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2016-10-25

Alfa Laval: Alfa Laval presents a restructuring programme as a result of the strategic review

Alfa Laval - a world leader in heat transfer, centrifugal separation
and fluid handling - today announces a restructuring programme, as a
result of the strategic review. The new organizational structure, in
combination with prevailing market conditions, means Alfa Laval now
introduces a program that will include three initiatives. These are
expected to cause non-recurring costs of SEK 1.5 billion in total, of
which SEK 1.1 billion was charged to the third quarter. Of the SEK
1.1 billion, some SEK 600 million are estimated to be non-cash items.
Savings, excluding effects on COGS, are expected to reach
approximately SEK 300 million.

The program includes the following initiatives:

· create a leaner organization, reflecting the new structure as
well as adjustments to the weak demand situation in the oil & gas and
marine sectors

· separate some product groups from the new organizational
structure

· restructuring of the manufacturing footprint.
"We must adjust the size of our organization to existing market
conditions", says Tom Erixon, President and CEO of the Alfa Laval
Group. "However, before launching any short-term initiatives, we
wanted to be perfectly clear about the long-term direction of the
company."

The new strategic direction is a long-term commitment for Alfa Laval,
with the objective to support organic growth. It also includes
efforts to manage the short-term challenges caused by weaknesses in
certain end markets.

A leaner organization
The new structure, combined with adjustments to prevailing market
conditions, will lead to a leaner organization. This part of the
program is expected to largely be implemented by the end of the
second quarter 2017.

A few product groups to be separated from the new organizational
structure

Alfa Laval's strategic review also identified three product groups in
need of special attention; commercial/industrial air heat exchangers,
commercial tubular heat exchangers and heat exchanger systems. These
units will be included in an initiative called "Greenhouse", which
will be managed separately from the new divisional structure. The aim
is to provide these units with the best possible conditions to
improve performance and develop the activities in a focused manner.

Restructuring of the manufacturing footprint
The third area is the stepwise implementation of a leaner and more
competitive manufacturing footprint. This initiative will gradually
be implemented over several years, starting in 2017 and completed by
the end of 2019. Further information about the footprint initiative
will be presented gradually.

Costs/savings
The three initiatives are estimated to lead to costs of a
non-recurring nature of SEK 1.5 billion. Of these, SEK 1.1 billion
were charged to the third quarter out of which SEK 600 million are
mainly attributed to the write-off of step-up and goodwill and are
non-cash items. The remaining SEK 500 million mainly refers to
redundancies of some 700 employees.

The initiatives are expected to generate considerable savings. Savings
relating to sales and administration costs are estimated to reach
approximately SEK 300 million. However, the charge will also generate
certain savings within the COGS-area that will limit the impact from
the adverse volume development. Regular capacity adjustments within
our manufacturing units are handled on an ongoing and continuous
basis and are not included.

Conference call
Questions are referred to the Q3 earnings conference call, arranged at
08:30 a.m. CET. Call-in details have previously been made public in a
press release which is available at www.alfalaval.com/investors.

About Alfa Laval
Alfa Laval is a leading global provider of specialized products and
engineering solutions based on its key technologies of heat transfer,
separation and fluid handling.

The company's equipment, systems and services are dedicated to
assisting customers in optimizing the performance of their processes.
The solutions help them to heat, cool, separate and transport
products in industries that produce food and beverages, chemicals and
petrochemicals, pharmaceuticals, starch, sugar and ethanol.

Alfa Laval's products are also used in power plants, aboard ships, oil
and gas exploration, in the mechanical engineering industry, in the
mining industry and for wastewater treatment, as well as for comfort
climate and refrigeration applications.

Alfa Laval's worldwide organization works closely with customers in
nearly 100 countries to help them stay ahead in the global arena.
Alfa Laval is listed on Nasdaq OMX, and, in 2015, posted annual sales
of about SEK 39.7 billion (approx. 4.25 billion Euros). The company
has about 17 500 employees.

www.alfalaval.com

For more information, please contact:

Peter Torstensson
Senior Vice President, Communications
Alfa Laval
Tel: + 46 46 36 72 31

Thomas Thuresson
CFO
Alfa Laval
Tel: +46 46 36 72 40

This information is information that Alfa Laval AB (publ) is obliged
to make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency of the
contact person set out above, at CET 07:25 on October 25, 2016.

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http://news.cision.com/alfa-laval/r/alfa-laval-presents-a-restructuring-...
http://mb.cision.com/Main/905/2107762/579468.pdf

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