Q3 2021
Advancing better™
Continued strong order intake
- Strong order intake in all regions and end markets.
- Record high order intake in the Energy Division.
- Growth in all parts of the service business.
- The adjusted EBITA margin improved to 18.0%.
Outlook for the fourth quarter
"We expect demand in the fourth quarter to be about the same as in the third quarter."
Earlier published outlook (July 20, 2021): "We expect demand in the third quarter to be somewhat lower than in the second quarter."
The Q3 2021 report has been reviewed by the company's auditors, see page 25 for the review report.
Summary
Q3 | Jan-Sep | ||||||||
SEK millions | 2021 | 2020 | % | % * | 2021 | 2020 | % | % * | |
Order intake | 11,680 | 8,935 | 31 | 31 | 34,067 | 30,561 | 11 | 18 | |
Net sales | 10,275 | 9,728 | 6 | 7 | 29,219 | 30,773 | -5 | 1 | |
Adjusted EBITA ** | 1,854 | 1,710 | 8 | 5,122 | 5,262 | -3 | |||
- adjusted EBITA margin (%) ** | 18.0 | 17.6 | 17.5 | 17.1 | |||||
Result after financial items | 1,567 | 1,382 | 13 | 4,281 | 4,053 | 6 | |||
Net income for the period | 1,226 | 1,038 | 18 | 3,323 | 3,016 | 10 | |||
Earnings per share (SEK) | 2.91 | 2.46 | 18 | 7.87 | 7.14 | 10 | |||
Cash flow from operating activities | 1,469 | 1,256 | 17 | 3,853 | 5,059 | -24 | |||
Impact on adjusted EBITA of foreign exchange effects | 0 | 10 | -100 | 160 | |||||
Impact on result after financial items | |||||||||
of comparison distortion items | - | -63 | -192 | -63 | |||||
Return on capital employed (%) ** | 18.3 | 21.4 | |||||||
Net debt to EBITDA, times ** | 1.07 | 0.49 |
* Excluding currency effects. ** Alternative performance measures.
Comment from
Tom Erixon
President and CEO
"The demand across almost all regions and end markets continued on a high level. The higher focus on sustainability is the main driver in applications like energy efficiency and new sources of protein. In several important product groups, order intake reached a new all-time high and is now well above the running rate in 2019. The service business also achieved a new record level due to the post-pandemic recovery and Alfa Laval's targeted investments in digital solutions and field engineering over the last years.
The EBITA margin improved to 18.0% in the quarter. Productivity improvements and continued reduced cost of quality more than compensated the broad inflationary pressure. In particular, the profitability improvements accomplished in engineering projects had a meaningful contribution to the group´s margin improvement trend.
Demand in several of our core technologies has been strong and is expected to grow in the years to come. To support this expected growth, an investment program to increase the capacity of the current technology platforms has been initiated. In addition, Alfa Laval has increased the R&D activities over the last four years to prepare the new technology platforms to further address the carbon reduction targets of our customers. Both these factors are resulting in a forward- looking capex program, expected to reach a level of SEK 2-2.5 billion per year over the next three years. This is around twice the level in recent years. Further details will be presented at the capital markets day on November 30, 2021."
Tom Erixon,
President and CEO
Q3
2021 Quarter Third Laval Alfa
3
26
Financial overview
Order intake
BnSEK | BnSEK | ||||||||||||
quarter | 12 months | ||||||||||||
14 | 49 | ||||||||||||
12 | 42 | ||||||||||||
10 | 35 | ||||||||||||
8 | 28 | ||||||||||||
6 | 21 | ||||||||||||
4 | 14 | ||||||||||||
2 | 7 | ||||||||||||
0 | 0 | ||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |||
Q3 | |||||||||||||
2018 | 2019 | 2020 | 2021 | ||||||||||
Order intake per quarter | Orders received rolling 12 months | ||||||||||||
Orders received was SEK 11,680 (8,935) million in the third quarter and SEK 34,067 (30,561) million in the first nine months 2021.
Orders received from Service constituted 29.2 (30.3) percent of the Group's total orders received during the third quarter and 27.8 (29.4) percent during the first nine months 2021.
Order backlog
BnSEK | September 30 | % | |||||
30 | 120 | For delivery next | |||||
25 | 23.3 | 22.9 | 100 | ||||
20.7 | year or later | ||||||
20 | 80 | ||||||
For delivery | |||||||
15.2 | 14.8 | ||||||
15 | 60 | ||||||
13.0 | during rest of | ||||||
current year | |||||||
10 | 40 | Part of last 12 | |||||
5 | 20 | months' | |||||
8.1 | 7.7 | 8.1 | invoicing | ||||
0 | 0 | ||||||
2019 | 2020 | 2021 | |||||
Excluding currency effects and adjusted for acquisition and divestment of businesses the order backlog was 17.8 percent higher than the order backlog on September 30, 2020 and 26.6 percent higher than the order backlog at the end of 2020.
Net sales
Net invoicing was SEK 10,275 (9,728) million for the third quarter and SEK 29,219 (30,773) million for the first nine months 2021.
Net invoicing relating to Service constituted 29.5 (28.5) percent of the Group's total net invoicing in the third quarter and 29.3 (28.2) percent in the first nine months 2021.
- Organic: change excluding acquisition/divestment of businesses.
- Structural: acquisition/divestment of businesses.
- Service: Parts and service.
Order bridge | ||
SEK millions/% | Q3 | Jan-Sep |
2020 | 8,935 | 30,561 |
Organic 1) | 29.4% | 17.3% |
Structural 1) | 2.0% | 0.8% |
Currency | -0.7% | -6.6% |
Total | 30.7% | 11.5% |
2021 | 11,680 | 34,067 |
1) Change excluding currency effects. |
Order bridge Service | ||
SEK millions/% | Q3 | Jan-Sep |
2020 | 2,707 | 8,978 |
Organic 1) | 21.1% | 9.9% |
Structural 1) | 6.5% | 2.6% |
Currency | -1.5% | -7.0% |
Total | 26.1% | 5.5% |
2021 | 3,414 | 9,470 |
1) Change excluding currency effects. |
Sales bridge | ||
SEK millions/% | Q3 | Jan-Sep |
2020 | 9,728 | 30,773 |
Organic 1) | 5.3% | -0.3% |
Structural 1) | 1.8% | 0.8% |
Currency | -1.5% | -5.5% |
Total | 5.6% | -5.0% |
2021 | 10,275 | 29,219 |
1) Change excluding currency effects. |
Sales bridge Service | ||
SEK millions/% | Q3 | Jan-Sep |
2020 | 2,775 | 8,705 |
Organic 1) | 4.7% | 2.5% |
Structural 1) | 6.4% | 2.7% |
Currency | -1.9% | -6.6% |
Total | 9.2% | -1.4% |
2021 | 3,030 | 8,581 |
1) Change excluding currency effects.
Income analysis
Q3 | Jan-Sep | Jan-Dec | Last 12 | |||||
SEK millions | 2021 | 2020 | 2021 | 2020 | 2020 | months | ||
Net sales | 10,275 | 9,728 | 29,219 | 30,773 | 41,468 | 39,914 | ||
Adjusted gross profit * | 3,835 | 3,507 | 11,066 | 11,197 | 15,113 | 14,982 | ||
- adjusted gross margin (%) * | 37.3 | 36.1 | 37.9 | 36.4 | 36.4 | 37.5 | ||
Expenses ** | -1,660 | -1,541 | -5,063 | -5,135 | -6,748 | -6,676 | ||
- in % of net sales | 16.2 | 15.8 | 17.3 | 16.7 | 16.3 | 16.7 | ||
Adjusted EBITDA * | 2,175 | 1,966 | 6,003 | 6,062 | 8,365 | 8,306 | ||
- adjusted EBITDA margin (%) * | 21.2 | 20.2 | 20.5 | 19.7 | 20.2 | 20.8 | ||
Depreciation | -321 | -256 | -881 | -800 | -1,134 | -1,215 | ||
Adjusted EBITA * | 1,854 | 1,710 | 5,122 | 5,262 | 7,231 | 7,091 | ||
- adjusted EBITA margin (%) * | 18.0 | 17.6 | 17.5 | 17.1 | 17.4 | 17.8 | ||
Amortisation of step-up values | -199 | -209 | -591 | -653 | -855 | -793 | ||
Comparison distortion items | 0 | -63 | -192 | -63 | -796 | -925 | ||
Operating income | 1,655 | 1,438 | 4,339 | 4,546 | 5,580 | 5,373 |
* Alternative performance measures. ** Excluding comparison distortion items.
The gross profit has been affected positively by a higher sales volume and positively by the mix between service and capital sales.
Sales and administration expenses were SEK 1,602 (1,368) million during the third quarter and SEK 4,671 (4,486) million during the first nine months 2021. The figures for the first nine months corresponded to 16.0 (14.6) percent of net sales. Excluding currency effects and acquisition/divestment of businesses, sales and administration expenses increased by 10.0 percent during the third quarter and by 5.7 percent during the first nine months 2021 compared to the corresponding periods last year. The increase is reflecting that the activity level now is returning to more normal levels after the pandemic, except for travelling.
BnSEK | % | |||||
15 | 42 | |||||
12 | 40 | |||||
9 | 38 | |||||
6 | 36 | |||||
3 | 34 | |||||
0 | 32 | |||||
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 | ||||||
201 8 | 201 9 | 202 0 | 202 1 |
Q3
Quarter Third Laval Alfa
The costs for research and development during the first nine months 2021 corresponded to 2.8 (2.5) percent of net sales. Excluding currency effects and acquisition/divestment of businesses, the costs for research and development increased by 12.6 percent during the third quarter and by 8.2 percent during the first nine months 2021 compared to the corresponding periods last year.
Earnings per share was SEK 7.87 (7.14) for the first nine months 2021. The corresponding figure excluding amortisation of step-up values and the corresponding tax, was SEK 9.05 (8.40).
Comparison distortion items
Q3 | Jan-Sep | Jan-Dec | Last 12 | ||||
SEK millions | 2021 | 2020 | 2021 | 2020 | 2020 | months | |
Other operating income | |||||||
Comparison distortion items: | |||||||
- | Realised gain on sale of businesses | - | - | 3 | - | - | 3 |
- | Realised gain on sale of properties | - | - | 9 | - | - | 9 |
Other operating costs | |||||||
Comparison distortion items: | |||||||
- Realised loss on sale of businesses | - | -63 | - | -63 | -55 | 8 | |
- Write down of goodwill | - | - | - | - | -360 | -360 | |
- Restructuring costs | - | -204 | - | -381 | -585 | ||
Net comparison distortion items | - | -63 | -192 | -63 | -796 | -925 |
Net sales | ||||||||
Adjusted gross margin in % | ||||||||
BnSEK | % | |||||||
2.5 | 19 | |||||||
2.0 | 18 | |||||||
1.5 | 17 | |||||||
1.0 | 16 | |||||||
0.5 | 15 | |||||||
0.0 | 14 | |||||||
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 | ||||||||
201 8 | 201 9 | 202 0 | 202 1 |
Adjusted EBITA
Adjusted EBITA margin in %
2021
4
26
The comparison distortion items during the first nine months 2021 are relating to the final step in the restructuring program that was started during the fourth quarter 2020 and the realised gains on the sale of the remaining air heat exchanger operation in India to LU-VE and on the sale of a property in India.
Q3
2021 Quarter Third Laval Alfa
5
26
The realized loss in full year 2020 was relating to the divestment of the operations in DSO Fluid Handling Inc in the U.S. The write down of goodwill and the restructuring costs were part of the restructuring program that was announced on December 16, 2020 and that is described on page 24.
Consolidated financial net and taxes
The financial net for the first nine months 2021 was SEK -111(-144) million, excluding realised and unrealised exchange rate losses and gains. The main elements of costs were interest on the debt to the banking syndicate of SEK -9(-3) million, interest on the bilateral term loans of SEK -2(-27) million, interest on the corporate bonds of SEK -62(-64) million, interest on the commercial paper programme of SEK -0(-) and a net of dividends, changes in fair value and other interest income and interest costs of SEK -38(-50) million. The net of realised and unrealised exchange rate differences was SEK 53 (-349) million.
The tax on the result after financial items was SEK -341(-344) million in the third quarter and SEK -958(-1,037) million in the first nine months 2021.
Cash flow
During the first nine months 2021 cash flows from operating and investing activities were SEK -485 (4,483) million. The change is mainly explained by the acquisition of StormGeo, see below, but also by increased inventories to secure our ability to deliver.
Depreciation, excluding allocated step-up values, was SEK 881 (800) million during the first nine months 2021.
Acquisition of businesses during the first nine months 2021 amount to SEK -3,615(-18) million. The figure for 2021 is mainly relating to the acquisition of StormGeo with SEK -3,588 million. In addition, StormGeo has acquired two small companies in Brazil for SEK -13 million, withheld purchase price has been paid for the acquisitions of Airec with SEK -8 million, of WCR Benelux BV with SEK -1 million and of Chiefmar with SEK -0 million. Furthermore, an additional purchase price for the acquisition of Aalborg AS has been paid with SEK -5 million. The figure for 2020 was relating to acquisition of a smaller operation in the Netherlands, WCR Benelux BV, with SEK -10 million and payment of withheld purchase price for the acquisition of Airec with SEK -8 million.
Divestment of businesses during the first nine months 2021 amount to SEK 8 (125) million. The figure for 2021 is relating to additional purchase price concerning the sale of the remaining air heat exchanger operation in India to LU-VE. The figure for 2020 was relating to divestment of the operations in DSO Fluid Handling Inc with SEK 6 million, payment of withheld purchase price for the sale of the commercial/industrial air heat exchangers business to the LU-VE Group with SEK 101 million and the sale of Alfa Laval Champ to Thermal Solutions Manufacturing with SEK 18 million.
Key figures | Sep 30 | Dec 31 | ||
2021 | 2020 | 2020 | ||
Return on capital employed (%) 1) | 18.3 | 21.4 | 19.1 | |
Return on equity (%) 2) | 13.1 | 16.0 | 12.7 | |
Solidity (%) 3) | 47.6 | 45.1 | 47.8 | |
Net debt to EBITDA, times 1) | 1.07 | 0.49 | 0.48 | |
Debt ratio, times 1) | 0.26 | 0.15 | 0.13 | |
Number of employees 4) | 17,678 | 16,921 | 16,882 |
- Alternative performance measure.
- Net income in relation to average equity, calculated on 12 months' revolving basis, expressed in percent.
- Equity in relation to total assets at the end of the period, expressed in percent.
- At the end of the period.
The increase in number of employees during 2021 is mainly explained by the acquisition of StormGeo, that added 519 employees as per June 30, 2021.
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Alfa Laval AB published this content on 26 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2021 05:45:11 UTC.