February 5, 2013 / 6:46 AM / 5 years ago

Alfa Laval sees stable Q1 demand as orders pick up

STOCKHOLM (Reuters) - Swedish engineering group Alfa Laval (ALFA.ST) said on Tuesday it expected flat demand in the first quarter after a pick-up in order intake at the end of last year, but saw persistent pressure on margins squeeze earnings in the fourth quarter.

The global economic slowdown and an especially sharp slump in ship building weighed on activity in many of Alfa Laval’s markets during last year and most analysts expect the group to face relatively subdued growth in 2013.

Earnings before interest, tax, amortization and other items (adjusted EBITA) dipped to 1.32 billion Swedish crowns ($209.17 million) versus a year-ago 1.39 billion to just fall short of a mean forecast in a Reuters poll of analysts of 1.34 billion.

Adjusted EBITA is the company’s standard measure of profitability and strips out items that distort comparison.

Alfa Laval, whose products are used by sectors as disparate as food processing, ship building and nuclear energy production, said it expected market demand in the first quarter to be on about the same level as in the preceding three-month period.

Order bookings at the group rose to 7.25 billion crowns in the fourth quarter from a year-ago 6.77 billion, topping a mean forecast for 6.97 billion seen in a Reuters poll of analysts.

The maker of pumps, heat-transfer products and fluid-handling equipment has also seen profitability come under pressure in 2012 from low capacity utilization at some of its plants and a weaker product mix.

Alfa Laval’s core profit margin fell to 16.2 percent in the third quarter, well below the year-ago 17.0 percent, missing the 16.6 percent seen by analysts and the group said that while capacity use had improved, its product mix remained a drag.

The company proposed a dividend of 3.50 crowns per for 2012, up from 3.25 crowns in the previous year and in line with analysts’ expectations. ($1 = 6.3108 Swedish crowns)

Reporting by Niklas Pollard and Johannes Hellstrom

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