Alfa Laval Earnings: Marine Demand Remained on a High in Late 2024, but Shares Still Expensive

Demand conditions remained buoyant for wide-moat Alfa Laval’s marine division in the fourth quarter of 2024, driving an 8% year-on-year increase in quarterly group order intake. Exceptional shipbuilding demand conditions remained in place in the final quarter of 2024, delivering a 39% year-on-year increase in organic order intake for the marine division. Elsewhere, demand conditions were mixed with new orders for the energy division rising about 7.5% organically while organic order intake for the food and water division contracted about 12% compared with the prior corresponding period. Alfa Laval anticipates a similar order intake in the first quarter of 2025 to that of the final quarter of 2024. While we expect to revise our 2025 order intake and related earnings forecasts, we continue to expect demand to moderate as 2025 progresses and we therefore continue to view Alfa Laval shares as expensive. We don’t expect our tweaked 2025 estimates to have a material impact on our SEK 360 fair value estimate, with Alfa Laval shares trading at a 28% premium to our valuation.