welcome everyone to our Q4 and full year 2021 financial result earnings presentation. On this call, we have our President and Chief Executive Officer, Mikael Bratt, and our Chief Financial Officer, Fredrik Westin, and me, Anders Trapp, Vice President, Investor Relations. During today's earnings call, our CEO will provide a brief overview of our quarterly 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 at autoliv.com. Turning to the next slide, we have the safe harbor statement, which is an integrated part of this presentation and includes the Q&A that follows. During this 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 available on autoliv.com and in the 10-K 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 it over to our CEO, Mikael Bratt. Thank you, Anders. Looking on the next slide. First, I like to thank our team once again for their unrelenting commitment in maneuvering through these challenging times. I would especially like to thank our colleagues in the Philippines that successfully restarted our operations after the devastating typhoon that hit the Philippines in December. All of our employees are safe. We experience rising number of COVID cases, resulting in a high number of absentees in our operations. We have managed this without any real effects on our business. Supply shortage of semiconductors and other components continued to impact the light vehicle production in the quarter. It led to a Q4 global LVP decline of 13% according to IHS Markit. Component availability improved somewhat towards the end of the quarter. Markets with high safety content per vehicle were the most negatively affected. LVP in the important markets in Western Europe, North America, and Japan combined fell by more than 20% compared to a year ago. The impact from higher costs for raw materials amounted to close to $60 million in the quarter, and we expect to continue to see substantial headwinds from raw materials also in 2022. Given all of that, I'm pleased that we reached our latest guidance for 2021 with organic sales growth of around 8%, adjusted operating margin of 8.3%, and operating cash flow of $754 million. Also, I'm happy to report that we estimate that the order intake share was 50% in 2021, supporting our growth target and an increasing market share. Despite the challenging environment, our cash flow was solid both in the quarter and for the year, and our debt leverage ratio remains well within our target range. We paid a dividend of $0.64 per share in the Q4. This was 3% more than in the previous quarter. Looking now on the financial overview on the next slide. Our consolidated net sales of $2.1 billion was 16% lower than in Q4 2020, mainly due to lower global light vehicle production. Adjusted operating income, excluding cost for capacity alignment, fell from $311 million to $177 million. The adjusted operating margin was 8.3% in the quarter. The lower operating margin was a result of lower sales, rising costs for raw materials, and currency effects. Operating cash flow was a solid $317 million despite the challenging environment. Looking now on order intake on the next slide. Our order intake share for the full year continued on a high level, supporting our growth in the years to come. This is strong evidence that our company is the leading company in the passive safety automotive industry, and it shows that we have managed well when launching previous year's high order intake. One of our key performance indicators, customer satisfaction, has continued to improve and is at a high level. However, this does not mean that we can relax. We always strive for improving products, services, processes, and costs. We estimate that we booked 50% of available global order value in 2021. We achieved high win rates with all product types, including front center airbags and hood lifters for pedestrian protection. We are also proud that we were successful in winning many contracts with new pure EV makers. Our strong order intake and current customer satisfaction makes us confident regarding our midterm sales targets communicated at our capital markets day last November. Looking at the next slide. Our sales in the quarter came in lower than expected, with all regions disappointing except China. This is in contrast to the changes in light vehicle production reported by IHS Markit during the quarter. This suggests that there might have been an element of pull forward of our sales from fourth to Q3, contributing to the lower than expected outperformance. In China, we did see some improvements of production volumes towards the end of the quarter, supporting our sales. As a result of the declining light vehicle production, our Q4 sales declined organically by almost 16%. This was three percentage points worse than the LVP according to IHS Markit. The regional mix indicates a negative mix impact of close to three percentage points in the quarter. Markets with high safety content per vehicle declined significantly more than low safety content markets. We see the sales underperformance as temporary, and we expect sales to substantially outperform LVP in 2022. Based on the latest LVP numbers from IHS Markit, we underperformed in North America by four percentage points and in China by three percentage points. In China, the main reason for the underperformance was that production of high-end vehicle declined by 10%, while production of low-end vehicles grew by 2%. Regarding North America, our sales during the quarter showed a very different development compared to what IHS Markit reported. This difference can partly be explained by possible pull forward of our sales from the fourth to the Q3. We outperformed in Japan, Europe, and rest of Asia with between one and four percentage points. We are confident of a solid outperformance in 2022 in all major regions. On the next slide, we can see some key model launches from the Q4. For the full year 2021, we set a new company record of product launches. We also set a new Q4 record. The models shown on this slide have an Autoliv content per vehicle from approximately $200 to almost $450. Five of these vehicles are either EVs or plug-in hybrids, further extending our exposure to this growing market. The long-term trend to higher CPV is supported by the introduction of front center airbags, active seat belts, and knee airbags on both driver and passenger side. I will now hand it over to our CFO, Fredrik Westin, who will talk about the financials on the next few slides. Thank you, Mikael. This slide highlights our key figures for the Q4 of 2021 compared to the Q4 of 2020. Our net sales were $2.1 billion. This was a 16% decrease compared to the same quarter last year. Gross profit declined by 27% to $368 million, while the gross margin decreased to 17.4%. The gross margin decrease was primarily driven by the lower sales, higher raw material costs, and negative FX effects. In the quarter, capacity alignments had a $3 million negative impact on the operating profit. The adjusted operating income decreased to $177 million from $311 million. As a result, the adjusted operating margin declined to 8.3%. The operating cash flow was $317 million. earnings per share decreased by $0.84, where the main drivers were $1.04 from lower adjusted operating income, partly mitigated by $0.10 from financial items, $0.06 from lower tax, and $0.05 from lower capacity alignment. Our adjusted return on capital employed declined to 19.1%, and the adjusted return on equity to 17.5%. We declared and paid a dividend of $0.64 per share in the quarter, $0.02 more than in the previous quarter. Looking now on the adjusted operating margin bridge on the next slide. In the Q4 of 2021, our adjusted operating income of $177 million was 43% lower than in the same quarter last year. The Q4 in 2020 was exceptionally strong, with a record adjusted operating income of $311 million, fueled by the rapid recovery of light vehicle production, coupled with a very lean cost structure on the back of earlier shutdowns in 2020. Cost for recalls was $55 million lower than Q4 last year. The impact of raw material price changes was a -$60 million in the quarter, year-over-year. Foreign exchange impacted the operating profit negatively by $50 million, mainly as a result of the fall of the Turkish lira. Support from government in connection with the pandemic was $3 million lower in the Q4 compared to last year. SG&A and RD&E net of governmental support was $3 million higher. Mainly lower sales, but also high call-off volatility and cost inflation, for instance, related to logistics and utilities, impacted our operations negatively in the quarter. Excluding foreign exchange, raw material cost increases and governmental support, the adjusted operating income leverage was approximately 28% on the organic sales decline. The 28% incremental margin is at the high end of our communicated normal range, impacted by unpredictable customer call-offs and the fact that the Q4 2020 was exceptionally strong. Looking on the full year 2021 sales performance on the next slide. I'm very pleased that all regions showed organic sales outperformance in 2021. This was achieved as we continued to execute on our strong order book. In North America, we outperformed by five percentage points, and in Europe by 12 percentage points. In China, we outperformed by seven percentage points, despite high-end vehicles being more affected by the semiconductor shortage. The seven percentage points outperformance in Japan was substantially higher than in previous years. Looking now at the next slide. Our key figures for the full year 2021. 2021 was again a turbulent year, with significantly lower light vehicle production than expected in the beginning of the year, mainly due to shortages of semiconductors. Our net sales were $8.2 billion, with sales increasing organically by 8% in line with the latest guidance, despite LVP being virtually flat year-over-year. The adjusted operating income was increased by 42% to $683 million. The adjusted operating margin was 8.3% compared to our latest guidance of around 8%. The operating cash flow was $754 million compared to the guidance of around $700 million. Earnings per share more than doubled to $4.96. Lastly, dividends of $1.88 were paid. Looking at the cash flow on the next slide. For the full year of 2021, operating cash flow decreased by $95 million to $754 million compared to last year, as the higher net income was more than offset by changes in working capital. For the Q4 of 2021, operating cash flow decreased by $152 million to $317 million compared to the same period last year, mainly due to lower net income and less positive effects from deferred income taxes. Compared to prior quarter, working capital improved by $116 million, benefiting from an $89 million change in trade working capital. This was mainly a result of a $145 million reduction of inventories and $68 million from increases of accounts payables, but partly offset by a $124 million from increased receivables. The decrease in inventories was a consequence of improving LVP volatility and measures taken to normalize inventory levels. For the full year 2021, capital expenditures increased by $114 million, which mainly reflects that the level in the prior year was still low due to the pandemic. In relation to sales, Capex, net was 5.5% in 2021 versus 4.6% in 2020. For the Q4, capital expenditures increased by 38% to $153 million. Net capital expenditure in relation to sales was 7.2% versus 4.4% a year earlier. For the full year 2021, free cash flow was $300 million compared to $509 million a year earlier, driven by the lower operating cash flow and higher capital expenditure. In the Q4, 2021, free cash flow was $164 million, and also here impacted by lower operating cash flow and higher capital expenditure. The cash conversion for the full year 2021 was 69%. Now looking on our leverage ratio development on the next slide. In the past two years, we have managed a very difficult market environment with significant declines in light vehicle production, raw material price increases and low demand visibility, as well as severe disruptions of global supply chains. Still, we have reduced our net debt by more than $750 million since mid-2019, and thereby recovered to a balance sheet position that is in line with our target. The leverage ratio at the end of December 2021 was 1.2 times, a significant improvement since the peak of 2.9 times in 2020. In the quarter, our 12-month trailing adjusted EBITDA decreased by $140 million, approximately balanced by the net debt decrease of $148 million. Now looking at the raw material development onto the next slide. Supply-demand imbalances continued to drive prices of raw materials higher during the year. Cost increases from, for raw materials generated a headwind of $60 million or three percentage points to our operating margin in the Q4. In 2021, we limited the impact from raw materials to around 130 basis points, or around $105 million, of which $100 million came in the second half of the year. For the full year 2022, we expect raw material costs to amount to around three percentage points in operating margin headwind, with around five percentage points year-over-year impact in the first half and around one to two percentage points in the second half year. Given this exceptional period of high raw material prices, we believe that customer recoveries will offset some of these expected raw material cost increases. It will take time to see the results of these efforts, and we do not expect to see much result until the second half of 2022. For commercial reasons, we will not discuss the anticipated recovery or its nature at this time. On to the next slide. Through a number of actions, we have mitigated some of the negative effects from the lower sales and the cost inflation during 2021. These actions include activities such as adjusting production, shortening work week hours, and furloughing personnel. This includes, for example, footprint and capacity alignment in Europe, as well as moving overhead functions to best cost countries in Americas. We have also initiated further footprint adjustments in Japan and in the rest of Asia. In total, we have reduced headcount by over 8,000 since the beginning of the year, of which 1,400 were in the Q4. Other strict measures include management of inventories and payables, negotiating with suppliers and customers to mitigate impacts of raw materials and high level of volatility. Our supply chain management teams have been working hard to balance inventories to actual demand. During the quarter, production planning accuracy improved from November as customer call loss are more stable than before. This concludes 2021. Now switching to 2022, I hand it back to Mikael. Thank you, Fredrik. Looking now at the LVP development on the next slide. For the first three quarters of 2022, global LVP is expected to remain on a similar level as we saw in Q4, at just below 20 million units per quarter. This level should be achievable, assuming no further deterioration of component availability. In North America, the industry continues to struggle to meet consumer demand for new vehicles due to the shortage of semiconductor. Inventory of new vehicles in the U.S. ended December around 1 million units, the lowest level seen for at least 35 years. Despite healthy underlying demand trends in Europe, component shortages meant that registrations have not returned to the pre-pandemic level. This has led to record long waiting times for new vehicles. In China, we saw a rebound in December for light vehicle sales, indicating an easing of semiconductor chip shortages. As component availability appear to be improving somewhat, we expect a good demand and low inventories to support the recovery in LVP in 2022. IHS Markit expects that the global LVP will be around 80 million units in 2022, a 9% increase over 2021. However, we still see the component availability as a limiting factor for the recovery. We expect a positive regional mix as most growth is expected to come in high content per vehicle markets such as Western Europe and North America. Where possible, OEMs will likely continue to prioritize production of vehicles with no or low CO2 levels, as well as larger vehicles. Turning to the next slide. Here you see some of the key models supporting the strong sales growth and outperformance we expect for 2022. These models are expected to count for a quarter of our organic sales growth during the year. Most of these models were launched in 2021. Some are yet to be launched, including the Chevrolet Silverado. New steering wheels on several new and existing Mercedes vehicles are also to be launched. Our content per vehicle on these 12 models is in the range of $140-$400. According to IHS Markit, global LVP in 2022 is expected to increase by approximately 9% with a positive region mix for Autoliv. The mix is expected to provide two to three percentage points growth over market. We also expect CPV growth of around 2%. We foresee substantial sales outperformance in all major regions in 2022. Japan and China are expected to be the markets for us with the highest outperformance, followed by Europe and North America. Backed by these recent product launches, strong rebound in global LVP and a positive regional LVP, light vehicle production mix, we expect sales to increase organically by around 20%. Looking to our expected margin development for 2022 on next slide. Our strategic initiatives continue to yield good results, and we are confident in our 2022, 2024 targets. In 2021, we reduced headcount by 11%, and we will continue a strict cost control in 2022, as previously outlined by Fredrik. This includes executing on capacity alignments, footprint optimization, strategic initiatives, and customer recoveries, partly offset by cost inflation from wages, logistics, and energy. The expected sales increase should bring strong margin improvement support, while rising raw material costs is expected to amount to around three percentage points in operating margin headwind, with a significantly larger year-over-year impact in first half. We expect customer recoveries to offset some of these expected raw material cost increases, mainly in the second half year. This would lead to an improved adjusted operating margin for the full year 2022 of around 9.5% compared to 8.3% in the prior year. Our adjusted operating margin outlook may still be impacted by supply chain disruption in the automotive industry and potential risk of surging COVID cases and its effect on us and the automotive industry. Looking at the detailed indications on the next slide. Our full year 2022 indications exclude costs for capacity alignment, antitrust related matters, and other discrete items. Our full year indication is based on a LVP growth assumption of around 9% compared to 2021. We expect sales to increase organically by around 20%. Currency translation effects are assumed to be around 3% negative. We expect an adjusted operating margin of around 9.5%. Operating cash flow is expected to be around $950 million. Turning to the slide to look at our 2022 priorities. The health and safety of our employees is our first priority, while continuing with more activities to further improve efficiency. We will also continue our efforts of flawless execution of new launches, improving customer satisfaction further, and thereby supporting our new and stronger market position. Through our capital efficiency program, we aim to unlock capital from receivables, inventory, and payables for other uses. Combined with the execution of our strategic plan, this should lead to strong cash flow generation, which sets Autoliv up for attractive shareholder value creation. By executing on our strategic initiatives, footprint optimization, and negotiating compensations from OEMs, we will mitigate headwinds from raw materials and cost inflation. We also aim to grow mobility safety solutions, supporting our growth targets beyond 2024. To progress towards our climate target, we will focus on increased resource efficiency and reduction of our carbon footprint. I will now hand it back to Anders. Thank you, Mikael. Turning the page, this concludes our formal comments for today's earnings call, and we would like to open the line for questions. Thank you. I'll turn it back to Mark. Thank you. Just as a reminder, if you do wish to ask a question, please dial zero one on your telephone keypads now. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Emmanuel Rosner of Deutsche Bank. Please go ahead. Your line is open. Oh, thank you very much. I have two questions. The first one is around the revenue outlook. Very pleased and positively surprised to see your expected 11% growth of the market in 2022, as well as your confirmation that you're on track for the midterm targets. At the same time, just at the recent Capital Markets Day, you had sort of tweaked back down your growth of a market's midterm framework to just four points a year or so on average. Based on the cadence of your backlog and sort of like the new business that you have won, would you expect sort of like, you know, the rest of the horizon to be, you know, below average on growth of a market? Thank you for your question. I think at the Capital Markets Day, we did not lower the expectation. We actually increased it. As you remember, in 2019, we talked about this 4%-5% over the strategic horizon. Now, as we have moved forward, we talked about the LVP outperformance for 2022, 2023 and 2024 to be LVP plus around 4%. When you compare those numbers, it's actually a little bit higher number when you look at our latest update. What we are saying here is that we are confirming the strong growth that we have as a result of the order book we have built over the last couple of years. We have the right trajectory here going forward, and that is what you see in our guidance for 2022 here. Okay, understood. Second question, I guess, on the raw material headwind, you know, for this year, and then obviously partly mitigated by some recoveries. I think in some of your earlier expectations, I think you had assumed that you would have decent amount of clarity on commercial recoveries earlier in the year, and potentially some of these, you know, commercial recoveries achieved already in the first or Q2 of 2022. Does your latest comment today seem to indicate maybe a little bit more back-end loaded in terms of clarity on this and sort of like achieving that? I understand you can't quantify expectation, but can you maybe just, you know, characterize, you know, what drives this? I'm saying, why will it take sort of like, you know, a little bit longer? Have your expectations, you know, directionally in terms of, magnitude change in terms of the ability to recover commodities? No, I don't think there's any change to what we have thought or said previously. We did have already recoveries in 2021. As we indicated, they were say at that lower levels. We expect now to have larger recoveries in 2022. Of course, on the smaller part of our business where we are already indexed, I mean, that reset then happens already earlier during the year. Those recoveries will come in earlier. As the bulk of it will be based on negotiations, they will have an effect then more in towards the second half of the year. Just to be clear, is there some level of recovery baked in on raw materials baked into this 9.5% guidance? Yes. The three percentage points headwind we're guiding for on the raw materials side is the pure headwind we're seeing on the cost side. That is not net of any recovery. That's just the pure cost element. If you look at the high level, the waterfall we're giving to get to the 9.5%, even if you take, say, an average leverage on the incremental volume, you can also infer from that that there is a recovery assumption also baked into the 9.5%. Perfect. Thank you. Thanks. Thank you. Our next question comes from the line of Hampus Engellau of Handelsbanken. Please go ahead. Your line is open. Thank you very much. Two questions for me. First is on the order intake. If you maybe could discuss a little bit on the drivers behind getting back to 50% market share compared to 45% in 2020. Also if there's an element of how we should think about pricing in regards to stepping up in market share again in orders. That's my first question. Second question is more related to, like, semi shortage. If I'm reading OEMs and looking at IHS, seems like it's reasonable to assume that there will be similar semi shortage in Q1 as we had in Q4, and it would be interesting to hear your comments on that. Thanks. Thank you, Hampus. On the order intake, I think, I mean, as we said last year there, I mean, we were pleased with that order intake we had that year as well. Of course, every year is not the same. We, as you know, don't have a market share target per se, but we need to, you know, fight for the business here. We believe that we have a strong order book that we have continued to build, and we are heading towards around 45% market share in the future, as we have indicated, and that is what we intend to defend here. Of course defend it with healthy business and that is what we are focusing on here. So 50% one year, around 45 another year, and that's really no drama in that development either up or down there. So we have no real differences there, I would say. For us, the market share is not the top priority. It's to have healthy business defending our position in the market. That's our priority. Okay. Then on the semi shortage side there, I mean, I definitely believe that as you see in our indications here also, we believe that we will have disturbances and limitations to the LVP growth due to semiconductors for the major part of 2022 as well. I think it's very difficult to have a very clear opinion when semiconductor challenges will be behind us, because we all know the growing need for semiconductors, not only in automotive, but also in society at large here. It's a catch-up game that needs to be done here from the semiconductor manufacturers here. That's not a quick fix. What we think here is that we have come to some kind of more stable situation overall. As we have commented here, we saw the volatility in the call outs coming down towards the end of the quarter. We believe that we will have a more stable situation. However, still, growth are being held back due to semiconductor shortage. Thank you. Thank you. Our next question comes from the line of Victoria Greer at Morgan Stanley. Please go ahead. Your line is open. Morning, afternoon. Yeah, a couple of questions from me, please. I wanted to come back to your top line guidance, please. So production, you know, 9% in LVP, based on the IHS, and then making it up to 20%, you know, with 1,100 basis points of outperformance. You know, but I can think of, I guess, several factors that are probably, you know, additional to normal than just the new business in that 1,100 basis points, you know, so positive geographical mix. You mentioned CPV growth of about 200 basis points. I guess some of that is coming from regional mix. Some of it may be coming from new orders, and maybe there's an element of price increases in that top line guidance also. You know, could you talk us through, I guess, how much of that 1,100 basis points outperformance in 2022 is from these unusual factors like the geographical mix, and how much of it is straight, you know, new starts? The second question is on share buybacks. Really kind of more of a procedural question than anything else. You know, you obviously set the target across 2022 to 2024, you know, of up to $1.5 billion. How would you expect to execute on that? Could you give us a specific number for 2022, or should we think about this as more opportunistic? Thanks. Thank you for your questions there. I think you touched most of the components there when it comes to the outperformance, as you correctly said there. I mean, mix and content per vehicle on top of the LVP growth stands for, I would say, the 2/3 of the development here. Then the remaining part is really our growth as a result of the order book built here. I think that's the short of it. On the share buyback side, I think we have nothing to comment around that here. I mean, we have presented our buyback program here leading up to 2024, and we will take those steps towards that. We are still committed to that, but we will not have any pre-announcement on that. We will inform in due course here when we take the different steps towards that. We are still, of course, fully committed to that. We believe we have more to say when we have something to talk about there. Great. Thank you. Thank you. Our next question comes from the line of Mattias Holmberg of DNB. Please go ahead, your line is open. Thank you. To get back to the four percentage point outperformance guidance for 2022 to 2024, but I didn't really understand the answer. I would just like to get it clarified. The four percentage point, should we expect that you grow at least four percentage point faster also in 2023 and 2024, despite the much stronger outperformance now in 2022? Yeah. I mean, as I said here, I mean, we have indicated that for the coming three years, 2022, 2023, and 2024 should have LVP outperformance of around 4% per year. Then, of course, as it comes out here, it will not be a linear development. We have only guided you here now for 2022, and when it comes to 2023 and 2024, we will come back then. Can also add a little bit. I mean, as you might have seen that we did not perform as well as we had expected or outperform as well as expected, in the Q4, largely due to negative mix of almost taking out all three percentage points. We think that some of that negative mix we will recover in 2022, which was not part of the original 4% per year growth, over market, or over LVP, as an average for 2022, 2023, and 2024. It might be somewhat higher actually than combined compared to what we said before, due to this mix effect, that we now see positive in 2022. Great. That's clear. Second one for me. You mentioned the 50% market share on order intake. Can you say what market share you had on sales, please? We are not ready with that calculation yet, so, it's more data required in order to conclude on that calculation. We have no update when it comes to the, let's call it the running portfolio market share there. Yeah, we're still waiting for competitors to report and so on, and some more market intelligence to conclude on those calculations, yeah. Understood. Thank you. Thank you. Our next question comes from the line of Rod Lache at Wolfe Research. Please go ahead. Your line is open. Hi, everybody. On the commodities, your slide 14 charts on commodities looks like it ends in Q3. Steel looks like it's been coming down a lot since that timeframe. Hot-rolled coils are now $1,100 or $1,200 a short ton. I'm wondering if that is reflected in your guidance, and maybe you can just educate us a little bit on how that flows through, what kind of lag you typically experience. If it stayed at spot levels, how does that factor into your 12% margin target? Yeah. No, I think it's a formatting thing that on the axis. I believe it is Q4 that is also included in those developments. You're right. I mean, also here during the first part of Q1, we've seen those trends on certain commodities continuing in a positive direction for us. The main impact that we see here for next year is continued headwinds here on steel. That is based on how our contracts are structured and the timing of how we roll those over. We also see an increased impact from non-ferrous metals, mainly aluminum and magnesium, but also yarn, so especially here polyester and polyamide or nylon will have a significantly larger impact in 2022 than it had in 2021. Those are the main components of the raw material headwinds that we're seeing. The guidance is based on, say, on our contract structures, so the timing on when we have to roll these contracts over and then also on the price trends that we're seeing in the market. They're not necessarily based on current spot price levels. As we have indicated before, there are always, I mean, time lags. How they roll into our contractual setup, and then also the duration of our contracts also play a role. It's our best estimate at this point of time, how the current raw material price situation and trends will be reflected in our cost base. At the moment, I mean, we're working hard both on, say, operational efficiency, also, I mean, value add and value engineering activities with our supply base and our customers, but also now obviously on the commercial recoveries, to ensure that we can still hit the 12% margin target that we have set out. Okay. Maybe second, can you give us an update on just the status of just the automation and digitization projects? I think you had $160 million of savings from that. There was maybe $80 million of footprint changes. R&D over the next year or two was going to come down by about 100 basis points. Any update on what we should be looking for in 2022? No. Again, I think in the bridge or the waterfall chart that we're giving here for 2022, you can already infer from that that there are further improvements also included there from those activities. We see that continuing automation and more operational activities with the shorter payback periods. The footprint activities tend to have longer payback periods, not such a significant component or impact from the second part here on 2022. Those are the main components where we are able then to mitigate the effects from raw material headwinds that are quite significant at three percentage points and still be able to give a 9.5% margin target here for next year or for this year. Okay, great. Thank you. Thank you. Our next question comes from the line of Colin Langan at Wells Fargo. Please go ahead. Your line is open. Oh, great. Thanks for taking my questions. Just to follow up on the raw material question, just want to understand this. Can you remind us the split of your exposure by steel, nonferrous, and nylon? You know, I would kind of anticipate maybe a six-month lag between when maybe the spot and your contracts. So does that mean in the outlook that steel you know is maybe more flat in the second half of the year and the bulk of the impact is hitting? Just seems. Just any color there in terms of how that operates. Yes. On the commodity breakdown, steel is roughly 45% of our commodity exposure. That is followed by yarn or textiles, that's around 20%, followed by resins or, I mean, plastic inputs, that's around 15%. Nonferrous metals is between 10%-15%. The others make up 5%-10%. That's the composition we have. As you said, we were expecting the majority of the headwinds on steel to be in the first half of the year. We had very limited impact in the first half of 2021 due to our ability to postpone the impact and also our contractual setups. Now as those contracts expire and we have to roll them over, we will see a significant headwind in the first half and then, as you say, a much lower impact in the second half on steel. Yeah. Okay. The second half is mostly the nylon and the nonferrous type of stuff hitting. Yeah, the impact is of the $105 million that we had this year. Basically three quarters almost of that was from steel, yeah. Of the 300 basis points we have for 2022, it's much more evenly spread between steel, nonferrous, and textiles. Yeah. Correct. Oh, that's very helpful. Just to follow up on the growth over market, one of the things I struggle with is understanding product mix, 'cause, you know, in 2021 seems like all the luxury, full-size pickup, stuff like that were in favor, and that sort of helped mix overall. How are you thinking about that in your guidance? Obviously, geographic mix makes total sense with North America and Europe outperforming. Have you factored in negative product mix, or do you think it's going to be steady this year? Just, your thoughts there would be helpful. Thank you. No, I mean, of course that's a part of our estimation here. I would say right now you have a growth in content per vehicle across the board here. I mean, over also the low end vehicle, if we call them that, as well as the premium, have a gradually increase. Actually, the gap between the lower end and the premiums remains as both are to a large extent, as they both are growing. That's a, I would say, a minor factor there if you look at the total development of the industry. Of course, in a single quarter or single month, you can have those swings depending on which model it is. As a general principle, I would say the mix effect is mainly then the regional side of things. Okay, thanks for taking my questions. Thank you. Thank you. Our next question comes from the line of Joseph Spak at RBC Capital Markets. Please go ahead, your line is open. Thanks very much. Sorry, one more on commodities. I guess maybe this is, I just want to clarify something because I think, you know, there was maybe an assumption that Q4 would have been the peak for raw materials, and now it clearly seems it's more first half. I'm wondering when you talk about these numbers either, you know, absolute like the $105 million in 2021 or the 300 basis points in this Q4 versus the 500 in the first half. Is there like a net versus gross? Because I think in answer to Emmanuel's question earlier, you mentioned the 300 basis point impact for 2022 is a gross number. when you talk about it in the actual results, is that also gross or is that netted? No, it's the same basis, yeah. It's the same. But it- Okay. It's not the full risk or exposure we would have on commodities that would be even higher. I mean, if we were transacting on spot markets and so on, the raw material impact would be higher. There are already a lot of mitigating actions in the 300 basis points for this year or the 130 basis points for last year. That's, I mean, delaying price increases, switching suppliers, and so on. There are already a lot of mitigating activities in the 300 basis points. But it is, as I said, a gross number, how we expect to hit our P&L in terms of cost increases year-over-year from raw materials. Um, but then the- Right. The recovery part from our customers is not included. As I said, we already had recoveries in 2021. For commercial reasons, we prefer not to disclose those because the negotiations are ongoing. Yeah. Okay. That makes sense. Then just on the comment about, you know, that you may have seen some pull forward from the Q3, the Q4. Can you just expand upon that a little bit? Because I guess what you're trying to imply that there may have been some, you know, vehicles you ship to that maybe weren't completely assembled because they were missing components, and so they got assembled in a quarter later, which may have sort of, you know, created a mismatch in outgrowth when you sort of compare it to production. Maybe you could talk a little bit more about your views there. Yeah. I mean, it's exactly right. I think as I indicated here, I mean, we have had a very volatile 2021, especially Q3 there, where we had short-term changes to the production schedules and we believe that some of the material that was actually cooled off at the end of the day were going into vehicles that were produced later in Q4. The whole volatility situation has made it a little bit more difficult to read here. As we have said here, I mean, what we can see, the production numbers for Q4 is a little bit higher than what the actual on the LVP side, a little bit higher than what activity we could see from our side here. We believe that there is a effect of that, some of the volumes in Q3 belong really to Q4 in terms of LVP. Maybe just a quick follow-up. How do you see recent schedule volatility? Is your expectation of that will improve, that the stability will improve as you move through the year? We believe so. As we said, towards the end of the quarter, we saw a stabilization. When we look into 2022, we are not seeing anything that should indicate that we have increased volatility. I mean, there is a lot of things going on in the world around us here with raw material prices, energy situations, et cetera. We of course keep a very close eye on the development here, but no indications as of today that volatility should return. Thank you. Thank you. Our next question comes from the line of Chris McNally at Evercore. Please go ahead. Your line is open. Thanks so much, team. two just questions around the general pace of the production recovery. The first around the orders. You talked about the 50% share, but if you actually look at the absolute, I was kind of surprised to see that the absolute level of orders this year was back to 2019. It seems quicker than expected. Also, you know, we're not expected to get back to the pre-production levels for another year. Just if you can comment on the general pace of industry orders. I mean, the numbers are the same 50%, so I know you're pleased with the 50%, but how about, you know, just the RFQs that are out there? Yeah, I mean, if I understand your question right here, I mean, the order value on RFQs that we are winning, of course, are based on our customers' expectation on these different programs here. So I don't think you can compare it to 2019 where we have, you know, in terms of production schedules or anything like that. This is for the future. Some of these programs may go into production in 2024 and even some cases beyond. But I would say more 2024, 2025, 2026 time horizon. There is, of course, different basis for that. Yeah. I guess my only point was, you know, we hear a lot about lack of confidence in the future, and this would sort of say that we're getting back to some level of pre-COVID normalization for the expectations of your customers. Yeah. I think, I mean, the underlying demand there, at least I don't see any doubt about the strength in that. I think we have a very strong underlying demand driven by the fact that there is a much older fleet out there, and there is replacement need. We have had several years with relatively low production, and it has not been low because of demand. It has been low because of first COVID and then semiconductor shortage and other challenges here on the material side. It's still hampered by the fact that the availability is not there. Underlying demand is very strong. We have pipelines, for example, in the U.S. that are at record low levels as we indicated here. I mean, one million vehicles. It's $2-3 million just to refill that pipeline to what's normal. So very strong there. On top of that also you have the shift to electric vehicles. There is strong interest from consumers here to go into new vehicles with new technology here. When the chip shortages and material shortages is behind us, we believe in a very strong recovery here. Maybe one other comment that we expect the lifetime sales that we were quoting on to be even higher for 2021 at the beginning of the year. We've seen some products being pushed out into 2022. We do expect at the moment that 2022 will be also a step up from 2021 in terms of business that will be out for sourcing from our customers. No, I appreciate the detail. Then maybe just a little bit more near-term question about recovery sequentially. I think on slide 16 you talk about, you know, next couple of quarters being relatively flat, like vehicle production. I know that's sort of what IHS has. But what's interesting is we're hearing from some of the customers like Toyota, you know, I think is talking about April being 35% higher than February. Is there potential that while Q1 seems pretty flat, that by Q2 as we get out of sort of some of the COVID-related shutdowns, that Q2 could be actually up sequentially? I know some of the other forecasters are up 4%-5% Q1 to Q2. No, I think, I mean, you're referring to one customer here, and it could very well be so for various reasons. As an industry, it's to the best of our knowledge that what we have described here today. Once again, I think the limiting factor is the availability of material here. If that is corrected, you can see quicker step-ups here. That's the best data we have as of today. Of course, you know, as you know, the visibility we have is not that far out in terms of roll-offs. Okay. Perfect. Thanks so much. Again, I think that the underlying assumption for the full year is that Q1, Q2, and Q3 will be relatively flat versus Q4, so that the industry should be able to hold up at those, at the Q4 volumes, and then a slight increase sequentially into the Q4 this year. Thanks. I think we have time for one more question. Thank you. That will come from the line of Sascha Gommel of Jefferies. Please go ahead, your line is open. Good morning, good afternoon. Thanks for squeezing me in. Two quick ones, actually. The first one is on working capital. You mentioned that you see further improvement potential. I was wondering if you can give us a bit of scope and measures for the main working capital items that you see. Secondly, on the share buyback, again, more procedural question. Is it a management or a board decision like the dividend? Yeah. On the dividend, it's a board decision. As you know, we have quarterly dividend, and that's decided by the board, quarter by quarter. Buybacks as well, or is buybacks a management decision? Buybacks, we have a mandate from the board, and that is the mandate we have present up to that level. Then it's an operational question after that. Yeah. Appreciate it. Thank you. Yeah. Then on working capital, I mean, I think you can see that, and we did talk about on the Capital Markets Day how we're focusing, especially on accounts payable. I think if you look at the multi-year trend, you can see a significant improvement, also into 2022. We're expecting that we will see further improvements from that here over the next few years. Then on inventory, I think we proved also here that in very challenging times, we were able to reduce inventory sequentially by almost $150 million, which also shows that we have a lot of focus and traction also on those initiatives. also here we expect to see more going forward, and I think we have a good setup for these improvements. I think we're well on track to get to the $800 million that we've talked about with 2019 as a basis point. That's great. Thank you. Thanks. That was the last question. Okay. Thank you very much. Before we end today's call, I would like to say that we are operating from a position of strength in many aspects, including market position, growth, and dedicated employees. Unfortunately, there will be millions of vehicle collisions in 2022. Autoliv continues to focus on our vision of saving more lives, which is our key contribution to a sustainable society. Our Q1 earnings call is scheduled for Friday, April 22, 2022. Thank you everyone for participating on today's call. We sincerely appreciate your continued interest in Autoliv. Until next time, stay safe.