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Alfa Laval AB ALFA

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Morningstar’s Analysis

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Alfa Laval's Third Quarter Reflects Challenging Markets; Fair Value Estimate Unchanged

Analyst Note

| Denise Molina, CFA |

Alfa Laval posted third-quarter results that were slightly weaker than we expected on revenue and still challenged by large exposure to the energy and marine sectors. We have made minor changes to our full-year assumptions but continue to model in a two-year recovery period over 2021 and 2022. Our SEK 200 fair value estimate and wide moat rating remain unchanged, and we see modest upside in the shares at current levels.  Revenue came in at EUR 9.7 billion, a 13% organic decline, while order intake declined 9% organically due to lower demand from oil and gas and shipping clients. Adjusted EBITA margin stayed almost flat at 17.6% thanks to the fast cost-savings program implemented by the company. Service activity remained at a lower level than last year due to constraints to access customer sites. 

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Company Profile

Business Description

Founded in 1883 by Swedish engineer and inventor Gustaf de Laval, Alfa Laval's products are focused on three core competencies: heat transfer, separation, and fluid handling and in each it possesses the number-one market position. De Laval patented the centrifugal milk-cream separator in 1878. The legacy of this invention is in the Alfa Laval's separation business, generating about one fifth of group revenue with 25%-30% global market share. Alfa Laval expanded later into heat exchangers, its largest segment, and eventually fluid handling.

Rudeboksvagen 1, Box 73
Lund, SE-221 00, Sweden
T +46 46366500
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 16,921