financial update - alfa laval · *) including msek 35 million capitalized tools. **) increase due...
TRANSCRIPT
www.alfalaval.com
Financial update
Mr. Jan Allde
CFO
Alfa Laval Group
www.alfalaval.com
Evolution over almost 20 years Four phases from 2001
20
15
30
Phase 1: ”Creating the base”
Order intake: 15-20 BnSEK
Adjusted EBITA: 2 BnSEK
Phase 2: ”Super cycle”
Order intake: 20-30 BnSEK
Adjusted EBITA: 3-6 BnSEK
Phase 3: ”Aquired growth”
Order intake: 30-35 BnSEK
Adjusted EBITA: 5-6 BnSEK
Phase 4: ”Organic growth”
Order intake: 35- BnSEK
Adjusted EBITA: 6- BnSEK
2006 2011 20172001
35
LTM 2018-09
43
www.alfalaval.com
-30
-20
-10
0
10
20
30
4
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318
Organic volume development- Compared with same quarter last year (%), excluding currency effects
= Organic sales development
= Organic order intake development
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Adjusted EBITA/margin*- SEK millions (rolling 12 months) and in percent of sales
5
= Adjusted EBITA LTM in % of invoicing (%)
= Adjusted EBITA LTM (SEK)* Adjusted EBITA – ”Earnings before interests, taxes, amortization of goodwill and step up values and comparison distortion items.”
17,0
17,517,6
17,116,9
16,3
15,9
15,615,5 15,5
15,6
15,9
16,216,3
16,5
14,0
14,5
15,0
15,5
16,0
16,5
17,0
17,5
18,0
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 LTM
Comments
Positive impact from
higher volumes,
productivity
improvements, and cost
reductions
Negative impact from
capital sales & service
mix
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Net income and EPS- SEK (rolling 12 months)
6
= EPS, Earnings Per Share (SEK)
= Net income LTM (SEK million)
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 LTM
7,738,39
9,07 9,15 9,178,83
6,22
5,46 5,24
4,17
6,03
7,097,74
9,26
10,22
0,0
2,0
4,0
6,0
8,0
10,0
12,0
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000Comments
Tax rate expected at
26% of PBT
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7
= Deliveries at standard cost / Total employees in Operations= Orders received / White Collar employees in Global Sales & Service
Productivity in Sales & Operations- Orders received and delivery / employees (rolling 12 months, SEK 1000’s)
Global Sales & Service
2016-12 2017-12 2018-09
+40%
2016-12 2017-12 2018-09
Operations
+15%
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Product cost reduction - Example Marine Division
8
3,1%
2,3%
2,0%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
50
100
150
200
250
Business xx Business yy Business zz
Capital Sales COGS COGS savings %
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Quality cost reductions- Example Energy Division
9
Quality & Delivery in project business
Increased selectivity
Standardization
Project execution
Early planning for service
Quality cost reduction now visiable!
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Development of R&D spend- SEK millions (rolling 12 months) and in percent of sales
10
= R&D expenses LTM in % of invoicing (%)
= R&D expenses LTM (SEK)
2,1%2,0% 2,0% 1,9% 1,9%
2,1%2,2%
2,3% 2,3% 2,4% 2,4% 2,5% 2,5% 2,5% 2,4%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
400
500
600
700
800
900
1 000
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 LTM
Comments
R&D expenses
increased by 10.5%
YTD 2018* to develop
new product platforms
R&D expenses
expected to remain at
2.5% of sales
*) Excluding currency effects and acquisitions/divestments of businesses.
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Capital expenditure- SEK millions (rolling 12 months) and in percent of sales
11
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 LTM
= Depreciation LTM (SEK)
= Capital expenditure LTM (SEK)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
0
200
400
600
800
1 000
1 200
1 400
= Capital expenditure in % of invoicing LTM (%)
Comments
Increased investments
for capacity
expansions and
manufacturing
optimization
Capex expected at 3%
of sales in 2018 and
2019, and then start to
normalize in 2020
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Footprint 1.0 during 2018-2019
Executing program according to plan, most projects to be completed by 1H 2019
Total: SEK ~900 million
Capacity Expansion during 2018-2019
Extension of BHE production
Extension of HSS production
Extension of Scrubber production
Total: SEK ~400 million
Footprint 2.0 during 2019-2020
New footprint projects identified
Total: SEK ~600 million
Capital expenditure- Major projects
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Return on equity & capital employed- Rolling 12 months
13
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 LTM
= Return on equity LTM (%)
= Return on capital employed LTM (%)
20,5% 20,3%
21,8% 21,6% 21,1%19,9%
17,0%
15,3% 15,1% 15,3% 15,5%
17,7%18,5%
20,8%22,1%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0% Comments
Capital employed
impacted by:
Step-up values will be
reduced from SEK
4.0bn in 2018 to SEK
3.1bn in 2019
IFRS 16 require
capitalization of leased
assets, estimated
impact of up to SEK
2.0bn in 2019
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Net debt and net debt/EBITDA- SEK millions (rolling 12 months)
14
= Net debt / EBITDA (times)
= Net debt LTM (SEK million)
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318
2,071,96
1,79
1,56 1,51
1,74
1,901,81
1,70
1,91
1,60
1,311,22
1,28
1,08
0,00
0,50
1,00
1,50
2,00
2,50
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
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Organic transformation
• High organic growth
– Strong global economy
– Recovery in energy
and marine markets
– Structural growth in
marine environmental
products
• Favourable FX rates
• Productivity and quality
improvements
• Strengthened balance sheet
(net debt/ebitda ratio)
• Portfolio management /
”greenhouse”
• Increased R&D expenses to
develop new product
platforms
• Increased S&A expenses to
launch new products, build
e-business platform and
ramp-up environmental
business
• Increased investments and
costs to increase capacity
and optimize manufacturing
footprint
• Strong growth in capital
sales impacting CS/Service
mix
Current situation (+/-)
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Foreign exchange- Estimated impact on adjusted EBITA from FX fluctuations
SEK million FY 2018 FY 2019*
Transaction effect -80 150
Revaluation - -
Translation effect 80 0
Total 0 150
*Based on EUR/USD 1.148 and EUR/SEK 10.33
© Alfa Laval
16
www.alfalaval.com
Order backlog as per September 30
= For delivery in 2019
= For delivery this year
17
For next year,
SEK 13.6 (10.8) Bn,
SEK +2.8 Bn!
= For delivery after 2019
5 487 5 938 6 418 6 705 6 6727 371
8 0146 913 6 969
7 921
7 324 5 480
8 050 8 387 7 993
13 36413 359
10 093 10 823
13 664
381
272
600 404 406
1 665 744
785882
1 188
0
5000
10000
15000
20000
25000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
13,19211,689
15,49615,068 15,071
22,400 22,117
17,79118,674
22,773
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SalesFull year 2019, SEK (bn)
Full year 2018* Approx. 41.0
Change in OBL y-o-y + 2.8
FX translation +/- xx
Acquisitions/divestments during 2018 - 0.2
Subtotal 43.6
© Alfa Laval
18
Change “In-for-out” +/- ?
Price +/- ?
Acquisitions/divestments during 2019 +/- ?
Full year 2019 ?
*) SME Direkt, consensus estimate as per November 8 2018.
www.alfalaval.com
Organic transformation
• High organic growth
– Strong global economy
– Recovery in Energy
and Marine markets
– Structural growth in
Marine Environmental
products
• Favourable FX rates
• Productivity and Quality
improvements
• Strengthened balance sheet
(net debt/ebitda ratio)
• Portfolio management /
”greenhouse”
• Increased R&D expenses to
develop new product
platforms
• Increased S&A expenses to
launch new products, build
e-business platform and
ramp-up Environmental
business
• Increased investments and
costs to increase capacity
and optimize manufacturing
footprint
• Strong growth in capital
sales impacting CS/Service
mix
• Organic growth enablers
– Renewed product
portfolio
– Service strategy in
place, example global
marine service
– New e-business and
connectivity platforms
• Strong balance sheet
enabling inorganic growth
• Optimized manufacturing
footprint and supply chain
• Balanced capital
sales/service growth
• Increased uncertainty of
global economy
• FX development
• Retrofit part of marine
environmental produts
reaches plataeu
Current situation (+/-) Going forward (+/-)
www.alfalaval.com*) Excluding net effect of step-up amortisation
Guidance- A summary
Capital expenditure in relation to total revenues, 3.0% in
2018/2019 and then start to normalize in 2020
Step-up amortization of SEK ~950 million in 2019, SEK
~850 million in 2020
R & D-spend in relation to total revenues, 2.5%
Taxes in the P&L, 26.0 % of PBT
Dividend pay-out ratio, 40 – 50 % of adjusted EPS*
Updated
Updated
www.alfalaval.com
Quarterly report makeover
Based on a perception study we will make changes to our
quarterly report.
The changes will affect structure and disposition. No
significant change to content, except for EBIT bridges that
are already in place.
“New” version to be launched with the Q1 2019 report.
www.alfalaval.com
Capital expenditure (I) – Footprint 1.0- Major projects 2018-2019
*) Including MSEK 35 million capitalized tools. **) Increase due to scope change and higher metal prices impacting real estate costs
Plans presented at CMD 2017 Current Status
Footprint in the USA, SEK 175 million Expected completion H1 2019 (SEK 250 million)
Footprint in Poland, SEK 100 million Söborg to stay open FY2019 due to high load. Krakow scope
extended, completion expected H1 2019 (SEK 100 million)
Adjustment to global supply structure GPHE, SEK 150 million Expected completion H1 2019 (SEK 185 million*)
Relocation in Qingdao, China SEK 200 million Expected completion H1 2019 (SEK 220 million**)
Extension in Kunshan, China SEK 100 million Expected completion H1 2019 (SEK 110 million**)
Establish BHE production in Richmond, USA SEK 50 million Expected completion H1 2019 (SEK 40 million)
Upgrade and relocation in Pune, India SEK 75 million Scope change, new start 2019 as part of Footprint 2.0
Total investment: SEK ~850 million Total investment: SEK ~900 million