Jan Carlson - President & CEO Mats Wallin - CFO Thomas Jonsson - VP, Corporate Communications.

Pat Nolan - Deutsche Bank Steven Hempel - Barclays Brett Hoselton - KeyBanc Samik Chatterjee - JPMorgan Hampus Engellau - Handelsbanken Anders Trapp - SEB Richard Hilgert - Morningstar Andeas Brock - Nordea.

Good day, and welcome to the Q1 2014 Autoliv Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the call over to your host today Mr. Jan Carlson. Please go ahead, sir..

Thank you, Sara. Welcome, everyone, to our first quarter 2014 earnings presentation. Here in Stockholm, we have our CFO, Mats Wallin; our VP Corporate Communications, Thomas Jonsson; and myself, Jan Carlson, President and Chief Executive Officer.

During today's earnings call, I will provide a brief overview of our Q1 performance along with the current outlook for our business, while our CFO will provide some commentary around the financial results. Then at the conclusion of our presentation, we will remain available to respond to your questions.

And as usual, the slide deck is available through a link on the home page of our corporate website. Turning the page, we have the Safe Harbor statement, which, as you know, 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 and the reconciliations to U.S.

GAAP are disclosed in our quarterly press release and the 10-Q that will be filed with SEC. On the next slide at our first quarter highlights, record first quarter sales drove another quarter of solid financial performance where we achieved close to 8% organic sales growth and an adjusted operating margin of 8.6%.

Our operating margin and sales were both better than guidance mainly due to stronger than expected production in Western Europe and South Korea. Adjusted earnings per share of $1.43 increased year-over-year mainly due to our sales growth, which resulted in increased profit performance.

Our exceptional operating cash flow of $185 million were the best ever for the first quarter while we continue to deliver strong returns on return on capital employed and return on equity 23% and 13% respectively.

During the quarter, we continue to adjust our capital structure by returning approximately $143 million to shareholders by repurchasing around 1 million shares and paying a record dividend of $0.52 per share.

In line with achieving our long-term leverage ratio target of one time we raised $1.250 billion through a private debt offering which was concluded on April 23, 2014. And lastly, we received two PACE awards for most innovative technology and best OEM corporation.

I would like to take this opportunity to sincerely thank the entire Autoliv team for their continued focus and commitment to quality and our customers while creating value for our shareholders. Turning the page, we have some of the key models that contributed to our strong organic sales growth.

In the first quarter, these platforms represented close to 70% of organic sales growth and 9% of our total sales. This strong model mix has enabled our company to continue to outperform the light vehicle production in all our major regions during the quarter. Our active safety growth of 68% was the fourth consecutive quarter of more than 50% growth.

Looking now upon our overall market position on the next page. We have our delivery figures for the first quarter this year. Overall we are pleased with our strong volume growth in virtually all products areas and therefore continue to enhance our overall market position.

The 1% decline in seatbelt is a temporary changeover effect as we phase out old programs now and ramp up new programs later this year. It is encouraging to see continued high growth rates with newer products like knee airbags, active seatbelts, and active safety, which increased the overall safety content.

I will now turn it over to our CFO, Mats Wallin, who will comment on the financial results for the first quarter. Please go ahead Mats..

Thank you, Jan. Moving now to the next slide. We have our key figures for the first quarter. Our sales of $2.3 billion were the best first quarter ever due to our strong growth in all regions, especially in Japan, China, and active safety. These three areas combined accounted more than 70% of our year-over-year organic sales growth for the quarter.

This sales performance drove our second best gross profits for the first quarter and our better than expected operating margin result. Looking at our margin development on the next page. Our adjusted operating profit increased 6% year-over-year.

The 8.6% adjusted operating margin were 60 basis points better than our guidance and 20 basis points lower than the same period last year. As shown by the chart on the left the improvement versus guidance was mostly due to our strong execution on high organic sales growth.

When comparing to the prior year, as illustrated by the chart to the right the benefit from organic sales and commodity cost were 150 bps and 40 bps respectively. These favorable items were more than offset by combined footprint effect of a 140 bps.

Adverse currencies were 10 bps, and higher RD&E net of 60 bps, which is mostly due to the higher engineering cost in active safety. As we have noted on the previous earnings calls the combined footprint effect mainly includes our buildup for growth, including vertical integration, and operating inefficiencies in Brazil, steering wheels in Europe.

The still very low production levels in Western Europe continues to weigh on our margins, which we are addressing through our capacity alignment as highlighted on the next slide. During Q1 the cash outlay was $5 million and we expensed $5 million for future activities.

For the full year 2014 our estimates for the capacity alignment costs and cash outlay remained unchanged, both are expected to be in the range of $20 million to $40 million. In full year 2014 we now expect to realize an additional $9 million in savings throughout the year, which reflects some delays.

This is in addition to the $12 million in savings we had in 2013. We expect to see step-up in savings in 2015 and further savings in 2016, 2017 as these activities are implemented. Looking now on to our cash flow on the next slide. Our exceptional operating cash flow of $185 million was our best ever for the first quarter.

Thanks to the strong start to the year. We are well on our way to achieve our full year operating cash flow target of at least $700 million. We now expect D&A to be 30 bps higher than 2013 levels and CapEx net to be in the range of 4.5% to 5% of sales for full year 2014.

During the quarter we returned $143 million to our shareholders through dividends and repurchases. Looking now on our debt structure as illustrated on the next slide. During the quarter we successfully priced a private debt offering in the U.S. for $1.25 billion. Subsequently on April 23, 2014, the transaction funding was completed.

This debt raise is in line with the gross debt level that would be required to reach our long-term leverage ratio target of one time. As illustrated on the left-hand chart the maturity tranches vary from 5 to [15] [ph] years and carry an average interest rate of 3.8%. But the maturity level does not exceed $300 million in any one year.

We are very pleased with the result of this offering and believe this debt level should provide the required flexibility to execute on our financial priorities for the medium and long-term. As we have communicated in the past, we remained focused on growth and increasing shareholder value. I will now turn it back to our CEO for further comments..

Thank you, Mats. Moving on to the next page. We are proud to have been recognized with two PACE awards for innovation. Autoliv together with Volvo Car was recognized with a innovation partnership award for the Pedestrian Protection Airbag on the Volvo V40 and XC40.

The aim of this new airbag is to decrease the impact on the pedestrian when coming in contact with the vehicle. In addition, our new Green Inflator Technology have received an award for safety innovation. This inflator is lighter, less costly, and more environmentally friendly, since the only residual product is water.

There are further examples that our investments in RD&E are paying off and are supporting our underlying strategies for growth. Shifting now from innovation to quality on the next page. Our industry continues to see heightened focus on quality.

This confirms our overall strategic equation of zero-defect and executional focus on quality is the only way to go. Q5 is about shaping an Autoliv culture leading to zero-defect and providing the best value for all our customers in all aspects of our business. That is customers, suppliers, products, growth, and behavior.

Our zero-defect policy focuses on four primary areas, which include designing robust product upfront in the product development process, purchasing flawless components from our suppliers, manufacture flawless products within our production system, and lastly verify conformity of products through mistake proofing.

With this focus, we have reduced our non-conforming events with our customers more than 40% since 2010. On to the next page. We continue to expect another solid year of light vehicle production growth in 2014. Within Asia, we foresee solid demand in China continuing in the upper single-digits, while rest of Asia is expected to see moderate growth.

After our first start of the year in Japan, partly due to the increasing consumption tax in April, light vehicle production is expected to decline by around 10% for the remainder of the year. In Americas, the growth rate is slowing while the U.S. SAAR continues to track in around $16 million range with fairly healthy inventories.

The economic conditions in South America are deteriorating as the light vehicle production has been revised down to a double-digit year-over-year decline. Vehicle registrations in the EU27 are improving slightly on the last 12-month basis, however, are still at low levels.

This in combination with strong export demand mainly due to premium brands is positively affecting inventories. However, consistent with our view that there are no real signs of an economic recovery or cyclical rebound, the light vehicle production growth in Europe is expected to be slow.

Therefore, the underlying trend continues for 2014 where the majority of the light vehicle production growth is coming from the growth market while the triad remains relatively flat.

Turning the page, we have our guidance for the second quarter and based on our customer call offs, organic sales are expected to increase approximately 5% year over year mainly due to continued strong growth in China and Active Safety. Sequentially, organic sales are expected to increase roughly 2% mainly due to China and North America.

In the second quarter, we expect to achieve an adjusted operating margin of around 9%. Year-over-year higher costs for RD&E net and the ramp up for capacity for growth and vertical integration are expected to essentially offset the benefit from organic sales, commodities and currency.

Sequentially, the adjusted operating margin improvement is mainly due to the currency. On to the next page, we have our outlook which excludes costs for capacity alignment and antitrust investigation and assumes mid-April exchange rates prevailing.

Based on these exchange rates, the effect on sales is expected to be slightly favorable by approximately 1% for both second quarter and full year 2014. Based on our stronger than expected Q1 sales, our full year organic sales growth indication is now more than 5%.

However, our operating margin remains unchanged due to increasing our engineering cost in Active Safety. We estimate RD&E net to be less than 6% of sales and commodities to be a slight tailwind of approximately $20 million in full year 2014.

Excluding any discrete and non-recurring tax items, we now expect an underlying tax rate of approximately 29% and target an operating cash flow of at least $700 million in 2014.

Regarding our capital structure, we have 10.6 million shares remaining on our repurchasing program and, as communicated earlier, we aim to reach 0.5 times leverage ratio by the end of the year.

To summarize, we continue to see 2014 as a transition year where we are addressing margin challenges and adjusting our footprint to meet evolving market trend while implementing our strategies towards our long-term target.

We believe that through a combination of these efforts and our continued quality focus we will be able to achieve a margin improvement beyond 2014 as we position our company to capitalize on long-term industry trend. Turning the page, this concludes the formal comments of today's earnings call. We would now like to open it up for questions.

And with that I leave the word back to you, Sarah. Thank you..

Certainly, thank you, Mr. Carlson. (Operator Instructions) And now, we will move to our first question today which comes from Rod Lache of Deutsche Bank. Please go ahead..

Good morning everyone, it's actually Pat Nolan on for Rob..

Good morning..

Couple of questions, Jan. First, I just wanted to discuss the 0.5 times leverage for year-end. You repurchased 94 million of stock during the quarter.

To get to that 0.5 times leverage you need to either significantly take up the buyback pace in the remaining three quarters or potentially you may be seeing that acquisition is another way to get you there.

Can you discuss the buyback pace in Q1 and how you expect that to play out for the balance of the year?.

The buyback, if you compare the buyback program in Q1 compared to Q4, you can see that it’s lower, and the reason for that is fewer days. We had a late report date in February. So we had the report in coming at the end of January and preventing us to start the buyback program in the month of January. The month of February is shorter.

So we had fewer days for buyback. So that gave us the natural lower pace on the buyback program in February. When you are talking about the 0.5 leverage ratio as we said here in the presentation, we have an aim to reach 0.5. And as you know, we're doing this through several ways.

And acquisition is one of it, buybacks or returning money to shareholders are another one. And the strategy for us is to build the company for the future and to grow the company. And as you know, that is also a reason why we build up the strong buyback program. So we will see how that will evolve throughout the year..

And can I also follow-up on your comments about margins improving post 2014? How does that -- I mean previously, you said normalize margins for the company are not that different from where you are guiding to for 2014.

Has your long-term expectations for the margin of the company changed at all?.

We have not changed our long-term margin range over the business cycle. The long-term business cycle target has been 8% to 9%. And we have said that in the better times we would do above that and probably also be forced to see quarters below that in times not so good.

We have communicated already last quarter and we repeated that now that beyond '14 we could see margin improving because of that issues that we have should slow down and improve throughout the year, effects of vertical integrations will start kicking in in the 2015 and beyond, and this should give us an opportunity to improve margins beyond '14.

Otherwise, the communicated margin range etcetera is unchanged..

Thank you. We now move to our next question from Brian Johnson of Barclays. Please go ahead..

Hi. Good morning, gentlemen. This is actually Steven Hempel on for Brian Johnson..

Hi. Good morning, Steven..

Just wanted to turn to China real quick, kind of get your view on the China content story.

I mean, right now we have suppliers that are benefiting from domestic OEMs up-contenting to compete with the foreign OEMs and while on the other end you have -- there is a market view that the low end A&B segment vehicle growth will cut into the CPV end margins.

I guess the question here is just in terms of your view on current up-contenting persisting over the next few years, do you see that occurring? And if so, to what extent do you believe the gains of up-contenting by the domestics will be offset by growth in A&B segment vehicles combined with potential market share losses by domestic OEMs moving forward?.

We do not see it quite like what you said. Even though what you described is right, if you look upon it from an average perspective. We see an increase in content coming through in Chinese market even in the lower specified cars as well as mid specified and, of course, in the upper segment.

It’s just so that the inflow of lower specified cars are so high and during growth times that it offsets the impact of the higher specified vehicles. So that overall the market is growing significantly in China but the average content per vehicle is relatively flat.

And looking ahead, we do not see a significant change on the average content of vehicle over time due to the fact that you have the influx of lower specified cars..

Great. That was very helpful. And then, in terms of active safety growth for remainder of the year, I read the comment in terms of -- given the tough comps in back half of the year, we might see some moderation in active safety revenue growth. But I also understand that you launched a new brake controller business in 1Q.

I'm just wondering how we can kind of foot that to tougher comps combined with a new active safety brake controller businesses launching in 1Q and [inaudible] for the rest for the year?.

You are very correct. We are launching the first program right at this stage and we will -- hope we will be able to comment more on that in the next earnings call. We are also seeing to launch our second program here in first quarter 2015 in this area. We commented this sometime ago that we have to come back.

While we are coming a little bit further into the business of brake control, what target we aim for when it comes to market share and the impact of it. The change of the electronic architecture by integrating passive electronics together with active electronics is relatively new to most of the OEM.

So we will see the adoption rate, how that will evolve and based on that we will come back and give you some more color on our position..

Okay, great. And then just a follow-up on that.

In terms of the engineering spend commentary, was this something you were expecting roughly three, four months ago or is this incremental investment to drive future expansion moving forward?.

We commented last quarter that we will spend $40 million more in engineering in 2014 compared to 2013. We have upped that figure now to $50 million.

All of that $10 million increase is going into active safety, and that is a combination of course in being prepared for the future, also taking care of the continued strong growth that we see in the active safety..

Thank you. We now move to our next question from Brett Hoselton of KeyBanc. Please go ahead..

Few questions here.

First, how much capital you estimate that you're going to need to deploy to reach your 0.5 leverage ratio by year-end 2014?.

Brett, if you just look into the balance sheet of today and how we measure it, it's -- it will take - the gap is around $800 million..

And the second question I had for you was can you talk about the acquisition environment.

I know you're obviously looking for active safety opportunities but what's the deal flow look like? Is there -- are there any deals out there? And then secondly what evaluations looks like?.

They are deals out there to make and there are a flow of deals. What is important to us is that we make the right deal.

We have a very strong balance sheet and we have the opportunity to execute and we are picky when it comes to deal execution because it needs to be the right deal fitting into our strategy, filling the gap that we're looking for in terms of market position and building up resources et cetera.

So there are deals but deals that we are looking for aren't available and we -- that has been the case for some time and it's still the case. Having said all of that we are in discussions and we have been in discussions with potential sellers of assets et cetera, and that's something that is happening all the time.

But nothing today that I can comment on, nothing today that I'm able to give you more color on..

Yes, if you were to put a probability on it what would you say the likelihood of completing a meaningful acquisition by the end of the year might be?.

Well these deals are very digital. I wouldn't dare to give any probability at a call like this today. People may change their mind or strategies and then suddenly sell and it can go relatively fast. I think we have talked about that before people changing their mind and then the deals will come out for sale.

So I stand away from giving any probability on it..

Thank you. And we'll move to our next question from Ryan Brinkman of JPMorgan. Please go ahead..

This is Samik here for Ryan Brinkman. The first thing that I wanted to touch upon is when you issued your guidance for net debt to capital of one time back at your Investor Day, you were talking about three buckets, primarily acquisitions, share buyback, and antitrust fines that you would look to deploy capital in.

Now once you've done this debt transaction today is there more clarity about how much you intend to allocate capital to those three different buckets here?.

No, we haven't given any indication of how much will go into each bucket. We said we will keep strong investment grade. We said we will be able to look to bridge difficult periods like we saw in 2008-09 timeframes.

We also as you're right talked about share returns, potential fines, and also accusations, but we haven't made any sort of one pile for this and another pile for that. I have no information to give you..

And secondly on Europe, I just wanted to ask for your views on that. I mean we have been hearing from a few suppliers that there is potentially some upside to IHS production forecast in that region.

Is that sort of what you're seeing as well or what your judgment on that region is, any direction commentary on that?.

No, I agree that we also see some positive signs in Europe, and we can see the trend of the several quarters and the years of decline has been broken and it's flattening out and even bending upwards. So I agree to that positive approach. We have to recall though that Europe is still on a very, very low level.

Month of March and registrations were up over 10%, but still that month was the second worst since it was start measuring. So it's still coming from very low levels, but we have to be positive and look on the upturn. So I agree to that..

And quickly, if I could just touch on the year-over-year walk for the second quarter. I see that you guiding to roughly $120 million in incremental revenues year-on-year for the second quarter.

If I convert that it's roughly like 30% incremental that you always sort of execute on, there is probably another $20 million of headwinds that you're expecting in the next quarter.

Can you sort of help us with what those headwinds are?.

I think there are two areas where you see cost increase. The first area is in our footprint as you have seen also in the first quarter..

Right..

You will also see that come in the second quarter with basically the same size that we have seen in the first quarter around 140 basis points. And this mainly to support the growth, the buildup in growth areas, but also the vertical integration, so that's one area.

The other area is in the RD&E area, where you also could see in the first quarter year-over-year that there is an increase. You will see that also to come in the second quarter year-over-year that we need to spend more in RD&E and that will do another - around another 30 basis points approximately..

Thank you. We now move to our next question from Hampus Engellau of Handelsbanken. Please go ahead..

I have three questions. I mean, first question is on the capacity alignment program in Europe. The cost you saw in first quarter was kind of the lower side around U.S.$4 million and I was wondering if what's for the big range for this year what will decide it will be at the 40 level or the 20 level, that's my first question.

Second question is RD&E spending in active safety and I would be interested to know more where you're paying your most focus is on in active safety? Last is more on the demand situation, how you see Russia exposure and the risk in Russia going forward for you guys? Thanks..

Okay. We start with the capacity alignment and the cost of the range it's all dependent on negotiations and it's all depending on how discussions we have with different stakeholders in this will evolve. And you know how it is, if you do something, it sometimes digital and it then can take the entire range actually.

So based on that aspect not to be able to go into any details of what it could be and where it could be either as we are in discussions you probably understand that if you're doing something somewhere it may cost some money and that's why the bigger range.

If you talk to the RD&E and the focus on spend it is to focus on where we are -- we are active as you know, in the radar area, we are active in vision systems, and we are active in night vision systems.

We are also looking into the next and third generation of active safety autonomous drive and we are aiming to take up activities here and to look into these areas and be also leading supplier in this area looking ahead. So that's the area of focus and that's the area of where spend is going.

Details in which area between the radar and vision I don't think we are discussing here. When it comes to Russia we have one plant in Togliatti, and this is a smaller plant providing products for the Russian market. We have seen so far no disturbance in that plant.

We are monitoring this of course on a daily basis more or less and sometimes even closer due to the tense situation in Russia in general. We also have three suppliers in Ukraine, three suppliers that we have been monitoring taking supply for; we are starting to build stock from these suppliers.

We are building stock from these suppliers to be able to handle a cut off totally from these suppliers. Now, these suppliers are in the western part of Ukraine so there has been relatively little disturbance compared to what's happening in the eastern part. I think that's --.

Can I do just a follow-up on the active safety side? Is it -- what proportion are you, if you would split it up in terms of R&D in hardware versus R&D in software, is there a split that you could may be share with us?.

The lion part is going into software development, it's a lot of software activities in our parts.

But active safety is also a question of system integration; to be a leading supplier you need to be able to handle a system aspect of integrating your parts into the bumper, into different positions of vehicle and thereby also testing activities system understanding is requiring efforts and requiring resources.

And if you pick and choose there it's probably more on the hardware side rather than on the software side..

Thank you. We will now move to our next question from Anders Trapp from SEB. Please go ahead..

I have a question really on if you have been influenced by or will be influenced by how you're going to handle the F&C new policy from OEMs about recalls. Judging from the last few months development it looks like you're going to see in the industry much more recalls that what have been the case in the past.

I know that for instance, Ford, is now suffering from increased warranty cost. I suspect this will have an impact on the suppliers as well eventually and even though you haven't have been part of the recall so far that you might in future so how do you handle this situation really and how do you see it as a threat or an opportunity going forward..

Well, I guess as you had in the presentation -- you saw in the presentation we have been focusing a lot on quality long before this was more on the radar screens from OEMs and we initiated our activities and initiative we call Q5 of quality in many dimensions including behavior growth, product, suppliers, et cetera.

And focus is on quality is absolutely essential for us in the company, we are making life saving products and our products never get a second chance. So for us, we believe we are very well positioned when it comes to meeting higher quality demand and higher quality requirements from customers.

We see this as well, but we are also seeing that our value we can bring to customers in terms of the quality product and the quality system we have in place could then also give customers a higher level of comfort.

One example actually what's happening if you look to, as you mentioned, the recalls, out of the recalls in 2013 and '14 there were NHTSA decided recalls of roughly 7 million cars in 2013. And so far this year in quarter one there has been 6 million cars announced by NHTSA for recalls.

Autoliv has only been involved in 25,000 of vehicles during this timeframe. So that gives kind of a flavor of the level of involvement that we are seeing here..

So it could be that top quality -- if you're a top quality supplier you could actually gain share a long-term from this changed recall behavior.

Is that what you're saying?.

Well it's kind of way of saying it. I wouldn't say it like that. I would say that customer will definitely look long-term to suppliers that are providing the quality they need to have. And we have very good statistics, we have very good data to show and prove our high quality records in our production with our product..

Okay, that's very good. But do you see any risk of you as a company, Autoliv will need to up your own warranty reserve basically that you always have based on….

Well we have no data today that shows that we should up our warranty reserve or nothing like that. So nothing today..

Thank you. We now move to our next question now from Richard Hilgert of Morningstar. Please go ahead..

Couple of questions. First one, the growth rate on the active safety products. And given what the company has said in the past about its active safety revenues and its market share in the active safety market, it looks to me like perhaps the total market for active safety this year might approach $2 billion.

Does that sound about right?.

Yeah, it sounds about ballpark right..

Okay. And the increase in legislation and the increase in end cap, this drives the market additionally.

It looked like 2016 and previous comments that the company has made you're looking for the market to be somewhere in the $3 billion to $4 billion area but that includes active safety not just from the standpoint of consumer demand, but also the additional legislation that is going to come out by that time?.

Well, I guess that I do not have on the top off my head all the assumptions behind it. But if you look between the market on 2013 and '16, the market in '16, according to what we have estimated, would grow to around $2.8 billion of size.

And that is including what we are aware of the Euro NCAP demand and potential legislation that is out there and also, to the best of our knowledge, the forecast on consumer demand..

Once the technologies really start to hit their run rate later this decade, I am assuming that we'll need to have another generation or two of vehicle launches before we really see it get to its ultimate peak and kind of run rate really before we even take that next step, logical step in somewhat autonomous vehicle technology.

Where does the market go from there? Do you have any idea of what you are looking at for the total market?.

No. Unfortunately, I have no color to give you on that one. We believe that active safety and technology in general in this area will grow fast, and it will continue to grow fast. And if you look to the rationale behind that, it's much better to prevent the accident from happening rather than protecting the occupant when the accident has happened.

And if you can also use the equipment for more comfort feature and autonomous drive and assisting the driver, we believe this trend will continue and it will continue to grow very fast. But I have no available data to give you at this stage, I'm sorry..

Okay. Then, final question, the guidance for the 8% margin level.

As we see this market develop and given it's a combination of algorithms and electronics and expertise in the dynamics of the vehicle in a crash, all of which you possess, does it mean that 2016 and beyond as more of this technology penetrates more vehicles, we should expect margins to slightly expand because more of this technology will be a greater concentration in your revenue?.

Well, let us come back to that and talk about the data. We have said that 8% to 9% by 2016 is our target where we should be able to do the corporate average longer term margin range, also in active safety. Today, the margin in active safety, as you are aware, as we have said before is the drag on our margin.

It all depends to also about how much you invest in engineering and in growth. And we are determined to grow the company and we continue to grow the company. And we will have to see later on what this means and how we can use economy of scale and how fast we can keep the pace in the future. Therefore, I stay out of any further color.

We have communicated two targets here $0.5 billion by 2015 in sales and also the margin range of 8% to 9% in 2016..

Thank you. (Operator Instructions). We will now move to our next question from Andeas Brock from Nordea. Please go ahead..

Thank you. So two questions, if I may. Another question been asked, but two more. Just on active safety there.

Do you think that you will be -- for the long term success of Autoliv, do you need to team up with someone either like an IT company or an IT infrastructure company to be able to -- for long term success? And then, secondly, on Europe, when we look at registration in Europe, they were running at about $14 million for about a decade 1997-2007 and we’re now down to 11.

So there is conceptually a [inaudible] possible increase over time, whether that’s three or five years' time, let's see.

If that would happen, how meaningful would that be to you -- for your European sales, given that some of your sales probably goes to export et cetera but just focus on Europe and say if we actually move from 11 to 14, how meaningful would that be for our European sales? Thank you..

Thank you. To the first question, teaming up with somebody depends on what we aim to do. I think if you go to a full fledged autonomous drive system integrator, I think there are very few companies being able to do that alone. So if we target to do that I think we need partnerships and we need to do that together with all the companies too.

And that is involving a lot of different kind of technologies from car to car communication, car to roadside, map databases et cetera, et cetera. So most probably in such case we will need to do that.

Being successful, I think we are already showing a great success in active safety through our growth taking market share and also within very short timeframe relatively targeting our average corporate margin range in 2016. So that points to the success we have in the active safety.

And I think acquisitions will strengthen these positions further but I think also going forward with our organic sales -- organic investments generating the organic sales growth we are already successful as we go with that. Acquisitions and partnership will take this even further. That’s my comment to the first one.

On the second question, the car production going back to the 14 million level, eventually it might come there; the question is how long time it will take? The question is also how it will look into the future where cars will be produced and how it'll go from being built in eastern part and exported into western part etc.

It will definitely be meaningful if the volumes would come back and it would improve from the 11 million range to 14 million range. It would have a positive effect on us. Clearly, light vehicle production is most important factor for our success in the company and we are seeing that when we saw that in particular in 2008-'09 timeframe.

That would have a positive meaning for it. I have no more quality of figures and data to give you what such gap would give you in terms of margin improvement etc unfortunately at this point..

Thank you. And that would conclude today's Q&A session. I would like to turn the call back to you Mr. Carlson for any additional or closing remarks. Thank you..

Thank you, Sarah. I'd like to thank everyone for your attention and continued interest in Autoliv. We look forward to speaking with you again during our second quarter 2014 earnings call on Friday, July 18. Goodbye for now and thank you very much all of you..

Thank you, sir. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect..