Alfa Laval’s Capital Markets Day - summary of the business update

Alfa Laval’s Capital Markets Day, held today in Copenhagen, Denmark, started
with a presentation by Lars Renström, President and CEO.  He talked about how
structural changes - specifically within energy, environment, living standards
and globalization - continue to be highly relevant growth drivers going forward.
More specifically he mentioned markets such as oil & gas and marine, relating to
energy and globalization, respectively. Talking about marine he emphasized that
while this market is volatile in terms of ship contracting, meaning order intake
for Alfa Laval – revenues are much more stable due to the long industry lead
times. This mechanism is visible in Alfa Laval as last year’s rise in
contracting has boosted orders for the group, resulting in a big marine order
backlog providing visibility for the coming years. The marine backlog for
delivery after December 31, now totals SEK 9.7 billion - stretching over the
coming three years.

Turning to oil & gas, Lars Renström provided information about Alfa Laval’s
exposure, which is, totally for the group, roughly 19 percent. But it spreads
over four different sections of the value chain; drilling, processing &
transportation, refinery and petrochemicals. These all face different demand
drivers and also the influence from changes in the oil price differs. Looking
specifically at drilling, the exposure is roughly 4 percent of the group.
Processing & transportation makes up 9 percent, refinery some 3 percent and
petrochemicals another 3 percent.

“I am convinced that both marine and oil & gas are good places to be,” said Lars
Renström. Marine is driven by the need for transportation, which depends on
world trade, while rising energy needs sets the stage for the oil and gas
sector. “Both of them may fluctuate in the short term, for different reasons,
but over time we are confident that there will be continued growth – providing
opportunities for Alfa Laval.”

Furthermore he highlighted the Service business and its positive development,
reporting 10 percent growth in the first nine months. This is a result of our
increased efforts, aimed at capturing more of the opportunity. “With our focus
on Service and the potential we see, Service will be an important contributor to
profitable growth,” said Lars Renström.

Thomas Thuresson, Executive Vice President and CFO, gave an update on Alfa
Laval’s financial goals and benchmark values. Regarding return on capital
employed (ROCE) the new goal is set at 20 percent – at least for the medium
term. This is a change from the previous level of 25 percent, reflecting the
very substantial step-up and goodwill values added by the two major acquisitions
Alfa Laval has carried out in recent years. The estimate for amortization of
step-up is approximately SEK 900 million for 2014 and SEK 1,050 million for
2015, then gradually declining – everything the same. Moving over to the
financial benchmark values, he announced that one is about to be replaced. “We
are moving away from net debt/equity to net debt/EBITDA, when it comes to our
target for the capital structure”, Thomas Thuresson said. “We do this as we
believe net debt/EBITDA is more relevant.” The target is set at 2.0. “Given
where we are after the acquisition of Frank Mohn AS, the target of 2 means that
we will focus on de-leveraging - at least in the short term.”

www.alfalaval.com

About Alfa Laval
Alfa Laval is a leading global provider of specialized products and engineering
solutions based on its key technologies of heat transfer, separation and fluid
handling.

The company’s equipment, systems and services are dedicated to assisting
customers in optimizing the performance of their processes. The solutions help
them to heat, cool, separate and transport products in industries that produce
food and beverages, chemicals and petrochemicals, pharmaceuticals, starch, sugar
and ethanol.

Alfa Laval’s products are also used in power plants, aboard ships, in the
mechanical engineering industry, in the mining industry and for wastewater
treatment, as well as for comfort climate and refrigeration applications. Alfa
Laval’s worldwide organization works closely with customers in nearly 100
countries to help them stay ahead in the global arena.

Alfa Laval is listed on Nasdaq OMX, and, in 2013, posted annual sales of about
SEK 29.8 billion (approx. 3.5 billion Euros). The company has today, after the
acquisition of Frank Mohn AS, some 17 500 employees.

www.alfalaval.com

For more information contact:
Peter
Torstensson

Senior Vice President, Communications
Alfa
Laval

Tel: + 46 46 36 72
31

Mobile: +46 709 33 72 31


Gabriella Grotte
Investor Relations Manager
Alfa Laval
Tel: +46 46 36 74 82
Mobile: +46 709 78 74 82