Financial update

Thomas ThuressonCFO

Alfa Laval Group

www.alfalaval.com

FinancialFinancialFinancialFinancial

FINANCIAL UPDATE

NOVEMBER 25, 2014

www.alfalaval.com© Alfa Laval Slide 4

Financial targets

Return on capital employed - ROCE

Following the Frank Mohn acquisition the

Group target for ROCE is 20%

0

5

10

15

20

25

30

35

40

2012 2013 20142010 2011

%Aalborg

FRAMO

www.alfalaval.com© Alfa Laval Slide 5

Financial benchmark values

From Net Debt / Equity to Net Debt / EBITDA

The benchmark value from now on is

Net Debt / EBITDA < 2

2012 2013 20142010 2011

Times

-0,5

0

0,5

1

1,5

2

2,5

3

Debt/Equity

Debt/EBITDA(pro-forma)

www.alfalaval.com

Savings programme - Communicated in the Q3-report

Main elements of the programme:

- Cost of goods sold, consolidation of acquired supply-chains- R & D, adjustment to launch capacity

- S & A, re-balance to revenue development

Timing of realization:

- 2014 SEK 50 M

- 2015 150- 2016 100

- Savings fully implemented during Q4-2015

Estimated impact on personnel (net):

- COGS 40 %

- R & D and S & A 60 %- Totally in FTE´s 300

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Group funding- Utilisation and maturity structure, status as per September 30, 2014

- Committed and utilized

- Committed, not utilized

- Not committed, utilized

SEK Bn

5

10

15

20

25

2015 20192017 2021

US PP

EIB

RCF

SEK

� Committed, not utilised SEK 4.9 Bn

� Credits, 80 % outside RCF

� Maturity of SEK 19 Bn > 4.5 years

RCF

SEK

EMTN, fixed

EMTN, var

EIB

www.alfalaval.com© Alfa Laval Slide 8

Foreign exchange

SEK million

Translation effect

Transaction effect

Total

Average and closing rates refers to the rates applied as per

September 30, 2014

Estimated impact on adjusted EBITA from FX fluctuations

WY 14

Cl rates

+ 100

- 35

+ 65

WY 15

Cl rates

90

130

220

WY 14

Av rates

+ 60

- 35

+ 25

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Gross profit margin

30

35

40

45

In percent of sales

35.3

36.737.0

Q212

38.3

Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314Q311 Q411 Q112 Q312

www.alfalaval.com© Alfa Laval

Gross profit margin

30

40

50

In percent of sales

Q113 Q314Q313 Q114Q111 Q311 Q112 Q312

LTM QuarterLTM Quarter

www.alfalaval.com© Alfa Laval Slide 11

0%

10%

20%

30%

40%

50%

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Asian crisis

Marine & BRIC BoomWeak SEK

Gross profit margin- Development 1991 – YTD 2014

Strong SEKStructure -AcquisMarine ”normalis”

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Gross profit margin- Evolution over the last 25 years

1990’s 2000 - 2006 2006 - 2010

36 - 39 %35 - 40 %

� Restructuring

� Procurement

37 – 43 %

� Demand

� Pricing

� Product mix

� Weak SEK

2011 – 2014

� Structure - Acquisitions

� Strong SEK

� Marine ”normalization”

� Product mix

35 - 40 %

www.alfalaval.com

0

100

200

300

400

500

600

700

800

900

1 000

1 100

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Step-up values up to 2018- Closing balance and amortization according to plan, SEK million

Closing balance Amortization

LBO-related Acquisitions Amortization acc to plan

2018

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Order backlog development

0

10

20

30

40

50

60

70

80

0

4 000

8 000

12 000

16 000

20 000

24 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% of LTM-sales

Order backlog % of LTM (last twelve months) sales

SEK millions

www.alfalaval.com

Order backlog as per Sept 30

For delivery next year

0

4000

8000

12000

16000

20000

24000

7,324

6,567

13,192

8,766

15,873

6,256

15,314

8,330

For delivery later than next year

200920082007

For next year,

SEK 13,4 (8.0) Bn!

For delivery during the rest of current year

5,487

11,689

5,480

5,937

2010

SEK million at prevailing rates

2012

6,705

8,387

15,496

6,418

8,050

15,068

2011

15,071

7,993

6,672

2013 2014

7,371

13,364

22,400

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Order backlog as per Sept 30 - For delivery after December 31

SEK millions at prevailing rates

Other Segments

0

2000

4000

6000

8000

10000

12000

14000

16000

4,576

4,730

9,306

4,099

4,959

9,058

2,327

4,338

6,665

Marine & Diesel

20082006 2007

1,733

1,820

3,553

2005

7,705

3,655

4,050

2010

5,751

2,155

3,596 5,572

3,219

8,791

20122009 2011

8,650

3,508

5,142

Aalborg added SEK 2.0 Bn to Marine in 2011 and Frank Mohn added SEK

5.7 Bn in 2014!

2013

5,336

3,063

8,399

2014

5,297

9,732

15,029

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Sales- 2014 and 2015

BnSEK

LTM Q314 32.9

Change order backlog Q4, y-o-y - 0.1

Fx. Translation + 0.3

Acquisitions (backlog + in-for-out) + 1.2

Demand & Price Q414 + / - 0.0

Full year 2014 appr 34.3

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BnSEK

Full year 2014 appr 34.3

Change in order backlog y-o-y + 0.1

Fx. Translation + 0.5

Acquisitions during 2014 + 1.6

Subtotal: 36.5

Price + / - ?

Demand + / - ?

Further acquisitions + ?

Full year 2015: ?

Sales- 2014 and 2015

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