www.alfalaval.com

www.alfalaval.com

Report for Q3 2018

Mr. Tom Erixon

President and CEO

Alfa Laval Group

www.alfalaval.com

July – September 2018

Key figures

Orders received grew 35% to SEK 11,357 million.

Net sales increased 24% to SEK 10,131 million.

Adjusted EBITA* up 33% at SEK 1,736 million.

Adjusted EBITA margin at 17.1% vs 16.0%.

*) Positive currency effect SEK 50 million.

© Alfa Laval

3

January – September 2018

Orders received grew 25% to SEK 33,444 million.

Net sales increased 17% to SEK 29,457 million.

Adjusted EBITA* increased 23% to SEK 4,931 million.

Adjusted EBITA margin at 16.7% vs 15.9%.

*) Positive currency effect SEK 5 million.

www.alfalaval.com

Order analysis- Q3 2018 versus Q3 2017 and versus Q2 2018 (MSEK)

Q3 2017 8,418 Q2 2018 12,062

Structural change, % - 1.0 -

Organic development, % + 27.1 - 5.8

Total + 26.1 - 5.8

Currency effects, % + 8.8 -

Total, % + 34.9 - 5.8

Q3 2018 11,357 Q3 2018 11,357

© Alfa Laval

4

www.alfalaval.com

Orders received

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

= Order intake per quarter

= Order intake per quarter “large”

SEK million SEK million R 12

= Rolling twelve months value

= % development at constant rates by quarter, year on year+XX%

+26%

+15%

-14%

-15%

+26%

5

www.alfalaval.com

Highlights in the quarter

6

Energy MarineAlfa Laval Niagara evaporative air cooler

systems for a gas processing plant in the

U.S. Value: SEK 100 million.

Framo pumping systems for an FPSO.

Value: SEK 70 million.

Alfa Laval Compabloc heat exchangers

for a petrochemical plant in the US.

Value: SEK 85 million

Two fleet agreements for Alfa Laval

PureBallast, covering retrofit installations

onboard 80 vessels between 2019 and

2024.

© Alfa Laval

www.alfalaval.com

Adjusted EBITA/margin*- SEK millions and in percent of sales

0,0

3,0

6,0

9,0

12,0

15,0

18,0

21,0

24,0

0

250

500

750

1 000

1 250

1 500

1 750

2 000

Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

* Adjusted EBITA – ”Earnings before interests, taxes, amortization of goodwill and step up values and comparison distortion items.”

7

www.alfalaval.com

Energy division- Highlights and comments

MARKETS & ORDER INTAKE

Continued positive sentiment across end

markets. Sequential order decline due to

seasonality in HVAC and fewer mid-sized

and large orders from refineries and

petrochemicals.

Good service growth with increased demand

for service contracts in oil & gas industry.

PROFITABILITY (EBIT)

Supported by higher volumes, while there

was a negative impact from mix (ASS/CS).

Cost, which reflects higher S&A due to

increased activity, compares with a quarter

when it was extraordinarily low.

8

Q3 18 Q2 18 %-change

Q3 17

ORDERS 3,039 3,401 -9.6 2,513

SALES 3,043 3,215 -4.9 2,598

EBIT 461 490 417

EBIT mrgn (%) 15.1 15.2 16.1

0

200

400

600

800

1 500

2 000

2 500

3 000

3 500

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Q318

Sales EBIT

www.alfalaval.com

Food & Water division- Highlights and comments

MARKETS & ORDER INTAKE

Orders declined sequentially, following two

strong quarters. No change in end-market

sentiment.

Continued good development for the

component business while project-related

activity was a bit slower.PROFITABILITY (EBIT)

Volume and mix had a positive effect on

profitability. A favourable development within

capital sales outweighed the impact from a

smaller service share.

9

Q3 18 Q2 18 %-

change

Q3 17

ORDERS 3,151 3,589 -11.6 2,788

SALES 3,336 3,390 -1.0 2,882

EBIT 542 507 410

EBIT mrgn (%) 16.2 15.0 14.2

0

200

400

600

800

1 500

2 000

2 500

3 000

3 500

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Q318

Sales EBIT

www.alfalaval.com

Marine division- Highlights and comments

MARKETS & ORDER INTAKE

High activity in the scrubber market.

Contracting-related order intake on a

somewhat higher level than last year.

Continued good market activity offshore.

PROFITABILITY (EBIT)

Volume had a positive impact, driven by

scrubbers and pumping systems. The

uptick in capital sales led to a smaller

service share and hence a negative mix

effect.

10

Q3 18 Q2 18 %-

change

Q3 17

ORDERS 4,903 4,685 +3.6 2,725

SALES 3,433 3,486 -1.4 2,322

EBIT 599 571 361

EBIT mrgn (%) 17.4 16.4 15.5

200

300

400

500

600

700

800

1 500

2 000

2 500

3 000

3 500

4 000

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Q318

Sales EBIT

www.alfalaval.com

Greenhouse- Highlights and sequential comments

Greenhouse EBIT-margin at 6.7 percent, meaning

the business has turned around from last year’s

loss-making level.

Air heat exchangers affected by non-repeats as well

as seasonally lower demand for commercial

refrigeration. Applications in industrial refrigeration

and data centre cooling, however, saw continued

good demand.

The remaining tubular business reported growth, as

recently signed OEM agreements, started to

generated orders for engine cooling applications in

the U.S.

© Alfa Laval

11

www.alfalaval.com

Service, by division

© Alfa Laval

12ENERGY FOOD & WATER MARINE

Q3: 27%

SERVICE SHARE

ABSOLUTE

DEVELOPMENT

SEQYoY

Q2: 32%

SERVICE SHARE

ABSOLUTE

DEVELOPMENT

SEQYoY

Q2: 21%

SERVICE SHARE

ABSOLUTE

DEVELOPMENT

SEQYoY

+

Order intake

=+ ++ -

www.alfalaval.com

Orders received by business unit- July – September 2018, at constant rates, like for like and year-on-year

Brazed & fusion-bonded HEX

GPHE

Energy Separation

WHE

Food Heat Transfer

Decanters

Food Systems

Pumping Systems

Boilers & Gas Systems

Marine Separation & Heat Transfer

High-speed Separators

+

+

Hygienic Fluid Handling

Energy Food & Water Marine Year-on-year comparison

+

-

++

“Greenhouse” - +

+

+

+

+

+

13

“Greenhouse”

www.alfalaval.com

-30

-20

-10

0

10

20

30

14

Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

Organic order growth- Compared with same quarter last year (%), excluding currency effects

www.alfalaval.com

-30

-20

-10

0

10

20

30

15

Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

= Organic order growth in %, excluding Marine Environmental

= Organic order growth from Marine Environmental in %

Organic order growth- Compared with same quarter last year (%), excluding currency effects

www.alfalaval.com

Orders received by region- July – September 2018, development at constant rates

North

America

16%

Western

Europe 18%

Nordic

9%

CEE

5%

Asia 45%

+9

+4

+58

+20

+14

-7

+45 -1

-19

-7

-9

Year-on-year comparison Sequential comparison

16

+33

Africa &

Oceania

2%

www.alfalaval.com

Report for Q3 2018

Mr. Jan Allde

CFO

Alfa Laval Group

www.alfalaval.com

Highlights 2018- July – September, SEK million

Order intake 11,357

Net sales 10,131

© Alfa Laval

18

www.alfalaval.com

Gross profit margin- In percent of sales

30

35

40

45

Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

36.637.035.735.2

© Alfa Laval

19

www.alfalaval.com

Gross profit margin- Q3 2018 versus Q3 2017 and versus Q2 2018

Q3 2017 37.0 Q2 2018 35.4

Mix/price - - =

Load/volume + =

PPV/metals - -

FX + ++

Structure = =

Q3 2018 36.6 Q3 2018 36.6

© Alfa Laval

20

www.alfalaval.com

Highlights 2018- July - September, SEK million

Order intake 11,357

Net sales 10,131

Adjusted EBITA 1,736

Adjusted EBITA margin, % 17.1

Profit before tax 1,458

Earnings per share 2.56

Earnings per share, excl. step-up 3.06

ROCE 22.1

ROE 20.0

© Alfa Laval

21

www.alfalaval.com

Divisional performance

Energy Marine Food & Water

Q3 2018 2017 2018 2017 2018 2017

Orders 3,039 2,513 4,903 2,725 3,151 2,788

Backlog 4,852 4,883 12,529 8,714 4,917 4,541

Sales 3,043 2,598 3,433 2,322 3,336 2,882

Op. profit 461 417 599 361 542 410

Op. margin, % 15.1 16.1 17.4 15.5 16.2 14.2

Comments onoperating margin

Volume/load (pos)

Mix (neg)

S&A cost (neg)

Volume/load (pos)

Mix (neg)

Volume/load (pos)

Mix (pos)

© Alfa Laval

22

www.alfalaval.com

Cash-flow statement

SEK million Q3 2018

Q3 2017

9M2018

9M2017

Cash flow from- operating activities- investing activities

1,350-415

1,044-121

3,393-765

2,890-437

Financial net paid -58 -145 -66 -234

Total 877 778 2,562 2,219

Pro Forma Free cash-flow* 876 779 2,396 2,263

*Incl. operating activities, capital expenditure and financial net paid.

© Alfa Laval

23

www.alfalaval.com

Foreign exchange- Estimated impact on adjusted EBITA from FX fluctuations

SEK million Q3 2018

9M 2018

FY 2018 FY 2019**

Transaction effect -25 -65* -80 120

Revaluation 5 0 - -

Translation effect 70 70 80 0

Total 50 5 0 120

Projected FX-effect for 2018 communicated with the Q2 earnings’ release: SEK 150 million

**Based on EUR/USD 1.1608 and EUR/SEK 10.3130

© Alfa Laval

24

*1H transaction effect has been restated to -40, from the reported 0.

www.alfalaval.com

Order backlog as per September 30

= For delivery this year

= For delivery after 2018

SEK million

0

5 000

10 000

15 000

20 000

25 000

Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318

1.08

22,773

7,9

21

14,8

52

18,674

11,7

05

6,9

69

book to bill1.03 1.120.97

25

1.13

www.alfalaval.com

SalesFull year 2018, SEK (bn)

9M sales 29.5

Backlog, for delivery current year + 7.9

FX translation + 0.3

Divestments - 0.1

Subtotal 37.6

© Alfa Laval

26

“In-for-out” +/-?

Price +/-?

Acquisitions +?

Full year 2018

In-for-out, same period 2017: SEK 3.1 bln.

www.alfalaval.com

Report for Q3 2018

Mr. Tom Erixon

President and CEO

Alfa Laval Group

www.alfalaval.com

Outlook for the fourth quarter

“We expect that demand during

the fourth quarter will be somewhat

higher than in the third quarter.”

© Alfa Laval

28

www.alfalaval.com

www.alfalaval.com

Marine

Alfa Laval

Share of totalAlfa Laval

Energy

Activity split O&G, totalDistribution of orders Q3 (MSEK) 2018

Drilling Processing &Transportation

PetrochemicalsRefinery

Grand total SEQ/YOY

1,072 (-/+)

333 (-/+)

=1,405*(-/+)

= 12.4%

* including Service

2.0% 3.8%1.0%5.6%

64

162

= 226

469

171

= 640

106

0

= 106

433

0

= 433

30

www.alfalaval.com

Share

Driver

Marine Division’s industry split- Distribution of orders LTM September

Marine Offshore oil and gas

Engine power Service

World trade &

fleet capacity

Oil & gas demand

and prices

Electrical

power needs

World trade

Environment & Energy, Marine

Legislation &

fuel cost

33%4%

23%

32%8%

© Alfa Laval

31

www.alfalaval.com

Marine Division’s industry split- Distribution of sales LTM September

Share

Driver

41%

Marine Offshore oil and gas

Engine power Service

5%

30%

World trade &

fleet capacity

Oil & gas demand

and prices

Electrical

power needs

World trade

Environment & Energy, Marine

18%

Legislation &

fuel cost

6%

© Alfa Laval

32

www.alfalaval.com

Orders received by business unit- January – September 2018, at constant rates, like for like and year-on-year

Brazed & fusion-bonded HEX

GPHE

Energy Separation

WHE

Food Heat Transfer

Decanters

Food Systems

Pumping Systems

Boilers & Gas Systems

Marine Separation & Heat Transfer

High-speed Separators

+

+

Hygienic Fluid Handling

Energy Food & Water Marine Year-on-year comparison

+

=+

“Greenhouse” - +

+

+

=

=

+

33

“Greenhouse”

+

www.alfalaval.com

Top ten markets*- SEK million at prevailing rates

*The development of the 2017 top ten markets.

0 1000 2000 3000 4000 5000 6000 7000

India

Benelux

South East…

Adriatic

Japan

Mid Europe

South Korea

Nordic

China

United States

= WY 2017

= LTM Q3 2018

34

www.alfalaval.com

Orders received by region- January – September 2018, development at constant rates

North

America

17%

Western

Europe 20%

Nordic

10%

CEE

5%

Asia 41%

=

+6

+43

+38

+8

+35

Year-on-year comparison

35

Africa &

Oceania

2%

www.alfalaval.com

Cautionary statement

This presentation contains forward-looking statements that are based on the current

expectations of the management of Alfa Laval Group.

Although management believes that the expectations reflected in such forward-

looking statements are based on reasonable assumptions, no assurance can be

given that such expectations will prove to have been correct. Accordingly, results

could differ materially from those implied in the forward-looking statements as a

result of, among other factors, changes in economic, market and competitive

conditions, changes in the regulatory environment, other government actions and

fluctuations in exchange rates. Alfa Laval undertakes no obligation to publicly

update or revise these forward-looking statements, other than as required by law or

other regulations.

© Alfa Laval

36