Fitch Ratings has assigned Autoliv, Inc. a Long-Term Issuer Default Rating (IDR) of 'BBB+' with a Stable Outlook, along with a 'BBB+' rating for its senior unsecured debt. This first-time investment-grade rating reflects Autoliv's strong competitive position as the leading global supplier of automotive safety systems.
The rating is supported by Autoliv's market share of 45% globally, which is twice the size of its closest competitor, contributing to stable profitability and cash generation. Fitch forecasts Autoliv's EBIT margins to be around 9-10% in its forecast period, consistent with pre-pandemic levels and 2024 performance.
While the rating is constrained by a low free cash flow margin of approximately 1.5% of revenues, driven by high capital expenditures and a shareholder-friendly distribution policy, Autoliv's commitment to maintaining net leverage below 1.5x is a key rating driver. The company's powertrain-agnostic product portfolio and increasing regulatory requirements for safety content are expected to support future revenue growth.
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