Swedish airbag maker Autoliv shifts tariff costs onto customers, confirms outlook

By Anna Chaberska, Marie Mannes and Alessandro Parodi

STOCKHOLM (Reuters) -Car parts supplier Autoliv successfully passed the full costs of tariff increases onto clients in the first quarter after setting up a task force to react to the shifting duties, it said on Wednesday, as it confirmed its full-year guidance.

U.S. tariffs on foreign auto imports that are expected to raise car prices by thousands of dollars, reducing demand and hurting job growth, have rattled an automobile industry already struggling with a difficult transition to electric vehicles.

Mikael Bratt, CEO of Autoliv, the world's largest producer of airbags and seatbelts, said his company was mostly affected by tariffs between the United States and Mexico and Canada, with the Americas accounting for 33% of the company's net sales.

Autoliv put in place what he called a task force at the beginning of the year to focus on volatility caused by the tariffs and make adjustments where required, he told Reuters.

"We have good control over it. The whole organisation ... follows what's happening," he told Reuters.

Continued uncertainty and rapid changes to trade measures have left companies - including Autoliv's biggest clients Volkswagen, Stellantis and Honda - struggling with how to best mitigate the impact.

Autoliv and other parts suppliers, such as France's Novares and Valeo, have been clear that they expect their customers to cover the full costs of the new duties.

"Additional costs need to be passed on and, in my view, ultimately hit the end consumer through a higher sticker price on the vehicles," Bratt said.

Autoliv has several factories in the United States. But Bratt said there were some components - magnesium for steering wheels, specific electronics, and high-quality leather for example - that must be imported, since there are no local alternatives.

Despite the headwinds, Autoliv reiterated its outlook from January for a full-year adjusted operating profit margin of around 10-10.5% and organic sales growth of around 2%.

The Swedish company's Stockholm-listed shares were up 8% by 1341 GMT, reversing a 2% fall from before the results were released.

Analysts took a dimmer view of Autoliv's ability to fully mitigate the current trade turmoil, however.

Citi analysts questioned whether it could completely pass on tariff-related costs without clients cancelling orders.

And Pareto analyst Forbes Goldman said Autoliv remained exposed to consumers' reactions to expected higher vehicle costs. If people buy fewer cars due to the tariffs, there is "not that much to do about it", he said.

Autoliv's adjusted operating profit came above expectations at $255 million in the first quarter, beating the $202 million forecast in a company-provided poll.

(Reporting by Marie Mannes, Anna Chaberska, Alessandro Parodi, editing by Anna Ringstrom, Kirsten Donovan and Joe Bavier)