Alfa Laval presents a restructuring programme as a result of the strategic review

Alfa Laval – a world leader in heat transfer, centrifugal separation and fluid
handling – today announces a restructuring programme, as a result of the
strategic review. The new organizational structure, in combination with
prevailing market conditions, means Alfa Laval now introduces a program that
will include three initiatives. These are expected to cause non-recurring costs
of SEK 1.5 billion in total, of which SEK 1.1 billion was charged to the third
quarter. Of the SEK 1.1 billion, some SEK 600 million are estimated to be non
-cash items. Savings, excluding effects on COGS, are expected to reach
approximately SEK 300 million.
The program includes the following initiatives:

  ·  create a leaner organization, reflecting the new structure as well as
adjustments to the weak demand situation in the oil & gas and marine sectors
  ·  separate some product groups from the new organizational structure
  ·  restructuring of the manufacturing footprint.

“We must adjust the size of our organization to existing market conditions”,
says Tom Erixon, President and CEO of the Alfa Laval Group. “However, before
launching any short-term initiatives, we wanted to be perfectly clear about the
long-term direction of the company.”

The new strategic direction is a long-term commitment for Alfa Laval, with the
objective to support organic growth. It also includes efforts to manage the
short-term challenges caused by weaknesses in certain end markets.

A leaner organization
The new structure, combined with adjustments to prevailing market conditions,
will lead to a leaner organization. This part of the program is expected to
largely be implemented by the end of the second quarter 2017.

A few product groups to be separated from the new organizational structure
Alfa Laval’s strategic review also identified three product groups in need of
special attention; commercial/industrial air heat exchangers, commercial tubular
heat exchangers and heat exchanger systems. These units will be included in an
initiative called “Greenhouse”, which will be managed separately from the new
divisional structure. The aim is to provide these units with the best possible
conditions to improve performance and develop the activities in a focused
manner.

Restructuring of the manufacturing footprint
The third area is the stepwise implementation of a leaner and more competitive
manufacturing footprint. This initiative will gradually be implemented over
several years, starting in 2017 and completed by the end of 2019. Further
information about the footprint initiative will be presented gradually.

Costs/savings
The three initiatives are estimated to lead to costs of a non-recurring nature
of SEK 1.5 billion. Of these, SEK 1.1 billion were charged to the third quarter
out of which SEK 600 million are mainly attributed to the write-off of step-up
and goodwill and are non-cash items. The remaining SEK 500 million mainly refers
to redundancies of some 700 employees.

The initiatives are expected to generate considerable savings. Savings relating
to sales and administration costs are estimated to reach approximately SEK 300
million. However, the charge will also generate certain savings within the COGS
-area that will limit the impact from the adverse volume development. Regular
capacity adjustments within our manufacturing units are handled on an ongoing
and continuous basis and are not included.

Conference call
Questions are referred to the Q3 earnings conference call, arranged at 08:30
a.m. CET. Call-in details have previously been made public in a press release
which is available at www.alfalaval.com/investors.

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, oil and gas
exploration, 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 2015, posted annual sales of about SEK 39.7 billion (approx.
4.25 billion Euros). The company has about 17 500 employees.

www.alfalaval.com

For more information, please contact:

Peter Torstensson
Senior Vice President, Communications
Alfa Laval
Tel: + 46 46 36 72 31

Thomas Thuresson
CFO
Alfa Laval
Tel: +46 46 36 72 40


This information is information that Alfa Laval AB (publ) is obliged to make
public pursuant to the EU Market Abuse Regulation. The information was submitted
for publication, through the agency of the contact person set out above, at CET
07:25 on October 25, 2016.