Alfa Laval Aalborg A/S

Management's reviewFinancial highlights20212020201920182017DKKmDKKmDKKmDKKmDKKmManagement's reviewOperating review

Development in activities and financial mattersIn 2021, the Company reported revenue of DKK 2,549,704 thousand against DKK 2,518,998 thousand last year. The income statement for 2021 shows a profit of DKK 318,539 thousand against a profit of DKK 399,614 thousand last year.The realised revenue and profit from ordinary operating activities ended up lower than what we had assumed in our outlook in our last annual report. This is mainly driven by delays in revenue due to the Covid-19 pandemic. However, the development versus last year is still considered satisfactory.At 31 December 2021, the Company's balance sheet showed equity of DKK 1,133,165 thousand.The purpose of our business is to accelerate success for our customers, people and planetAlfa Laval is a leading global provider of premium products in the areas of technology, services and digital solutions within heat transfer, separation, and fluid handling, and is active in the areas of Energy, Marine and Food & Water. Alfa Laval offers its expertise, products, and services to a wide range of customers worldwide. Alfa Laval is committed to optimizing processes, creating responsible growth, and driving progress – always going the extra mile to support customers in achieving their business goals and sustainability targets.Alfa Laval’s innovative technologies are dedicated to purifying, refining, and reusing materials, to promote a more responsible use of natural resources. The company contributes to improved energy efficiency and heat recovery, better water treatment and reduced CO2 emissions. In this way, Alfa Laval is not only accelerating success for its customers, but also for people and the planet.Alfa Laval's Danish companies are owned by Alfa Laval Corporate AB, which is listed on Nasdaq OMX. The group is headquartered in Lund, in the Oresund region. Alfa Laval's products are sold in more than 100 countries, of which more than 50 have their own sales organizations.Alfa Laval has approx. 17,900 employees in 50 sales companies and more than 100 local service centres worldwide. Most of the employees work in Sweden, Denmark, China, India, and North America.Alfa Laval’s five business entities in Denmark have approx. 1,750 employees focusing primarily on innovation, business development, production, sales, and sales promotion. Several of Alfa Laval’s knowledge hubs and test centres are based in the Danish companies and represent a vital part of the Alfa Laval Group’s development activities.2021 in brief2021 was another strong year for Alfa Laval. The company’s business units launched a new strategic plan for long-term growth leading to significant year-end results, particularly in relation to the overall aim to strengthen order intake, earnings, customer experience, and to increase Alfa Laval’s overall market share.The full-year order intake amounted to SEK 45.7 billion or DKK 33.2 billion and finished strongly with order intake growing to 26 percent. In fact, almost all regions and end-user markets showed good results during the year.The main growth driver continues to be the growing demand for sustainable solutions for energy efficiency and decarbonization. Additionally, the contracting of new ships accelerated significantly, indicating profitable business opportunities within the Marine sector.After several years of low activity level in the Oil & Gas sector, order intake is also growing in the end markets. Finally, service continued to show growth across the company in the fourth quarter and increased by 14 percent compared to last year.Despite high-cost inflation, raw material costs, and logistic costs, Alfa Laval reached a EBITA margin of 17 percent through higher volumes, operating efficiency, and a further reduction of costs. Alfa Laval’s supply chain was stable at the end of the year despite a challenging environment. Delayed deliveries due to component shortages remained at approximately the same level as 2020.The annual accounts of the Danish companies have been affected positively by the increasing demand from major energy companies for hydrotreated vegetable oil (HVO) pre-treatment systems to produce renewable diesel from used cooking oil for heavy transport.Due to increasing prices on fossil fuels in 2021, Alfa Laval in Denmark is also experiencing increasing demand for decanter centrifuges for ethanol production - a biofuel that reduces the environmental impact of fossil fuels.In addition, the continued impact of the Covid-19 pandemic in 2021, seriously boosted the sale of digital solutions, which was particularly evident in the breakthrough of the sales of digital solutions for Alfa Laval's decanter centrifuges to the Food and Wastewater industries. The interplay between increased sales of digital solutions for decanter centrifuges and the implementation of a new digital remote service solution based on merged reality also had a positive effect on the company's service business, which grew considerably in 2021, in Denmark and globally.Alfa Laval also experienced an increasing demand from established dairies in Denmark and the Nordic countries for, e.g., decanter centrifuges. This development is based on a desire to expand portfolios to also include various plant-based beverages and is driven by increased demand for plant-based beverages, such as wheat and soy, caused partly by pressured global food supply chains and because of increased consumer awareness of food's environmental footprint.The market for plant-based protein also continued to grow in 2021, which contributed positively to the sale of Alfa Laval's processing equipment for more traditional forms of plant-based protein. The company is also experiencing increasing interest in investment in the development of new types of protein based on new raw materials, such as plants or insects, and in completely new forms of production, such as those based on cell-grown protein.Investments and development in DenmarkThe financial year saw several different investments in Alfa Laval's Danish sites. The company continued to invest in new technology that will enable shipowners to live up to the ever-tightening requirements for shipping worldwide. Through a collaboration with Blue World Technologies in Aalborg, Alfa Laval has succeeded in developing fuel cells, which will enable the use of methanol as a cleaner alternative to fossil fuels on board ships. Testing is scaled up to take place in a natural size ratio at the test and training centre in Aalborg. The use of methanol as a fuel is generally considered a step in the right direction and is part of a larger solution to ensure a transition to shipping that has a drastically reduced environmental impact. The development has taken place in close collaboration with customers in the Marine industry and is planned for launch during 2022.In Søborg, Alfa Laval has invested in a new innovation and test centre that will provide customers, and Alfa Laval, with a framework for testing and developing the use of Alfa Laval Revos. The technology is used to concentrate, for example, beer, which enables breweries around the world to reduce the volume of the finished beer they transport by up to 80 percent by simply transporting a concentrate, thus reducing the environmental impact while at the same time preserving the full taste experience.Alfa Laval has also continued the expansion of its global test and innovation centre for decanter centrifuges in Søborg. With the employment of more employees to work with machine learning and data processing, the staffing is almost fully expanded, and the utilization rate of the facilities is now close to maximum.Also, in Søborg, Alfa Laval's Nordic service and sales company continued to expand the Group's regional service centre for separation technology, in 2021, by increasing capacity and adding more advanced services that cannot be implemented at customer sites. This includes the service of an increasing amount of equipment from customers all over the Nordic region as well as elsewhere in Northern Europe. The employees are experienced specialists with a focus on both quality and safety.At Alfa Laval's site in Nakskov, the company laid the foundations for investment in an upgrade of production equipment and production capacity. This is ongoing alongside targeted efforts to reduce the amount of wastewater and the cost of chemical treatment driven by the tightening of EU chemicals legislation REACH in 2018 and increased product quality requirements. In 2021, 70 percent of the process water used was treated to a quality that means it can be sent directly to the local municipal treatment plant via a pipeline built by Alfa Laval in 2020. The company continues to optimize its water consumption and wastewater treatment.2021 was also the year in which Alfa Laval took new steps to move activities from its Eastbourne factory, in the UK, to the company's site in Kolding. The purpose of the move is partly to optimize production and standardize products and partly to ease the environmental footprint of the company's activities.In 2021, the company also launched several new groundbreaking solutions for hygienic liquid handling. The new DuraCirc® pump gives a large number of industries a highly optimized operation and is unparalleled in the market. The launches of Condition Monitor and CM Connect are the first step towards the digitized monitoring of hygienic liquid handling, which will improve Alfa Laval’s ability to anticipate customers' operational failures and improve their utilization of Alfa Laval equipment.In 2021, Alfa Laval also entered into a collaboration with Stena Recycling with a view to reutilizing worn-out heat exchangers from customers throughout the Nordic region. The scheme ensures the recycling of all metal in the used heat exchangers. It is a significant step towards ensuring the recycling of other worn-out products and will contribute to neutralizing Alfa Laval's CO2 emissions by 2030.Contribution to energy transitionIn 2021, the Alfa Laval Group enhanced its interplay between services, business development and the digital transformation of business processes. In addition, the higher volume of digital services, which enable its customers to assess the need for service to reduce their carbon footprint, is also enhanced and has led to a more dynamic approach in the optimization of customers’ systems.Across Alfa Laval’s customer-focused activities, four cornerstones have been identified in the effort to reduce carbon footprint. These areas contribute to Alfa Laval’s profitability and to enhancing customer competitiveness through sustainable solutions. These are now a driving force for green transition.Energy efficiencyAccelerating sustainable solutions through energy efficiency is essential for the delivery of sustainable products and solutions across all of Alfa Laval’s business areas and industries.Alfa Laval’s heat transfer technology plays a decisive role in recovering and converting waste heat directly into electrical power on board ships as it is up to 50 percent more energy efficient than traditional technology. This reduces costs and provides customers with an incentive to reuse heat as fossil fuel prices continue to rise. Shipowners’ use of green hydrogen as an alternative fuel will also drive rapid cost reduction for green hydrogen.Clean energyThe demand for clean energy solutions accelerated faster than ever in 2021, and Alfa Laval kept its investments in the field as a result. Heat transfer and separation technologies are often critical components when producing green hydrogen, Power-to-X, and fuels cells for energy storage, which make them significant business potential areas.CircularityIn 2021, circularity became an even more important part of Alfa Laval’s activities in improving and optimizing its customers’ recirculation of water, heat, chemicals, polymers, and other resources.Alfa Laval’s customers are embracing circularity to turn a profit, which is essential for Alfa Laval’s move towards circularity and circular economy. Processing the by-products of ethanol production is far more profitable for customers than the actual ethanol production.Sustainable foodIn recent years, Alfa Laval has been preparing for changing consumer behaviour for sustainable foods and has developed energy-efficient solutions for plant-based protein processing systems. This is partly to ensure the higher yield of existing foods and partly to strengthen global supply chains and to enable a supplement from local supply chains.SustainabilityAlfa Laval is not only accelerating sustainability for its customers. For Alfa Laval, sustainability is an integral part of our long-term strategy and Alfa Laval continues to support the UN Global Compact. In addition, Alfa Laval has joined the ‘1.5 C Business Playbook initiative to accelerate its efforts to become carbon neutral by 2030. It is a big undertaking for the Alfa Laval Group, but progress in 2021 was substantial. First, the emissions of scope 1 & 2 were reduced by 33 percent compared to 2020, despite increased volumes in production. Second, for the first time, Alfa Laval now has a clear plan for how to reach our objectives by 2030.Alfa Laval aims to reduce its impact on the environment and continues its efforts to reduce emissions throughout the value and supply chains, while also extending the lifespan of our products. Many Alfa Laval products have a lifespan of 20 to 30 years. By designing products that last longer, Alfa Laval sees the greatest potential for reducing its environmental impact. Alfa Laval will develop environmentally optimized products for use in global supply chains and help its customers to optimize their processes to become more productive, energy efficient and competitive.Inclusion and diversityAt Alfa Laval, collaboration and strong, lasting partnerships are deeply rooted in our culture. Development, implementation, and servicing of customer solutions take place together with our customers and our partners. At Alfa Laval, we always go the extra mile to overcome the toughest challenges. Alfa Laval has dedicated people with curious minds and its driving force is to accelerate success for its customers, people, and planet. Every day.At present there are 44 nationalities in the Danish companies, which clearly demonstrates that diversity and inclusion are key prioritiesAlfa Laval in DanmarkThe five Danish companies work closely together to coordinate activities and to position Alfa Laval Group in Denmark. Below is an overview of the activity areas of the five different legal entities.Alfa Laval Aalborg A/SAlfa Laval Aalborg is a global centre for boiler technology. The company develops, manufactures, supplies and services boilers, burners, heat exchangers and inert gas burners for ships and industries throughout the world. The company has increasing focus on the development of green technologies for the Shipping industry, such as fuel cells as a renewable energy source for shipping. Alfa Laval Aalborg has the world’s largest test and training centre, which gives the customers a unique opportunity to test their marine products in their own environment using seawater from the nearby Limfjord and with state-of-the-art equipment. In addition, the company has production facilities for manufacturing of PureBallast technology dedicated to ballast water treatment on board ships.Alfa Laval Copenhagen A/SAlfa Laval Copenhagen, headquartered in Søborg, is a global centre for process technology, decanter centrifuges and desalination. Alfa Laval’s Food & Water Division and Alfa Laval’s global Innovation & Test Centre for decanters are also headquartered in Søborg. The primary business areas are product development, production, sales promotion and worldwide sales of various technologies, digital solutions, services for various industries within the Energy sector, Food industry and Wastewater treatment business.Alfa Laval Kolding A/SAlfa Laval Kolding is a global centre for flow equipment and for tank-cleaning equipment. The primary business areas are product development, production, distribution and sale of pumps, valves and tank equipment for the Food, Brewery, Dairy, Pharmaceutical and Cosmetics industries. The company specializes in precision control of fluid transport solutions for pumping liquids of any viscosity, fast cleaning, and intelligent, automated control. In addition, the company is responsible for purchasing complementary solutions for use within Food & Beverage, Brewery, Pharmaceutical, Chemical, and Pulp & Paper as well as the Marine and Offshore industries. In addition, the company has a global Application & Innovation Centre and a Training Centre, which are used by end users, business partners and Alfa Laval employees.Alfa Laval Nakskov A/SAlfa Laval Nakskov is a global centre for membrane filtration. The company is Alfa Laval's global centre for development, production and sale of membranes and advanced liquid separation systems for the Biotechnological and Pharmaceutical industries, the Food industry, the Process industry, the Wastewater industry and other selected customers and applications. The company produces the finest pore-size filters in the market ranging from microfiltration to nanofiltration and ultrafiltration to reverse osmosis membranes, where separation takes place based on molecular size. The company develops and provides MBR Membranes, which makes wastewater plants smaller, less expensive, and more efficient. Alfa Laval Nakskov also has a global test centre where customers can test Alfa Laval’s membrane technology on various applications.Alfa Laval Nordic A/SAlfa Laval Nordic A/S is the Alfa Laval Group’s sales and service company in Denmark. The company is responsible for the sales and marketing of products and systems, as well as the sale of spare parts and services within separation, heat exchangers and liquid handling in Denmark. The company is part of the Nordic sales region within Alfa Laval, which entails integrated cooperation across the sales organizations in Denmark, Finland, Norway, and Sweden, which also covers activities in Iceland and the Faroe Islands.Unusual mattersNo unusual matters have occurred in 2021 that have materially affected results apart from the market trends in the marine industry and the volatility due to the Covid-19 Pandemic.Uncertainty related to recognition and measurementThere are no material uncertainty related to the financial statement items in the annual report.Special risksThe Company assesses that it is exposed to the following risks that may affect performance and expected resultsCancellation of contracts or credit riskProduct defectsCompetitive environmentForeign currency risk related to purchase and sale on global marketsTrends in the new ship market.Activities are continuously in progress to reduce the effect of these risks.