Alfa Laval misses profit forecast as weak tanker market takes affect

Swedish engineering group Alfa Laval missed its quarterly earnings forecasts on Tuesday, October 25, and launched a restructuring drive that could affect around 500 employees after a weak tanker market and soaring costs hit its marine business.

The company’s shares fell more than eight percent in early trading, among the worst performers on the pan-European STOXX 600 index.

Alfa Laval’s adjusted operating profit (EBITA) increased by four percent to 1.93 billion Swedish crowns ($173.10 million) in its fiscal third quarter but missed analysts’ consensus forecast of 2.15 billion crowns.

The marine unit’s quarterly operating income fell 41 percent from a year earlier, hit by weak order intake from the tanker market and rising material costs.

The unit’s operating margin more than halved to eight percent from 16.2 percent a year ago.

RBC analysts said in a note: “Despite the respectable top-line orders and sales performance, the significant margin degradation in Marine is the main topic today.”

Alfa Laval, which makes heat exchangers, pumps and filters, received orders worth 15.20 billion crowns in the quarter, above analysts’ estimates. It said it expected demand in the final three months of the year to remain at a similar level.

The company said it would revamp its marine and energy divisions, affecting about 500 jobs and leading to a charge of 200 million crowns in the fourth quarter.

The number of affected employees includes the continued wind-down of operations in Russia, where Alfa Laval had previously said that it would reduce its personnel to 85 by the end of October, from about 230 before the Ukraine war.

The group employed 19,818 people at the end of the third quarter.

For more information visit www.alfalaval.co.uk