Financial Overview

(in million USD)

	FY ended Dec. 31, 2014	FY ended Dec. 31, 2013	Rate of change (%)	Factors
Overall
Sales	9,240	8,803	5.0	1)
Operating Income	723	761	(5.0)	2)
Sales by Product Line
Airbags products *1	5,951	5,686	4.7	3)
Seatbelt products	2,800	2,773	1.0	4)
Active safety products	489	345	41.7	5)

*1: Includes sales of steering wheels, passive safety electronics and inflators

Factors
1) Overall
-Net sales for the fiscal year ended December 31, 2014 increased by 5.0% over the previous year to USD 9,240 million. Excluding currency effects, the Company had organic sales growth of over 6%.

2) Operating Income
-The Company's operating income in the fiscal year ended December 31, 2014 was USD 723 million, a decrease of 5.0%. The decrease in operating income was primarily due to settlements of antitrust class action suits in the U.S.

3) Airbag products
-Sales of airbags and related products increased by 4.7% over the previous year to USD 5,951 million. An increase in the sales of steering wheels, side airbags, knee airbags, and safety electronics contributed to this increase.

4) Seatbelt products
-In 2014, the Company's sales of seatbelt products had a 1.0% year-to-year increase to USD 2,800 million. Increased sales of seatbelt products in Europe and North America were partially offset by decreased sales in Asia.

5) Active safety products
-Sales of active safety products rose by 41.7% in 2014 to USD 489 million. This increase was caused by higher demand of all systems, though radar related products experienced particularly strong growth, caused by Mercedes' expansion of its Collision Prevention Assist (CPA) in most of its platforms. Increased sales of visions systems to BMW and night vision systems to BMW and Mercedes also contributed to the increase in sales.

Recent Developments

Manufacture replacement airbag inflators for Honda
-The Company announced that it will supply replacement airbag inflators for Honda Motor Co., Ltd. in support of the ongoing field action initiatives in the United States. The agreement is made in order to meet the expanded supply of inflators needed by Honda and is subject to definitive documentation. In order to meet increased demand, the Company will develop additional inflator capacity in its existing manufacturing facilities. Deliveries are expected to begin after June 2015. (From a press release on December 3, 2014)

Restructuring

-The Company announced a new operating structure to more effectively manage its business operations. The new operating structure will be introduced in phases and will, when finalized, create two business segments: Passive Safety and Electronics. Starting September 1, the Passive Safety segment will be responsible for all regional operations involving passive safety products, including airbag and seatbelt products. The Electronics segment will include the Company's active safety products. Beginning January 1, 2015, passive safety electronics will be transitioned from the Passive Safety segment to the new Electronics segment. (From a press release on August 13, 2014)

Contracts

-Major contracts of launches in 2014

Maker / Model	Parts Supplied
Chrysler 200C	Driver airbag, Side airbags, Inflatable curtains, Seatbelts with pretensioners, Radar system
Baojun 730	Driver airbag with steering wheel, Passenger airbag, Safety electronics, Seatbelts with pretensioners
Subaru Legacy and Outback	Side airbags, Inflatable curtains
Land Rover Discovery Sport	Driver airbag with steering wheel, Passenger airbag, Inflatable curtains, Side airbags, Pedestrian airbag, Seatbelts with pretensioners, Safety electronics
Hyundai Sonata	Steering wheel, Seatbelt with pretensioners
Ford F-Series	Side airbags, Inflatable curtains, Safety electronics
Volkswagen Passat	Driver airbag with steering wheel, Passenger airbag, Side airbags, Active seatbelts with pretensioners
Mazda 3/Axela	Driver airbag with steering wheel, Side airbags, Inflatable curtains, Safety electronics
Kia Sorento	Driver airbag, Passenger airbag, Inflatable curtains, Side airbags, Safety electronics, Seatbelts with pretensioners

Awards

-The Company's "green" airbag inflator was one of the winners of the 2014 Automotive News PACE (Premier Automotive Suppliers' Contribution to Excellence) Award. Together with Volvo Car, the Company was also recognized as a "Innovation Partnership Award" winner for the Pedestrian Protection Airbag on the Volvo V40 and XC40. (From a press release on April 8, 2014)

-Autoliv China, a subsidiary of the Company, has been presented with the "Excellent supplier award" from SAIC-GM-Wuling Automobile (SGMW) for 2013. This marks Autoliv China's third consecutive year that it has won an award from SGMW following "the best quality award" in 2011 and "the best platform award" in 2012. (From a press release on January 16, 2014)

Outlook

-The Company expects to have organic sales growth of more than 6% for 2015. By 2019, the Company hopes to have sales of over USD 1 billion in active safety systems.

R&D Expenditure

(in million USD)

	FY ended Dec. 31, 2014	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012
Net R&D Expenditure	536	489	455
% of Sales	5.8	5.6	5.5

-No single project accounts for over 2% of the Company's gross R&D expenditures.

R&D Structure

-As of December 2014, the Company has 5,500 employees working in Research, Development and Engineering. This constitutes approximately 9% of the Company's total number of employees.

R&D Facilities

-The Company participated in the inauguration of the world's first fully equipped full scale test track for traffic safety. The AstaZero test site is located outside Boras, Sweden. AB Volvo, Volvo Car Corporation, Scania, and several Swedish institutions partnered with the Company to create AstaZero. The facility is unique as it features different traffic environments make it possible to test advanced safety systems and their functions for all kinds of traffic and traffic situations. (From a press release on August 21, 2014)

-The Company has 18 technical centers in the following nine countries.

• China
• France
• Germany
• India
• Japan
• Romania
• South Korea
• Sweden
• U.S.

Patents

-As of December 31, 2014, the Company holds more than 6,600 patents covering a wide range of innovations and products in automotive safety and key supporting technologies.

Capital Expenditure

(in million USD)

	FY ended Dec. 31, 2014	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012
Total	453	379	360
% of sales	4.9	4.3	4.4

-Capital expenditures for 2015 are expected to be 5% - 6% of sales to support the Company's growth strategy. 

Investments outside Sweden

<China>
-The Company announced that it will establish an airbag plant in Baoding, Hebei Province near the facilities of Great Wall Motor Company. The new factory will be constructed in the second half of 2014. It will produce airbags mainly for the automaker's Haval SUV and the C30 compact sedan. Currently, the Company produces airbags and active safety systems and employs 7,000 people at ten plants in China. (From news releases issued by multiple sources on February 25, 2014)