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Alfa Laval
Earnings Release • Feb 6, 2024
2876_10-k_2024-02-06_ec109e39-b05a-4a28-b2ba-d92e06c247ea.pdf
Earnings Release
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Highlights
Summary
- Order intake increased by 7 percent to SEK 16.9 (15.8) billion.
- Net sales increased by 8 percent to SEK 17.8 (16.5) billion.
- Adjusted EBITA increased by 12 percent to SEK 2.8 (2.5) billion, corresponding to a margin of 15.9 (15.3) percent.
- Strong cash flow from operating activities of SEK 3.9 (1.7) billion.
- Earnings per share of SEK 3.77 (3.00).
Outlook for the first quarter
"We expect demand in the first quarter to be somewhat lower compared to the fourth quarter."
Earlier published outlook (October 25, 2023): "We expect demand in the fourth quarter to be about the same as in the third quarter."
The Board of Directors will propose a dividend of SEK 7.50 (6.00) per share to the Annual General Meeting.
The Q4 2023 report has not been subject to review by the company's auditors.
| Q4 | Jan-Dec | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | % | % * | 2023 | 2022 | % | % * |
| Order intake | 16,920 | 15,767 | 7 | 7 | 70,742 | 58,645 | 21 | 17 |
| Net sales | 17,839 | 16,484 | 8 | 7 | 63,598 | 52,135 | 22 | 18 |
| Adjusted EBITA ** | 2,830 | 2,520 | 12 | 10,221 | 8,229 | 24 | ||
| - adjusted EBITA margin (%) ** | 15.9 | 15.3 | 16.1 | 15.8 | ||||
| Result after financial items | 2,254 | 1,762 | 28 | 8,650 | 6,179 | 40 | ||
| Net income for the period | 1,570 | 1,260 | 25 | 6,381 | 4,569 | 40 | ||
| Earnings per share (SEK) | 3.77 | 3.00 | 26 | 15.31 | 10.89 | 41 | ||
| Cash flow from operating activities | 3,891 | 1,662 | 134 | 9,169 | 3,291 | 179 | ||
| Impact on result after financial items | ||||||||
| of comparison distortion items | - | -440 | - | -767 | ||||
| Return on capital employed (%) ** | 21.0 | 17.3 | ||||||
| Net debt to EBITDA, times ** | 0.85 | 1.47 |
* Excluding currency effects. ** Alternative performance measures.
Comment from
Tom Erixon
President and CEO
"2023 marked a record year with SEK 71 billion in order intake and an organic order growth of 11 percent. Invoicing also reached an all-time high of SEK 64 billion and the adjusted EBITA margin increased to 16.1 percent.
Order intake generally remained firm in the quarter and amounted to SEK 17 billion, as expected sequentially stable. The Food & Water Division booked a new record in order intake of SEK 7.3 billion, mainly supported by the project related business and large orders. The more short-cycle transactional business improved from a low level, indicating that the bottom of the cycle is now behind us. Order intake in the Marine Division amounted to SEK 5 billion, somewhat lower compared to the very strong order intake in recent quarters. Still, market conditions remained positive in all end-markets providing a positive momentum into 2024. In the Energy Division, a weak demand in the HVAC applications was compensated by solid market conditions in other end-markets. The order intake amounted to SEK 4.7 billion, an organic growth of 5 percent compared to last year. The demand for solutions related to energy efficiency and decarbonization remains fundamentally strong.
The EBITA margin in the quarter was 15.9 percent, somewhat stronger than last year and supported by a record invoicing of almost SEK 18 billion. The Marine Division continued the margin recovery as expected with a margin of 18 percent. The Food & Water Division recorded a margin of 14.3 percent in the quarter. The profitability was negatively affected by claims provisions and some one-off charges compared to last year. After a period of elevated earnings, the margin in the Energy Division was 17.3 percent, somewhat stronger than last year but lower sequentially. The margin was negatively affected by revaluations and under-absorptions related to a weak heat-pump market.
The investments in R&D and new application development remained on a high level during the year, primarily supporting the offerings in sustainability and decarbonization. The product portfolio for the period 2025-30 is now largely in place. With a broader offering and a more diverse technology platform, the R&D expenses will likely remain on the current level of 2.5-3 percent of invoicing.
Capacity investments to support growth increased and amounted to SEK 2.4 billion, in line with guidance. During the year, actions have been taken to expand production capacity in all major geographies and the construction of a new service distribution centre in Lund was initiated. The current softer demand trend for brazed heat exchangers related to HVAC applications will not affect the medium-term capacity planning, but the implementation will slow down compared to the original plan. The capex guidance for 2024 is reduced to approximately SEK 2 billion.
In summary, 2023 ended strong and exceeding the financial targets. Invoicing growth was 12 percent organically, well ahead of the 5 percent target. The adjusted EBITA margin was 16.1 percent, above of the 15 percent target. The ROCE target of 20 percent was exceeded and reached 21 percent for the year, supported by a strong cashflow and a normalized balance sheet."
Tom Erixon, President and CEO
Financial overview
Order intake
Orders received was SEK 16,920 (15,767) million in the fourth quarter and SEK 70,742 (58,645) million in the full year 2023.
Orders received from Service constituted 27.9 (28.4) percent of the Group's total orders received during the fourth quarter and 27.6 (28.4) percent during the full year 2023.
17.3 24.5 32.1 5.6 12.5 13.2 0 6 12 18 24 30 36 42 48 2021 2022 2023 BnSEK December 31 For delivery later than next year For delivery during next year 23.0 37.0 45.3
Excluding currency effects and adjusted for acquisition and divestment of businesses the order backlog was 19.0 percent higher than the order backlog at the end of 2022.
Net sales
Order backlog
Net invoicing was SEK 17,839 (16,484) million for the fourth quarter and SEK 63,598 (52,135) million for the full year 2023.
Net invoicing relating to Service constituted 29.7 (28.6) percent of the Group's total net invoicing in the fourth quarter and 30.3 (30.0) percent in the full year 2023.
| Order bridge | ||||||
|---|---|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||||
| 2022 | 15,767 | 58,645 | ||||
| Organic 1) | 6.8% | 10.5% | ||||
| Structural 1) | 0.1% | 6.3% | ||||
| Currency | 0.4% | 3.8% | ||||
| Total | 7.3% | 20.6% | ||||
| 2023 | 16,920 | 70,742 | ||||
1) Change excluding currency effects.
| Order bridge Service | ||||
|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||
| 2022 | 4,471 | 16,640 | ||
| Organic 1) | 4.6% | 11.9% | ||
| Structural 1) | 0.4% | 0.7% | ||
| Currency | 0.7% | 4.9% | ||
| Total | 5.7% | 17.5% | ||
| 2023 | 4,725 | 19,551 |
1) Change excluding currency effects.
| Sales bridge | |||||
|---|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | |||
| 2022 | 16,484 | 52,135 | |||
| Organic 1) | 7.2% | 12.3% | |||
| Structural 1) | 0.1% | 5.3% | |||
| Currency | 0.9% | 4.4% | |||
| Total | 8.2% | 22.0% | |||
| 2023 | 17,839 | 63,598 |
1) Change excluding currency effects.
| Sales bridge Service | ||||
|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||
| 2022 | 4,730 | 15,688 | ||
| Organic 1) | 10.4% | 17.2% | ||
| Structural 1) | 0.3% | 0.7% | ||
| Currency | 1.5% | 5.2% | ||
| Total | 12.2% | 23.1% | ||
| 2023 | 5,306 | 19,308 |
1) Change excluding currency effects.
- Organic: Change excluding acquisition/divestment of businesses.
- Structural: Acquisition/divestment of businesses.
- Service: Parts and service.
Income analysis
| Q4 | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | |
| Net sales | 17,839 | 16,484 | 63,598 | 52,135 | |
| Adjusted gross profit * | 5,877 | 5,443 | 21,849 | 18,589 | |
| - adjusted gross margin (%) * | 32.9 | 33.0 | 34.4 | 35.7 | |
| Expenses ** | -2,606 | -2,607 | -10,069 | -8,911 | |
| - in % of net sales | 14.6 | 15.8 | 15.8 | 17.1 | |
| Adjusted EBITDA * | 3,271 | 2,836 | 11,780 | 9,678 | |
| - adjusted EBITDA margin (%) * | 18.3 | 17.2 | 18.5 | 18.6 | |
| Depreciation | -441 | -316 | -1,559 | -1,449 | |
| Adjusted EBITA * | 2,830 | 2,520 | 10,221 | 8,229 | |
| - adjusted EBITA margin (%) * | 15.9 | 15.3 | 16.1 | 15.8 | |
| Amortisation of step-up values | -235 | -266 | -965 | -943 | |
| Comparison distortion items | - | -440 | - | -767 | |
| Operating income | 2,595 | 1,814 | 9,256 | 6,519 |
| Income bridge | |||
|---|---|---|---|
| SEK millions | Q4 | Jan-Dec | |
| Adjusted EBITA 2022 | 2,520 | 8,229 | |
| Volume 1) | 380 | 3,157 | |
| Mix 1) | 41 | -518 | |
| Costs 1) | -88 | -854 | |
| Currency | -23 | 207 | |
| Adjusted EBITA 2023 | 2,830 | 10,221 |
1) Change excluding currency effects
* Alternative performance measures. ** Excluding comparison distortion items.
After years of positive book-to-bill, the strong invoicing in the quarter resulted in a decrease of the order backlog of around SEK 1 billion. The Group now has orders amounting to SEK 45 billion and a good base for invoicing growth in 2024. Gross margins on sales remained stable in the fourth quarter across the divisions, for the base business as well as service sales. From a mix perspective the higher portion of project invoicing in the quarter was offset by a good level of service invoicing. Gross profit in the fourth quarter was negatively affected by utilization imbalances in some of the manufacturing units and negative material and currency hedge results. The fourth quarter marks the last quarter with a portion of project invoicing of backlog that is out of sync with current commodity and input price levels.
Sales and administration expenses were SEK 2,441 (2,144) million during the fourth quarter and SEK 9,222 (7,939) million during the full year 2023. The figures for the full year corresponded to 14.5 (15.2) percent of net sales. Excluding currency effects and acquisition/divestment of businesses, sales and administration expenses increased by 12.0 percent during the fourth quarter and by 7.8 percent during the full year 2023 compared to the corresponding periods last year.
The costs for research and development during the full year 2023 corresponded to 2.5 (2.6) percent of net sales. Excluding currency effects and acquisition/divestment of businesses, the costs for research and development increased by 3.0 percent during the fourth quarter and by 7.9 percent during the full year 2023 compared to the corresponding periods last year.
Earnings per share was SEK 15.31 (10.89) for the full year 2023. The corresponding figure excluding amortisation of step-up values and the corresponding tax, was SEK 17.15 (12.78).
Comparison distortion items
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Other operating costs | ||||
| Comparison distortion items: - Provision for financial consequences of Russia's war on |
||||
| Ukraine | - | -73 | - | -400 |
| - Restructuring costs | - | -367 | - | -367 |
| Net comparison distortion items | - | -440 | - | -767 |
The comparison distortion items during the full year 2022 were relating to costs triggered by Russia's war on Ukraine and for a restructuring project for
parts of the Marine Division and the Business Unit for Welded Heat Exchangers in the Energy Division.
Consolidated financial net and taxes
The financial net for the full year 2023 was SEK -337 (-219) million, excluding realised and unrealised exchange rate losses and gains. The main elements of costs were interest on the debt to the banking syndicate of SEK -26 (-18) million, interest on the bilateral term loans of SEK -132 (-20) million, interest on the corporate bonds of SEK -125 (-127) million, interest on the commercial paper programme of SEK -16 (-10) and a net of dividends, changes in fair value and other interest income and interest costs of SEK -38 (-44) million. The net of realised and unrealised exchange rate differences was SEK -269 (-121) million.
The tax on the result after financial items was SEK -684 (-502) million in the fourth quarter and SEK -2,269 (-1,610) million in the full year 2023.
Cash flow
During the full year 2023 cash flows from operating and investing activities were SEK 6,482 (-2,227) million. The figure for 2023 has been burdened with SEK -652 (-3,140) million for build-up of inventories due to the volume growth and build-up of work in progress.
Depreciation, excluding allocated step-up values, was SEK 1,559 (1,449) million during the full year 2023.
Acquisition of businesses during the full year 2023 amount to SEK -337 (-3,685) million. The figure for 2023 is relating to the acquisition of the remaining shares in Marine Performance Systems with SEK -24 million, the acquisition of additional shares in StormGeo's subsidiary Climatempo in Brazil with SEK -118 million, the acquisition of 51 percent of Header-coil Company A/S with SEK -49 million, the acquisition of a European service provider with SEK -163 million, payment of withheld purchase price for the acquisition of Scanjet with SEK -23 million, payment of withheld purchase price for the acquisition of BunkerMetric with SEK -2 million and a reduction of the purchase price for Desmet with SEK 42 million. The figure for 2022 was relating to the acquisition of Desmet with SEK -3,431 million, the acquisition of Scanjet with SEK -237 million, the acquisition of BunkerMetric with SEK -13 million and payment of withheld purchase price for the acquisition of Airec with SEK -4 million.
| Key figures | Dec 31 | ||
|---|---|---|---|
| 2023 | 2022 | ||
| Return on capital employed (%) 1) | 21.0 | 17.3 | |
| Return on equity (%) 2) | 17.6 | 13.5 | |
| Solidity (%) 3) | 45.4 | 43.9 | |
| Net debt to EBITDA, times 1) | 0.85 | 1.47 | |
| Debt ratio, times 1) | 0.27 | 0.37 | |
| Number of employees 4) | 21,321 | 20,300 |
1) Alternative performance measure.
2) Net income in relation to average equity, calculated on 12 months' revolving basis, expressed in percent.
3) Equity in relation to total assets at the end of the period, expressed in percent.
4) At the end of the period.
Energy Division
The division targets customers in HVAC and refrigeration markets as well as process industries such as chemicals, petrochemical industry and the oil & gas industry.
Focus is on increased energy efficiency, waste heat recovery and sustainable solutions.
- Order intake increased by 6 percent to SEK 4.7 (4.4) billion, with an organic growth of 5 percent.
- Net sales increased by 16 percent to SEK 5.2 (4.5) billion, with an organic growth of 14 percent.
- Adjusted EBITA of SEK 900 (746) million, corresponding to a margin of 17.3 percent.
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Orders received | 4,662 | 4,407 | 20,414 | 17,294 |
| Order backlog 1) | 10,075 | 8,517 | 10,075 | 8,517 |
| Net sales | 5,196 | 4,500 | 19,269 | 15,074 |
| Operating income 2) | 890 | 705 | 3,927 | 2,761 |
| Adjusted EBITA 3) | 900 | 746 | 3,986 | 2,927 |
| Adjusted EBITA margin 4) | 17.3% | 16.6% | 20.7% | 19.4% |
| Depreciation | 116 | 67 | 372 | 352 |
| Amortisation | 10 | 41 | 59 | 166 |
| Investments 5) | 384 | 209 | 992 | 535 |
| Assets 1) | 19,263 | 17,330 | 19,263 | 17,330 |
| Liabilities 1) | 7,433 | 6,574 | 7,433 | 6,574 |
| Number of employees 1) | 5,902 | 5,457 | 5,902 | 5,457 |
1) At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.
Quarterly development Order intake Jan-Dec 2023 split per end market*/business unit
Gasketed Plate Heat Exchangers
HVAC & Refrigeration 38%
* "Process industry" consists of inorganic chemicals, metals, petrochemicals and pulp & paper and "other" consists mainly of manufacturing and mining.
Order intake*
The Energy Division reported a higher order intake compared to the same quarter last year. Continued high prices for energy and raw materials drove investments in gas production and in mining & metal industries. The positive development in the emerging clean energy sector continued and demand also grew for the recycling solutions. Order intake was strong across many geographical markets, but a slowdown in order intake was noted in Western Europe related to a weaker sentiment in the building industry.
Order intake in the largest end market, HVAC** was lower than last year, mainly as a consequence of lower demand for heat exchangers to heat pumps. This was driven by temporarily lower activity levels in Western Europe driven by lower construction activity. Demand for our solutions in commercial refrigeration was on the same level as last year. Demand in process industries grew in the quarter and exceeded last year. The order intake grew from customers investing in green hydrogen production as well as in production of fertilizers.
Service grew well in the quarter. A positive development was seen across most industries and geographical markets.
Net sales*
Net sales grew in all end markets driven by both service and capital sales, despite some remaining capacity constraints.
Adjusted EBITA***
The increased net sales in the quarter had a positive drop through contribution to EBITA. The net mix impact was positive reflecting our ability to balance fluctuations in the commodity markets. Increased sales activities, costs related to investments and inflationary pressure resulted in increasing overhead cost compared to last year.
| Order bridge | |||
|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | |
| 2022 | 4,407 | 17,294 | |
| Organic 1) | 4.8% | 13.2% | |
| Structural 1) | 0.2% | 0.1% | |
| Currency | 0.8% | 4.7% | |
| Total | 5.8% | 18.0% | |
| 2023 | 4,662 | 20,414 |
1) Change excluding currency effects.
| Sales bridge | |||
|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | |
| 2022 | 4,500 | 15,074 | |
| Organic 1) | 13.8% | 22.7% | |
| Structural 1) | 0.2% | 0.1% | |
| Currency | 1.5% | 5.0% | |
| Total | 15.5% | 27.8% | |
| 2023 | 5,196 | 19,269 |
1) Change excluding currency effects.
Order intake Jan-Dec 2023 split on:
| Income bridge | ||
|---|---|---|
| SEK millions | Q4 | Jan-Dec |
| Adjusted EBITA 2022 | 746 | 2,927 |
| Volume 1) | 212 | 1,292 |
| Mix 1) | 79 | 123 |
| Costs 1) | -132 | -411 |
| Currency | -5 | 55 |
| Adjusted EBITA 2023 | 900 | 3,986 |
* Comments excluding currency effects.
** Heating, Ventilation & Air Conditioning.
*** Comments relating to income bridge.
1) Change excluding currency effects.
Food & Water Division
The division offers different types of products for heat transfer, separation and hygienic fluid handling and targets customers in food, pharmaceuticals, biotech, vegetable oils, brewery, dairy and body care products. In addition, the division focuses on public and industrial water treatment as well as wastewater and waste treatment.
- Order intake increased by 30 percent to SEK 7.3 (5.6) billion, with an organic growth of 28 percent.
- Net sales decreased by 5 percent to 7.1 (7.4) billion, with an organic decrease of 6 percent.
- Adjusted EBITA of SEK 1,011 (1,292) million, corresponding to a margin of 14.3 percent.
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Orders received | 7,286 | 5,613 | 26,368 | 21,909 |
| Order backlog 1) | 15,977 | 14,381 | 15,977 | 14,381 |
| Net sales | 7,060 | 7,407 | 25,280 | 20,691 |
| Operating income 2) | 950 | 1,234 | 3,698 | 3,339 |
| Adjusted EBITA 3) | 1,011 | 1,292 | 3,942 | 3,458 |
| Adjusted EBITA margin 4) | 14.3% | 17.4% | 15.6% | 16.7% |
| Depreciation | 148 | 88 | 502 | 449 |
| Amortisation | 61 | 58 | 244 | 119 |
| Investments 5) | 172 | 139 | 472 | 360 |
| Assets 1) | 20,376 | 21,196 | 20,376 | 21,196 |
| Liabilities 1) | 8,295 | 8,291 | 8,295 | 8,291 |
| Number of employees 1) | 8,283 | 8,052 | 8,283 | 8,052 |
1) At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.
Quarterly development Order intake Jan-Dec 2023 split per end market/business unit
Alfa Laval Fourth quarter 2023 Q4 8 28
Order intake*
Order intake grew compared to the same quarter last year and demand was positive across most industries. Geographically, growth was seen across all subregions in Europe. The growth in Asia was primarily driven by India and Southeast Asia, whereas China was stable. Order intake in North America was somewhat below last year.
The strong order intake in oils & fats was driven by a continued positive development in Desmet for traditional oils & fats as well as HVO** for biodiesel. Dairy showed strength with significant growth, where an overall positive industry sentiment drove investments and generated more capacity related orders. The pharma & biotech market declined somewhat despite solid developments in North America and Europe, but weaker demand in predominantly China held back overall growth. Order intake grew in ethanol, starch & sugar. Ethanol related orders continued to be driven by biofuel demand as a result of higher blending requirements in many countries. Geographically, growth was particularly strong in the U.S., Brazil and India. The order intake for waste & water grew and outside the stable and important North American market, demand was positive also in Europe and Asia. Brewery had an order intake slightly below last year's level although the order mix did include some larger capacity expansion projects. Protein showed strong growth across all applications in the industry.
The aftermarket showed growth, with particularly good demand in dairy, oils & fats and protein. The growth was equally driven by service and spare parts. Geographically, Southeast Asia, China and India showed the strongest growth whilst Europe and North America were unchanged.
Net sales*
Net sales was lower than last year, mainly as a result of a more even revenue recognition in Desmet during the year compared to last year. The share of project sales of total sales decreased and after sales grew faster than capital sales. Sales grew in protein and waste & water, while a decline was mainly noted in oils & fats.
Adjusted EBITA***
The lower net sales gave a negative volume effect. The negative mix impact was caused by somewhat higher project related costs in the quarter.
| * Comments excluding currency effects. | ||||
|---|---|---|---|---|
| -- | ---------------------------------------- | -- | -- | -- |
** Hydrotreated Vegetable Oil.
*** Comments relating to income bridge.
| Order bridge | |||
|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | |
| 2022 | 5,613 | 21,909 | |
| Organic 1) | 28.0% | 0.0% | |
| Structural 1) | 0.1% | 15.4% |
Currency 1.7% 5.0% Total 29.8% 20.4% 2023 7,286 26,368
1) Change excluding currency effects.
| Sales bridge | ||||
|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||
| 2022 | 7,407 | 20,691 | ||
| Organic 1) | -6.4% | 5.2% | ||
| Structural 1) | 0.1% | 12.0% | ||
| Currency | 1.6% | 5.0% | ||
| Total | -4.7% | 22.2% | ||
| 2023 | 7,060 | 25,280 |
1) Change excluding currency effects.
Order intake Jan-Dec 2023 split on:
| Income bridge | ||
|---|---|---|
| SEK millions | Q4 | Jan-Dec |
| Adjusted EBITA 2022 | 1,292 | 3,458 |
| Volume 1) | -166 | 1,097 |
| Mix 1) | -134 | -261 |
| Costs 1) | 8 | -490 |
| Currency | 11 | 138 |
| Adjusted EBITA 2023 | 1,011 | 3,942 |
1) Change excluding currency effects.
Marine Division
The division's customers include shipowners, shipyards, manufacturers of diesel and gas engines, as well as companies that work with offshore extraction of oil and gas. The offering includes pumping systems, boilers, heat transfer equipment, high speed separators digital solutions and several different environmental products, including systems to clean ballast water and exhaust gases.
- Order intake decreased by 13 percent to SEK 5.0 (5.7) billion, with an organic decrease of 12 percent.
- Net sales increased by 22 percent to SEK 5.6 (4.6) billion, with an organic growth of 23 percent.
- Adjusted EBITA of SEK 1,003 (664) million, corresponding to a margin of 18.0 percent.
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Orders received | 4,972 | 5,747 | 23,960 | 19,442 |
| Order backlog 1) | 19,273 | 14,122 | 19,273 | 14,122 |
| Net sales | 5,583 | 4,577 | 19,049 | 16,370 |
| Operating income 2) | 840 | 497 | 2,178 | 1,741 |
| Adjusted EBITA 3) | 1,003 | 664 | 2,836 | 2,399 |
| Adjusted EBITA margin 4) | 18.0% | 14.5% | 14.9% | 14.7% |
| Depreciation | 88 | 74 | 336 | 312 |
| Amortisation | 163 | 167 | 658 | 658 |
| Investments 5) | 132 | 93 | 336 | 235 |
| Assets 1) | 29,856 | 30,932 | 29,856 | 30,932 |
| Liabilities 1) | 7,998 | 7,241 | 7,998 | 7,241 |
| Number of employees 1) | 5,655 | 5,465 | 5,655 | 5,465 |
1) At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.
Quarterly development Order intake Jan-Dec 2023 split per end market/business unit*
* Business Units Boilers and Gas Systems (within Environmental Products) have been merged into Heat & Gas Systems. The Business Unit Separation & Heat Transfer has been renamed to Water, Wind & Fuel Solutions and includes Ballast Water Treatment that previously was reported within Environmental Products.
Order intake*
Order intake for the Marine Division was lower compared to the same quarter last year. A continued high demand for digital solutions, marine pumping systems and service could not fully offset more normalized demand levels in offshore and ballast systems.
The underlying market sentiment related to the building of new vessels was on a higher level compared to the same period last year. New contracting has been driven primarily by tankers and vehicle carriers, supported by a fair level of contracting in the other ship segments. The increased shipbuilding activity has been further supplemented by a continued growing demand for sustainability related solutions which mitigate CO2 emissions, including solutions around energy efficiency and low and zero carbon fuels. Demand for PureBallast has eased further as fewer vessels remain to be retrofitted before the approaching 2024 regulatory deadline and the market gets more oriented to new vessels. Multi-fuel capable solutions continue to gain traction. Order intake for offshore was at a significantly lower level compared to the same quarter last year as a number of projects have been deferred due to constrained supply chains after four quarters of very strong demand. The underlying market sentiment in this area however remained strong due to stable high oil prices and new projects to safeguard long term energy supply.
Order intake for service was at a stable high level compared to the same quarter last year. Volumes were driven by a good activity level in shipping and a growing environmental installed base. High freight rates in the tanker vessel segment and the need to keep vessel assets in good operational readiness resulted in increased on-board maintenance and higher demand for spare parts and service.
Net sales*
Net sales were at a higher level than the same quarter last year. Sales growth for service and for most product groups in capital sales, offset the lower sales for PureBallast.
Adjusted EBITA**
The increased net sales in the quarter had a positive volume effect. The product mix and the strong development of service sales positively influenced the net mix effect. The factory and engineering result was positive driven by a good factory load. The cost level was higher than last year due to a higher activity level. The currency effect was negative.
| Order bridge | ||||
|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||
| 2022 | 5,747 | 19,442 | ||
| Organic 1) | -12.2% | 19.9% | ||
| Structural 1) | 0.0% | 1.6% | ||
| Currency | -1.3% | 1.7% | ||
| Total | -13.5% | 23.2% | ||
| 2023 | 4,972 | 23,960 |
1) Change excluding currency effects.
| Sales bridge | ||||
|---|---|---|---|---|
| SEK millions/% | Q4 | Jan-Dec | ||
| 2022 | 4,577 | 16,370 | ||
| Organic 1) | 22.6% | 11.7% | ||
| Structural 1) | 0.1% | 1.5% | ||
| Currency | -0.7% | 3.2% | ||
| Total | 22.0% | 16.4% | ||
| 2023 | 5,583 | 19,049 |
1) Change excluding currency effects.
Order intake Jan-Dec 2023 split on:
| Income bridge | |||
|---|---|---|---|
| SEK millions | Q4 | Jan-Dec | |
| Adjusted EBITA 2022 | 664 | 2,399 | |
| Volume 1) | 354 | 774 | |
| Mix 1) | 55 | -286 | |
| Costs 1) | -40 | -67 | |
| Currency | -30 | 16 | |
| Adjusted EBITA 2023 | 1,003 | 2,836 |
* Comments excluding currency effects.
** Comments relating to income bridge.
1) Change excluding currency effects.
Operations and Other
Operations and Other covers procurement and logistics as well as corporate overhead and non-core businesses.
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Orders received | 0 | 0 | 0 | 0 |
| Order backlog 1) | 0 | 0 | 0 | 0 |
| Net sales | 0 | 0 | 0 | 0 |
| Operating income 2) | -98 | -151 | -565 | -507 |
| Adjusted EBITA 3) | -97 | -151 | -561 | -507 |
| Depreciation | 89 | 87 | 349 | 336 |
| Amortisation | 1 | 0 | 4 | 0 |
| Investments 5) | 236 | 472 | 640 | 723 |
| Assets 1) | 1,986 | 1,983 | 1,986 | 1,983 |
| Liabilities 1) | 885 | 1,097 | 885 | 1,097 |
| Number of employees 1) | 1,481 | 1,326 | 1,481 | 1,326 |
1) At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure.
5) Excluding new leases.
Adjusted EBITA decreased in the full year 2023 compared to the corresponding period last year reflecting a higher activity level in turn driven by the high sales and order level.
Reconciliation between Divisions and Group total
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Adjusted EBITA | ||||
| Total for divisions | 2,817 | 2,551 | 10,203 | 8,277 |
| Amortisation | -235 | -266 | -965 | -943 |
| Comparison distortion items | - | -440 | - | -767 |
| Consolidation adjustments * | 13 | -31 | 18 | -48 |
| Total operating income | 2,595 | 1,814 | 9,256 | 6,519 |
| Financial net | -341 | -52 | -606 | -340 |
| Result after financial items | 2,254 | 1,762 | 8,650 | 6,179 |
| Assets ** | ||||
| Total for divisions | 71,481 | 71,441 | 71,481 | 71,441 |
| Corporate *** | 10,807 | 9,808 | 10,807 | 9,808 |
| Group total | 82,288 | 81,249 | 82,288 | 81,249 |
| Liabilities ** | ||||
| Total for divisions | 24,611 | 23,203 | 24,611 | 23,203 |
| Corporate *** | 20,299 | 22,342 | 20,299 | 22,342 |
| Group total | 44,910 | 45,545 | 44,910 | 45,545 |
* Difference between management accounts and IFRS. ** At the end of the period. *** Corporate refers to
items in the statement on financial position that are interest bearing or are related to taxes.
Large orders (>EUR 5 million) in the fourth quarter
| Division | Order | Total per Business Unit | ||
|---|---|---|---|---|
| Business Unit | Delivery | amount | Q4 2023 | Q4 2022 |
| Scope of supply | date | SEK millions | ||
| Energy | ||||
| Energy Separation | ||||
| Zero liquid discharge system to a recycling plant in the U.S. | 2024 | 71 | 71 | - |
| Gasketed Plate Heat Exchangers | ||||
| Heat exchangers for a fertilizer plant in Australia. | 2024 | 70 | 70 | 99 |
| Food & Water | ||||
| Food Systems | ||||
| Equipment for a juice mixing plant in Denmark. | 2025 | 324 | ||
| Equipment for edible oil processing plant in Mexico. | 2025 | 120 | ||
| Refining equipment for palm oil plant in Nigeria. | 2024 | 61 | 505 | 306 |
| Desmet | ||||
| Equipment for an oleochemical plant in Indonesia. | 2024 | 237 | ||
| Equipment for an oleochemical plant in Indonesia. | 2024 | 244 | ||
| Equipment for an oleochemical plant in Indonesia. | 2024 | 74 | ||
| Equipment for a rapeseed preparation and extraction plant in Lithuania. | 2025 | 176 | ||
| Refining equipment for a tropical oil refinery in Guatemala. | 2025 | 113 | ||
| Equipment for a vegetable oil refinery in the Netherlands. | 2025 | 251 | 1,095 | 350 |
| Marine | ||||
| Pumping Systems | ||||
| Suction pump system for an offshore wind farm in Taiwan. | 2025 | 277 | 277 | 728 |
| Total | 2,018 | 1,483 |
Information about products and services
| Net sales by product/service * | Q4 | Jan-Dec | |||
|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | |
| Own products within: | |||||
| Separation | 3,046 | 2,703 | 10,312 | 8,304 | |
| Heat transfer | 6,717 | 6,003 | 25,311 | 20,149 | |
| Fluid handling | 3,830 | 3,200 | 13,024 | 11,584 | |
| Marine environmental | 917 | 976 | 3,596 | 3,995 | |
| Other | 0 | 0 | 0 | 0 | |
| Associated products | 2,101 | 2,531 | 7,083 | 4,567 | |
| Services | 1,228 | 1,071 | 4,272 | 3,536 | |
| Total | 17,839 | 16,484 | 63,598 | 52,135 |
* The split of own products within separation, heat transfer and fluid handling is a reflection of the current three main technologies. Marine environmental is a growing new product area basically outside the main technologies. Other is own products outside these four product areas. Associated products are mainly purchased products that compliment Alfa Laval's product offering. Services cover all sorts of service and service agreements excluding spare parts.
Sustainability
At Alfa Laval, we are committed to progress towards a more efficient, less wasteful world for our customers and society as whole. We support the sustainable transformation and drive efficiency and behavioural change. We believe actions speak louder than words, so with every step we act to reach the challenging targets we have set. To make the change happen we collaborate closely with our partners and together we enable technologies that create sustainable future alternatives. We pioneer innovative solutions that play a key role in optimizing and transforming critical industrial processes and enable our customers to unlock the true potential of resources - bringing the goal of a truly sustainable world closer.
Case studies
Scrap reduction at San Bonifacio
At Alfa Laval's San Bonifacio site in Italy, a scrap reduction project for small brazed heat exchangers significantly cut raw material use, while boosting energy efficiency. Targeting a 20 percent reduction in scrapping and costs, the project also aimed at lessening waste and improving the manufacturing process. The use of stainless steel and copper in these processes also significantly contributes to Scope 3 CO2 emissions, making material reduction crucial. The outcome of this initiative exceeded the initial goals. Scrapping was reduced by 30 percent and re-brazing by 54 percent, resulting in 71 MWh yearly energy savings and a 0.35 tonnes CO2e reduction in emissions.
Focusing on employee safety
The factory in Petropolis, Brazil, had an injury rate of 4-5 incidents each year in which employees were injured and unable to work. This highlighted the need for improved safety and an initiative was launched which included overhauling safety policies and adopting proactive strategies. The workforce's commitment was strengthened through intensive communication, participation in focus groups, and impactful actions such as videos with family members emphasizing safety. Significant investments in the safety infrastructure showed employees that their wellbeing was paramount. By 2023, these measures resulted in only one incident of serious injury in which an employee required time off from the factory, an increase in hazard reporting and a noticeable shift in safety behaviour. Employees were more proactive in identifying and addressing safety risks, demonstrating greater engagement with the safety improvements.
Reducing emissions from service cars
In our Nordic sales company, we started the year by introducing our first electric service car. The car will be used by our field service engineers when executing service at our customers' sites in Denmark and is a first step into electrification of our operational/service car fleet. This is one of the many actions taken to accelerate the transition to a more sustainable future.
Quarterly follow up
Alfa Laval's sustainability targets aim to drive efficiency and behavioural change to achieve better results in the short and long term. For the quarterly reports, Alfa Laval has chosen to highlight the development in the areas of energy consumption, CO2 emissions and injuries.
Energy consumption is followed up in relation to the turnover in order not to be distorted by a growing business.
Carbon emissions
We continue to see a positive trend in our energy efficiency in the fourth quarter 2023 compared to the corresponding period last year. We see a slight increase in total energy consumed which can be explained by higher sales volumes in the quarter. Our continuous work in controlling and managing our consumption in our Energy Management system, ALEM, have again shown results and improved our efficiency. Increased focus and awareness on energy efficiency in general led also to many minor savings in daily work globally.
An important side note is that exchange rate fluctuations and inflation-driven price increases can impact the sales figure. What is important is to establish a trend and drive improvement initiatives.
We can conclude that the fourth quarter 2023 was well aligned with the targets we set out in 2020. We see a significant decrease in Scope 2 emissions due to the organization's work to buy renewable electricity and we also see a decrease in our Scope 1 emissions where we have reduced our energy consumption by 10 percent during the last year. Working on initiatives to further reduce the consumption of natural gas will be a priority in 2024.
Health and safety
The number of accidents increased in the fourth quarter compared to the previous quarter from 21 (revised from 23) to 27. Slip, trip and falls and use of handheld tools such as hammers stands for approximately 70 percent of all LTIs in the quarter, mainly resulting in accidents in the lower severity category. One accident in the quarter was however more severe. An employee visiting a customer site slipped and fell into a hot water pond and got burns.
LTIFR = Number of lost time injuries in time period * 1,000,000 Exposed/Worked hours in time period
New products during the fourth quarter
During the fourth quarter Alfa Laval has introduced among others the following new products that help our customers to become more energy efficient, reduce their carbon footprint and improve their processes:
Alfa Laval Hygienic Line HL12
Alfa Laval HL12 gasketed plate heat exchanger is predominantly used in large breweries and dairies. The HL12 heat exchanger excels in terms of cleanability and durability due to its optimal flow distribution. Additionally, its unique plate pattern sets a new standard for hygiene while boosting efficiency in both heating and cooling processes. This enables significant savings in energy, water and chemicals.
Alfa Laval Life-cycle Assessment Solution
Based on the strategic importance of sustainability, Alfa Laval has launched the Life-cycle Assessment Solution, an innovative software service. The Alfa Laval Life-cycle Assessment Solution is a subscription-based software service that calculates, analyses and validates the environmental impact of food and beverage products from farm to retail. It offers full supply-chain transparency and makes it easy to communicate the environmental impact of food products. The solution is unique since it is tailored to the requirements of food and beverage manufacturers and comes backed by more than 140 years of food processing experience from Alfa Laval.
Alfa Laval Filter (ALF)
The Alfa Laval Filter (ALF) can help businesses reduce energy consumption and CO2 emissions. The ALF is an automatic selfcleaning filter that is designed to maintain the thermal performance of plate heat exchangers and tubular condensers. Additionally, with the ALF the risk of unplanned downtime will decrease and service intervals of downstream equipment will be prolonged. The ALF can be used in various industries where cooling systems use low-quality water. The filter removes undesirable particles, marine life and debris, whilst protecting the plate heat exchanger from clogging, fouling and corrosion.
Western Europe including Nordic
The region reported a growing order intake compared to the same quarter last year. Energy grew in power and process industry and Food & Water grew in prepared foods and oils & fats. Marine reported a strong underlying demand in shipping. Service reported strong growth in Energy and Food & Water.
Central and Eastern Europe
The order intake in the region grew with double-digits compared to the same quarter last year and the effects of the war in Russia and Ukraine has petered out. Energy grew in HVAC & refrigeration and refinery. Food & Water reported a solid growth in oils & fats and in protein. Marine noted a weaker demand in shipbuilding and shipping. Excluding Russia and Ukraine, service reported growth in all three divisions.
North America
The region reported a decline in order intake compared to the same quarter last year. Energy reported growth driven by oil & gas and HVAC & refrigeration. Food & Water declined driven by brewery and oils & fats. Marine reported strong demand in shipbuilding and shipping. Service grew in Energy and Food & Water.
Latin America
The order intake in the region grew with double-digits compared to the same quarter last year. Energy reported a strong underlying demand in oil & gas. Food & Water noted a strong growth in oils & fats and ethanol and dairy. Marine reported growth driven by oil & gas. Service grew in Energy and Marine.
Asia
The region reported growth in order intake compared to last year. Energy reported growth in oil & gas and power. Food & Water noted strong growth in oils & fats and brewery. Marine reported a strong underlying demand in shipbuilding. Service grew in all three divisions.
Africa and Oceania
The order intake in the region increased with double digits compared to the same quarter last year. Energy reported strong growth in process industry. Food & Water had strong growth in oils & fats and protein. Marine reported growth in offshore. Service reported growth in Food & Water and Marine.
Order intake for the 10 largest markets
| Net sales | |
|---|---|
| Q4 | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | |
| To customers in: | |||||
| Sweden | 363 | 355 | 1,411 | 1,206 | |
| Other EU | 4,129 | 4,062 | 15,591 | 12,889 | |
| Other Europe | 1,364 | 1,460 | 5,076 | 4,812 | |
| USA | 2,710 | 2,729 | 10,613 | 8,784 | |
| Other North America | 424 | 308 | 1,327 | 1,081 | |
| Latin America | 1,025 | 693 | 3,578 | 2,388 | |
| Africa | 338 | 354 | 1,187 | 778 | |
| China | 2,656 | 2,015 | 8,943 | 7,153 | |
| South Korea | 1,161 | 1,245 | 3,527 | 3,801 | |
| Other Asia | 3,445 | 3,044 | 11,558 | 8,559 | |
| Oceania | 224 | 219 | 787 | 684 | |
| Total | 17,839 | 16,484 | 63,598 | 52,135 |
Net sales are reported by country on the basis of invoicing address, which is normally the same as the delivery address.
| Non-current assets | Dec 31 | ||
|---|---|---|---|
| SEK millions | 2023 | 2022 | |
| Sweden | 3,509 | 2,942 | |
| Denmark | 5,354 | 5,348 | |
| Other EU | 9,219 | 8,829 | |
| Norway | 13,689 | 15,393 | |
| Other Europe | 391 | 416 | |
| USA | 3,961 | 4,236 | |
| Other North America | 154 | 158 | |
| Latin America | 352 | 379 | |
| Africa | 7 | 9 | |
| Asia | 4,808 | 4,394 | |
| Oceania | 114 | 118 | |
| Subtotal | 41,558 | 42,222 | |
| Other long-term securities | 542 | 475 | |
| Pension assets | 239 | 201 | |
| Deferred tax asset | 1,720 | 1,895 | |
| Total | 44,059 | 44,793 |
Information about major customers
Alfa Laval does not have any customer that accounts for 10 percent or more of net sales. Tetra Pak within the Tetra Laval Group is Alfa Laval's single largest customer with a volume representing 5.4 (4.0) percent of net sales.
| Consolidated cash flows | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 |
| Operating activities | ||||
| Operating income | 2,595 | 1,814 | 9,256 | 6,519 |
| Adjustment for depreciation and amortisation | 676 | 582 | 2,524 | 2,392 |
| Adjustment for other non-cash items | -451 | 150 | -419 | 105 |
| 2,820 | 2,546 | 11,361 | 9,016 | |
| Taxes paid | -292 | -394 | -1,933 | -1,834 |
| 2,528 | 2,152 | 9,428 | 7,182 | |
| Changes in working capital: | ||||
| Increase(-)/decrease(+) of receivables | 1,120 | -862 | -1,319 | -2,155 |
| Increase(-)/decrease(+) of inventories | 999 | 138 | -652 | -3,140 |
| Increase(+)/decrease(-) of liabilities | -317 | 406 | 2,373 | 2,058 |
| Increase(+)/decrease(-) of provisions | -439 | -172 | -661 | -654 |
| Increase(-)/decrease(+) in working capital | 1,363 | -490 | -259 | -3,891 |
| 3,891 | 1,662 | 9,169 | 3,291 | |
| Investing activities | ||||
| Investments in fixed assets (Capex) | -924 | -913 | -2,440 | -1,853 |
| Divestment of fixed assets | 76 | 4 | 90 | 20 |
| Acquisition of businesses | -5 | -13 | -337 | -3,685 |
| -853 | -922 | -2,687 | -5,518 | |
| Financing activities | ||||
| Received interests and dividends | 60 | 42 | 168 | 99 |
| Paid interests | -131 | -41 | -489 | -290 |
| Realised financial exchange gains | 2 | -2 | 52 | 68 |
| Realised financial exchange losses | -345 | -79 | -536 | -147 |
| Repurchase of shares | - | - | - | -661 |
| Dividends to owners of the parent | - | - | -2,480 | -2,480 |
| Dividends to non-controlling interests | - | -12 | -18 | -12 |
| Increase(-) of financial assets | -498 | -93 | -555 | -457 |
| Decrease(+) of financial assets | -26 | 10 | 11 | 1,002 |
| Increase of loans | -9 | 799 | 2,400 | 12,546 |
| Amortisation of loans | -1,596 | -899 | -4,096 | -6,575 |
| -2,543 | -275 | -5,543 | 3,093 | |
| Cash flow for the period | 495 | 465 | 939 | 866 |
| Cash and cash equivalents at the beginning of the period | 4,793 | 3,932 | 4,352 | 3,356 |
| Translation difference in cash and cash equivalents | -153 | -45 | -156 | 130 |
| Cash and cash equivalents at the end of the period | 5,135 | 4,352 | 5,135 | 4,352 |
| Free cash flow per share (SEK) * | 7.36 | 1.82 | 16.50 | 3.52 |
| Capex in relation to net sales | 5.2% | 5.5% | 3.8% | 3.6% |
| Average number of shares** | 413,326,315 | 413,326,315 | 413,326,315 | 413,637,227 |
* Free cash flow is an alternative performance measure. It is the sum of cash flows from operating activities, investments and divestments of fixed assets.
** Average number of shares has been impacted by repurchase of shares.
| Consolidated comprehensive income | Q4 | Jan-Dec | |||
|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | |
| Net sales | 17,839 | 16,484 | 63,598 | 52,135 | |
| Cost of goods sold | -12,197 | -11,307 | -42,714 | -34,489 | |
| Gross profit | 5,642 | 5,177 | 20,884 | 17,646 | |
| Sales costs | -1,684 | -1,553 | -6,342 | -5,634 | |
| Administration costs | -757 | -591 | -2,880 | -2,305 | |
| Research and development costs | -413 | -386 | -1,563 | -1,356 | |
| Other operating income | 304 | 261 | 932 | 772 | |
| Other operating costs | -502 | -1,118 | -1,827 | -2,652 | |
| Share of result in joint ventures | 5 | 24 | 52 | 48 | |
| Operating income | 2,595 | 1,814 | 9,256 | 6,519 | |
| Dividends and other financial income and costs | 6 | 2 | 13 | 5 | |
| Interest income and financial exchange rate gains | 151 | 53 | 448 | 267 | |
| Interest expense and financial exchange rate losses | -498 | -107 | -1,067 | -612 | |
| Result after financial items | 2,254 | 1,762 | 8,650 | 6,179 | |
| Taxes | -684 | -502 | -2,269 | -1,610 | |
| Net income for the period | 1,570 | 1,260 | 6,381 | 4,569 | |
| Other comprehensive income: | |||||
| Items that will subsequently be reclassified to net income | |||||
| Cash flow hedges | 602 | 891 | 54 | -346 | |
| Translation difference | -1,656 | -553 | -2,040 | 1,872 | |
| Deferred tax on other comprehensive income | -233 | -134 | -31 | 211 | |
| Sum | -1,287 | 204 | -2,017 | 1,737 | |
| Items that will subsequently not be reclassified to net income | |||||
| Revaluations of defined benefit obligations | -183 | 149 | -125 | 329 | |
| Market valuation of external shares | -2 | 1 | -2 | -13 | |
| Deferred tax on other comprehensive income | 41 | -34 | 23 | -109 | |
| Sum | -144 | 116 | -104 | 207 | |
| Comprehensive income for the period | 139 | 1,580 | 4,260 | 6,513 | |
| Net income attributable to: | |||||
| Owners of the parent | 1,554 | 1,239 | 6,330 | 4,503 | |
| Non-controlling interests | 16 | 21 | 51 | 66 | |
| Earnings per share (SEK) | 3.77 | 3.00 | 15.31 | 10.89 | |
| Average number of shares* | 413,326,315 | 413,326,315 | 413,326,315 | 413,637,227 | |
| Comprehensive income attributable to: | |||||
| Owners of the parent | 140 | 1,572 | 4,224 | 6,427 | |
| Non-controlling interests | -1 | 8 | 36 | 86 |
* Average number of shares has been impacted by repurchase of shares.
Consolidated financial position
| SEK millions 2023 2022 ASSETS Non-current assets Intangible assets 29,622 31,417 Property, plant and equipment 11,769 10,710 Other non-current assets 2,668 2,666 44,059 44,793 Current assets Inventories 14,950 14,775 Assets held for sale 59 100 Accounts receivable 10,282 9,717 Other receivables 6,761 6,596 Derivative assets 314 605 Other current deposits 728 311 Cash and cash equivalents * 5,135 4,352 38,229 36,456 TOTAL ASSETS 82,288 81,249 SHAREHOLDERS' EQUITY AND LIABILITIES Equity Owners of the parent 37,033 35,382 Non-controlling interests 345 322 37,378 35,704 Non-current liabilities Liabilities to credit institutions etc. 9,829 13,362 Lease liabilities 1,473 1,549 |
|---|
| Provisions for pensions and similar commitments 1,090 1,192 |
| Provision for deferred tax 2,372 2,293 |
| Other non-current liabilities 390 590 |
| 15,154 18,986 |
| Current liabilities |
| Liabilities to credit institutions etc. 3,444 1,700 |
| Accounts payable 5,205 5,314 |
| Advances from customers 7,975 6,634 |
| Other provisions 1,757 2,164 |
| Other liabilities 10,849 10,054 |
| Derivative liabilities 526 693 |
| 29,756 26,559 |
| Total liabilities 44,910 45,545 |
| TOTAL SHAREHOLDERS' EQUITY & LIABILITIES 82,288 81,249 |
* The item cash and cash equivalents is mainly relating to bank deposits and liquid deposits.
| Financial assets and liabilities at fair value | Valuation hierarchy | Dec 31 | |
|---|---|---|---|
| SEK millions | level | 2023 | 2022 |
| Financial assets | |||
| Other non-current securities | 1 and 2 | 280 | 270 |
| Bonds and other securities | 1 | 132 | 114 |
| Derivative assets | 2 | 481 | 700 |
| Financial liabilities | |||
| Derivative liabilities | 2 | 579 | 833 |
| Liability for seller's earn-out possibility | 3 | 117 | - |
Valuation hierarchy level 1 is according to quoted prices in active markets for identical assets and liabilities. Valuation hierarchy level 2 is out of directly or indirectly observable market data outside level 1.
Valuation hierarchy level 3 is out of unobservable market data.
| Borrowings and net debt | Dec 31 | ||||
|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | |||
| Credit institutions | 145 | 829 | |||
| Swedish Export Credit | 2,207 | 2,227 | |||
| Handelsbanken | - | 1,114 | |||
| Commercial papers | - | 892 | |||
| Corporate bonds | 10,921 | 10,000 | |||
| Borrowings | 13,273 | 15,062 | |||
| Cash and cash equivalents and current deposits | -5,863 | -4,663 | |||
| Net debt excluding lease liabilities* | 7,410 | 10,399 | |||
| Lease liabilities | 2,601 | 2,671 | |||
| Net debt including lease liabilities* | 10,011 | 13,070 | |||
| * Alternative performance measure. |
Alfa Laval has a revolving credit facility of EUR 700 million corresponding to SEK 7,736 million on December 31, 2023 with a banking syndicate. The facility has a maturity of five years from April 2023 and includes a possibility to increase it by EUR 200 million. At December 31, 2023 the facility was not utilised.
Alfa Laval has two loans of EUR 100 million from Svensk Exportkredit that matures in 2027 and 2028 respectively. The loan of EUR 100 million from Svenska Handelsbanken that matured in June 2024, was repaid already on December 22, 2023.
The commercial paper programme of SEK 4,000 million, was not utilised at December 31, 2023.
On December 31, 2023, Alfa Laval has four tranches of corporate bonds listed on the Irish stock exchange. Three of them of EUR 300 million each that matures in June 2024, in February 2026 and in February 2029 respectively, whereas the fourth of SEK 1,000 million was raised in May 2023 and matures in November 2025.
| Changes in consolidated equity | Jan-Dec | |
|---|---|---|
| SEK millions | 2023 | 2022 |
| At the beginning of the period | 35,704 | 32,344 |
| Changes attributable to: | ||
| Owners of the parent | ||
| Comprehensive income | ||
| Comprehensive income for the period | 4,224 | 6,427 |
| Transactions with shareholders | ||
| Repurchase of shares | - | -661 |
| Cancellation of repurchased shares | -1 | -15 |
| Bonus issue of shares | 1 | 15 |
| Increase of ownership in subsidiaries | ||
| with non-controlling interests | -93 | - |
| Dividends | -2,480 | -2,480 |
| -2,573 | -3,141 | |
| Subtotal | 1,651 | 3,286 |
| Non-controlling interests | ||
| Comprehensive income | ||
| Comprehensive income for the period | 36 | 86 |
| Transactions with shareholders | ||
| Decrease of non-controlling interests | -27 | - |
| Non-controlling interests in acquired companies | 32 | 0 |
| Dividends | -18 | -12 |
| -13 | -12 | |
| Subtotal | 23 | 74 |
| At the end of the period | 37,378 | 35,704 |
Condensed segment reporting per quarter
Order backlog 2023 2022
SEK millions Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Energy 10,075 10,676 10,716 10,149 8,517 8,582 7,625 6,669 Food & Water 15,977 15,806 15,454 14,779 14,381 16,158 10,169 9,146 Marine 19,273 19,935 18,807 17,247 14,122 12,870 11,712 10,829 Operations & Other 0 0 0 0 0 0 0 0 Total 45,325 46,417 44,977 42,175 37,020 37,610 29,506 26,644 Energy Food & Water Marine
Jan–Dec 2023
December 31, 2023
30%
| Net sales | 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| SEK millions | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Energy | 5,196 | 4,967 | 4,910 | 4,196 | 4,500 | 3,726 | 3,639 | 3,209 |
| Food & Water | 7,060 | 6,086 | 6,412 | 5,722 | 7,407 | 5,402 | 4,140 | 3,742 |
| Marine | 5,583 | 4,715 | 4,558 | 4,193 | 4,577 | 4,056 | 4,073 | 3,664 |
| Operations & Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 17,839 | 15,768 | 15,880 | 14,111 | 16,484 | 13,184 | 11,852 | 10,615 |
| Adjusted EBITA* | 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| SEK millions | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Energy | 900 | 1,075 | 974 | 1,037 | 746 | 735 | 708 | 738 |
| Food & Water | 1,011 | 942 | 962 | 1,027 | 1,292 | 833 | 684 | 649 |
| Marine | 1,003 | 712 | 565 | 556 | 664 | 490 | 692 | 553 |
| Operations & Other | -97 | -118 | -132 | -214 | -151 | -113 | -121 | -122 |
| Total | 2,817 | 2,611 | 2,369 | 2,406 | 2,551 | 1,945 | 1,963 | 1,818 |
Total 15.8 16.6 14.9 17.1 15.5 14.8 16.6 17.1
Jan–Dec 2023
30%
Jan–Dec 2023
40%
Adjusted EBITA margin* 2023 2022 % Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Energy 17.3 21.6 19.8 24.7 16.6 19.7 19.5 23.0 Food & Water 14.3 15.5 15.0 17.9 17.4 15.4 16.5 17.3 Marine 18.0 15.1 12.4 13.3 14.5 12.1 17.0 15.1
Per quarter
* In management accounts, see reconciliation on page 12.
Parent company
The parent company's result after financial items for the full year 2023 was SEK 4,271 (95) million, out of which dividends from subsidiaries SEK 4,037 (62) million, net interests SEK 252 (44) million, realised and unrealised exchange rate gains and losses SEK -1 (2) million, costs related to the listing SEK -4 (-4) million, fees to the Board SEK -9 (-9) million, cost for annual report and annual general meeting SEK -1 (-1) million and other operating income and operating costs the remaining SEK -3 (1) million.
Parent company income *
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| -2 | -3 | -14 | -14 | |
| -9 | -5 | 1 | 2 | |
| -3 | 1 | -4 | -1 | |
| -14 | -7 | -17 | -13 | |
| - | - | 4,037 | 62 | |
| 82 | 44 | 252 | 46 | |
| -1 | 0 | -1 | 0 | |
| 67 | 37 | 4,271 | 95 | |
| -48 | 578 | -48 | 578 | |
| 1,314 | 509 | 1,314 | 509 | |
| 1,333 | 1,124 | 5,537 | 1,182 | |
| -237 | -242 | -271 | -241 | |
| 1,096 | 882 | 5,266 | 941 | |
* The statement over parent company income also constitutes its statement over comprehensive income.
| Parent company financial position | Dec 31 | |||
|---|---|---|---|---|
| SEK millions | 2023 | 2022 | ||
| ASSETS | ||||
| Non-current assets | ||||
| Shares in group companies | 4,669 | 4,669 | ||
| Current assets | ||||
| Receivables on group companies | 9,266 | 6,402 | ||
| Other receivables | 116 | 141 | ||
| Cash and cash equivalents | 3 | 0 | ||
| 9,385 | 6,543 | |||
| TOTAL ASSETS | 14,054 | 11,212 | ||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Restricted equity | 2,387 | 2,387 | ||
| Unrestricted equity | 9,293 | 6,507 | ||
| 11,680 | 8,894 | |||
| Untaxed reserves | ||||
| Tax allocation reserves, taxation 2018-2024 | 2,341 | 2,293 | ||
| Current liabilities | ||||
| Liabilities to group companies | 30 | 22 | ||
| Accounts payable | 0 | 1 | ||
| Other liabilities | 3 | 2 | ||
| 33 | 25 | |||
| TOTAL EQUITY AND LIABILITIES | 14,054 | 11,212 |
Owners and shares
Owners and legal structure
Alfa Laval AB (publ) is the parent company of the Alfa Laval Group. The company had 54,178 (54,346) shareholders on December 31, 2023. The largest owner is Winder Holding AG, Switzerland (formerly Tetra Laval International SA, Switzerland), who owns 29.5 (29.5) percent. Next to the largest owner, there are nine institutional investors with ownership in the range of 7.4 to 1.7 percent. These ten largest shareholders owned 61.3 (63.0) percent of the shares.
Proposed disposition of earnings
The parent company has unrestricted funds of SEK 9,293 (6,507) million.
The Board of Directors propose a dividend of SEK 7.50 (6.00) per share corresponding to SEK 3,100 (2,480) million to the Annual General Meeting and that the remaining income available for distribution in Alfa Laval AB (publ) of SEK 6,193 (4,027) million be carried forward.
The Board of Directors are of the opinion that the proposed dividend is consistent with the requirements that the type and size of operations, the associated risks, the capital needs, liquidity and financial position put on the company.
Cancellation of repurchased shares and a corresponding bonus issue
On March 21, 2023 when the notice to the Annual General Meeting was sent the number of repurchased shares was 550,508. The Annual General Meeting 2023 decided to cancel these repurchased shares. Cancellation of the shares means that the share capital will decrease with SEK 1 million. At the same time the Annual General Meeting decided to increase the share capital through a bonus issue of the same amount without issuing any new shares. In this way the size of the share capital was restored and the company did not have to obtain permission from Bolagsverket or if disputed the local court to cancel the repurchased shares. This means that the number of shares has developed as follows:
| Specification of number of shares | |
|---|---|
| Number | |
| Number of shares at January 1, 2023 | 413,876,823 |
| Cancellation of re-purchased shares at May 15, 2023 | -550,508 |
| Number of shares at December 31, 2023 | 413,326,315 |
Annual General Meeting 2024
The Annual General Meeting of Alfa Laval AB will be held at Stadshallen at Stortorget in Lund, Sweden on Thursday April 25, 2024, at 16.00 (CET).
Acquisitions of businesses
In 2021, Alfa Laval acquired a minority stake of 16.5 percent in the Netherland-based company Marine Performance Systems (MPS) with an option to acquire the remaining part later. Now Alfa Laval has executed that option and completed the acquisition to own 100 percent of MPS. The closing date for the acquisition was March 21, 2023. MPS' innovative technology significantly reduces the friction from vessels when sailing, resulting in fuel savings. Friction between the hull and the water when sailing is the most significant driver of a vessel's fuel consumption, and the cost of fuel represents up to 60 percent of a vessel's operating costs. Fuel consumption has a direct impact on greenhouse gas emissions, as reducing 1 ton of fossil fuel consumption equals the reduction of approximately 3 tonnes of CO2 emissions. Marine Performance Systems' air lubrication technology generates micro bubbles under a ship's hull, reducing friction between the vessel and the water by 50-70 percent and enabling substantial fuel cost savings and improvement in overall ship efficiency, during normal service speed. The technology was first tested on a sea-going vessel in 2020 and the fuel savings have been confirmed by the shipowner based on several months of operation. The patented solution can be installed on vessels of any size or fuel type at point of building or retrofitted on already operating vessels. Since the acquisition Alfa Laval has launched the Alfa Laval OceanGlide product that creates an even layer of micro air bubbles across the vessel's flat bottom area, which reduces drag by up to 75 percent. That translates into fuel savings of up to 12 percent. Since Alfa Laval OceanGlide needs few compressors and no large hull penetrations it can be easily installed.
On March 2, 2023, Alfa Laval acquired an additional 38.7 percent of StormGeo's subsidiary Climatempo in Brazil from the minority owners. Alfa Laval's ownership thereby
increased from 51 percent to 89.7 percent . The transaction is reported as a change within the equity.
On July 31, 2023 Alfa Laval acquired 100 percent of a European service provider. The company will operate under its own name as an independent channel.
On July 31, 2023 Alfa Laval acquired 51 percent of the Danish company Header-coil Company A/S that develops and manufactures heat exchangers and steam generation system equipment components based on its header-coil design for the concentrated solar power (CSP) industry, thermal energy storage etc.
The acquisitions during 2023 are summarized in the following table. The larger acquisitions of MPS and the European service provider are shown separately, whereas the acquisitions of the other companies are shown on a single line as other minor acquisitions. All acquired assets and liabilities were reported according to IFRS at the time of the acquisitions.
| Acquisitions 2023 | MPS | European service provider | Total | ||||
|---|---|---|---|---|---|---|---|
| Adjustment | |||||||
| Book | to fair | Fair | Book | to fair | Fair | Fair | |
| SEK millions | value | value | value | value | value | value | value |
| Property, plant and equipment | 1 | - | 1 | 44 | - | 44 | 45 |
| Patents and unpatented know-how 1) | 0 | 211 | 211 | 18 | 46 | 64 | 275 |
| Trademarks 1) | - | - | - | - | 9 | 9 | 9 |
| Inventory | 4 | - | 4 | 14 | - | 14 | 18 |
| Accounts receivable | 1 | - | 1 | - | - | - | 1 |
| Other receivables | 37 | - | 37 | 15 | - | 15 | 52 |
| Liquid assets | - | - | - | 40 | - | 40 | 40 |
| Accounts payable | -11 | - | -11 | - | - | - | -11 |
| Advance payments | -14 | - | -14 | - | - | - | -14 |
| Other liabilities | -7 | - | -7 | -17 | - | -17 | -24 |
| Deferred tax | - | -55 | -55 | - | -15 | -15 | -70 |
| Acquired net assets | 11 | 156 | 167 | 114 | 40 | 154 | 321 |
| Goodwill 2) | 0 | 45 | 45 | ||||
| Equity attributable to owners of parent | 26 | - | 26 | ||||
| Purchase price | -141 | -199 | -340 | ||||
| Costs directly linked to the acquisitions 3) | 0 | -4 | -4 | ||||
| Retained part of purchase price 4) | 117 | - | 117 | ||||
| Liquid assets in the acquired businesses | 0 | 40 | 40 | ||||
| Other minor acquisitions current year | -167 | ||||||
| Payment of amounts retained in prior years | 17 | ||||||
| Effect on the Group's liquid assets | -24 | -163 | -337 |
1) The step up values for patents and un-patented know-how as well as trademarks are amortised over 10 years. The purchase price allocation is still preliminary so the allocated step up values may be subject to change.
2) The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the companies' ability to over time recreate its intangible assets. The purchase price allocation is still preliminary so the value of the goodwill may be subject to change.
3) Refers to fees to lawyers, due diligence and assisting counsel. Has been expensed as other operating costs.
4) Contingent on certain warranties in the contract not being triggered or that certain profitability goals are fulfilled. The probable outcome has been calculated.
Risks and other
Material factors of risk and uncertainty
The main factors of risk and uncertainty facing the Group concern the business cycle, the consequences of Russia's war on Ukraine and other geo-political tensions, the price development of metals, inflationary pressures, the interest rate development and volatile fluctuations in major currencies. It is the company's opinion that the description of risks made in the Annual Report for 2022 is still correct.
Russia's war on Ukraine
Alfa Laval had a factory and a sales company in Russia and a sales company in Ukraine. Historically the order intake from the markets in Russia and Ukraine has been approximately SEK 1 billion per year, equivalent to 2 percent of the total order intake for the company. When the war started on February 24, 2022, the total order backlog in Russia and Ukraine amounted to approximately SEK 750 million. In addition, Alfa Laval companies in other countries had orders from Russian end customers of SEK 360 million. Since then, the order backlog has been re-assessed and as a result orders of SEK 973 million have been removed from the order backlog. This is mainly due to sanctions, but also when Alfa Laval has assessed that the company will not be able to deliver or get paid. Also orders where Alfa Laval supplies equipment to ship yards in other countries building ships for ship owners under sanctions have been removed from the order backlog.
In the interim reports and the annual report for 2022 a detailed description was made of how Alfa Laval has calculated and provided for the company's costs for cancelled orders, late delivery fees, accounts receivable that we do not believe we will get paid for, foreign exchange losses and advance payments to suppliers in Russia and Ukraine where we do not expect any delivery or the advance being repaid to us.
Before the war, Alfa Laval had a competent team of approximately 230 employees in Russia and 10 employees in Ukraine. At December 31, 2023 the number of employees in Russia had decreased further down to 6. Alfa Laval's assessment is that the longer-term implications of the war on the Russian market are of such a magnitude that the company in the fourth quarter 2022 provided for a closure of the operations. The total cost for these provisions amounted to SEK 400 million and was reported as a comparison distortion item in the first quarter 2022 with SEK 327 million and in the fourth quarter 2022 with an additional SEK 73 million.
Asbestos-related lawsuits
The Alfa Laval Group was as of December 31, 2023 named as a co-defendant in a total of 427 asbestos-related lawsuits with a total of approximately 427 plaintiffs. Alfa Laval strongly believes the claims against the Group are without merit and intends to vigorously contest each lawsuit.
Based on current information and Alfa Laval's understanding of these lawsuits, Alfa Laval continues to believe that these lawsuits will not have a material adverse effect on the Group's financial condition or results of operation.
Restructuring program
A restructuring program covering parts of the Marine Division and the Business Unit for Welded Heat Exchangers in the Energy Division was initiated in the fourth quarter 2022 to adjust capacity imbalances in the supply organization and manage the impact as we transit from fossil to sustainable energy solutions. The program was completed during 2023.
Accounting principles
The interim report for the fourth quarter 2023 is prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting principles are according to IFRS (International Financial Reporting Standards) as adopted by the European Union. In the report, alternative performance measures are used. See the annual report 2022 for definitions. Alfa Laval follows the Guidelines on Alternative Performance Measures issued by ESMA (European Securities and Markets Authority).
In the first quarter 2023 the alternative performance measure "Adjusted EBITA" has been added per division. The reason is that Adjusted EBITA is the most important performance measure used for the consolidated Group. In order to show how it is arrived at, information on amortisation has been added by division (operating income by division less amortisation by division equals Adjusted EBITA by division). The definition of free cash flow has been changed to the sum of cash flows from operating activities, investments and divestments of fixed assets. The reason is that the new definition is more meaningful for investors. It is presented per share in the statement of consolidated cash flows. Net debt is presented both excluding and including lease liabilities. The reason is that lease liabilities have nothing to do with the company's loans.
"Q4" and "Fourth quarter" refer to the period October 1 to December 31. "Jan-Dec" and "Full year" refer to the period January 1 to December 31. "The corresponding period last year" refers to the fourth quarter 2022 or the full year 2022 depending on the context.
"Currency effects" only relate to translation effects, whereas "foreign exchange effects" also relate to transactional effects. "Mix" in the operating income bridge also includes a price effect. Comparison distortion items are reported in the comprehensive income statement on each concerned line but are specified on page 4.
The accounting and valuation principles of the parent company comply with the Swedish Annual Accounts Act and the recommendation RFR 2 Accounting for legal entities issued by the Council for Financial Reporting in Sweden.
Annual report 2023
The annual report will be published on Alfa Laval's website on March 28, 2024 at 10.00 CET.
The interim report has been issued at CET 7.30 on February 6, 2024 by the President and Chief Executive Officer Tom Erixon by proxy from the Board of Directors.
Lund, February 6, 2024,
Tom Erixon President and Chief Executive Officer Alfa Laval AB (publ)
Alfa Laval AB (publ)
Box 73 SE-221 00 Lund Sweden Corporate registration number: 556587-8054 Visiting address: Rudeboksvägen 1 Tel: + 46 46 36 65 00 Website: www.alfalaval.com
For more information, please contact:
Johan Lundin, Head of Investor Relations Phone: +46 46 36 65 10, Mobile: +46 730 46 30 90, E-mail: [email protected]
Date for the next financial reports
Alfa Laval will publish financial reports at the following dates: Interim report for the first quarter April 25 Interim report for the second quarter July 23 Interim report for the third quarter October 24
This information is information that Alfa Laval AB (publ) is obliged to make public pursuant to the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at CET 7.30 on February 6, 2024.
