Q3 profit misses estimates; restructuring programme launched

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.

Building on a decent start; new CFO from November

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 low

Decent start overshadowed by a potentially weak outlook

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.

Visible green shoots bode well for 2022

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.

Delivering better on profitability

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.

Order book building up, but growth is in 2022

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.

At par with expectations

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.

Nothing out of the ordinary

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.

Weak Q3 as expected

Alfa Laval’s Q3 figures were weak and in line with our expectations. Despite Net sales and adj. EBITA being lower by 8% yoy, margins largely remained flat showing that the cost programme is bearing fruit.

Better-than-expected figures

Alfa Laval posted better than expected Q2 20 figures. The recent cost programme implemented by Alfa Laval to protect the group’s profitability is bearing fruit: the EBITA margin improved to 17.2% (+70bp yoy).

Rather solid figures

Alfa Laval reported rather solid results given the current situation, with both orders and revenues remaining resilient. Management decided to withdraw the dividend in order to protect cash and it expects demand in the second quarter to be lower than in the first quarter.

Super Marine except on orders!

Alfa Laval reported a strong set of Q4 results, with both sales and adjusted EBITA beating consensus (6% above for EBITA). The only downside of this release was on orders which slipped 6% organically (c.2% below consensus), mainly due to Marine. All divisions have contributed to growth. The favourable trend in both Food and Energy end-markets still drives the performance, further propped up now by Marine thanks to the IMO regulation.

Is the scrubbers growth over?

The return to growth in Marine was much appreciated when the Q3 figures came out. This was, once again, largely driven by the IMO 2020 sulphur regulation. Now, the question is rather to identify where the industry is going and what level of growth in scrubbers is sustainable.

Strong set of Q3 results

Alfa Laval reported a strong set of Q3 results, with both sales and adjusted EBITA growing in double-digits. Following a weak momentum in Q2, the Marine division was back in positive territory at record levels. This trend should continue to be supported by the IMI 2020 regulation, and management gave a positive outlook for Q4, with demand expected to be somewhat higher compared to this quarter.

Weaker orders on lower scrubbers

Alfa Laval reported a mixed set of results, with declining orders due to both pumping systems and scrubbers, a better than expected development in Energy and Marine, while Food and Water underperformed and affected the whole group’s performance. The Marine division continues to drive growth thanks to good deliveries and execution. Management remains confident and expects demand to be “somewhat higher” in Q3 compared to Q2.

Heading for record 2023 deliveries

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Invinity Energy Systems - Reassuring Update And New Sale

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Hybridan Small Cap Feast - 17 Jan 23

17 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object