Alfa Laval’s Capital Markets Day – summary of the business updates
Alfa Laval’s Capital Markets Day, held today in Copenhagen, Denmark, started with a presentation by Lars Renström, President and CEO of the Alfa Laval Group. He announced a new organization, consisting of three selling divisions. Process Technology Division, Equipment Division and the newly formed Marine & Diesel Division. As per the first quarter report 2012, Alfa Laval’s public financial reporting will reflect this new structure.
“Alfa Laval has almost doubled in size since the present organizational structure was set up 10 years ago,” said Lars Renström. “By combining the recently acquired Aalborg Industries with Alfa Laval’s segment Marine & Diesel, we are forming a division focusing on the marine and diesel markets, with stable growth and good profitability.” With the new structure, a more transparent and focused Alfa Laval is created.
He also talked about the growth target, revised earlier in the year, and pointed at the global long-term structural drivers that will support Alfa Laval’s organic growth in the years to come. One important driver is the improved living standards in the world’s fast-growing countries, markets where Alfa Laval has a strong presence. Year to date, five of Alfa Laval’s top ten markets are found among these countries, which supports the increased focus on expanding both the product range and supply chain capacity in these countries, as well as adding more resources to sales and service.
Looking at China specifically, Lars Renström, highlighted the product differentiation that successfully has been implemented in the country for fluid handling products. Furthermore he presented the multi-brand strategy, now in place since several years. The multi brand companies which, after they are acquired, continue to operate in full competition with the Alfa Laval brand, have grown to account for 12 percent of group sales, compared to 1 percent five years ago. Long term we expect it to be on about the 10 percent level.
In his presentationThomas Thuresson, Executive Vice President and CFO, confirmed that financing was secured already during the spring, at competitive terms. The committed credit facilities amount to almost SEK 10 billion, of which SEK 7.7 billion have their maturity in 7 years or later. As per the end of September, SEK 4 billion had not been utilized.
Furthermore he provided pro forma numbers for the first nine months for the new organization. Order intake for the period totalled SEK 23 billion for the Group, with the Process Technology Division making up for 43 percent, the Equipment Division 31 percent and the new Marine & Diesel Division 26 percent. Looking at the three divisions’ performance in the same period, a pro forma EBIT margin of 17.7 percent for the Group was distributed as follows: Process Technology Division 20.1 percent, Equipment Division 16.7 percent and Marine & Diesel Division 21.3 percent.
Return on capital employed, again pro forma, of 28 percent for the Group and for the three business divisions the return was 40 percent for the Process Technology Division, 23 percent for the Equipment Division and 16 percent for Marine & Diesel.
He also gave an update on the developments in the process that aim at delisting Alfa Laval India Ltd. “The process, which was initiated in September, has passed the first step. The postal ballot ended with almost 70 percent of the minority shareholders supporting the proposal of a delisting,” Thomas Thuresson said. The preparations for the second step, the reverse book-building process will start immediately. “This step is expected to be completed within 2-3 months.” Given that Alfa Laval can accept the offered price from minority shareholders controlling at least 50 percent of the shares, Alfa Laval India Ltd can go ahead and apply for a delisting.
Divisional managers Susanne Pahlén Åklundh and Svante Karlsson also gave updates on the development in their respective divisions, describing current trends and activities,and Peter Leifland, head of the newly formed Marine & Diesel Division, gave a first introduction to the division, its structure, end markets and offering.
“With the new division, the Marine & Diesel business leaves Equipment Division. That means that we are now also creating a new Equipment Division, with a clear focus on the transactional component business,” said Susanne Pahlén Åklundh, manager for the Equipment Division. She highlighted the continued belief in structural growth drivers associated with an improved living standard in the fast-growing markets, as well as the need for energy-efficient products and a generally increased environmental awareness. She continued: “Our main focus therefore continues to be the development of the network of distributors and other sales channels.”
In his presentation Svante Karlsson, manager for the Process Technology Division, summarized the development in the first nine months. “Structural changes, leading to an increased demand for energy-efficient solutions, products that can reduce the environmental impact and solutions that can contribute to a safe food production, contributed to all segments reporting growth compared to the same period last year,” Svante Karlsson said. Structural changes have also lead to a search for new, sustainable ways of producing energy, which creates further opportunities for Alfa Laval. He named solar power as one example where the company’s products and technologies can be applied. Additionally, he talked about Alfa Laval’s heat transfer product range, where R&D as well as complementary acquisitions, mean the company today has products that can cover a wide range of pressures and temperatures for demanding industrial applications. With products installed in critical processes, service presence is essential. Today Alfa Laval can offer an unparalleled network, with 100 service centres located around the globe.
Peter Leifland, manager for the new Marine & Diesel Division, presented the segment structure, clarifying the split between the end markets and products offered. He talked about the different growth drivers, the geographical as well as the technological mix and emphasized that while order intake can be quite volatile, revenues tend to be substantially less volatile. Looking at how the division’s order intake is distributed, this is also supported by the fact that 35 percent comes from aftermarket sales, something which supports stability. About 12 percent is associated with capital sales to the land-based diesel market, while the remaining part relates to the marine and offshore industry. “Please also remember that our environmental applications not solely rely on the development of new builds. There are also large opportunities in retrofitting for existing ships,” said Peter Leifland.
All the presentations can be found on www.alfalaval.com – “Investors”.
www.alfalaval.com
About Alfa Laval
Alfa Laval is a leading global provider of specialized products and engineering solutions based on its key technologies of heat transfer, separation and fluid handling.
The company’s equipment, systems and services are dedicated to assisting customers in optimizing the performance of their processes. The solutions help them to heat, cool, separate and transport products in industries that produce food and beverages, chemicals and petrochemicals, pharmaceuticals, starch, sugar and ethanol.
Alfa Laval’s products are also used in power plants, aboard ships, in the mechanical engineering industry, in the mining industry and for wastewater treatment, as well as for comfort climate and refrigeration applications.
Alfa Laval’s worldwide organization works closely with customers in nearly 100 countries to help them stay ahead in the global arena.
Alfa Laval is listed on the Nordic Exchange, Nordic Large Cap, and, in 2010, posted annual sales of about SEK 24.7 billion (approx. 2.6 billion Euros). The company has 12 600 employees.
For more information please contact:
Peter Torstensson
Senior Vice President, Communications
Alfa Laval
Tel: + 46 46 36 72 31
Mobile: +46 709 33 72 31
Gabriella Grotte
Investor Relations Manager
Alfa Laval
Tel: +46 46 36 74 82
Mobile: +46 709 78 74 82