Financials Thomas Thuresson Alfa Laval Group
Financial NOVEMBER 23, 2017 FINANCIAL UPDATE Restructuring R & D Capital Expenditure Return on Capital Fx, Step-up etc. GPM Order backlog & sales bridge
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 - - 450-450 + 80 + 215 +300-100 - 250-550 + 10 + 15 + 200 Total - 100-700 - 1,000 + 90 + 230 + 500 Savings expected to be reached to 75% level by end 2017 and completely by end of 2018
Development of R&D spend Industry 4.0 SEK million 900 800 700 600 500 400 300 Percent of sales 3,6 3,2 2,8 2,4 2 1,6 1,2 200 100 0,8 0,4 R&D spend R&D as percent of sales 0 2005 2007 2009 2011 2013 2015 0 LTM1709
Capital expenditure 900 SEK million Percent of sales 4,5 800 4 700 3,5 600 3 500 Industry 4.0 400 2,5 2 300 200 100 1,5 1 0,5 Cap ex Depr acc to plan (excl step-up) Percent of sales 0 2003 2005 2007 2009 2011 2013 2015 2017 0
Capital expenditure - Major projects in 2016-2017 Relocation to new site in India NOT carried through, EUR 27 million Development of current main site including consolidation
Capital expenditure - Major projects in 2016-2017 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
Capital expenditure - Major projects in 2016-2017 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
Capital expenditure 1000 SEK million Percent of sales 5 900 4,5 800 4 700 3,5 600 3 500 Industry 4.0 400 2,5 2 300 200 100 1,5 1 0,5 Cap ex Depr acc to plan (excl step-up) Percent of sales 0 2004 2006 2008 2010 2012 2014 2016 2018 0
Capital expenditure - Major projects in 2018-2019 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
Capital expenditure - Major projects in 2018 2019 Footprint Reduction of footprint in the USA, capex of EUR 17-20 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
Capital expenditure - Major projects in 2018 2019 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
Capital expenditure - Major projects in 2018 2019 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
Capital expenditure - Major projects in 2018-2019 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
Return on capital employed - Development from Q110 to Q317 40 35 Aalborg 30 25 20 Industry 4.0 FRAMO Restruct. Group target for ROCE is 20% 15 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017 Alfa Laval Slide 16
Return on capital employed - Main items of capital employed 35000 30000 27,259 31,512 30,663 28,852 25000 20000 Industry 4.0 15000 12,752 16,324 17,833 18,598 10000 5000 0 4,399 4,560 4,430 4,657 4,447 3,734 4,146 4,200 2010 2011 2012 2013 2014 2015 2016 1709 Goodwill Step-up Operating capital
Return on - Development for ROC and ROCE (Amounts in BnSEK) 2010 2012 2015 2016 2017* 2018** 2023** Industry 4.0 Operating capital Step up Goodwill Capital employed ROC in % ROCE in % 4.4 2.4 6.0 12.8 108.5 37.4 4.6 2.2 9.5 16.3 112.2 31.3 3.7 8.3 19.5 31.5 182.4 21.6 4.1 6.1 20.4 30.7 112.9 15.3 4.2 5.3 19.3 28.9 130.0 19.0 4.2 3.9 19.3 27.4 130.0 20.1 4.2 0.0 19.3 23.5 130.0 23.4 Capital management IAS / IFRS EBITA in % 19.3 16.4 17.1 13.1 15.6 15.6 15.6 *) EBITA LTM 1709 excl non-recurring charges **) EBITA LTM 1709 excl non-recurring and capital items c.p.
Foreign exchange - Estimated impact on adjusted EBITA from FX fluctuations SEK million Q3 2017 9M 2017 FY 2017* FY 2018* Transaction effect 41 135 190 70 Translation effect -22 55 20 - Industry 4.0Total 19 190 210 70 *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
Step-up values up to 2021 - Closing balance and amortization according to plan, SEK M 12 000 Closing balance Amortization 1 200 10 000 1 000 8 000 800 6 000 Industry 4.0 600 4 000 400 2 000 200 Amortization acc to plan Acquisitions 0 2005 2007 2009 2011 2013 2015 2017 2019 2021 0 LBO-related
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, 40 50 % of adjusted EPS* *) Excluding net effect of step-up amortisation
Gross profit margin - Development 1991-50% 40% 30% Industry 4.0 20% Asian crisis Marine & BRIC boom O&G decline Marine decline - CS share - Fx + Volume + Restruct. 10% 0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1709 2019 Alfa Laval Slide 22
Order backlog development 24 000 SEK millions % of LTM-sales 80 21 000 70 18 000 60 15 000 50 12 000 Industry 4.0 40 9 000 30 6 000 20 3 000 0 2001 2003 2005 2007 2009 2011 2013 2015 10 0 2017 % of LTM sales Order backlog
Order backlog as per Sept 30 - MSEK at prevailing rates 24000 22,400 22,117 20000 16000 Industry 4.0 12000 8000 15,314 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 + 0.7 Bn! 4000 0 6,256 6,567 5,487 5,937 6,418 6,705 6,672 7,371 8,014 6,913 6,969 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 For delivery later than next year For delivery next year For delivery during the rest of current year
Sales - 2017 and 2018 BnSEK LTM Q316 35.1 Change order backlog Q4, y-o-y + 0.0 Fx. Translation - / + 0.x Acquisitions + 0.0 Demand, in-for-out Q417 - / + 0.x Full year 2017 appr 34.8* *) SME Direkt, consensus estimate as per November 8, 2017
Sales - 2017 and 2018 BnSEK Full year 2017 appr 34.8* Change in order backlog y-o-y + 0.7 Fx. Translation - x.x Acquisitions during 2017 0.0 Subtotal: 35.5 Price + / -? Demand + / -? Further acquisitions +? Full year 2018:? *) SME Direkt, consensus estimate as per November 8, 2017