· 2019-12-05 · Jan Allde CFO Alfa Laval Group 04/12/2019 | © Alfa Laval 2 | −From a...

www.alfalaval.com

www.alfalaval.com

Jan Allde

CFO

Alfa Laval Group

04/12/2019 | © Alfa Laval 2 |

− From a financial point of view

www.alfalaval.com

− Key figures, SEK millions

Performance 2019

04/12/2019 | © Alfa Laval 3 |

YTD 2019 YTD 2018 %-change %-▲,org

Order intake 32,966 33,444 -1 -3

Net sales 33,553 29,457 14 12

Adjusted EBITA 5,739 4,931 16

Adjusted EBITA-margin (%) 17.1 16.7

www.alfalaval.com04/12/2019 | © Alfa Laval 4 |

Growth− SEK millions (rolling 12 months)

Orders received Sales

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

201

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5 000

10 000

15 000

20 000

25 000

30 000

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45 000

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201

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CAGR ~12% CAGR ~8% • Order growth driven by strong

global economy, partial recovery in

Energy and Marine markets and

structural growth in Marine

Environmental products

• Service growth improving in 2019

• Sales growth driven by successful

execution of large order backlog

*) Measured over a business cycle

5%Growth*


Profitability− SEK millions (rolling 12 months)

Adj. EBITA & Margin (%) Net Income & EPS

14,0

14,5

15,0

15,5

16,0

16,5

17,0

17,5

18,0

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2015 Q

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Adjusted EBITA Adjusted EBITA-margin

7,7

8,4

9,1 9,2 9,28,8

6,2

5,5 5,2

4,2

6,0

7,1

7,7

9,3

10,210,8

11,2

11,9

12,8

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

0

1 000

2 000

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4 000

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6 000

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Net income for the period Earnings per share

Adj. EBITA & Margin (%)

• Positive impact from higher

volumes, productivity improvements

and FX impacts

• Margin negatively impacted by

reduced service share and

investments in R&D, footprint costs,

etc.

Net Income & EPS

• EPS growth driven by higher

operating earnings and reduced tax

rate

• Tax rate expected at 26% of PBT


15%EBITA*


Capital utilization− SEK millions (rolling 12 months)

ROCE (%) Net Debt

0,0

0,5

1,0

1,5

2,0

2,5

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2015 Q

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1

2019 Q

2

2019 Q

3

Net debt (excl. IFRS16) Net debt (excl. IFRS 16) / EBITDA

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

2015 Q

1

2015 Q

2

2015 Q

3

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2

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3

Return on capital employed *

ROCE (%)

• IFRS 16 capitalization of leased

assets, impact of SEK 2.8 bn in

2019

• Step-up values will be reduced from

SEK 3.3 bn in 2019 to SEK 2.4 bn in

2020

Net Debt

• Net debt excluding lease liabilities

(SEK 2.8 bn) now at SEK 7.0 bn and

Net Debt / EBITDA ratio below 1.0*

*) Excluding lease liabilities from IFRS16

implementation

20%ROCE


Key drivers of financial goals

15%EBITA*

20%ROCE

5%Growth*


• Stepped-up product innovation with

improved competitiveness

• Service strategy taking effect

• Connectivity solutions

• Sustainability providing new business

opportunities

• Strong balance sheet enabling inorganic

growth

• Pricing power with strengthened product

& service offering

• New product platforms with increased

efficiency

• Drive service growth

• Optimized manufacturing footprint and

supply chain

• Strong cost control

• Strengthen focus on Working Capital and

ROCE with new internal financial

reporting structure

• Capex level to be reduced after

completion of footprint program


Example; Gasketed Plate Heat Exhanger (GPHE)

Growth

• New platform with increased efficiency, reliability

and serviceability

• Industrial range completed by end of 2021

• Service = large untapped installed base

• Strong on-line presence and connectivity

solutions being piloted

Profitability

• New platform with improved competitiveness

• Improved global supply structure

• Target service growth of >5% p.a.


Example; High Speed Separators (HSS)

Growth

• Unique customers values; improved separation

performance at lower cost of ownership and

increased reliability

• Contributes to our customers sustainability targets;

substantially reduced energy and water consumption

• Connected solutions; increased uptime and longer

service intervals through condition based

maintenance contracts

Profitability

• Modularization and development of common product

family platforms

• Increased coverage of the installed base with multi

year service contracts


www.alfalaval.com

Example; Marine Service

04/12/2019 | © Alfa Laval 10 |

Growth

• Upgrading opportunities for the fuel line and boilers.

• International Marine Service (IMS) is a differentiator;

improve the customer experience and market

position.

• Alfa Laval PureBallast and PureSox installed base –

represents a service growth opportunity.

Profitability

• Environmental compliance systems is expected to

have a higher share of service agreements and

customer loyalty due to criticality of the systems.



R&D spend− SEK millions (rolling 12 months) and in percent of sales

R&D development R&D spend by category (% of total 2017-2019)

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

0

200

400

600

800

1 000

1 200

2015 Q

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2019 Q

3

R&D SEK millions R&D in % of net sales

19%

38%14%

13%

16%

Technology development New product development

Improved products Product maintenance

R&D support costs

R&D development

• R&D increased by 14% in 2018 and

14% in 2019 (YTD), excluding

currency effects, to develop new

product platforms.

• R&D expenses expected to remain

at 2.5% of sales

R&D spend by category

• Majority of R&D spend related to

development of new products or

improving existing products

including driving new product

features, cost and/or quality

improvements


Capital expenditure− SEK millions (rolling 12 months) and in percent of sales

Capex development

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

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2015 Q

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2019 Q

2

2019 Q

3

Investments SEK millions Investments in % of net sales

Capex by category(% of total 2017-2019)

14%

34%

10%

5%

4%

33%

Separation Products Heat Transfer Products

Fluid Handling Products Other Systems

Operations Real Estate

Capex development

• Increased investments driven by

manufacturing footprint

optimization and capacity

expansions (+1.5 bn in 2 years)

• Capex expected at ~2.5% of sales

in 2020, and then reduce to ~

2.0% of sales in 2021

Capex by category

• Majority of investments related to

key product technologies, approx.

1/3 related to improving our real

estate assets


Capital expenditure

Footprint Wave 1 during 2017-2019

• Projects to be completed by end of 2019

• Capex of SEK ~ 1.1 bn, whereof ~ 45% in real estate assets

• Opex / footprint costs of SEK 450 million

• Payback 5 years (excl. real estate)

Capacity Expansion during 2018-2019

• Expansion of Brazed Heat Exchanger, High Speed Separation and Scrubber production

• Capex of SEK of SEK 400 million

Footprint Wave 2 during 2020-2021

• Include Brazed Heat Exchanger supply chain, Kolding Hygienic Fluid Handling Centre

and consolidation India

• Capex of SEK ~ 0.7 bn, whereof ~ 45% in real estate assets

• Opex / footprint costs of SEK 200 - 250 million

• Payback 5 years (excl. real estate)

Capex of ~ 1.5 bn


Order backlog− SEK (million), September 30

Order backlog periodization

8 0146 913 6 969

7 921 8 138

13 359

10 093 10 823

13 664 13 900

0

5 000

10 000

15 000

20 000

25 000

30 000

2015 2016 2017 2018 2019

For delivery later than next yearFor deliery next yearFor delivery during rest of current year

Order backlog for ”next year”

per division (% of total)

14% 14%

71%

19%15%

66%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Energy Food & Water Marine

2018 2019

• Order backlog for delivery next

year: SEK 13.9 (13.7) Bn, increase

of SEK +0.2 bn

• Less favorable product mix in

order backlog for delivery next

year


Sales− Full-year 2020, SEK (bn)

Full year 2019* Approx. 45.6

Change in OBL y-o-y + 0.2

Acquisitions/divestments during 2019 - 0.3

Subtotal 45.5

Change “In-for-out”, FX translation, price,

acquisitions/divestments during 2020

+/- ?

Full year 2020 ?

*) SME Direkt, consensus estimate as per November 11 2019


Readiness

Market outlook

• Most end-customer industries in Energy and

F&W divisions expected to show stable activity

levels in 2019, but readiness for a potential

slow-down in 2020

• New ship-contracting levels in Marine market

expected to return towards historical levels in

2020-2021, demand for environmental

products to stabilize in 2020

• New product platforms with improved

competitiveness and service strategy taking

effect

• Sustainability trend creating new opportunities.

Mitigations

• Strong OBL for execution in 2020, however

product mix less favorable

• Strict cost control of S&A and footprint costs in

2020/2021

• ~15% of employees in Operations are

temps/contract employees providing flexibility

• Ambition is to drive service growth through

business cycle

• Optimized manufacturing footprint and supply

chain


Guidance

• Capital Expenditure in relation to total revenues,

~ 2.5% in 2020 and ~ 2.0% in 2021

• Step-up amortization of SEK ~ 900 million in 2020, SEK

~ 770 million in 2021

• FX impact on EBITA estimated to SEK 495 million in 2019,

SEK 420 million in 2020*

• R&D spend in relation to total revenues, 2.5%

• Taxes in the P&L, 26.0% of PBT

• Dividend pay-out ratio, 40 - 50% of adjusted EPS

*) 2019 = total of transaction and translation FX impact. 2020 = transaction FX impact only, based on EUR/USD 1.115 and EUR/SEK 10.5

Updated

Updated

Updated

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· 2019-12-05 · Jan Allde CFO Alfa Laval Group 04/12/2019 | © Alfa Laval 2 | −From a...

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Transcript of · 2019-12-05 · Jan Allde CFO Alfa Laval Group 04/12/2019 | © Alfa Laval 2 | −From a...