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Alfa Laval''s Marine division (34% of group orders) is exposed to the cyclical shipping industry, which often drives the direction of Alfa''s order intake. In this report, we look at the latest trends and find it likely that consensus is too cautious on the near-term development for the Marine division. However, it looks like we are approaching ship order levels that are not sustainable longer term, especially for Product and Chemical Tankers, which is one of Alfa''s most important segments. We maintain Neutral. Ship orders have had a strong start to the year, but is it sustainable? Looking at new ship orders, the start of the year has been strong, and Alfa Laval''s weighted value opportunity is running ~45% above last year. It is too early to draw conclusions, but current run rate points to an order level of ~3,500 vessels in 2024 vs ~2,600 vessels in 2023e. Based on today''s fleet size, we estimate that around 2,000-2,500 vessels should cover the replacement need over time. Strong demand for Pumping Systems Alfa''s Pumping Systems business is exposed to Product and Chemical Tankers as well as Offshore applications, two areas that were strong last year. Order intake for Alfa Laval''s Pumping Systems increased 150% in 2023 to SEK9.6bn (14% of group orders). Pumping Systems accounted for 40% of the division, up from 20% in 2022 and the historical average of 27%. The 2023 level is likely not sustainable although the start of 2024 has been strong and will support Alfa''s order intake. We increase our estimates and sit meaningfully above consensus on the Marine division On the back of our analysis, we increase our estimates for the Marine division, corresponding to a 4% higher group EBITA 2025 estimate. We are meaningfully above Visible Alpha consensus on the Marine division, but deviations on the group level are rather small as we are below consensus on both the Energy and Food and Water divisions. We maintain Neutral; increase target price SEK445 Alfa reports Q1...
Alfa Laval Alfa Laval AB
Q1 results due on 25 April at 13:00 CET. We expect orders -9%, margin of 16.7% (16.9%). Forceful LT trends justify high valuation. BUY, TP SEK 440 (420).
Outside of construction, most end-markets were solid, pricing and margins held up, and cash flow was strong. We think Alfa Laval, SKF and Volvo look attractive in H1’24.
ALFA ALFA VOLVB VOLCARB VOLVB VLPAC1 ABBV ABT ABBN ABT ABBV ABB ABA ABBY ABB BOOT 2256 ABBEYBDS BUDSNOK ABOT ABBY ATCOA ATCOA WRT1V EPIA EPIA HEXAB HEX HXG HEX HPUR HEXAB HPOLB HPOLB KKT KCR KNEBV METSO MTRS MTRS SAND SAND SKFB SKF TRELB TRELB ALV ALV
Alfa''s mixed Q4 results gave support to our view that the company will lack earnings growth in 2025, which makes it difficult for the stock to perform in the near term. We stay on the sidelines. What did we learn from the quarter? Alfa Laval''s Q4 23 orders of SEK 16.9bn came in 3% ahead of consensus estimate driven by large orders, which amounted to SEK 2bn, and a beat in the Food and Water division. Orders missed expectations in Energy and Marine as weakness started to come through in HVAC and offshore OandG. We note that Service orders have sequentially weakened for two consecutive quarters, which has not happened since Covid. For the group, Alfa Laval guided for somewhat lower demand in Q1 24, which creates some uncertainty. Alfa''s revenue was 2% better than expected while adjusted EBITA missed expectations by 3% due to a margin miss of 70bps. However, Alfa''s margin included some one-offs, which the company was not prepared to quantify. What do we expect going forward? Alfa has a record high backlog that will give support to sales and earnings in 2024. Order intake will likely weaken in 2024, partly because of fewer large orders and some weakness in HVAC, OandG and Marine. On the back of this, we think Alfa Laval will lack revenue and earnings growth in 2025, which will make it difficult for the stock to perform in the near term. Alfa''s Q4 results did not trigger material estimate changes, but uncertainty increased At the end of last year, we downgraded Alfa Laval to Neutral and suggested some profit taking in our note Cooling down. Following Alfa Laval''s Q4 results, we see no reason to turn more optimistic at this point. We think it will be difficult for the stock to perform until we see a positive infection point in orders. Alfa''s Q4 results did not trigger any major changes to our estimates, but as we think uncertainty increased, we lower our 2024e SOTP-based target multiple to 15.5x (from 16.2x) and our target price to SEK 400 (from SEK 420). We...
Divisional deviations, but overall close to expectations. Adj. EBITA +2-3% on backlog visibility and FX. Great exposure, visibility, financials - keep BUY.
Q4 results due on 6 February at 7:30 CET. We expect orders +10%, margin of 15.8% (14.7%). Forceful LT trends justify high valuation.
Alfa Laval''s shares have performed well in 2023, outperforming MSCI Europe by ~15% over the past 12 months. The stock has almost reached our target price of SEK430, leaving limited upside potential in the near-term, at a time when we start to see some clouds forming. Thus we downgrade our rating to Neutral and suggest investors to cool off and transfer some profit. We still see Alfa Laval as a beneficiary of energy transition and will revisit the stock once it reaches an attractive entry point. Expect demand to cool down in 2024 Within The BNPPE Wheel 2024, a note published alongside this piece, we examine the outlook for Capital Goods most important end-markets. We expect Construction markets to remain weak. This could impact Alfa Laval as HVAC accounts for ~40% of Alfa Laval''s Energy division. On Marine, ship orders are likely to reach almost 2,500 vessels in 2023, which would be the strongest year since 2013. Higher interest rates could now impact demand for new vessels, construction activities, and food processing equipment. Large orders of SEK 8.4bn (SEK 6.6bn excl. Desmet) have been a growth driver in the past four quarters as it is up from SEK 3.3bn in the previous period. We think large orders could weaken in the coming quarters. We tweak our estimates and sit below Consensus Based on Alfa Laval''s end-market exposure, we think demand will be muted in 2024 despite long-term structural drivers. We are 5% below Consensus order intake estimates for 2024 and we do not expect the stock to outperform when orders start to disappoint. Downgrade to Neutral for 2024, but still an interesting long-term case Alfa Laval remains an interesting long-term stock, benefiting from the energy transition structural trend, but we do not expect it to Outperform in 2024 as we see limited upside to our target price. Consequently, we downgrade our recommendation to Neutral. Our target price remains unchanged at SEK 430, which corresponds to 15x EV/EBITA.
Alfa Laval delivered solid Q3 results and an outlook pointing to sequentially unchanged demand. We leave our estimates relatively unchanged and maintain our Outperform rating. What did we learn from the quarter? Alfa Laval reported order intake of SEK 17bn in Q3 (1% above Infront consensus), supported by large orders of SEK 2.5bn. Alfa Laval expects fewer large orders in Q4. Because of that, we should not see normal seasonality of sequentially stronger Q4 orders and Alfa guided for relatively unchanged demand q/q. Sales came in 1% below consensus while adjusted EBITA was 2% stronger than expected, supported by a solid margin of 16.6%. The Energy division''s EBITA margin continued to impress, but current level 20% is likely not sustainable. Alfa''s backlog for delivery next year or later stands at SEK 33.5bn, which corresponds to an increase of 30% y/y and that will give support to sales and earnings in 2024. How did this change our view? Alfa Laval has a strong backlog and we are likely to see solid revenue and earnings growth in 2024. Of course, for the share price, the order intake will be important, and we expect that to remain stable. We leave our estimates relatively unchanged. Rating and target price Alfa''s products will enable a low-carbon economy and we see clear signs that Alfa Laval will benefit from the energy transition. It starts with increased focus on energy efficiency among customers followed by new technologies such as carbon capture, hydrogen and energy storage. We maintain an Outperform rating and target price of SEK430. Our target price is based on a SOTP-valuation corresponding to 16.0x EV/EBITA 2024e.
Margins bounced back and orders held up. Further margin gains supported by backlog, load and savings. Strong exposure now at reasonable price - up to BUY.
Alfa Laval’s Q3 figures were in line with the consensus on orders, marginally below on sales, but ahead of on profits. Organic order growth came from the Energy and Marine division, while the sales growth came from backlog execution amidst easing supply chains. The adjusted EBITA increased due to higher sales and the benefits of the previously-announced restructuring. CFO and FCF showed good improvements. For Q4 23, the company expects the demand dynamics to remain similar to those of the Q3.
Q3 results due on 25 October at 7:30 CET. We expect orders +10%, margin of 15.8% (14.7%). Forceful LT trends capped by ST valuation.
Q2 was another solid quarter with continued strong demand Alfa Laval''s order intake exceeded consensus estimate by 11% as the company won many large orders in the quarter. All three divisions delivered orders above expectations. Despite macro-economic uncertainty, the company guided for relatively unchanged demand in the third quarter adjusted for normal seasonality. The company sees some weakness in its short cycle business but think this economic downturn will not be as broad-based as a normal downcycle. Q2 sales came in 6% above expectations while adjusted EBITA was only 3% better than expected as Alfa''s profitability missed expectations. The adjusted EBITA margin of 14.9% was 40bps weaker than expected. However, we believe Alfa''s margins should improve in the coming quarter as Alfa has reduced cost and improved the mix in the backlog. We think other supportive factors will be easing cost headwinds while at the same time improvement in pricing. Sales should reach SEK ~65bn in 2023e Alfa Laval''s book-to-bill was 1.16x in the quarter. Alfa''s backlog stands at SEK 45bn of which SEK 20.1bn is planned to be delivered in the second half of 2023. If in-for-out orders are unchanged in H2, we should see a revenue level of around SEK 65bn in 2023. We increase our estimates and forecast double digit organic revenue growth for all quarters this year. As a consequence of adverse currency movements, we lower our 2024 adjusted EBITA estimate by 2%. Ride the energy transition trend Alfa''s products will enable a low-carbon economy and we see clear signs that Alfa Laval will benefit from the energy transition. It starts with increased focus on energy efficiency among customers followed by new technologies such as carbon capture, hydrogen and energy storage. We maintain an Outperform rating and increase our target price to SEK430 (SEK420). The increase is driven by a somewhat better net debt situation. Our target price is based on a SOTP-valuation...
Alfa Laval printed another strong result, beating consensus across the board. Order growth came from the Energy and Marine divisions alongside good growth in Service. Revenues increased on the back of strong backlog execution. This increased invoicing led to an increase in adjusted EBITA and net income. CFO and FCF generation improved due to somewhat better working capital management. For Q3 23, the company expects the demand dynamics to remain unchanged but sees them being affected by seasonality.
Margins fell short, but orders again much better. Secular growth supported, margins likely to recover. Adj. EBITA -0-2% on FX, high visibility, high valuation – HOLD.
Q2 results due on 20 July at 7.30 CET. We expect Q2 orders +3%, margin of 16.3% (16.5%). Forceful LT trends capped by ST valuation.
Alfa Laval delivered a strong beat versus consensus estimates across the board. Order growth was supported by solid demand across two out of three divisions and good growth in Service. Revenue growth was driven by stabilising supply-chains which led to a level of backlog execution. Consequently, adjusted EBITA was also lifted with attractive margins backed by price and volume growth. CFO and FCF were decent but inventory levels remained high. For Q2, the demand is expected to be sequentially lower.
Alfa Laval delivered a solid set of Q1 results with a significant order beat. Besides many large orders, Alfa has seen increasing demand for energy efficiency solutions and strong growth in its aftermarket business. We raise our earnings estimates and maintain our Outperform recommendation with an increased target price of SEK 410 (up from SEK 380). A strong quarter with record high order intake and a book-to-bill of 1.30x Alfa Laval''s order intake of SEK 18.4bn was 19% above Infront consensus. The order beat was driven by strong demand in the Marine and Energy divisions. Alfa''s order intake was supported by large orders of SEK 2.2bn, which will most likely not be repeated in Q2. As a consequence, Alfa Laval guided for sequentially lower demand in the second quarter. Sales came in 4% ahead of consensus and adjusted EBITA exceeded expectations by 13%. A large part of the beat was attributed to inventory revaluation in the Energy division and the underlying beat was 6%. However, the Energy division''s underlying margin was 20%, which we think highlights the longer-term potential once higher sales volumes cover more of its fixed cost. The Marine margin continued to be weak, but Alfa expects a recovery from H2 2023. We increase our estimates Alfa Laval''s book-to-bill was 1.30x in the quarter. Alfa''s backlog stands at SEK 42.2bn. SEK 24.8bn is expected to be delivered from the backlog in 2023 implying a revenue level of around SEK 63bn, if in-for-out orders are unchanged y/y in Q2-Q4. We increase our estimates and forecast double digit organic revenue growth for all quarters this year. We have increased our 2024 adjusted EBITA estimate by 6%. We increase our target price and maintain our Outperform rating We maintain our Outperform rating as Alfa Laval is well positioned for the energy transition and we expect continued strong growth. We increase our target price of SEK 410 (380), which is based on a SOTP-valuation corresponding to around 16.5x...
Alfa Laval delivered a solid set of Q4 results and the near-term outlook of relatively unchanged demand was encouraging as Q4''22 order intake reached an all-time high level. The energy transition is driving demand for Alfa Laval''s products and the company will invest in new production capacity to be able to meet its customers'' needs. We adjust our estimates and maintain our Outperform rating. A strong quarter with all-time-high order intake Alfa Laval reported order intake 5% above Infront consensus, driven by a strong beat in the Marine division. Alfa Laval was awarded several large orders, supporting order intake in Q4, but was still guiding for relatively unchanged demand in the near term. Sales came in 7% above consensus as all divisions exceeded expectations and adjusted EBITA beat expectations by 5%. The Energy division missed consensus EBIT estimate by 7% as the EBIT margin came in 190bp below consensus. This was mainly explained by some underperforming businesses that Alfa Laval is restructuring, implying that the Energy division''s EBIT margin should improve going forward. We increase our estimates In our report Stay on board, we presented our view of the shipping environment for Alfa Laval and concluded there should be limited downside risk to consensus estimates in 2023. In this note, we increase our estimates further and raise our group adjusted EBITA estimates by 3% for 2023 and 2024. Alfa Laval raised its capex guidance to invest in new production capacity and growth opportunities, which should filter through to the PandL over the coming years. Performance and valuation We increase our target price to SEK 380 (360), which is based on a SOTP-valuation corresponding to 16x EV/EBITA 2024e, up from 15.5x previously, as we see stronger mid-term growth opportunities ahead.
Alfa Laval’s Q4 figures beat consensus across the board. This result also led to a beat in the 2022 figures. Orders and revenues grew in almost all end-markets and across most geographies. Service growth was decent. Adjusted EBITA increased due to higher invoicing. The group also announced a new investment programme for the next 3-4 years and the board will propose a dividend of SEK6.0. The demand in Q1 is expected to be somewhat similar to that in Q4.
Alfa Laval''s Marine orders were strong in 2022e, supported by robust ship orders in 2021. Ship orders fell in 2022, and as there is a lag of 6-12 months until Alfa receives its equipment orders, investors are nervous about what 2023 will bring. They shouldn''t be: following detailed analysis we conclude Alfa Laval''s value opportunity is on par with 2022 and there is limited downside risk to consensus 2023 estimates. We expect Alfa Laval will continue to perform relatively well. Outperform. Ship orders are down in 2022, but Alfa''s value opportunity is not Alfa Laval''s Marine orders increased organically by ~10% in 2022e, supported by strong ship orders in 2021. Headline ship orders were down 40% in 2022e, but that is not the real decline. There will be major revisions and we think ship orders were down 20% in 2022. This will impact demand for Alfa''s products in 2023 as it takes time until Alfa receives its equipment orders. However, mix effects and increasing demand for alternatively fuelled vessels will make up for that and Alfa''s Marine orders should be flattish, leaving limited downside risk to consensus 2023 estimates. Solid growth opportunities elsewhere We see several growth opportunities for Alfa Laval. Based on Alfa''s message at the CMD late last year, we do not rule out that organic growth CAGR could exceed 5% this decade. Alfa''s offering helps customers lower their energy consumption, and new technologies such as carbon capture, hydrogen and energy storage will grow in importance. All these technologies will contain lots of heat exchangers and should be solid growth drivers for Alfa. We think it is possible that Alfa Laval''s revenue could approach SEK 100bn by the end of this decade. Maintaining our Outperform recommendation Driven by growth and margin expectations, we increase our earnings estimates by 3% for 2023-2024. As we see stronger mid-term growth opportunities ahead, we increase our valuation multiples and value Alfa Laval based...
Alfa Laval will release its Q4 2022 results on February 2. The company has guided for relatively unchanged demand q/q in the fourth quarter, supported by favourable end-market trends. Alfa has been volatile around quarterly result releases this year and it''s difficult to call the near-term performance, but we do not expect any major surprises in Q4 and maintain our long-term Outperform recommendation. What we expect for Q4 2022 We estimate Alfa''s order intake to decline slightly q/q and are forecasting SEK14.8bn, which is in line with consensus expectations. We forecast sales of SEK15.6bn, supported by strong deliveries within recently acquired Desmet. Desmet''s profitability is expected to improve from Q3 and Food and Water''s margin should exceed 17%. On the other hand, we expect Energy''s profitability to normalise following a couple of elevated quarters. Lastly, we estimate Marine''s margin to improve q/q, but still remain at depressed levels. All in all, this takes us to an adjusted EBITA estimate of SEK2.4bn, corresponding to a margin of 15.4%. We expect strong earnings growth and book-to-bill above 1x in 2023 We think Alfa Laval is well positioned for the energy transition and expect orders to be relatively resilient in 2023. We are looking for an organic order decline of 4% and a book-to-bill above 1x. We forecast earnings growth of 28% in 2023 followed by 7% in 2024. How we look at the stock Alfa''s products will enable a low-carbon economy. It starts with increased focus on energy efficiency among customers followed by new technologies such as carbon capture, hydrogen and energy storage. In a scenario analysis presented in A SEK 100bn opportunity, we see meaningful upside potential to the share price in the long term. We maintain our Outperform rating as we see potential for strong earnings growth in the coming years, partly driven by the Energy transition. We maintain our target price of SEK345 based on a SOTP-valuation corresponding to...
Increasing focus on the environment will be a growth driver for Alfa Laval A large part of Alfa''s CMD was focused on how Alfa''s products will enable a low-carbon economy. It starts with increased focus on energy efficiency among customers. Alfa claims that its products and services help customers lower their energy consumption by around 100GW per year. This will be followed by new technologies such as carbon capture, hydrogen and energy storage. All these technologies will contain lots of heat exchangers and should be solid growth drivers for Alfa. Slicing Alfa Laval in a different way Alfa sliced its business in a different way, which contained three buckets with different growth opportunities. Alfa''s venture business has a size of around SEK 1bn today and, according to Alfa, it could grow to SEK 10bn by the end of this decade. That alone would correspond to ~2% CAGR for the group. On top of that there will be volume growth and price increases in other businesses. Based on our scenario analysis, it could be possible for Alfa Laval to grow organically by ~6% per year until 2030. Assuming an MandA component of 1.5% per annum, it could take Alfa''s total order intake to around SEK 100bn by 2030, which should imply meaningful upside to the share price. Ship orders are expected to recover, but margin uncertainty remains for the Marine division The performance of the Marine division continues to be of interest among investors. It sounds like Alfa expects strong ship orders in the coming years. The order backlog is low relative to the fleet and the age of the fleet is increasing. It was, however, not clear what a normalised margin will be for the Marine division going forward. The margin will improve next year, according to Alfa, but it might take time before it returns to a level above 15%. We likely need to see an increase in tanker demand together with a lower share of ballast water treatment systems sales for that to happen. We maintain...
Alfa Laval’s Q3 figures were above consensus estimates on orders, in-line on revenues but short on profitability. Orders and revenues grew by double-digits with solid demand across most geographies and several end-markets. Service growth was also strong. Adjusted EBITA, however, was impacted by a softer performance in two of the three divisions. CFO and FCF were lower due to increased levels of inventory. In Q4, the group expects demand to be fairly similar to its Q3 level.
Alfa delivered solid organic order growth of 13% and total orders came in 8% above consensus estimates, but this was overshadowed by another quarter of disappointing profitability. We cut our estimates. Alfa needs to restore margins for our Outperform rating to work. Strong order intake was overshadowed by a weak Marine margin Alfa''s Q3 order intake came in 8% above consensus and the company expects demand to remain on about the same level in Q4. Sales were in line with consensus, which corresponded to a book-to-bill of 1.15x. Adjusted EBITA missed the consensus estimate by 10% as the group adjusted EBITA margin was 14.7%, largely explained by a substantial miss in the Marine division. The Marine division faces several margin headwinds at the same time Alfa''s Marine division reported an EBIT margin of 8.0%, which is the lowest level on record. It doesn''t sound like a strong recovery is expected in the near term. The weak margin is likely explained by several areas, such as a mismatch in price/cost, a loss-making boiler business, weak margins in cargo pumping and dilutive BWTS sales. New restructuring initiatives were launched to address some of the problems, while others should be alleviated once sales volumes improve. Estimate changes - we lower our forecasts It will likely take time for the Marine division''s margins to recover to historical levels, but we expect a gradual improvement over 2023. We have, however, lowered our group adjusted EBITA estimates by 7% for next year, entirely driven by lower estimates for the Marine division. Performance and valuation We maintain our Outperform rating as we see potential for strong earnings growth in the coming years, partly driven by the Energy transition. However, Alfa''s operational performance needs improvement for this to work. We lower our target price to SEK 305 (from SEK 335), which is based on a SOTP-valuation corresponding to 15x EV/EBITA 2023e.
Alfa Laval’s Q2 results were above consensus estimates on all fronts. Orders and revenues recorded double-digit growth with demand coming from most end-markets and all key geographies. Adjusted EBITA also grew by double-digits although margins slightly contracted. The aftermarket business performed better qoq. CFO and FCF, though, were weaker due to an inventory build-up. The group also announced a new CFO replacing Jan Allde from November. For the Q3, the group expects demand to be slightly lower than in Q2.
Alfa Laval’s Q1 figures were a mixed bag vs. consensus expectations. While orders were ahead of consensus, revenues were slightly below and adjusted EBITA in line. The demand came from most end markets and geographies. The aftermarket business performed decently. The group also signed an agreement to buy Desmet, which should become a part of the group in Q2. For Q2, the group expects demand to be slightly lower than in Q1.
While Alfa Laval’s full-year numbers were broadly in line with expectations, Q4 was the strongest quarter of the year and better than Q4 20. Order intake was robust for the majority of 2021 even as revenues and adjusted EBITA were flat. The aftermarket business grew strongly as well. The board will propose a dividend of SEK6.0 and to buy back up to 5% of issued capital. The outlook for Q1 22 is expected to be better than this quarter.
Alfa Laval’s results were a mixed bag when compared to the consensus but showed clear growth over Q3 20. Orders were again the strongest part of the release, whereas revenues and adjusted EBITA rose in single-digits. The service business also registered all round growth. Profitability continued to be better than expected. For Q4, the group expects an environment similar to Q3. This would imply that revenues are likely to decline over 2020 but profitability will clearly be better.
Alfa Laval’s Q2 results were at par with expectations but below last year’s Q2 figures with the exception of orders, which were particularly strong. Revenues and adjusted EBITA declined slightly over the last year. CFO, though, declined by 50% due to higher working capital requirements. Margins were a touch above the previous quarter. Considering Q2 figures, it appears that growth rates are likely to be flat in 2021 but higher than expected in 2022.
Alfa Laval’s Q1 results were broadly in line with our and consensus expectations but much lower when compared to the year before. Orders, sales, and adjusted EBITA, all declined by mid-teen percentages. The positive, however, was a similar level of CFO despite the decline in operating performance. Margins, too, improved to some extent as a result of the cost actions. No major changes for now but we see 2021 leaning more towards H2 than H1.
Alfa Laval’s Q4 and FY20 figures were pretty much in line with our expectations. Revenues and orders improved sequentially but were down yoy. Nevertheless, the group benefited from its cost-saving efforts and was able to expand margins, even if only marginally. Of the group’s three divisions, Food & Water recovered the most and helped the group achieve a reasonable showing.
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