Report for Q4 2016 - Alfa Laval Order Sales Backlog Q4 2016 2,759 2,874 1,695 Q4 2015 2,526 2,694...

Report for Q4 2016

Mr. Tom Erixon

President and CEO

Alfa Laval Group

- Key figures

- Orders received and margins

- Development per segment

- Geographical development

- Financials

- Outlook

www.alfalaval.com© Alfa Laval Slide 3

Key figures

Orders received declined 8% to SEK 8,709 million.

Net sales dropped 8% to SEK 9,904 million.

Adjusted EBITA* declined 15% to SEK 1,488 million.

Adjusted EBITA margin at 15.0% vs 16.2%

Non-recurring charge of SEK 400 million.

*Positive currency effect SEK 141 million.

October – December 2016

January – December 2016

Orders received declined 14% to SEK 32,060 million.

Net sales dropped 10% to SEK 35,634 million.

Adjusted EBITA* declined 18% to SEK 5,553 million.

Adjusted EBITA margin at 15.6% vs 17.1%

Non-recurring charge of SEK 1,500 million.

*Positive currency effect SEK 478 million.

www.alfalaval.com

Highlights in the quarter

Alfa Laval OLMI heat exchangers to a petrochemical

plant in the Middle East. Value: SEK 125 million.

Waste heat recovery systems for diesel power plants

to be built in Asia. Value: SEK 65 million.

Equipment for a power plant in the Middle East.

Value: SEK 50 million.

Alfa Laval PureBallast receives type approval from the

U.S. Coast Guard.

Alfa Laval OLMI heat exchangers to a power plant in

the Middle East. Value: SEK 100 million.

Order for service upgrade of compact heat exchangers

in nuclear power plant in France. Value: SEK 55

million.

Compact heat exchangers to a natural gas plant in the

Middle East. Value: SEK 150 million.

Process Technology Marine & Diesel

In 2016 large orders worth SEK 710 mln were booked (SEK 2,400 mln)

www.alfalaval.com

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

0

2 000

4 000

6 000

8 000

10 000

12 000

= Order intake per quarter

= Order intake per quarter “large”

SEK million

Orders received

SEK million R 12

= Rolling twelve months value

Q2

13

Q11

5

Q2

15

Q4

15

Q2

16

Q3

16

Q4

16

= % development at constant rates by

quarter, year on year+XX%

Q4

12

Q11

3

Q3

13

Q4

13

Q11

4

Q2

14

Q3

14

Q4

14

Q3

15

-11

%

Q11

6

-11

%

+2

2%

+1

6%

+11

%


Order analysis

Q4 2015 Q3 2016

Structural change, %

Organic development, %

Total

Currency effects,%

9,422

Q4 2016 versus Q4 2015 and versus Q3 2016 (MSEK)

8,709

-

- 11.3

- 11.3

+ 3.7

7,540

8,709

-

+ 12.8

+ 12.8

+ 2.7

Total, %

Q4 2016 Q4 2016

+ 15.5- 7.6


0,0

3,0

6,0

9,0

12,0

15,0

18,0

21,0

24,0

0

250

500

750

1 000

1 250

1 500

1 750

2 000

SEK millions and in percent of sales

* Adjusted EBITA – ”Earnings before interests, taxes, amortization of goodwill and step up values and comparison distortion items.”

Adjusted EBITA / margin*

Q314 Q315 Q216 Q316 Q416Q413 Q114 Q214 Q414 Q115 Q215 Q415 Q116

www.alfalaval.com

Order Sales Backlog

Q4 2016 2,759 2,874 1,695

Q4 2015 2,526 2,694 1,637

Equipment division

Slide 8

Industrial Equipment affected by

seasonality in Comfort while demand for

Refrigeration grew.

Sanitary saw mixed picture with growth in

prepared food while dairy-related orders

declined versus a very strong third quarter.

OEM saw positive effect from increased

demand from boiler and A/C equipment

manufacturers.

Industrial

Equipment

9%*

Sanitary

12%

OEM

5%

Service

6%

Year-on-year comparison

Sequential comparison

Highlights and sequential comments

*Share of Group total

+ -

+

=

+ =

+

=

www.alfalaval.com

Order Sales Backlog

Q4 2016 2,346 3,274 8,417

Q4 2015 3,807 4,010 11,715

Marine & Diesel division

Slide 9

M&D Equipment: higher demand for products going

into cruise ships. Diesel grew as did ballast water

treatment systems orders.

Marine & Offshore Systems: increased demand for

scrubbers and offshore systems compensated for a

negative effect from lower ship contracting.

M&O Pumping: demand growth for marine systems

while offshore orders declined.

Need for upgrades and higher service activity for

pumping systems boosted Service.

+ +




Marine & Diesel

Equipment

7%*

Marine &

Offshore Systems

4%*

Service

12%*


Marine & Offshore

Pumping Systems

3%*

- +

-

+-

+

www.alfalaval.com

Order Sales Backlog

Q4 2016 3,604 3,756 6,758

Q4 2015 3,089 4,101 7,226

Process Technology division

Slide 10

Energy & Process grew across end markets,

boosted by large orders. Business did very well

throughout the hydrocarbon chain, driven by

efficiency and certain capacity-related investments

despite a generally cautious market sentiment.

Food & LS did very well, particularly in Brewery,

Food Solutions and Life Science.

Water & Waste unchanged as lower activity in North

America was compensated for by growth in Western

Europe.

Service

14%*

=

- =

- +




Energy &

Process 15%*

Food & Life

Science 11%*

Water & Waste

Treatment 2%*


+

=

+

www.alfalaval.com

Orders received by customer segment

© Alfa Laval Slide 11

Industrial Equipment

OEM

Sanitary Equipment

EQD Service

-

=

+

=

Marine & Offshore Syst.

Marine & Diesel Eq.

Marine & Offshore

Pumping Systems

-

--

PTD Service

Food & Life Science

Water & Waste

Energy & Process

+

-

-

+

January – December 2016, at constant rates and like for like

Equipment division

Marine & Diesel division

Process Technology division


MDD Service -

www.alfalaval.com© Alfa Laval

Orders received by Region

Central

& Eastern

Europe 7%

North America 19%

Asia 31%

Latin

America

5%

Western Europe 27%

Nordic 9%


+37

-41

-3

+59

-17

+30

October – December 2016, development at constant rates

+14

+6

-9

+34=

+15



Top 10 markets*

0 1 000 2 000 3 000 4 000 5 000 6 000

India

Benelux

Adriatic

Mid Europé

SEA

Japan

Nordic

South Korea

China

United States

SEK million at prevailing rates

= WY 2015

= WY 2016 *The development of the 2015 top ten markets.


Orders received by Region

Central

& Eastern

Europe 7%

North America 20%

Asia 33%

Latin

America

5%

Western Europe 24%

Nordic 9%


+21

-31

-6

+12

-18

+4

January – December 2016, development at constant rates

Report for Q4 2016

Mr. Thomas Thuresson

CFO

Alfa Laval Group

- Key figures




- Financials

- Outlook


Highlights

Order intake

Net sales

SEK millions October – December, 2016

8,709

9,904


Gross profit margin

30

35

40

45

In percent of sales

34.334.234.3

Q315

36.3

Q116 Q216 Q316 Q416Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q415


Gross profit margin

Q4 2015 Q3 2016

Mix/price

Load/volume

PPV

FX

Structure

34.2

Q4 2016 versus Q4 2015 and versus Q3 2016

34.3

--

--

++

+++

=

35.7

34.3

---

--

+

++

=

Q4 2016 Q4 2016


Highlights

Order intake

Net sales

Adjusted EBITA

Adjusted EBITA-margin

Non-recurring charge

Profit before tax

Earnings per share

Earnings per share, excl step-up

ROCE

ROE

SEK millions October – December, 2016

8,709

9,904

1,488

15.0%

- 400

877

1.46

2.01

15.3%

11.8%

www.alfalaval.com

Comparison distortion items-A program for reorganization, cost adjustments and improved competitiveness

with three individual initiatives

Reorganization

Manufacturing footprint etc

“Greenhouse”

- Write-off

Total:

Total non-recurring charges, SEK 1.5 billion

245

70

185

600

1,100

Charge Q3 2016

0

285

15

100

400

Charge Q4 2016

www.alfalaval.com

Comparison distortion items- Impact in the P&L and on number of employees, SEK M

COGS - 420 - 550 + 200

R & D

S & A - 380 - 450 + 300

Other - 700*

Total charges

Total: - 1,500 - 1,000 + 500

Savings expected to be reached to 75% by end 2017 and completely by end of 2018

*) Write-off of primarily goodwill and step-up values

Total savingsEmployee impact

www.alfalaval.com

Divisional performance


Equipment Process Technology Marine & Diesel

Q4 2016 2015 2016 2015 2016 2015

Orders 2,759 2,526 3,604 3,089 2,346 3,807

Backlog 1,695 1,637 6,758 7,226 8,417 11,715

Sales 2,874 2,694 3,756 4,101 3,274 4,010

Op. profit 402 325 463 640 425 778

Op margin (%) 14.0 12.1 12.3 15.6 13.0 19.4

- Price/mix (pos)

- Volume (pos)

- Cost (neg)

- Volume (neg)

- Price/mix (neg)

- Cost (neg)

- Volume (neg)

- 1-time charge for

certain deliveries

and changes in

supply chain (neg)

Comments on

operating profit:


Cash flow from

- operating activities

- investing activities

Financial net paid

Dividend

Total

Cash-flow statement

Pro Forma Free cash-flow*

SEK millions

*Incl. operating activities, capital expenditure and financial net paid.

FY

2015

5,850

- 710

- 323

- 1,696

4,878

3,121

FY

2016

4,979

- 795

147

-1,800

2,531

4,548

Q4

2015

1,875

- 252

56

1,667

1,679

Q4

2016

1,925

- 451

129

1,603

1,799


Foreign exchange

SEK million

Translation effect

Transaction effect

Total

*Based on EUR/USD 1.05 and EUR/SEK 9.50

FY 17*

75

200

275

FY 16

-132

610

478

Projected FX-effect for 2017 as communicated at CMD: SEK 275 million

Q4 16

-47

188

141

Estimated impact on adjusted EBITA from FX fluctuations


Order backlog as per Dec. 31

SEK millions

For delivery in 2017

0

5 000

10 000

15 000

20 000

25 000

For delivery later than 2017

Q415 Q416Q412 Q413 Q414

16,870

12,9

28

3,9

42

20,578

4,9

88

15,5

90

book to bill

www.alfalaval.com

Sales

SEK (bln)

FY 2016 35.6

Backlog, like-for-like - 2.7

FX translation + 0.6

Acquisitions + ?

Subtotal 33.5

Change in “in-for-out” +/- ?

Price +/- ?

Full year 2017

Full year 2017

www.alfalaval.com

Board’s proposal to the AGM


Dividend

The board of directors proposes a

dividend of SEK 4.25 (4.25)

Report for Q4 2016

Mr. Tom Erixon

President and CEO

Alfa Laval Group

- Key figures




- Financials

- Outlook


Outlook for the first quarter

“We expect that demand during the

first quarter will be somewhat

lower than in the fourth quarter.”

www.alfalaval.com

Activity split O&G, total- Distribution of orders Q4 (MSEK) 2016

2%

Process

Technology

Drilling Processing &Transportation

Petrochemicals

Grand total

4.3%

44

Refinery

3.0%5.3%

351 262 373

Marine &

Diesel

Share of total

Alfa Laval

132 113 0 0

= 176 = 464 = 262 = 373

1,030 (+)

245 (+)

=1,275*(+)

= 14.6%

Alfa Laval

*) including Service

www.alfalaval.com

Marine & Diesel industry split- Distribution of orders FY 2016


34%

Driver

Marine Offshore oil and gas

Diesel power Service

Share

8%

42%

World trade &

fleet capacity

Oil & gas demand

and prices

Electrical power

needs

World trade

Environment & Energy, Marine

12%

Legislation and

fuel cost

4%

www.alfalaval.com

Marine & Diesel industry split- Distribution of sales FY 2016


48%

Driver

Marine Offshore oil and gas

Diesel power Service

Share5%

31%

World trade &

fleet capacity

Oil & gas demand

and prices

Electrical power

needs

World trade

Environment & Energy, Marine

9%

Legislation and

fuel cost

7%


Highlights Asia



October – December 2016, at constant rates, sequential comments

Asia:

Region boosted by large orders and

Marine. Service showed a general

improvement.

India benefited from food and refinery

projects and Korea from a sequential

pickup in marine pumping systems.

China declined, mainly reflecting the low

ship contracting levels. At the same time

lower activity in vegetable oil affected

Process Tech and Equipment was

affected by non-repeat contract orders in

Sanitary. Service reported growth.

-41 +14


Highlights Europe




Western Europe incl. Nordic:

Large projects, base business and

Service all grew.

All sub-regions reported growth except

for Nordic, which had a very strong third

quarter.

+37 +6

-17 -9

+30 +34

Central and Eastern Europe:

Large waste heat recovery order in

Turkey boosted development in the

region.

Russia affected by fewer large

projects.


Highlights Americas



-3 =

+59 +15


North America:

Order levels sequentially flat for projects and

base business alike.

Latin America:

Order growth explained by Mexico where a

number of larger Brewery orders were booked

and where the Service business reported a good

development.

Argentina and Chile also contributed through a

good base business development in both EQD

and PTD. Brazil was sequentially flat, following a

gradual recovery over the past few quarters.

www.alfalaval.com

Cautionary statement

This presentation contains forward-looking statements that are based on the

current expectations of the management of Alfa Laval Group.

Although management believes that the expectations reflected in such forward-

looking statements are based on reasonable assumptions, no assurance can be

given that such expectations will prove to have been correct. Accordingly, results

could differ materially from those implied in the forward-looking statements as a

result of, among other factors, changes in economic, market and competitive

conditions, changes in the regulatory environment, other government actions and

fluctuations in exchange rates. Alfa Laval undertakes no obligation to publicly

update or revise these forward-looking statements, other than as required by law

or other regulations.


Report for Q4 2016 - Alfa Laval Order Sales Backlog Q4 2016 2,759 2,874 1,695 Q4 2015 2,526 2,694...

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Transcript of Report for Q4 2016 - Alfa Laval Order Sales Backlog Q4 2016 2,759 2,874 1,695 Q4 2015 2,526 2,694...