Capital Market Day October 9th, 2002

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2 Capital Market Day October 9th, 2002 Our brand is about performance Sigge Haraldsson President and CEO Alfa Laval Group

3 Today s program Capital Market Day, October 9th, 2002 Update, growth strategy and some financial issues Sigge Haraldsson and Thomas Thuresson Guided tour manufacturing unit Ulf Granstrand and Sigge Haraldsson Research and Development Thomas Zachrisson Customer Segments Svante Karlsson Parts & Service Yannick Richomme Questions and Answers Alfa Laval Slide 3

4 Q302 Interim Report Release 7:30 AM CET, October 31 st. Roadshow,, Stockholm, London and Copenhagen October st October st November 1 st 09:00 AM CET Group breakfast in Stockholm, including conference call 04:00 PM CET Conference call 12:30 AM GMT Group lunch in London Alfa Laval Slide 4

5 A totally new company, founded in 1883 Agri To Tetra Laval Food To Tetra Laval Process Technology Division Industry D & A Automation Flow Separation Divested Equipment Division Thermal Today Alfa Laval Slide 5

6 Highlights A global company, founded in 1883 Highly engineered, high-margin, non-commodity products Leading, global market share positions Substantial customer and geographic diversification Large installed base of products Highly respected Alfa Laval brand name Significant upside potential Alfa Laval Slide 6

7 A global company Year 2001 Total sales: MSEK 15,830 No. of employees: 9, production units 70 service centres Sales Companies in 50 countries Other sales representation in more than 45 countries Alfa Laval Slide 7

8 Key technologies H e a t T r a n s f e r S e p a r a t i o n F l u i d H a n d l i n g Alfa Laval Slide 8

9 Capital sales/core product group Fluid Handling 20% Heat Transfer Separation Fluid Handling Separation 33% Heat Transfer 47% Market share 36% Market share 24% Market share 10% Capital sales 2001 Alfa Laval Slide 9

10 Examples of End-User Markets Personal Care / Biopharm Fresh water generation Heating and Cooling Brewing Refrigeration Alfa Laval Slide 10

11 Diversified blue chip customers BASF Bayer BP Cargill Chevron Coca-Cola Danone Du Pont Exxon Heineken Mobil Nestle Procter & Gamble Tetra Pak Unilever York Alfa Laval Slide 11

12 Highlights Order intake: MSEK Net sales: MSEK Adjusted EBITA / margin: 445 MSEK / 12.2% Cash flow: 937 MSEK * ROCE: 17.7% * Profit before tax: -193 MSEK*, incl. one-off off costs 304 MSEK * ) January June 2002 Alfa Laval Slide 12

13 Q on Q vs. last year (like for like) Orders received 4 Net sales Q102 Q202 Jan-June Q102 Q202 Jan-June 02 Alfa Laval Slide 13

14 Order Received by Segment Parts & Service + Comfort & Refrigeration Marine & Diesel Life Science Process Industry + + Fluids & Utility OEM Energy & Environment Sanitary Food + January June 2002 Alfa Laval Slide 14

15 Order Received by Region Nordic 13% Other 3% L. America 4% Asia 22% Asia 22% Western Europe 29% Centrr Centrr & East 8% & East 8% North North America America 21% 21% January June Alfa Laval Slide 15

16 Adjusted EBITA / Margin * MSEK and in percent of sales , ,0 10, , , ,0 2,0 0 Jan-June June 00 July-Dec 00 Jan-June June 01 July-Dec 01 Jan-June June 02 0,0 * Adjusted EBITA Earnings before interests, taxes, amortization of goodwill and step up values and comparison distortion items. Alfa Laval Slide 16

17 Reengineering Alfa Laval Slide 17

18 Beyond Expectations Other Projects BOM & NPR Org. re-design Shared Services Manufacturing Target Achieved Alfa Laval Slide 18

19 Financials A couple of your issues Thomas Thuresson CFO Alfa Laval Group

20 Consolidated Profit and Loss Proforma* MSEK Net sales 6,916 6,916 7,259 Adjusted EBITA Amortization of goodwill and step-up Financial net Comparison distortion items Profit before tax Profit after tax * Based on new capital structure and exclusive of comparison distortion items. Alfa Laval Slide 20

21 Intangibles in the Balance-Sheet Paid August 24, 2000 MSEK Goodwill MSEK 7,300 Alfa Laval Slide 21

22 Intangibles in the Balance-Sheet Paid August 24, MSEK Goodwill MSEK 7,300 - US-GAAP - Independen t valuation Alfa Laval Slide 22

23 Intangibles in the Balance-Sheet MSEK Paid August 24, 2000 Goodwill MSEK 7,300 - US-GAAP - Independen t valuation Allocation Realised Aug-Dec 2000, MSEK 600 Allocated value MSEK 3,400 Goodwill MSEK 3,300 Alfa Laval Slide 23

24 Intangibles in the Balance-Sheet Allocated values Depreciation as per individual asset category. Depreciation per annum, MSEK 334. Deferred tax liability, MSEK 979 (Dec. 31, 2001). Goodwill Amortization over 20 years, according to standard. Amortization per annum, MSEK 178. Deferred taxes not applied. Alfa Laval Slide 24

25 Financial Debt and Financial Net As per June 30, 2002 MSEK Proforma* Financial Income/ Cost MSEK Assumptions Cash and Deposits (2 %) Financial Debt - Credit institutions 3, (4 1/2%) - Bond 1, (12 1/8 %) - Other 27 2 (7%) IRS s 80 (Until 9/03) Capital. financing costs (78) 12 Net 4, *Calculated on an annual base Alfa Laval Slide 25

26 Cash-flow statement MSEK EBITDA Working capital Taxes paid Cash flow from operating activities Capital expenditures Divestments Acquisitions* Provisions Cash flow from investing activities Cash flow from financing activities Net increase in cash and bank Proforma * Vendor Warrant, MEUR 40 Alfa Laval Slide 26

27 Capital Expenditures MSEK Machinery EDP Property Other Alfa Laval Slide 27

28 Key ratios Ratio Earnings Per Share (proforma) Earnings Per Share (proforma, excl. goodwill amortization and step-up depreciation Remarks - Current number of shares - New capital structure - Exclusive of comparison distortion items - As above adding back goodwill amortization and step-up depreciation January-June June 2002 Before tax, SEK 3.03 After tax SEK 1.88 Before tax SEK 5.28 After tax SEK 4.14 Cash Earnings Per Share (proforma) - New capital structure - Excl. disposals and acquisitions Before tax SEK 6.30 After tax SEK 4.89 Alfa Laval Slide 28

29 Reengineering Alfa Laval Slide 29

30 Customer orientation By core product By customer process Alfa Laval Slide 30

31 Reengineering Alfa Laval Slide 31

32 Accelerating growth: The six step Alfa Laval gearbox Alfa Laval Slide 32

33 The drivers behind Alfa Laval s growth strategy 1 st gear: Existing range of products 1 2 nd gear: Market-driven R&D rd gear: Focus on customer segments 4 th gear: Strong commitment to Parts & Service 5 th gear: Exploitation of new market concepts th gear: Ambition to add new core products Alfa Laval Slide 33

34 The six step Alfa Laval gearbox Existing products Customer segments New market concepts Market-driven R&D Parts & Service New core products 4 4 Alfa Laval Slide 34

35 The six step Alfa Laval gearbox Existing products Customer segments New market concepts All six gears will give us an annual average growth of 5 % over a business cycle Market-driven R&D Parts & Service New core products Alfa Laval Slide 35

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