* Q1 operating profit $134 mln vs consensus $72 mln
* Seen "significant recovery" in China demand and production -CEO
* CEO says well prepared to handle any lockdown exit in Europe (Adds CEO comment, updates shares)
By Niklas Pollard
STOCKHOLM, April 24 (Reuters) - Autoliv, the world's largest producer of airbags and seatbelts, reported a much smaller than expected fall in the quarterly earnings on Friday and said it had seen a recovery in demand and output in China as pandemic restrictions eased.
First-quarter adjusted operating earnings at Autoliv fell to $134 million from a year-ago $173 million, but beat a consensus estimate of $72 million by analysts published by the company. Sales fell 15%.
Autoliv, a supplier to most global car brands, saw its Stockholm-listed stock surge 7.9% by 1234 GMT, trimming losses in the year to date to 23%.
The company, which competes with ZF TRW as well as Joyson Safety Systems, quickly moved to cut costs as the lockdowns to slow the pandemic saw carmakers across the world at varying times shutting down production over the past three months.
Autoliv withdrew its guidance for the year in early April and said most of its plants were shut down at the time as measures to contain the new coronavirus spread, disrupting demand and supply chains.
Since then the toughest lockdown measures have been largely lifted in China, with work resuming at factories across the country while hard-hit local car sales earlier this month recorded their first weekly rise since the virus outbreak.
"We have seen significant recovery in demand and production in China since restarting in mid-February and all of our plants in China are now operating at normal levels," Chief Executive Mikael Bratt said in a statement.
Bratt said the overall situation was still more challenging now than in the first quarter due to greater customer closures outside China, though some European countries had taken small steps toward loosening curbs and restarting badly stalled economies over the past week.
"It's very hard to have a good picture of how rapidly this will happen as it will really depend on what country and even individual site you're looking at," he told Reuters.
"As far as our ability to meet customers' demands is concerned I don't see any great challenges. We are well prepared." (Reporting by Niklas Pollard; editing by Johannes Hellstrom and Steve Orlofsky)