Alfa Laval AB · OMXSTO:ALFA
Alfa Laval AB — Q4 2018 Earnings Presentation
40 slides from Alfa Laval AB's earnings presentation, January 2019
Slide 1: www.alfalaval.com
www.alfalaval.com
Slide 2: Report for Q4 2018
Report for Q4 2018 Mr. Tom Erixon President and CEO Alfa Laval Group www.alfalaval.com
Slide 3: Key figures
Key figures October – December 2018 Orders received grew 18% to SEK 11,561 million. Net sales increased 11% to SEK 11,209 million. Adjusted EBITA* up 11% at SEK 1,787 million. Adjusted EBITA margin at 15.9% vs 15.9%. *) Negative currency effect SEK 90 million. January – December 2018 Order
Slide 4: Order analysis
Order analysis - Q4 2018 versus Q4 2017 and versus Q3 2018 (MSEK) Q4 2017 9,780 Q3 2018 11,357 Structural change, % - 0.5 - Organic development, % + 14.0 + 2.1 Total + 13.5 + 2.1 Currency effects, % + 4.7 - 0.3 Total, % + 18.2 + 1.8 Q4 2018 11,561 Q4 2018 11,561 © Alfa Laval www.alfalaval.com 4
Slide 5: Orders received
Orders received SEK million SEK million R 12 14 000 50 000 45 000 12 000 40 000 10 000 35 000 30 000 8 000 25 000 6 000 20 000 +22% +16% +13% -11% -11% 4 000 15 000 10 000 2 000 5 000 0 0 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 = Order intake per quarter
Slide 6: Organic order growth pace
Organic order growth pace - Compared with same quarter last year (%), excluding currency effects 30 20 10 0 -10 -20 -30 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 www.alfalaval.com 6
Slide 7: Organic order growth pace
Organic order growth pace - Compared with same quarter last year (%), excluding currency effects 30 20 10 0 -10 -20 -30 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 = Organic order growth from Marine Environmental in % = Organic order growth in %, excludi
Slide 8: Highlights in the quarter
Highlights in the quarter Energy Marine Food & Water Two orders for Alfa Laval air cooler Framo pumping systems for oil platforms Separation equipment to US food- systems to US gas processing plants. in the North Sea. manufacturing plant. Value: SEK 220 million. Value: SEK 175 million. Value: SEK 60
Slide 9: Adjusted EBITA/margin
Adjusted EBITA/margin* - SEK millions and in percent of sales 2 000 24,0 1 750 21,0 1 500 18,0 1 250 15,0 1 000 12,0 750 9,0 500 6,0 250 3,0 0 0,0 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 * Adjusted EBITA – ”Earnings before interests, taxes, amortization of goodwill and step
Slide 10: Energy division
Energy division - Highlights and comments MARKETS & ORDER INTAKE Q4 18 Q4 17 Seq %- Q3 18 Growth driven by good demand in refinery change and oil & gas production. Drilling and ORDERS 3,330 2,852 +8.6 3,039 petrochemicals were unchanged. HVAC SALES 3,343 3,259 +9.2 3,043 showed modest growth. EBIT
Slide 11: Food & Water division
Food & Water division - Highlights and comments MARKETS & ORDER INTAKE Q4 18 Q4 17 Seq %- Q3 18 Strong sequential growth, with change contribution from nearly all major end ORDERS 3,540 3,053 +12.4 3,151 markets. SALES 3,604 3,261 +7.5 3,336 Base business saw healthy growth, but EBIT 607 517 542
Slide 12: Marine division
Marine division - Highlights and comments MARKETS & ORDER INTAKE Q4 18 Q4 17 Seq %- Q3 18 Continued good interest in scrubbers as an change attractive solution to the 2020 challenge, ORDERS 4,439 3,497 -8.5 4,903 even as order placement was calmer than SALES 3,869 3,157 +12.6 3,433 previous quarte
Slide 13: Greenhouse
Greenhouse - Highlights and comments The sale of the air heat exchanger business was announced during the quarter. Closing is expected during the first half of 2019. Overall order intake was sequentially unchanged. Air heat exchangers grew in the quarter, driven by good demand for HVAC applica
Slide 14: Service, by division
Service, by division Order intake ENERGY FOOD & WATER MARINE 14 SERVICE SHARE SERVICE SHARE SERVICE SHARE Q4: 24% Q4: 30% Q4: 23% ABSOLUTE ABSOLUTE ABSOLUTE DEVELOPMENT DEVELOPMENT DEVELOPMENT + - + + - = YoY SEQ YoY SEQ YoY SEQ © Alfa Laval www.alfalaval.com
Slide 15: Orders received by business unit
Orders received by business unit - October – December 2018, at constant rates, like for like and year-on-year “Greenhouse”- = Brazed & fusion-bonded HEX Pumping Systems - + Energy Separation + GPHE Marine Separation & Heat Transfer + + WHE Boilers & Gas Systems + + Decanters High-speed Separators +
Slide 16: Orders received by region
Orders received by region - October – December 2018, development at constant rates Africa & Nordic Oceania 9% +8 -5 North 2% America +20 +24 18% Western +23 +17 +5 +12 Europe 20% +14 -7 CEE 6% +25 -6 Asia 41% Year-on-year comparison Sequential comparison www.alfalaval.com 16
Slide 17: Top ten markets
Top ten markets* - SEK million at prevailing rates United States China Nordic South Korea Mid Europe Japan Adriatic South East… Benelux India 0 1000 2000 3000 4000 5000 6000 7000 8000 = WY 2018 = WY 2017 *The development of the 2017 top ten markets. www.alfalaval.com 17
Slide 18: Report for Q4 2018 - CFO
Report for Q4 2018 Mr. Jan Allde CFO Alfa Laval Group www.alfalaval.com
Slide 19: Highlights 2018
Highlights 2018 - October – December, SEK million Order intake 11,561 Net sales 11,209 © Alfa Laval www.alfalaval.com 19
Slide 20: Gross profit margin
Gross profit margin - In percent of sales 45 40 34.2 34.3 36.3 35.4 35 30 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 © Alfa Laval www.alfalaval.com 20
Slide 21: Gross profit margin
Gross profit margin - Q4 2018 versus Q4 2017 and versus Q3 2018 Q4 2017 36.3 Q3 2018 36.6 Mix/price - - Load/volume - - PPV/metals = = FX - - Structure = = Q4 2018 35.4 Q4 2018 35.4 © Alfa Laval www.alfalaval.com 21
Slide 22: Highlights 2018
Highlights 2018 - October - December, SEK million Order intake 11,561 Net sales 11,209 Adjusted EBITA 1,787 Adjusted EBITA margin, % 15.9 Profit before tax 1,470 Earnings per share 3.07 Earnings per share, excl. step-up 3.48 ROCE 22.4 ROE 20.3 © Alfa Laval www.alfalaval.com 22
Slide 23: Divisional performance
Divisional performance Energy Marine Food & Water Q4 2018 2017 2018 2017 2018 2017 Orders 3,330 2,852 4,439 3,497 3,540 3,053 Backlog 4,857 4,471 13,118 9,027 4,860 4,317 Sales 3,343 3,259 3,869 3,157 3,604 3,261 Op. profit 438 469 659 600 607 517 Op. margin, % 13.1 14.4 17.0 19.0 16.8 15.9 © Alfa L
Slide 24: Cash-flow statement
Cash-flow statement SEK million Q4 Q4 FY FY 2018 2017 2018 2017 Cash flow from - operating activities 1,490 1,573 4,883 4,463 - investing activities -528 -284 -1,293 -721 Financial net paid -69 20 -135 -214 Dividend - 1,783 -1,797 Total 893 1,309 1,672 1,731 Pro Forma Free cash-flow* 862 1,311 3,258
Slide 25: Foreign exchange
Foreign exchange - Estimated impact on adjusted EBITA from FX fluctuations SEK million Q4 FY FY 2018 2018 2019* Transaction effect -20 -85 200 Revaluation -120 -120 - Translation effect 50 120 0 Total -90 -85 200 *Based on EUR/USD 1.1469 and EUR/SEK 10.1500 Projected FX-effect for 2019 communicated
Slide 26: Order backlog as per December 31
Order backlog as per December 31 SEK million 25 000 23,168 5,481 20 000 18,289 4,367 15 000 17,687 10 000 13,922 5 000 1.03 0.97 1.13 1.12 1.03 book to bill 0 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 = For delivery after 2019 = For delivery in 2019 www.alf
Slide 27: Sales
Sales Full year 2019, SEK (bn) FY 2018 40.7 Backlog, for delivery current year + 3.8 FX translation - 0.1 Divestments - 0.9 Subtotal 43.5 “In-for-out” +/-? Price +/-? Acquisitions +? Full year 2019 In-for-out, © Alfa Laval 2018: SEK 26.7 bln. www.alfalaval.com 27
Slide 28: Board's proposal to the AGM
Board’s proposal to the AGM The board proposes a dividend of SEK 5:00 (4:25) © Alfa Laval www.alfalaval.com 28
Slide 29: News on reporting
News on reporting -IFRS 16, leases, implemented from January 1st, 2019 • Leasing contracts must be booked in the balance sheet, except for short-term or minor contracts. Impacts rented properties, company cars, forklifts etc. Current operational lease contracts can include both a leasing part and a
Slide 30: News on reporting and structure
News on reporting and structure • Our quarterly reports will have a new structure starting with the Q1 report. Content-wise the changes will be minor. A dummy, based on Q4 numbers, will be available on our website beforehand to give you a chance to familiarize yourself with it. • Starting April 1st,
Slide 31: Report for Q4 2018
Report for Q4 2018 Mr. Tom Erixon President and CEO Alfa Laval Group www.alfalaval.com
Slide 32: Outlook for the first quarter
Outlook for the first quarter “We expect demand in the first quarter to be somewhat higher than in the fourth quarter.” © Alfa Laval www.alfalaval.com 32
Slide 33: www.alfalaval.com
www.alfalaval.com
Slide 34: Activity split O&G, total
Activity split O&G, total Distribution of orders Q4 (MSEK) 2018 Drilling Processing & Refinery Petrochemicals Transportation Grand total SEQ/YOY Energy 64 598 311 445 1,418 (+/+) Marine 451 198 0 0 649 (+/+) Alfa Laval = 515 = 796 = 311 = 445 =2,067*(+/+) Share of total Alfa Laval 4.5% 6.9% 2.7% 3.8
Slide 35: Activity split O&G, total
Activity split O&G, total Distribution of orders FY (MSEK) 2018 Drilling Processing & Refinery Petrochemicals Transportation Grand total YOY Energy 316 1747 918 1,700 4,681 (+) Marine 1,330 705 0 0 2,035 (+) Alfa Laval = 1,646 = 2,452 = 918 = 1,700 = 6,716*(+) Share of total Alfa Laval 3.7% 5.4% 2.0
Slide 36: Marine Division's industry split
Marine Division’s industry split - Distribution of orders FY 2018 Marine Offshore oil Environment & Engine power Service and gas Energy, Marine World trade & Oil & gas demand Legislation & Electrical World trade Driver fleet capacity and prices fuel cost power needs 29% 22% Share 3% 10% 36% © Alfa L
Slide 37: Marine Division's industry split
Marine Division’s industry split - Distribution of sales FY 2018 Marine Offshore oil Environment & Engine power Service and gas Energy, Marine World trade & Oil & gas demand Legislation & Electrical World trade Driver fleet capacity and prices fuel cost power needs 29% Share 39% 5% 7% 20% © Alfa Lav
Slide 38: Orders received by business unit
Orders received by business unit - January – December 2018, at constant rates, like for like and year-on-year “Greenhouse” - + Brazed & fusion-bonded HEX + Energy Separation Pumping Systems + + GPHE Marine Separation & Heat Transfer + + WHE Boilers & Gas Systems + = Decanters High-speed Separators =
Slide 39: Orders received by region
Orders received by region - January – December 2018, development at constant rates Africa & Oceania Nordic 2% 10% +30 North America +5 17% +10 +7 Western Europe 20% +29 CEE 5% +39 Asia 41% Year-on-year comparison www.alfalaval.com 39
Slide 40: Cautionary statement
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 assura