Alfa Laval Ab · OMXSTO:ALFA
Alfa Laval Ab — Q4 2017 Earnings Presentation
40 slides from Alfa Laval Ab's earnings presentation, February 2018
Slide 1: www.alfalaval.com
www.alfalaval.com
Slide 2: Report for Q4 2017
Report for Q4 2017 - Key figures - Orders received and margins - Development per segment - Geographical development Mr. Tom Erixon - Financials President and CEO - Outlook Alfa Laval Group www.alfalaval.com
Slide 3: Key figures
Key figures October – December 2017 Orders received grew 12% to SEK 9,780 million. Net sales increased 2% to SEK 10,112 million. Adjusted EBITA* grew 8% to SEK 1,611 million. Adjusted EBITA margin at 15.9% vs 15.0%. *) Positive currency effect SEK 33 million. January – December 2017 Orders
Slide 4: Highlights in the quarter
Highlights in the quarter Energy Marine Alfa Laval OLMI heat exchangers to a Framo pumping systems for an oil platform petrochemical plant in the Middle East. in the North Sea. Value: SEK 55 million. Value: SEK 60 million. Evaporative air-cooler systems to a gas PureBallast order intake: processing
Slide 5: Orders received
Orders received SEK million SEK million R 12 12 000 45 000 40 000 10 000 35 000 8 000 30 000 25 000 6 000 20 000 +16% +22% +16% -11% -11% 4 000 15 000 10 000 2 000 5 000 0 0 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 = Order intake per quarter “large” = Roll
Slide 6: Order analysis
Order analysis - Q4 2017 versus Q4 2016 and versus Q3 2017 (MSEK) Q4 2016 8,709 Q3 2017 8,418 Structural change, % - - Organic development, % + 15.8 + 13.6 Total + 15.8 + 13.6 Currency effects, % - 3.5 + 2.6 Total, % + 12.3 + 16.2 Q4 2017 9,780 Q4 2017 9,780 © Alfa Laval www.alfalaval.com 6
Slide 7: 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 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 * Adjusted EBITA – ”Earnings before interests, taxes, amortization of goodwill and step
Slide 8: Orders received by business unit
Orders received by business unit - October – December 2017, 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 9: Energy division
Energy division - Highlights and sequential comments The division reported good sequential growth, mainly driven by large Brazed & Fusion Bonded HEX + orders from the hydro carbon chain. The base business was flat. 5%* Brazed & Fusion lifted by demand from boiler and A/C manufacturers. Energy Sepa
Slide 10: Activity split O&G, total
Activity split O&G, total Distribution of orders FY (MSEK) 2017 Drilling Processing & Refinery Petrochemicals Transportation Grand total Energy 188 1,527 948 1,557 4,220 (+) Marine 546 356 0 0 902(+) Alfa Laval = 734 = 1,883 = 948 = 1,557 =5,122*(+) Share of total Alfa Laval 2.0% 5.1% 2.6% 4.2% = 13
Slide 11: Food & Water division
Food & Water division - Highlights and sequential comments Divisional growth supported by higher demand from brewery, Decanters + 6%* ethanol and dairy. Vegetable oil flat and pharma lower due to a non Food heat repeat. transfer 5%* + Business Units Decanters, Food Heat Transfer, Hygienic Fluid Fo
Slide 12: Marine division
Marine division - Highlights and sequential comments Boilers & Gas systems boosted by demand for exhaust gas cleaning Boiler and gas systems + and inert gas systems. 10%* Separation & Heat transfer unchanged, with growth for fresh water Separation & generators, engine power and ballast systems.
Slide 13: Service, by division
Service, by division ENERGY FOOD & WATER 13 MARINE SERVICE SHARE SERVICE SHARE SERVICE SHARE SERVICE SHARE SERVICE SHARE SERVICE SHARE Q4: 24% FY: 26% Q4: 30% FY: 31% Q4: 29% FY: 35% ABSOLUTE ABSOLUTE ABSOLUTE ABSOLUTE ABSOLUTE ABSOLUTE DEVELOPMENT DEVELOPMENT DEVELOPMENT DEVELOPMENT DEVELOPMENT DEV
Slide 14: Greenhouse
Greenhouse - Highlights and sequential comments Order intake declined slightly, mainly due to seasonally lower demand for Heat Exchanger Systems as well as the closure of a unit in Tubular Heat Exchangers. Air heat exchangers did well, driven by demand for industrial cooling in conventional powe
Slide 15: Orders received by region
Orders received by region - October – December 2017, development at constant rates Africa & Oceania Nordic 2% 9% +19 +6 North America -3 +16 17% +6 -2 -11 +22 Western Europe 22% +52 +18 CEE -4 +18 6% Asia 40% Year-on-year comparison Sequential comparison www.alfalaval.com 15
Slide 16: Top ten markets
Top ten markets* - SEK million at prevailing rates United States China Nordic Japan Mid Europe Adriatic SEA South Korea Benelux France 0 1000 2000 3000 4000 5000 6000 7000 = WY 2017 = WY 2016 *The development of the 2016 top ten markets. www.alfalaval.com 16
Slide 17: Report for Q4 2017
Report for Q4 2017 - Key figures - Orders received and margins - Development per segment - Geographical development Mr. Thomas Thuresson - Financials CFO - Outlook Alfa Laval Group www.alfalaval.com
Slide 18: Highlights 2017
Highlights 2017 - October-December, SEK million Order intake 9,780 Net sales 10,112 © Alfa Laval www.alfalaval.com 18
Slide 19: Gross profit margin
Gross profit margin - In percent of sales 45 40 34.3 34.2 34.3 36.3 35 30 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 © Alfa Laval www.alfalaval.com 19
Slide 20: Gross profit margin
Gross profit margin - Q4 2017 versus Q4 2016 and versus Q3 2017 Q4 2016 34.3 Q3 2017 37.0 Mix/price + - Load/volume ++ = PPV - - FX + + Structure = = Q4 2017 36.3 Q4 2017 36.3 © Alfa Laval www.alfalaval.com 20
Slide 21: Highlights 2017
Highlights 2017 - October-December, SEK million Order intake 9,780 Net sales 10,112 Adjusted EBITA 1,611 Adjusted EBITA margin, % 15.9 Profit before tax 1,358 Earnings per share, % 2.52 Earnings per share, excl. step-up, % 2.91 ROCE 17.7 ROE 13.9 © Alfa Laval www.alfalaval.com 21
Slide 22: Reorganisation & capacity adjustment programme
Reorganisation & capacity adjustment programme - Update as per December 31st, 2017 EMPLOYEE IMPACT, FTE TOTAL SAVINGS, MSEK Realized Realized Target Realized Realized Target Q4, 2017 FY, 2017 Q4, 2017 FY, 2017 R&D S&A Other - - 450 - 450 + 70 + 285 +300 - 100 - 350 - 550 + 30 + 45 + 200 COGS Total -
Slide 23: Divisional performance
Divisional performance Energy Marine Food & Water Q4 2017 2016 2017 2016 2017 2016 Orders 2,852 2,924 3,497 2,243 3,053 3,009 Backlog 4,471 4,230 9,027 8,285 4,317 3,741 Sales 3,259 3,000 3,157 3,202 3,261 3,276 Op. profit 469 447 600 411 517 457 Op. margin, % 14.4 14.9 19.0 12.8 15.9 13.9 Comments
Slide 24: Cash-flow statement
Cash-flow statement SEK million Q4 Q4 FY FY 2017 2016 2017 2016 Cash flow from - operating activities 1,573 1,925 4,463 4,979 - investing activities -284 -451 -721 -795 Financial net paid 20 129 -214 147 Dividend - 1,797 -1,800 Total 1,309 1,603 1,731 2,531 Pro Forma Free cash-flow* 1,311 1,799 3,57
Slide 25: Foreign exchange
Foreign exchange - Estimated impact on adjusted EBITA from FX fluctuations SEK million Q4 2017 FY 2017 FY 2018* Transaction effect 75 210 -25 Translation effect -45 13 0 Total 33 223 -25 *Based on EUR/USD 1.17 and EUR/SEK 9.75 Projected FX-effect for 2017 communicated at the capital markets day: SEK
Slide 26: Order backlog as per December 31
Order backlog as per December 31 SEK million 25 000 16,870 18,289 20 000 4,367 3,942 15 000 10 000 12,928 13,922 5 000 0.88 1.08 1.08 1.03 0.97 book to bill 0 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 = For delivery later than 2018 = For delivery in 2018 ww
Slide 27: Sales
Sales Full year 2018, SEK (bn) FY 2017 35.3 Backlog, current year + 1.0 FX translation +/- 0.0 Acquisitions +? Subtotal 36.3 Change in “in-for-out” +/-? Price +/-? Full year 2018 © Alfa Laval 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 4:25 (4:25) © Alfa Laval www.alfalaval.com 28
Slide 29: Report for Q4 2017
Report for Q4 2017 - Key figures - Orders received and margins - Development per segment - Geographical development Mr. Tom Erixon - Financials President and CEO - Outlook Alfa Laval Group www.alfalaval.com
Slide 30: Outlook for the first quarter
Outlook for the first quarter “We expect that demand during the first quarter will be somewhat lower than in the fourth quarter.” © Alfa Laval www.alfalaval.com 30
Slide 31: www.alfalaval.com
www.alfalaval.com
Slide 32: Activity split O&G, total
Activity split O&G, total Distribution of orders Q4 (MSEK) 2017 Drilling Processing & Refinery Petrochemicals Transportation Grand total Energy 51 415 277 355 1,098 (+) Marine 225 152 0 0 377 (+) Alfa Laval = 276 = 567 = 277 = 355 =1,475*(+) Share of total Alfa Laval 2.8% 5.8% 2.8% 3.6% = 15.0% Sequ
Slide 33: Marine Division's industry split
Marine Division’s industry split - Distribution of orders 2017 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 41% 34% Share 2% 6% 17% © Alfa Laval
Slide 34: Marine Division's industry split
Marine Division’s industry split - Distribution of sales 2017 Marine Offshore oil Environment & Diesel power Service and gas Energy, Marine World trade & Oil & gas demand Legislation & Electrical World trade Driver fleet capacity and prices fuel cost power needs 35% Share 43% 4% 5% 13% © Alfa Laval
Slide 35: Orders received by business unit
Orders received by business unit - January-December 2017, at constant rates and like for like “Greenhouse”- + Brazed & fusion-bonded HEX Pumping Systems + = Energy Separation + GPHE Marine Separation & Heat Transfer + + WHE Boilers & Gas Systems + High-speed Separators + + Decanters Hygienic Fluid H
Slide 36: Highlights Europe
Highlights Europe October – December 2017, at constant rates, sequential comments Western Europe incl. Nordic Regional growth supported by all three divisions. Base business, large orders and service all grew. Nordic area did well, lifted by Energy. +19 +6 Central and Eastern Europe -3 +16 Reg
Slide 37: Highlights Asia
Highlights Asia October – December 2017, at constant rates, sequential comments Asia Most countries in the region reported sequential growth. China and Japan were among the best performers, +52 +18 benefiting from an increase in yard contracting. India also did very well, boosted by higher dem
Slide 38: Highlights Americas
Highlights Americas October – December 2017, at constant rates, sequential comments North America US reported sequential growth, based on order development for Food & Water as well as Energy. Service grew in all three divisions. +6 -2 Canada declined as it was unable to repeat the positive devel
Slide 39: Orders received by region
Orders received by region - January - December 2017, development at constant rates Africa & Oceania Nordic 2% 9% +12 North America +3 19% +7 +4 Western +29 Europe 22% CEE -8 6% Asia 38% 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