Q2 2024 Alfa Laval AB Earnings Call Transcript
Key Points
- Alfa Laval AB (ALFVF) reported a record order intake for the second quarter, reaching SEK18.9 billion, marking a 3.5% organic growth.
- The company's balance sheet is in excellent shape, with a strong cash flow and a return on capital employed of 22%.
- The Marine division experienced strong demand, particularly in the tanker segment, contributing to a solid order book for 2024 and 2025.
- The Food & Water Division saw improved operating margins and EBITDA due to a recovery in invoicing and solid growth with channel partners.
- Service growth remains strong, with sequential growth in the Marine and Energy divisions, indicating a robust underlying growth momentum.
- The Energy division faced weak demand in the high-value segment, particularly in the HVAC/heat pump market, leading to a decrease in order intake.
- The third quarter is expected to be the bottom of the cycle for brazed heat exchangers, with low volumes and utilization potentially affecting margins.
- North America showed weaker demand after a long period of strong growth, raising concerns about future performance in the region.
- The Food & Water Division experienced a decrease in order intake in some product areas, despite improvements in transactional business.
- There is uncertainty regarding the US market, with potential impacts from tariffs and a slowdown in project decisions affecting future demand.
Good morning, and welcome to Alfa Laval's second quarter earnings call as Frederic and myself will run through the quarter and with some details, and then we'll open up for Q&A as always.
So, let me start with a couple of introductory comments. 2024 started well with solid demand and record order intake for the second quarter and also for the first half of 2024 as a whole, the order book now stands at SEK50 billion, also a new all-time high.
We expect markets to remain on a similar level in Q3 sequentially, although order intake is expected to be somewhat lower in all, we had a clean quarter in a stable operating environment with solid project execution and a good invoicing level as a result. In fact, all financial KPIs moved in a positive direction, including a strong cash flow and return on capital employed of 22%. The balance sheet matters and it is now in a very good shape.
So with that, let me go to the divisional review. The Energy division, to start, had a good demand with the exception of the high-value
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