Alfa Laval Q1 2025 slides: Sales up 10%, orders down 8% amid mixed divisional performance

Introduction & Market Context

Alfa Laval AB (STO:ALFA) presented its Q1 2025 results on April 29, 2025, revealing a mixed performance with strong sales growth and margin improvement contrasted by declining order intake. The company’s stock closed down 3.39% following the presentation, suggesting investors may have been concerned about the order decline despite the positive profitability metrics.

The industrial equipment manufacturer reported strong profitability with adjusted EBITA margin reaching 17.7%, up from 16.3% in the same period last year, while order intake declined 8% year-over-year to 16,807 MSEK.

Quarterly Performance Highlights

Alfa Laval delivered solid financial results in Q1 2025, with net sales increasing 10% to 16,465 MSEK compared to 14,906 MSEK in Q1 2024. The company’s adjusted EBITA grew 20% to 2,912 MSEK, with margins expanding to 17.7% from 16.3% in the same period last year.

As shown in the following key financial figures:

However, order intake declined 8% to 16,807 MSEK compared to 18,272 MSEK in Q1 2024. This decline was attributed to a combination of factors, including a 3.2% organic decline and a 4.8% negative currency impact. The company also noted a significant revaluation effect of 900 MSEK, primarily in the Marine division due to NOK/USD exchange rate fluctuations.

The order intake analysis provides a clearer picture of these trends:

Despite the decline in order intake, Alfa Laval’s order book remained strong at 52.1 BSEK as of March 31, 2025, representing a 9% increase year-over-year. The order book corresponds to 9.1 months of sales, with 31.7 BSEK scheduled for delivery in 2025 and 20.4 BSEK for 2026 or later.

The following chart illustrates the order book composition:

Divisional Performance

Alfa Laval’s three divisions showed varying performance in Q1 2025, with the Marine Division demonstrating the strongest margin improvement despite order challenges.

The Energy Division reported a 5.3% decline in orders to 4,903 MSEK, while sales increased 3.1% to 4,786 MSEK. Adjusted EBITA margin decreased slightly to 18.0% from 19.8% in Q1 2024, which the company attributed to revaluation effects. The division noted stable to positive demand in most end-markets, with particularly strong demand from data centers, while HVAC remained at low levels.

The Energy Division’s performance is summarized in the following chart:

The Food & Water Division showed relatively stable order intake at 6,315 MSEK, a marginal 0.7% decrease from Q1 2024. Sales grew significantly by 12.2% to 5,905 MSEK, and adjusted EBITA margin improved to 15.1% from 14.1%. The company highlighted that growth in transactional business and Service compensated for slower decisions on large orders.

The Food & Water Division’s results are illustrated here:

The Marine Division experienced the most significant order decline at 17.0%, dropping to 5,589 MSEK from 6,736 MSEK in Q1 2024. However, sales increased 15.5% to 5,775 MSEK, and the division achieved the highest adjusted EBITA margin at 21.8%, a substantial improvement from 17.9% in Q1 2024. The company noted an 800 MSEK order book revaluation driven by NOK/USD exchange rate fluctuations.

The following chart shows the Marine Division’s performance:

Service orders continued to be a significant component of Alfa Laval’s business, representing 42% of Marine, 31% of Food & Water, and 30% of Energy division order intake in Q1 2025.

Strategic Initiatives & Regional Performance

A key strategic development announced during the presentation was Alfa Laval’s acquisition of Fives Cryogenic, a world-leading expert in cryogenic heat exchangers and pumps with approximately EUR 200 million in revenue for 2024 and 700 employees. The acquisition strengthens Alfa Laval’s position in gas liquefaction technologies, including emerging applications in hydrogen and carbon dioxide.

The details of this strategic acquisition are outlined here:

From a regional perspective, North East Asia remained Alfa Laval’s largest market, accounting for 28% of orders received, followed by North America at 20% and Northern Europe at 16%. The geographical distribution provides insights into the company’s global market exposure:

Financial Position & Outlook

Alfa Laval maintained a strong financial position, with earnings per share increasing to 4.82 SEK in Q1 2025 from 4.07 SEK in Q1 2024. The company’s debt position improved significantly, with the Debt/EBITDA LTM ratio decreasing to 0.73 from 1.17 a year earlier.

The company’s profitability trends are illustrated in the following chart:

Free cash flow decreased to 771 MSEK in Q1 2025 from 1,072 MSEK in Q1 2024, primarily due to increased working capital requirements. The cash flow statement provides a comprehensive view of the company’s cash generation:

Looking ahead, Alfa Laval provided a cautious outlook, stating: "We expect demand in the second quarter to be on about the same level compared to the first quarter." The company also announced a proposed dividend increase to 8.50 SEK per share, up from 7.50 SEK previously.

For the full year 2025, Alfa Laval expects capital expenditures of 2.5-3.0 BSEK and estimates a positive currency impact on EBITA of approximately 200 MSEK. The company anticipates a tax rate of 24-26% for both Q2 and the full year 2025.

While Alfa Laval demonstrated strong sales growth and margin expansion in Q1 2025, the decline in order intake and cautious outlook for Q2 suggest potential challenges ahead. The strategic acquisition of Fives Cryogenic represents an important step in strengthening the company’s technological portfolio, particularly in emerging applications like hydrogen, which could support future growth despite current market uncertainties.

Full presentation:

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