Alfa Laval in brief

Alfa Laval is a leading global provider of first-rate products in the areas of heat transfer, separation and fluid handling. With these as its base, Alfa Laval aims to help enhance the productivity and competitiveness of its customers in various industries throughout the world. We define their challenges and deliver products and solutions that meet their requirements - mainly in energy, the environment, food and the marine industry.

Today's increased focus on saving energy and water while protecting the environment is also an excellent fit for the company's offering. Alfa Laval's products help to clean water, minimize electricity and water consumption and reduce CO2 emissions in a number of industries and processes.

WHAT? - Alfa Laval is a world leader in three key technologies

Heat transfer
Alfa Laval's heat exchangers transfer heating or cooling from, for example, one liquid to another. The company's compact heat exchangers have the capability to recycle heat, optimize customers' energy consumption, cut costs and reduce their environmental impact.

Separation
The technology is used to separate liquids from other liquids and solid particles from liquids or gases. The offering includes separators, decanter centrifuges, filters, strainers and membranes

Fluid handling
Alfa Laval offers pumps, valves, tank cleaning equipment and installation material for industries with stringent hygiene requirements as well as pumping systems specifically for the marine industry and the offshore market.

FOR WHOM? - The company's products are needed in most industries

The need to heat, cool, transport and separate arises in many industries. Take almost any sector: food, energy, the environment, engineering, pharmaceuticals, refineries or petrochemicals - Alfa Laval can help in the majority of them. Customers are reached through three sales divisions: Energy, Food & Water and Marine

HOW?

They are produced and distributed through a shared supply chain. The Operations division is responsible for the Group's production related procurement, manufacturing, distribution and logistics on a global basis. In other words, the Operations division ensures that anything sold by the three divisions - everything from heat exchangers and separators to pumps, valves and membranes - is produced and delivered in line with the promise made to the customer.

WHERE? - New sales reach more than 100 countries and the aftermarket offering reaches more than 160

New sales
Alfa Laval's products, systems and services are sold in more than 100 countries. Around half of all sales are handled directly by the three divisions and the rest via channels such as system builders, external contracting companies, retailers, agents and distributors.

Service and spare parts
Alfa Laval has more than 110 service centers with the capacity to deliver services in over 160 countries. This means that Alfa Laval is close to its customers, ready to help at a moment's notice when the need arises.

Key facts

  • 39 major production units
  • >110 service centres
  • Presence in 100 countries
  • Sales of about SEK 40.7 billion in 2018
  • Operating margin 16.5%
  • Aftermarket's share of order intake: 25.7%
  • ≈17,200 employees
  • >3,500 patents

Competitive strengths

  • A global company, founded in 1883
  • Highly engineered products
  • Global market leadership
  • Large customer and geographical diversification
  • Large base of installed products
  • Strong brand recognition 

Business concept, vision and strategy

Vision

To “help create better everyday conditions for people” by offering efficient and environmentally responsible products and solutions in the areas of heat transfer, separation and fluid handling.

Business concept

Based on its three key technologies – heat transfer, separation and fluid handling – Alfa Laval offers products and solutions that are in line with its business concept: “To optimize the performance of our customers’ processes, time and time again.” In other words, Alfa Laval aims to help its customers become more productive, energy-efficient and competitive.

Strategy

In order to achieve its vision, implement its business concept and attain its growth, profitability and capital utilization goals, Alfa Laval has established various strategic priorities that encompass customer interaction, a focus on products and working to further strengthen the aftermarket offering.

Read more about Alfa Laval's strategic priorities

Strategic priorities 2018.pdf 2019-06-12 678 kB

Strategy

To achieve its vision, implement its business concept and attain its growth, profitability and capital utilization goals, Alfa Laval has established various strategic priorities that encompass customer collaboration, a focus on products and working to further strengthen the aftermarket offering.

Customers

Alfa Laval endeavours to optimize its customers' processes. Naturally, the company's products play a key role in this. At the same time Alfa Laval endeavours to be a company that is easy to do business with. By meeting the customer's expectations and needs, from the initial contact through the sales process to delivery and even in the aftermarket, the conditions are created for a positive customer experience, making it more likely that Alfa Laval will become their first choice for their next procurement. Alfa Laval works on a broad scale to simplify customer collaboration. One aspect of this involves an organizational structure created to ensure short decision-making paths and thus faster customer contacts. Another involves the establishment of three standardized business models to address customers' differing needs, challenges and purchasing processes.

Products

Alfa Laval's product offering in the three key technologies of heat transfer, separation and fluid handling serve as the foundation for achieving the company's goal for profitable, organic growth. The efficiency and quality of these products are considered - and expected to remain - key criteria for customers who want to improve their competitiveness, lower their energy consumption and reduce their environmental impact. To ensure that Alfa Laval's product offering is constantly one step ahead of its competitors, the company invests approximately 2.5 percent of its sales in R&D. This level reflects an intensification of the company's development efforts in order to increase the number of products launched during the coming years.

Service

The aftermarket - meaning service and spare parts - is a highly significant part of the company's business. It involves local activity with a global presence comprising more than 100 service centers worldwide. Alfa Laval's products have a long service life, which forms the foundation for a large installed base that - to varying degrees and with varying frequency - requires both spare parts and service. Hence the installed base has inherent revenue potential that the company aims to capitalize on through various reinforced activities. These may comprise an expansion of additional service centers or the introduction of further automation or standardization of the service execution. Alfa Laval has a comprehensive aftermarket portfolio and can tailor its offering to individual customers. The work to further refine this packaging of aftermarket products will continue, including elements of digitization.

Financial goals

Growth

5% Alfa Laval’s target is to achieve average annual sales growth of at least 5 percent measured over a business cycle.

Profitability

15% Alfa Laval's is to achieve an operating margin – adjusted EBITA – of 15 percent measured over a business cycle.

Capital utilization

20% The goal is to have a return on capital employed of at least 20 percent.

For more information on Alfa Laval's financial goals and benchmark values, click here.

Related links

Structural changes

Demand for Alfa Laval’s products and solutions in the areas of heat transfer, separation and fluid handling are naturally driven by individual customer requirements, but also by more general external factors. Alfa Laval takes a proactive approach to understanding and analysing these external changes, as well as the underlying dynamics. The goal is to identify existing and potential future requirements and respond to these requirements by having a presence in the right markets and offering the right products. The following description provides an overview of four structural changes that are expected to impact demand for the company’s products.

Energy

The world's growing energy demand can be met in two ways - through increased energy efficiency and increased production. Both alternatives generate opportunities which can boost demand for Alfa Laval's products.

Environment

Environmental problems arise in the wake of a growing world population and continued urbanization. Alfa Laval's products can reduce emissions, purify liquids and reduce the consumption of water and energy.

Improved living standards

With improved living standards comes changed eating and drinking habits as well as demand for food of better quality. A supplier to the food industry since 1883, Alfa Laval has a long history of providing reliable products for clean applications.

Globalization

The ongoing globalization means continued demand for transportation. Alfa Laval offers specialized products and solutions, mainly for use on board vessels, but also on trucks.

Driving development and change

Many factors can contribute to profitable growth. One of them is research and development. Alfa Laval's goal is to offer products and process solutions that can enhance the efficiency of customers' processes and thereby increase their competitiveness. In a world increasingly focused on competition, Alfa Laval wants to be customers' first choice. To maintain this position, continuous investments in research and development are necessary to ensure that the company's products and solutions are the latest and most efficient on the market.

Read more about Alfa Laval's research and development

Research and development 2018.pdf 2019-06-13 111 kB

Credit rating

 

Rating agency Rating Date Attachment
Standard & Poor's A- May 8, 2013 download

Standard & Poor's

A- April 7, 2014 download

Standard & Poor's

BBB+ May 26, 2014 download

Standard & Poor's - Change to negative outlook from stable.

BBB+ May 20, 2016 download

Standard & Poor's - Outlook revised to stable.

BBB+ May 23, 2018 download
Standard & Poor's Rating Affirmed On Improving Leverage And Operating Performance; Outlook Stable.

 

BBB+ May 21, 2019 download