So, we have a fair amount of lump sums paid to our supplier base as well. So, we balance these two sides of the business here against each other here to make sure that we have a good cost structure and a flexible cost structure to offset any changes there. But for me, I feel very comfortable with the way we get compensated here. And as long as we are in the inflationary environment, this will be ordinary course of business to negotiate with our customers on an early basis for this type of costs.
Colin Langan: Got it. All right. Thanks for taking the questions.
Mikael Bratt: Thank you.
Operator: Thank you. We will now take the next question from the line of Mattias Holmberg from DNB Markets. Please go ahead.
Mattias Holmberg: Great. Thank you. First, I would just like to clarify on the tax rate given that it’s likely to have quite a material impact on the net profit going forward. So, in order to get to the 20% for the full year, given that you’ve had a bit above 30% year-to-date, am I correct to assume that you’re paying basically zero tax in Q4? And then also on that topic, the 25% to 30% that you see a new normalized tax rate going forward, quite a wide range and also significantly lower than the 32% you’ve had in the past. Could you specify it perhaps a little bit more than that or is there any reason why you’ve given such a wide range? Thank you.
Fredrik Westin: So, yeah, you’re right. We were taking down the guidance here for the taxes of 32% to around 20%. This is due to the ongoing very significant reorganization of both global functions and our European operations, which is expected to lead to a reduced tax rate in this year, which is also very much associated with the ongoing restructurings. But it’s also important — this is not cash effective in this year. So, it will not affect the taxes paid in this year. Then going forward, we do expect, as we said, the normalized tax rate to be then around 25% to 30% from 2024 onwards. I think using the midpoint of that range is not a bad assumption at the moment. And this will then be impacting the taxes paid also from 2024 onwards.
Mattias Holmberg: And should we view this as a permanent steady state going forward in terms of tax rate?
Fredrik Westin: Yes, you can.
Mattias Holmberg: Right. Thank you. And then final question for me. You mentioned the potential recall here of the ARC inflators. I’m just curious, are you as a company liable for the inflators RCS produced or how would that work in a potential recall situation?
Mikael Bratt: ARC is – I mean, they are a competitor to us. That’s their exposure. Then of course, our part of that, as I mentioned here, is where we have purchased these components from them. So, we are also a customer to them in this regard. And the portion that is related to Autoliv modules as far as we understand and see here, there has not been any cases connected to that volume here. So, we’re, of course, following this development here very closely, but we see this also clearly as something we can support our customers with in case of a recall, but where they need to have replacement, but we are not there yet.
Mattias Holmberg: And do you believe that you could get compensation in a potential recall from ARC or would you have to cover that cost yourself?
Mikael Bratt: If there would be such a situation, our expectations, of course, is that this is on ARC’s accounts, for sure.
Mattias Holmberg: Thank you.
Operator: Thank you. We will now take the next question from the line of Jairam Nathan from Daiwa. Please go ahead.
Jairam Nathan: Hi. Thanks for taking my question. I was just wanted to go to the LEAP year outperformance slide. So, it looks like the outperformance in North America and Europe have declined quite a bit from the first half. And what are the main reasons for that and how should we think about the regional outperformance for next year?
Mikael Bratt: No. I think if you go back in time, you can see that this number is a little bit volatile, but that direction is clearly that we are continuing to grow our market share in our respective regions you talked about here. And of course, in a single quarter, you can have certain mix effects. So, I shouldn’t read in too much to that. I think we are steadily moving towards the market share of around 45% that we have communicated earlier on. And yes, I think we have a good activity level also to backfill our order book here to support that.
Jairam Nathan: Okay. Thanks. And just finally, on the share buybacks and debt to debt levels. But given the higher interest rate environment and maybe for longer, does that change your thinking on the debt levels and buyback funding? Thanks.
Mikael Bratt: I think we believe that with the good cash flow generating operations we have today, it supports well the buyback program that we are committed to here, and I don’t see this being something that would affect our way forward here.
Jairam Nathan: Okay. Great. Thank you.
Operator: Thank you. We will now take the next question from the line of Giulio Pescatore from BNP Exane. Please go ahead.
Giulio Pescatore: Hi. Thanks for taking my question. The first one on the guidance, just quickly, I’m just trying to understand exactly what assumptions are you incorporating with regards to the strike. So, you said you are in line with IHS. Does that mean that you expect the strike to continue until the end of November? I think that’s what S&P is currently forecasting. And is that — does that mean $6 million per week until the end of November? Is that what you are including in the 1.5% to 2% margin improvement in Q4? And maybe if you can give us also an indication of what operating leverage or drop-through on that lost revenue are you incorporating in the assumption? Thank you.
Fredrik Westin: So, the short answer to your first question is yes. So, it is until the end of November. And from what we can tell right now, it is around $6 million per week that is the impact on our top line. Of course, this can change daily. And on the drop through here, it remains to be seen what that will be at the end of the quarter. As Mikael mentioned here before, we do see that at the moment, the volumes seem to be picked up also by some of the competitors. They are not unionized by UAW. So, it’s still a very fluid environment here that we need to monitor throughout the quarter.
