Alfa Laval AB (publ) Interim report January 1 - March 31, 2016

“Order intake developed as expected in the first quarter, following a decline in
demand for pumping systems as well as a low level of large orders compared to
the previous quarter. The latter reflected a tendency among customers to delay
investment decisions. Adjusted for pumping systems and large orders the
underlying demand was unchanged. Order intake reached SEK 7.7 billion versus SEK
9.4 billion in the fourth quarter.

Looking specifically at the end-market development, the low oil price continued
to hamper the business sentiment in the oil and gas industries and the
contracting level for ships was low. Parts and service demand, particularly in
Process Technology, had a strong development. The Service business in total
reported a 4 percent growth year-on-year and 3 percent growth sequentially.

The EBITA-margin of 16.3 percent was on the same level as in the previous
quarter, despite a decline in sales. The margin was negatively affected by
Process Technology due to mix effects from declining sales in oil & gas and a
weaker factory as well as engineering performance. The Equipment Division
developed well with a significant margin improvement, driven by good cost
control and a positive mix. Marine & Diesel delivered a margin close to the
previous quarter, despite a sales decline, thanks to a positive mix.

Given the challenging conditions in some of our largest markets, we are
constantly driving initiatives, including improved and more efficient sourcing
as well as a balancing of resources in our supply chain to protect
profitability. In addition we have initiated a review of the strategic direction
for the Group.”
Summary

First three months

Order intake decreased by 19 percent* to SEK 7,710 (9,844) million.
Net sales decreased by 6 percent* to SEK 8,199 (9,071) million.
Adjusted EBITA was SEK 1,333 (1,569) million.
Adjusted EBITA-margin was 16.3 (17.3) percent.
Result after financial items was SEK 1,090 (1,263) million.
Net income was SEK 871 (863) million.
Earnings per share was SEK 2.06 (2.05).
Cash flow from operating activities was SEK 910 (1,101) million.
Impact on EBITA of foreign exchange effects was SEK 93 (148) million.

* Excluding currency effects.

Dividend

The Board of Directors propose a dividend of SEK 4.25 (4.00) per share.

Outlook for the second quarter

“We expect that demand during the second quarter 2016 will be on about the same
level as in the first quarter.”

Earlier published outlook (February 2, 2016): “We expect that demand during the
first quarter 2016 will be somewhat lower than in the fourth quarter, excluding
a substantially lower demand for pumping systems.”

The interim report has not been subject to review by the company’s auditors.