Financials. Thomas Thuresson Alfa Laval Group

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2 Financials Thomas Thuresson Alfa Laval Group

3 Financial NOVEMBER 23, 2017 FINANCIAL UPDATE Restructuring R & D Capital Expenditure Return on Capital Fx, Step-up etc. GPM Order backlog & sales bridge

4 Reorganisation & capacity - Update adjustment program as per September 30, 2017 EMPLOYEE IMPACT, FTE TOTAL SAVINGS, MSEK Industry 4.0 R&D S&A Other COGS Realized Q3, 2017 Realized 9M, 2017 Target Realized Q3, 2017 Realized 9M, 2017 Target Total , Savings expected to be reached to 75% level by end 2017 and completely by end of 2018

5 Development of R&D spend Industry 4.0 SEK million Percent of sales 3,6 3,2 2,8 2,4 2 1,6 1, ,8 0,4 R&D spend R&D as percent of sales LTM1709

6 Capital expenditure 900 SEK million Percent of sales 4, , Industry , ,5 1 0,5 Cap ex Depr acc to plan (excl step-up) Percent of sales

7 Capital expenditure - Major projects in Relocation to new site in India NOT carried through, EUR 27 million Development of current main site including consolidation

8 Capital expenditure - Major projects in New state of the art distribution centre in Kolding, Denmark carried through, according to plan and within the budget of EUR 25 million Benefits are being realized as anticipated

9 Capital expenditure - Major projects in New state of the art distribution centre in Kolding, Denmark carried through, according to plan and within the budget of EUR 25 million Benefits are being realized as anticipated

10 Capital expenditure 1000 SEK million Percent of sales , , Industry , ,5 1 0,5 Cap ex Depr acc to plan (excl step-up) Percent of sales

11 Capital expenditure - Major projects in Footprint in the USA, SEK 175 million Footprint in Poland, SEK 100 million Adjustment to global supply structure for GPHE, SEK 150 million Relocation in Qingdao, China SEK 200 million Extension in Kunshan, China SEK 100 million Establish BHE production in Richmond, USA SEK 50 million Extension of BHE production in Alonte, Ronneby & JiangYin, SEK 120 million Upgrade and relocation in Pune, India SEK 75 million

12 Capital expenditure - Major projects in Footprint Reduction of footprint in the USA, capex of EUR million including extensions of buildings and project costs of EUR 7 million Closure of activities in three locations and relocation to existing facilities, such as Broken Arrow, Oklahoma

13 Capital expenditure - Major projects in Relocation Forced relocation of manufacturing in Qingdao, China, due to city development Anticipated additional capital expenditure of EUR 22 million and project costs of EUR 4 million

14 Capital expenditure - Major projects in Extension Establish BHE production in Richmond, USA to improve customer service in the Americas Increased utilization of existing facility Anticipated capital expenditure of EUR 6 million and project costs of EUR 1 million

15 Capital expenditure - Major projects in Footprint in the USA, SEK 175 million Footprint in Poland, SEK 100 million Adjustment to global supply structure for GPHE, SEK 150 million Relocation in Qingdao, China SEK 200 million Extension in Kunshan, China SEK 100 million Establish BHE production in Richmond, USA SEK 50 million Extension of BHE production in Alonte, Ronneby & JiangYin, SEK 120 million Upgrade and relocation in Pune, India SEK 75 million

16 Return on capital employed - Development from Q110 to Q Aalborg Industry 4.0 FRAMO Restruct. Group target for ROCE is 20% Alfa Laval Slide 16

17 Return on capital employed - Main items of capital employed ,259 31,512 30,663 28, Industry ,752 16,324 17,833 18, ,399 4,560 4,430 4,657 4,447 3,734 4,146 4, Goodwill Step-up Operating capital

18 Return on - Development for ROC and ROCE (Amounts in BnSEK) * 2018** 2023** Industry 4.0 Operating capital Step up Goodwill Capital employed ROC in % ROCE in % Capital management IAS / IFRS EBITA in % *) EBITA LTM 1709 excl non-recurring charges **) EBITA LTM 1709 excl non-recurring and capital items c.p.

19 Foreign exchange - Estimated impact on adjusted EBITA from FX fluctuations SEK million Q M 2017 FY 2017* FY 2018* Transaction effect Translation effect Industry 4.0Total *Based on EUR/USD 1.17 and EUR/SEK 9.75 Projected FX-effect for 2017 communicated with the Q3 report: SEK 200 million 19

20 Step-up values up to Closing balance and amortization according to plan, SEK M Closing balance Amortization Industry Amortization acc to plan Acquisitions LBO-related

21 Guidance - A summary R & D-spend in relation to total revenues, <= 2.5 % Taxes in the P&L, 28 % of PBT Capital expenditure in relation to total revenues, <= 2.0 % and major projects Dividend pay-out ratio, % of adjusted EPS* *) Excluding net effect of step-up amortisation

22 Gross profit margin - Development % 40% 30% Industry % Asian crisis Marine & BRIC boom O&G decline Marine decline - CS share - Fx + Volume + Restruct. 10% 0% Alfa Laval Slide 22

23 Order backlog development SEK millions % of LTM-sales Industry % of LTM sales Order backlog

24 Order backlog as per Sept 30 - MSEK at prevailing rates ,400 22, Industry ,314 8,330 15,873 8,766 13,192 7,324 11,689 5,480 15,068 15,496 15,071 8,050 8,387 7,993 13,364 13,359 17,791 10,093 18,674 10,823 For next year, SEK 10.8 (10.1) Bn, like-for-like SEK Bn! ,256 6,567 5,487 5,937 6,418 6,705 6,672 7,371 8,014 6,913 6, For delivery later than next year For delivery next year For delivery during the rest of current year

25 Sales and 2018 BnSEK LTM Q Change order backlog Q4, y-o-y Fx. Translation - / + 0.x Acquisitions Demand, in-for-out Q417 - / + 0.x Full year 2017 appr 34.8* *) SME Direkt, consensus estimate as per November 8, 2017

26 Sales and 2018 BnSEK Full year 2017 appr 34.8* Change in order backlog y-o-y Fx. Translation - x.x Acquisitions during Subtotal: 35.5 Price + / -? Demand + / -? Further acquisitions +? Full year 2018:? *) SME Direkt, consensus estimate as per November 8, 2017

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