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.  Among other things, he
talked about how the focus on the aftermarket business has paid off, interesting
areas for M&A going forward and also the development for marine environmental
products.
Service has been a focus area since 2013. The target has been to grow Service in
absolute terms and at the same time increase the share of service hours. Looking
at the development from 2013 up to now and comparing it to the period 2008-2012,
total service growth has gone from a CAGR of 2.6 percent to 7.9 percent. At the
same time growth in service operations has gone from 5.3 percent to 9.5 percent.
“It is clear that our efforts to increase service operations to both brick wall
our installed base and capture growth, has paid off,” said Lars Renström. “We
also see continued good growth opportunities going forward, in both the short
and medium term“.

He also talked about the development of the marine environmentally-related
offering, including environmental products, energy-saving products and products
dealing with alternative fuels such as natural gas. Total order intake has
nearly tripled over the past five years. At the same time the distribution has
changed, with products for alternative fuels such as gas showing substantial
growth. This is an area that “represents good growth opportunities.”

Finally, Lars Renström elaborated on the M&A focus going forward. Given that it
is desirable to balance the three divisions, acquisitions are especially
interesting to complement the Equipment Division. From a geographical
perspective, “we would be very pleased to find something in the US, since we
believe the US holds good prospects for the future and we can still increase our
market penetration,” Lars Renström said.

Thomas Thuresson, Executive Vice President and CFO, gave an update on Alfa
Laval’s R&D spend. While the development in absolute terms has steadily
increased, as a percentage of sales the trend has actually been slightly
downward even if the guidance has remained at 2.5 percent or more. The
development, he explained, is due to two main reasons: “firstly a lower R&D
spend in most of our acquisitions and secondly, it reflects the activities
initiated last fall, to further improve efficiency in R&D.” Against that
background “we now change our guidance to 2.0-2.5 percent of sales.”

Talking about capital expenditure, the guidance was kept at 2.0 percent of
sales, or lower. “However, we have a couple of large projects that started this
fall, which will cause some increase to the level you have seen in recent
years”, he said. In addition to the regular capex level, up to SEK 200 million
will be spent per year in 2016 and 2017.

Turning to amortization of step up, the estimate is just below SEK 1.1 billion
for 2016, meaning quarterly amortization of approximately SEK 270 million.
Furthermore he gave an updated view on the expected FX effects on the adjusted
EBITA level. “The forecast has been updated and the positive FX effects are
expected to end up at SEK 510 million for this year and at SEK 575 for 2016,
Thomas Thuresson said.

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 2014, posted annual sales of about
SEK 35.1 billion (approx. 3.85 billion Euros). The company has about 18 000
employees.

www.alfalaval.com

For more information contact:
Peter Torstensson
Senior Vice President, Communications

Alfa Laval
Phone: + 6 46 36 72 31
Mobile: +46 709 33 72
31


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