· 2019-12-05 · jan allde cfo alfa laval group 04/12/2019 | © alfa laval 2 | −from a...
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www.alfalaval.com
www.alfalaval.com
Jan Allde
CFO
Alfa Laval Group
04/12/2019 | © Alfa Laval 2 |
− From a financial point of view
www.alfalaval.com
− Key figures, SEK millions
Performance 2019
04/12/2019 | © Alfa Laval 3 |
YTD 2019 YTD 2018 %-change %-▲,org
Order intake 32,966 33,444 -1 -3
Net sales 33,553 29,457 14 12
Adjusted EBITA 5,739 4,931 16
Adjusted EBITA-margin (%) 17.1 16.7
www.alfalaval.com04/12/2019 | © Alfa Laval 4 |
Growth− SEK millions (rolling 12 months)
Orders received Sales
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
201
5 Q
1
201
5 Q
2
201
5 Q
3
201
5 Q
4
201
6 Q
1
201
6 Q
2
201
6 Q
3
201
6 Q
4
201
7 Q
1
201
7 Q
2
201
7 Q
3
201
7 Q
4
201
8 Q
1
201
8 Q
2
201
8 Q
3
201
8 Q
4
201
9 Q
1
201
9 Q
2
201
9 Q
3
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
201
5 Q
1
201
5 Q
2
201
5 Q
3
201
5 Q
4
201
6 Q
1
201
6 Q
2
201
6 Q
3
201
6 Q
4
201
7 Q
1
201
7 Q
2
201
7 Q
3
201
7 Q
4
201
8 Q
1
201
8 Q
2
201
8 Q
3
201
8 Q
4
201
9 Q
1
201
9 Q
2
201
9 Q
3
CAGR ~12% CAGR ~8% • Order growth driven by strong
global economy, partial recovery in
Energy and Marine markets and
structural growth in Marine
Environmental products
• Service growth improving in 2019
• Sales growth driven by successful
execution of large order backlog
*) Measured over a business cycle
5%Growth*
www.alfalaval.com04/12/2019 | © Alfa Laval 5 |
Profitability− SEK millions (rolling 12 months)
Adj. EBITA & Margin (%) Net Income & EPS
14,0
14,5
15,0
15,5
16,0
16,5
17,0
17,5
18,0
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
Adjusted EBITA Adjusted EBITA-margin
7,7
8,4
9,1 9,2 9,28,8
6,2
5,5 5,2
4,2
6,0
7,1
7,7
9,3
10,210,8
11,2
11,9
12,8
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
0
1 000
2 000
3 000
4 000
5 000
6 000
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
Net income for the period Earnings per share
Adj. EBITA & Margin (%)
• Positive impact from higher
volumes, productivity improvements
and FX impacts
• Margin negatively impacted by
reduced service share and
investments in R&D, footprint costs,
etc.
Net Income & EPS
• EPS growth driven by higher
operating earnings and reduced tax
rate
• Tax rate expected at 26% of PBT
*) Measured over a business cycle
15%EBITA*
www.alfalaval.com04/12/2019 | © Alfa Laval 6 |
Capital utilization− SEK millions (rolling 12 months)
ROCE (%) Net Debt
0,0
0,5
1,0
1,5
2,0
2,5
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
Net debt (excl. IFRS16) Net debt (excl. IFRS 16) / EBITDA
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
Return on capital employed *
ROCE (%)
• IFRS 16 capitalization of leased
assets, impact of SEK 2.8 bn in
2019
• Step-up values will be reduced from
SEK 3.3 bn in 2019 to SEK 2.4 bn in
2020
Net Debt
• Net debt excluding lease liabilities
(SEK 2.8 bn) now at SEK 7.0 bn and
Net Debt / EBITDA ratio below 1.0*
*) Excluding lease liabilities from IFRS16
implementation
20%ROCE
www.alfalaval.com04/12/2019 | © Alfa Laval 7 |
Key drivers of financial goals
15%EBITA*
20%ROCE
5%Growth*
*) Measured over a business cycle
• Stepped-up product innovation with
improved competitiveness
• Service strategy taking effect
• Connectivity solutions
• Sustainability providing new business
opportunities
• Strong balance sheet enabling inorganic
growth
• Pricing power with strengthened product
& service offering
• New product platforms with increased
efficiency
• Drive service growth
• Optimized manufacturing footprint and
supply chain
• Strong cost control
• Strengthen focus on Working Capital and
ROCE with new internal financial
reporting structure
• Capex level to be reduced after
completion of footprint program
www.alfalaval.com04/12/2019 | © Alfa Laval 8 |
Example; Gasketed Plate Heat Exhanger (GPHE)
Growth
• New platform with increased efficiency, reliability
and serviceability
• Industrial range completed by end of 2021
• Service = large untapped installed base
• Strong on-line presence and connectivity
solutions being piloted
Profitability
• New platform with improved competitiveness
• Improved global supply structure
• Target service growth of >5% p.a.
www.alfalaval.com04/12/2019 | © Alfa Laval 9 |
Example; High Speed Separators (HSS)
Growth
• Unique customers values; improved separation
performance at lower cost of ownership and
increased reliability
• Contributes to our customers sustainability targets;
substantially reduced energy and water consumption
• Connected solutions; increased uptime and longer
service intervals through condition based
maintenance contracts
Profitability
• Modularization and development of common product
family platforms
• Increased coverage of the installed base with multi
year service contracts
• Target service growth of >5% p.a.
www.alfalaval.com
Example; Marine Service
04/12/2019 | © Alfa Laval 10 |
Growth
• Upgrading opportunities for the fuel line and boilers.
• International Marine Service (IMS) is a differentiator;
improve the customer experience and market
position.
• Alfa Laval PureBallast and PureSox installed base –
represents a service growth opportunity.
Profitability
• Environmental compliance systems is expected to
have a higher share of service agreements and
customer loyalty due to criticality of the systems.
• Target service growth of >5% p.a.
www.alfalaval.com04/12/2019 | © Alfa Laval 11 |
R&D spend− SEK millions (rolling 12 months) and in percent of sales
R&D development R&D spend by category (% of total 2017-2019)
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
0
200
400
600
800
1 000
1 200
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
R&D SEK millions R&D in % of net sales
19%
38%14%
13%
16%
Technology development New product development
Improved products Product maintenance
R&D support costs
R&D development
• R&D increased by 14% in 2018 and
14% in 2019 (YTD), excluding
currency effects, to develop new
product platforms.
• R&D expenses expected to remain
at 2.5% of sales
R&D spend by category
• Majority of R&D spend related to
development of new products or
improving existing products
including driving new product
features, cost and/or quality
improvements
www.alfalaval.com04/12/2019 | © Alfa Laval 12 |
Capital expenditure− SEK millions (rolling 12 months) and in percent of sales
Capex development
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%
4,5%
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2015 Q
1
2015 Q
2
2015 Q
3
2015 Q
4
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
2018 Q
3
2018 Q
4
2019 Q
1
2019 Q
2
2019 Q
3
Investments SEK millions Investments in % of net sales
Capex by category(% of total 2017-2019)
14%
34%
10%
5%
4%
33%
Separation Products Heat Transfer Products
Fluid Handling Products Other Systems
Operations Real Estate
Capex development
• Increased investments driven by
manufacturing footprint
optimization and capacity
expansions (+1.5 bn in 2 years)
• Capex expected at ~2.5% of sales
in 2020, and then reduce to ~
2.0% of sales in 2021
Capex by category
• Majority of investments related to
key product technologies, approx.
1/3 related to improving our real
estate assets
www.alfalaval.com04/12/2019 | © Alfa Laval 13 |
Capital expenditure
Footprint Wave 1 during 2017-2019
• Projects to be completed by end of 2019
• Capex of SEK ~ 1.1 bn, whereof ~ 45% in real estate assets
• Opex / footprint costs of SEK 450 million
• Payback 5 years (excl. real estate)
Capacity Expansion during 2018-2019
• Expansion of Brazed Heat Exchanger, High Speed Separation and Scrubber production
• Capex of SEK of SEK 400 million
Footprint Wave 2 during 2020-2021
• Include Brazed Heat Exchanger supply chain, Kolding Hygienic Fluid Handling Centre
and consolidation India
• Capex of SEK ~ 0.7 bn, whereof ~ 45% in real estate assets
• Opex / footprint costs of SEK 200 - 250 million
• Payback 5 years (excl. real estate)
Capex of ~ 1.5 bn
www.alfalaval.com12/4/2019 | © Alfa Laval 14 |
Order backlog− SEK (million), September 30
Order backlog periodization
8 0146 913 6 969
7 921 8 138
13 359
10 093 10 823
13 664 13 900
0
5 000
10 000
15 000
20 000
25 000
30 000
2015 2016 2017 2018 2019
For delivery later than next yearFor deliery next yearFor delivery during rest of current year
Order backlog for ”next year”
per division (% of total)
14% 14%
71%
19%15%
66%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Energy Food & Water Marine
2018 2019
• Order backlog for delivery next
year: SEK 13.9 (13.7) Bn, increase
of SEK +0.2 bn
• Less favorable product mix in
order backlog for delivery next
year
www.alfalaval.com04/12/2019 | © Alfa Laval 15 |
Sales− Full-year 2020, SEK (bn)
Full year 2019* Approx. 45.6
Change in OBL y-o-y + 0.2
Acquisitions/divestments during 2019 - 0.3
Subtotal 45.5
Change “In-for-out”, FX translation, price,
acquisitions/divestments during 2020
+/- ?
Full year 2020 ?
*) SME Direkt, consensus estimate as per November 11 2019
www.alfalaval.com04/12/2019 | © Alfa Laval 16 |
Readiness
Market outlook
• Most end-customer industries in Energy and
F&W divisions expected to show stable activity
levels in 2019, but readiness for a potential
slow-down in 2020
• New ship-contracting levels in Marine market
expected to return towards historical levels in
2020-2021, demand for environmental
products to stabilize in 2020
• New product platforms with improved
competitiveness and service strategy taking
effect
• Sustainability trend creating new opportunities.
Mitigations
• Strong OBL for execution in 2020, however
product mix less favorable
• Strict cost control of S&A and footprint costs in
2020/2021
• ~15% of employees in Operations are
temps/contract employees providing flexibility
• Ambition is to drive service growth through
business cycle
• Optimized manufacturing footprint and supply
chain
www.alfalaval.com04/12/2019 | © Alfa Laval 17 |
Guidance
• Capital Expenditure in relation to total revenues,
~ 2.5% in 2020 and ~ 2.0% in 2021
• Step-up amortization of SEK ~ 900 million in 2020, SEK
~ 770 million in 2021
• FX impact on EBITA estimated to SEK 495 million in 2019,
SEK 420 million in 2020*
• R&D spend in relation to total revenues, 2.5%
• Taxes in the P&L, 26.0% of PBT
• Dividend pay-out ratio, 40 - 50% of adjusted EPS
*) 2019 = total of transaction and translation FX impact. 2020 = transaction FX impact only, based on EUR/USD 1.115 and EUR/SEK 10.5
Updated
Updated
Updated
www.alfalaval.com
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