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Annual Report 2023

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313 views192 pages

Annual Report 2023

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Financial information

Alfa Laval uses a number of channels to provide regarding the company’s operations. In addition, Financial information for fiscal year 2024
information about the company’s operations representatives of Group management meet Alfa Laval will publish quarterly reports on
and financial development. The website – with analysts, investors and journalists on an the following dates in 2024:
www.alfalaval.com/investors – is updated ongoing basis to ensure that they have correct First quarter report: April 25, 2024
continuously with annual reports, quarterly and current information. Pursuant to the com- Second quarter report: July 20, 2024
reports, press releases and presentations. pany’s agreement with Nasdaq Stockholm, Third quarter report: October 25, 2024
Annual reports are also sent to those share- information that could have an effect on the Year-end report: Februari 5, 2025
holders who have notified the company that share price and that is not yet publicly known is
they wish to receive a copy. Conference calls never disclosed in conjunction with these types Shareholder information
with analysts, investors and the media are of meetings or contacts. Alfa Laval employs a Johan Lundin
arranged by Alfa Laval in conjunction with the so-called silent period of three weeks prior to the Head of Investor Relations
publication of the company’s quarterly reports. publication of a quarterly report. The President Tel: +46 46 36 74 82
A capital markets day is organized each year, and Chief Financial Officer do not meet or speak e-mail: [email protected]
during which representatives from the financial to representatives from the financial market
market are offered more in-depth information during this period.

Analysts tracking Alfa Laval

ABG Sundal Collier: Danske Bank HSBC Pareto Securities

Anders Idborg Viktor Trollsten Puneet Garg Anders Roslund
[email protected] [email protected] [email protected] [email protected]
Tel: +46 8 566 294 90 Tel: +46 767 21 67 96 Tel: +91 80 4555 2756 Tel: +46 8 402 52 88

ALPHAVALUE Deutsche Bank JP Morgan RBC Capital Markets

Luis Pereira John Kim Andrew Wilson Sebastian Kuenne
[email protected] [email protected] [email protected] [email protected]
Tel: +33 1 70 61 10 65 Tel: +44 207 541 8699 Tel: +44 20 7742 6332 +44 20 742 98932

Bank of America Merrill Lynch DNB Kepler Cheuvreux SEB

Uma Samlin Mattias Holmberg Johan Eliason Fredrik Agardh
[email protected] [email protected] [email protected] [email protected]
Tel: +44(0) 7708 835775 Tel: +46 8 473 48 14 Tel: +46 8 723 51 63 Tel: +46 8 522 298 06

Barclays Capital Exane BNP Paribas Morgan Stanley UBS

Vlad Sergievskii Andreas Koski Max Yates Sven Weier
[email protected] [email protected] [email protected] [email protected]
+44 207 116 1117 Tel: +46 8 566 398 23 Tel: +44 207 425 19 17 Tel: +49 69 1369 8278

Carnegie Goldman Sachs International Morningstar

Gustav Österberg Daniela Costa Matthew Donen

Enabling change
[email protected] [email protected] [email protected]

Annual Report – Sustainability Report – Corporate Governance Report – 2023

Tel: +46 8 5886 85 13 Tel: +44 20 7774 8354 Tel: +31 20 797 00 12

Citi Investment Research Handelsbanken Nordea

Klas Bergelind Gustav Schwerin Henrik Gripenvik
[email protected] [email protected] [email protected]
Tel: +44 207 986 4018 Tel: +46 8 701 13 81 Tel: +46 10 156 1231

This is Alfa Laval

Alfa Laval is active in the areas of Energy, Marine, and
Annual General Meeting 2024 tion – no later than April 19, 2024 – in accor- proxy, a power of attorney or authorization must Food & Water, offering its expertise, products, and service
The Annual General Meeting of Alfa Laval AB dance with the instructions in the notice. be submitted to the company prior to the Meeting. to a wide range of industries in some 100 countries. The
(publ) will be held on Thursday, April 25, 2024, Shareholders may exercise their voting rights at company is committed to optimizing processes, creating
at 4.00 p.m. at Stadshallen, Stortorget 9, in the Annual General Meeting 2023 by voting in Meeting program responsible growth, and driving progress – always going
Lund. Notice of the Annual General Meeting advance. A shareholder whose shares are held 4:00 p.m. Start of Meeting
the extra mile to support customers in achieving their
will be inserted as an announcement in the in the name of a nominee must, in addition to
business goals and sustainability targets.
Swedish Official Gazette and on the company’s providing notification of participation, register Dividend
website not more than six and not less than its shares in its own name so that the share- The Board of Directors and the President pro-
Alfa Laval’s innovative technologies are dedicated to
four weeks prior to the Meeting. An announce- holder is recorded in the share register relating pose that a dividend of SEK 7.50 per share be
purifying, refining, and reusing materials, promoting more Alfa Laval contributes to progress towards the UN Sustainable Development
ment that notification has been issued will be to the circumstances on April 17, 2024. Please distributed to shareholders. The proposed
placed in Dagens Nyheter. As a service to exist- see the notice for more information. record date for the dividend is Monday, April 29, responsible use of natural resources. They contribute to Goals for 2030. We continuously improve our own sustainability performance
ing shareholders, information about the Annual 2024. If the Annual General Meeting approves improved energy efficiency and heat recovery, better
General Meeting can also be sent to them by Notification of participation shall be made to: the proposal, the dividend is expected to be water treatment, and reduced emissions. Thereby, Alfa and enable change by supporting customers to reach their environmental targets.
mail. The following information concerning the – Alfa Laval AB, Group Staff Legal, distributed by Euroclear Sweden AB on Friday, Laval is not only accelerating success for its customers,
Meeting does not constitute legal notice. Box 73, SE-221 00 Lund, Sweden May 3, 2024. The record date and dividend but also for people and the planet. Making the world
– E-mail: [email protected] payment date may be postponed due to the better, every day. It’s all about Advancing better™.
Notification of participation – Website: www.alfalaval.com technical procedures required for the execution Alfa Laval’s products and solutions enable our customers to improve the efficiency
A shareholder who wishes to attend the Annual – Tel: +46 46 36 74 00 or +46 46 36 65 00. of the payment. How to contact Alfa Laval of their production processes by, for example, improving energy efficiency, reusing
General Meeting must be recorded as share - Up-to-date Alfa Laval contact details for all countries are water or reducing waste. Moreover, Alfa Laval supports the transition to a more
holder in the register of shareholders prepared Shareholders must state their name, personal always available on our website at www.alfalaval.com 2023 Annual & Sustainability Report sustainable future in the energy, food and marine industries.
by Euroclear Sweden AB relating the circum- identity number and telephone number on the
stances on April 17, 2024, and notify participa- notice of participation. If participation is by

XXXXXXX-1-EN 2403
Financial information
Alfa Laval uses a number of channels to provide regarding the company’s operations. In addition, Financial information for fiscal year 2024
information about the company’s operations representatives of Group management meet Alfa Laval will publish quarterly reports on
and financial development. The website – with analysts, investors and journalists on an the following dates in 2024:
www.alfalaval.com/investors – is updated ongoing basis to ensure that they have correct First quarter report: April 25, 2024
continuously with annual reports, quarterly and current information. Pursuant to the com- Second quarter report: July 20, 2024
reports, press releases and presentations. pany’s agreement with Nasdaq Stockholm, Third quarter report: October 25, 2024
Annual reports are also sent to those share- information that could have an effect on the Year-end report: Februari 5, 2025
holders who have notified the company that share price and that is not yet publicly known is
they wish to receive a copy. Conference calls never disclosed in conjunction with these types Shareholder information
with analysts, investors and the media are of meetings or contacts. Alfa Laval employs a Johan Lundin
arranged by Alfa Laval in conjunction with the so-called silent period of three weeks prior to the Head of Investor Relations
publication of the company’s quarterly reports. publication of a quarterly report. The President Tel: +46 46 36 74 82
A capital markets day is organized each year, and Chief Financial Officer do not meet or speak e-mail: [email protected]
during which representatives from the financial to representatives from the financial market
market are offered more in-depth information during this period.

Analysts tracking Alfa Laval

ABG Sundal Collier: Danske Bank HSBC Pareto Securities

ALPHAVALUE Deutsche Bank JP Morgan RBC Capital Markets

Bank of America Merrill Lynch DNB Kepler Cheuvreux SEB

Barclays Capital Exane BNP Paribas Morgan Stanley UBS

Carnegie Goldman Sachs International Morningstar

Gustav Österberg Daniela Costa Matthew Donen

Enabling change
[email protected] [email protected] [email protected]

Annual Report – Sustainability Report – Corporate Governance Report – 2023

Tel: +46 8 5886 85 13 Tel: +44 20 7774 8354 Tel: +31 20 797 00 12

Citi Investment Research Handelsbanken Nordea

Klas Bergelind Gustav Schwerin Henrik Gripenvik
[email protected] [email protected] [email protected]
Tel: +44 207 986 4018 Tel: +46 8 701 13 81 Tel: +46 10 156 1231

This is Alfa Laval

XXXXXXX-1-EN 2403
Alternative performance measures
and definitions
Ten-year overview Alternative performance measures hensive income statement and the amortisation of Order backlog at year-end
An alternative performance measure is a financial step-up values is exhibited in the Income analysis table Incoming orders that not yet have been invoiced,
Consolidated measure of historical financial performance, financial on page 120, while the corresponding tax is SEK 208 translated at the current closing rate. The order backlog
position or cash flows, other than a financial measure (159) million. This key figure is fully comparable over at the end of the year is equal to the sum of the order
SEK millions, unless otherwise stated 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 time independent of the amortisation of step-up backlog at the beginning of the year plus the orders
defined or specified in the financial reporting framework.
Key ratios values that from time to time burden the Group. received during the year less the net sales for the year.
In the annual report, the following alternative performance
Orders received 70,742 58,645 45,718 39,833 44,119 45,005 36,628 32,060 37,098 36,660 It gives an indication of how the net sales can be ex-
measures have been used (all of these alternative
Measures to show how the Group is pected to develop in the future.
Order backlog at year end 45,325 37,020 22,954 18,969 21,551 23,168 18,289 16,870 20,578 22,293 performance measures relate to actual historical figures
EBITA 10,221 7,462 6,922 6,435 8,178 6,869 5,610 4,680 6,811 5,571 and never to expected performance in future periods): funded and manages its capital
World-leading in three key technologies – Return on capital employed (%) is defined as EBITA Profit margin %
EBITDA 11,780 8,911 8,113 7,569 9,251 7,495 6,239 5,323 7,478 6,136 in relation to average capital employed, calculated on 12 Result after financial items in relation to net sales,
Measures to achieve full comparability expressed in percent.
EBITA-margin % 16.1% 14.3% 16.9% 15.5% 17.6% 16.9% 15.9% 13.1% 17.1% 15.9% months’ revolving basis and expressed in percent. Capital
over time
EBITDA-margin % 18.5% 17.1% 19.8% 18.3% 19.9% 18.4% 17.7% 14.9% 18.8% 17.5% employed is defined as total assets less liquid funds,
Heat transfer Separation Fluid handling All of these concern the comparison distorting impact Capital turnover rate, times
other long-term securities, accrued interest income,
Compact heat exchangers that recycle Separators, decanter centrifuges, filters, Pumps, valves, tank cleaning equipment Adjusted EBITA 10,221 8,229 7,114 7,231 7,989 6,718 5,610 5,553 6,811 5,891 from above all amortisation of step-up values both over Net sales in relation to average capital employed, ex-
operating liabilities and other non-interest-bearing
Adjusted EBITDA 11,780 9,678 8,305 8,365 9,062 7,344 6,239 6,196 7,478 6,456 time and compared to external companies. For the same pressed as a multiple of capital employed. Shown ex-
heat, optimize customers’ energy con- strainers and membranes that separate and installation material for industries with liabilities, including tax and deferred tax, but excluding
reasons adjustments are also made for comparison cluding and including goodwill, step-up values and
sumption, cut costs and reduce negative liquids from other liquids and solid particles stringent hygiene requirements as well as Adjusted EBITA-margin % 16.1% 15.8% 17.4% 17.4% 17.2% 16.5% 15.9% 15.6% 17.1% 16.8% distortion items. How they are calculated is exhibited in the
accrued interest costs. The measure shows how well
the capital that is used in the operations is managed. the corresponding deferred tax liability.
environmental impact. from liquids or gases. pumping systems specifically for the marine Adjusted EBITDA-margin % 18.5% 18.6% 20.3% 20.2% 19.5% 18.1% 17.7% 17.4% 18.8% 18.4% Income analysis table on page 120, except for the last one.
industry and the offshore market. Profit margin % 13.6% 11.9% 15.0% 12.0% 15.5% 14.5% 12.4% 9.3% 13.7% 11.7% – Net debt is defined as interest-bearing liabilities and
– EBITA or Earnings Before Interests, Taxes and Amor- Capital employed
lease liabilities less cash and cash equivalents and
tisation is defined as operating income before amor- Average total assets less liquid funds, other long-term
current deposits. The calculation of net debt is exhib-
tisation of step-up values. This measure of result is fully securities, accrued interest income, operating liabilities
Excl. goodwill and step-up values: ited in the Net debt table in Note 29. The measure
comparable over time independent of the financing and other non-interest-bearing liabilities, including tax
Capital turnover rate, times 3.4 3.5 3.8 3.9 4.4 7.4 5.7 8.6 10.6 7.9 shows the net financial indebtedness.
costs and the amortisation of step-up values that and deferred tax, but excluding accrued interest costs.

Three business divisions with customer needs front and centre Capital employed
Return on capital employed %
18,509
55.2%
15,087
49.5%
10,839
63.9%
10,751
59.9%
10,649
76.8%
5,474
125.5%
6,201
90.5%
4,146
112.9%
3,734
182.4%
4,447
125.3%
from time to time burden the Group.
– EBITA margin (%) is defined as EBITA in relation to
– Net debt to EBITDA, times is defined as Net debt in
relation to EBITDA, calculated on 12 months’ revolving
Shown excluding and including goodwill and step-up
values and the corresponding deferred tax liability.
basis and expressed as a multiple of EBITDA. This is one Shows the capital that is used in the operations. The
net sales and expressed in percent.
of the covenants of Alfa Laval’s loans and an important capital employed for the Group differs from the net
Food & Water Energy Division Marine Division – EBITDA or Earnings Before Interest, Taxes, Depreciation
Incl. goodwill and step-up values: key figure when reviewing the proposed dividend. capital for the operating segments concerning taxes,
The Food & Water Division works with The Energy Division focuses on solutions to The Marine Division specializes in solutions and Amortisation is defined as operating income before EBITDA or Earnings Before Interest, Taxes, Depreciation deferred taxes and pensions.
Capital turnover rate, times 1.3 1.2 1.2 1.2 1.3 1.3 1.1 1.2 1.3 1.3 depreciation and amortisation of step-up values.
products and systems for food and water promote greater energy efficiency, in both for shipping customers, including shipping and Amortisation is defined as operating income
Capital employed 48,753 43,060 34,677 33,678 35,550 30,729 31,698 30,663 31,512 27,259 This measure of result is fully comparable over time before depreciation and amortisation of step-up values.
applications, for example in industries such financial and environmental terms. Customers companies, shipyards, engine manufacturers Return on equity %
Return on capital employed % 21.0% 17.3% 20.0% 19.1% 23.0% 22.4% 17.7% 15.3% 21.6% 20.4% independent of the financing costs, the depreciation
as food, pharmaceuticals, biotech, brewing, include companies operating in data centres, and companies involved in offshore oil and – Debt ratio, times is defined as Net debt in relation Net income for the year in relation to average equity,
and the amortisation of step-up values that from
to equity at the end of the period and expressed as expressed in percent.
dairy and water treatment. renewable energy, heating, ventilation and gas exploration. time to time burden the Group.
Return on equity % 17.6% 13.5% 15.8% 12.7% 21.3% 20.3% 13.9% 11.8% 21.7% 17.6% a multiple of the equity. This is another measure of
refrigeration, oil and gas extraction, refining, – EBITDA margin (%) is defined as EBITDA in relation Solidity %
how the Group is funded.
petrochemicals and power generation. Solidity % 45.4% 43.9% 50.3% 47.8% 43.1% 40.6% 39.0% 38.0% 35.5% 30.8% to net sales and expressed in percent. Equity in relation to total assets, expressed in percent.
– Interest coverage ratio, times is defined as EBITDA
Net debt * 10,011 13,070 7,024 3,635 8,175 6,985 8,200 9,619 11,688 15,068 –A
djusted EBITA or Adjusted Earnings Before Interests, plus financial net increased by interest costs in relation
Net debt to EBITDA, times * 0.85 1.47 0.87 0.48 0.88 0.93 1.31 1.81 1.56 2.46 Taxes and Amortisation is defined as operating in- Cash flow from operating activities
to interest costs. Expressed as a multiple of interest
come before amortisation of step-up values, adjust- Shows the Group's cash flow from operating activities,
Debt ratio, times * 0.27 0.37 0.22 0.13 0.29 0.30 0.40 0.47 0.63 0.88 costs. Gives an expression for the Group's ability to pay
ed for comparison distortion items. This measure of that is the cash flow generated in the daily operational
Interest coverage ratio, times 23.1 27.9 38.4 27.3 32.8 39.3 28.4 24.5 22.3 18.2 interest. The reason EBITDA is used as the starting
result is fully comparable over time independent of activities.
point is that this forms the starting point for a cash flow
Cash flow from: the comparison distortion items, the financing costs perspective on the ability to pay interest. Financial
operating activities 9,169 3,291 5,264 7,723 5,223 4,883 4,463 4,979 5,850 5,123 and the amortisation of step-up values that from Cash flow from investing activities
items classified as comparison distorting are excluded
time to time burden the Group. Shows the Group's cash flow from investing activities,
investing activities -2,687 -5,518 -5,025 -1,058 -1,027 -1,293 -721 -795 -710 -14,970 from the calculation.
i.e. the cash flow generated by mainly the Group's in-
financing activities -5,543 3,093 -2,081 -6,917 -2,945 -2,445 -3,159 -3,566 -5,229 10,250 – Adjusted EBITA margin (%) is defined as Adjusted – Free cash flow per share is sum of cash flows from vestments in fixed assets, divestments and acquisitions
EBITA in relation to net sales and expressed in percent. operating activities, investments and divestments of
Investments 2,440 1,853 1,229 1,232 1,337 1,490 675 617 674 603 of businesses and divestments of real estate.
– Adjusted EBITDA or Adjusted Earnings Before Interest, fixed assets for the year divided by the average number
Average number of employees 20,803 19,002 17,419 17,160 17,387 16,785 16,521 17,305 17,486 17,109 Taxes, Depreciation and Amortisation is defined as of shares. This represents the cash flow available for Cash flow from financing activities
Earnings per share, SEK 15.31 10.89 11.38 8.47 13.08 10.77 7.09 5.46 9.15 7.02 operating income before depreciation and amortisation interest payments, acquisition of businesses and Shows the Group's cash flow from financing activities,
Free cash flow per share, SEK ** 16.50 3.52 9.71 15.76 9.28 8.38 9.09 10.49 12.40 10.96 of step-up values, adjusted for comparison distortion dividends to investors. that is mainly dividends, increase and amortisation of
items. This measure of result is fully comparable loans and the cash flow components of the financial net.
* Lease liabilities have increased by SEK 2,766 million as per January 1, 2019 due to the initial application of IFRS 16 Leases, which affects the net debt at December 31, 2019. over time independent of the comparison distortion Definitions of other performance measures
** Free cash flow is the sum of cash flows from operating activities, investments and divestments of fixed assets. items, the financing costs, the depreciation and the Net sales Investments
amortisation of step-up values that from time to Revenues from goods sold and services performed Investments represent an important component in the
Observe that certain financial measures above constitute alternative performance measures. time burden the Group. that are part of the ordinary operations of the Group, cash flow for the Group. The level of investments during

70,742 63,598 16.1% 21,321

– Adjusted EBITDA margin (%) is defined as Adjusted after deduction for given discounts, value added tax a couple of years gives a picture of the capacity build
Alfa Laval is a world-leading, global provider of first-rate products in the areas of heat transfer, EBITDA in relation to net sales and expressed in percent. and other tax directly linked to the sales. up in the Group.

separation and fluid handling. With these as its base, Alfa Laval aims to help enhance the – Adjusted gross profit is defined as gross profit ex-
Comparison distortion items Average number of employees
cluding amortisation of step-up values. This measure
productivity and competitiveness of its customers in various industries throughout the Order intake amounted to SEK Net sales amounted to SEK 63,598 Adjusted EBITA amounted to Alfa Laval’s employees are the company’s of result is fully comparable over time independent
Items that do not have any link to the normal operations The number of employees is measured and reported as
70,742 million in 2023, a growth million in 2023, a growth of 22 SEK 10,221 million in 2023, a most important resource. Creating a of the Group or that are of a non-recurring nature, where full time equivalents. The average number of employees
world. We understand their challenges and deliver sustainable products and solutions of 21 percent to 2022. Organic or- percent to 2022. Organic sales growth of 24 percent to secure, inspiring work environment is Alfa Laval AB (publ)
of the amortisation of step-up values that from time
to time burden the Group.
a reporting together with other items in the consolidated is calculated based on the number of employees at the
comprehensive income statement would have given end of the last 5 quarters. The costs that are related
that meet their requirements – mainly in energy, food and the marine industry. der intake grew 11 percent. growth was 12 percent. 2022. The adjusted EBITA therefore a top priority, as is forming a Box 73
– Adjusted gross margin (%) is defined as Adjusted gross a comparison distortion effect that would have made to the number of employees represent a large part of
margin was 16.1 percent. culture that can both attract and retain SE-221 00 Lund
profit in relation to net sales and expressed in percent. it difficult to judge the development of the ordinary the total costs for the Group. The development of the
talent and allow people to thrive. Corporate Registration Number:
– Earnings per share, excluding amortisation of operations for an outside viewer. average number of employees over time in relation to
556587-8054
step-up values and the corresponding tax is defined the development of the net sales therefore gives an
as net income attributable to the owners of the parent, Orders received indication of the cost rationalisation that is taking place.
Visiting address:
excluding amortisation of step-up values and the Incoming orders during the year, calculated in the same
Production: Alfa Laval AB / Hallvarsson & Halvarsson AB Rudeboksvägen 1
corresponding tax divided by the average number of way as net sales. The orders received give an indication Earnings per share
Prepress and printing: TMG Öresund Tel: + 46 46 36 65 00
shares. The net income attributable to the owners of of the current demand for the Group's products and Net income for the year attributable to the equity holders
Translation: The Bugli Company Website: www.alfalaval.com
the parent is presented in the consolidated compre- services, that with a varying delay appear in net sales. of the parent divided by the average number of shares.
Alternative performance measures
and definitions
Ten-year overview Alternative performance measures hensive income statement and the amortisation of Order backlog at year-end
An alternative performance measure is a financial step-up values is exhibited in the Income analysis table Incoming orders that not yet have been invoiced,
Consolidated measure of historical financial performance, financial on page 120, while the corresponding tax is SEK 208 translated at the current closing rate. The order backlog
position or cash flows, other than a financial measure (159) million. This key figure is fully comparable over at the end of the year is equal to the sum of the order
SEK millions, unless otherwise stated 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 time independent of the amortisation of step-up backlog at the beginning of the year plus the orders
defined or specified in the financial reporting framework.
Key ratios values that from time to time burden the Group. received during the year less the net sales for the year.
In the annual report, the following alternative performance
Orders received 70,742 58,645 45,718 39,833 44,119 45,005 36,628 32,060 37,098 36,660 It gives an indication of how the net sales can be ex-
measures have been used (all of these alternative
Measures to show how the Group is pected to develop in the future.
Order backlog at year end 45,325 37,020 22,954 18,969 21,551 23,168 18,289 16,870 20,578 22,293 performance measures relate to actual historical figures
EBITA 10,221 7,462 6,922 6,435 8,178 6,869 5,610 4,680 6,811 5,571 and never to expected performance in future periods): funded and manages its capital
World-leading in three key technologies – Return on capital employed (%) is defined as EBITA Profit margin %
EBITDA 11,780 8,911 8,113 7,569 9,251 7,495 6,239 5,323 7,478 6,136 in relation to average capital employed, calculated on 12 Result after financial items in relation to net sales,
Measures to achieve full comparability expressed in percent.
EBITA-margin % 16.1% 14.3% 16.9% 15.5% 17.6% 16.9% 15.9% 13.1% 17.1% 15.9% months’ revolving basis and expressed in percent. Capital
over time
EBITDA-margin % 18.5% 17.1% 19.8% 18.3% 19.9% 18.4% 17.7% 14.9% 18.8% 17.5% employed is defined as total assets less liquid funds,
Heat transfer Separation Fluid handling All of these concern the comparison distorting impact Capital turnover rate, times
other long-term securities, accrued interest income,
Compact heat exchangers that recycle Separators, decanter centrifuges, filters, Pumps, valves, tank cleaning equipment Adjusted EBITA 10,221 8,229 7,114 7,231 7,989 6,718 5,610 5,553 6,811 5,891 from above all amortisation of step-up values both over Net sales in relation to average capital employed, ex-
operating liabilities and other non-interest-bearing
Adjusted EBITDA 11,780 9,678 8,305 8,365 9,062 7,344 6,239 6,196 7,478 6,456 time and compared to external companies. For the same pressed as a multiple of capital employed. Shown ex-
heat, optimize customers’ energy con- strainers and membranes that separate and installation material for industries with liabilities, including tax and deferred tax, but excluding
reasons adjustments are also made for comparison cluding and including goodwill, step-up values and
sumption, cut costs and reduce negative liquids from other liquids and solid particles stringent hygiene requirements as well as Adjusted EBITA-margin % 16.1% 15.8% 17.4% 17.4% 17.2% 16.5% 15.9% 15.6% 17.1% 16.8% distortion items. How they are calculated is exhibited in the
accrued interest costs. The measure shows how well
the capital that is used in the operations is managed. the corresponding deferred tax liability.
environmental impact. from liquids or gases. pumping systems specifically for the marine Adjusted EBITDA-margin % 18.5% 18.6% 20.3% 20.2% 19.5% 18.1% 17.7% 17.4% 18.8% 18.4% Income analysis table on page 120, except for the last one.
industry and the offshore market. Profit margin % 13.6% 11.9% 15.0% 12.0% 15.5% 14.5% 12.4% 9.3% 13.7% 11.7% – Net debt is defined as interest-bearing liabilities and
– EBITA or Earnings Before Interests, Taxes and Amor- Capital employed
lease liabilities less cash and cash equivalents and
tisation is defined as operating income before amor- Average total assets less liquid funds, other long-term
current deposits. The calculation of net debt is exhib-
tisation of step-up values. This measure of result is fully securities, accrued interest income, operating liabilities
Excl. goodwill and step-up values: ited in the Net debt table in Note 29. The measure
comparable over time independent of the financing and other non-interest-bearing liabilities, including tax
Capital turnover rate, times 3.4 3.5 3.8 3.9 4.4 7.4 5.7 8.6 10.6 7.9 shows the net financial indebtedness.
costs and the amortisation of step-up values that and deferred tax, but excluding accrued interest costs.

70,742 63,598 16.1% 21,321

The share Financial information 191

Alfa Laval’s share in 2023 80 Annual General Meeting 191

Partnership for the goals

17 Alfa Laval has been a signatory of the UN Global
Compact since 2011. We actively engage with
stakeholders throughout our entire value
chain to develop common solutions
and create shared value.

5
For the most part, 2023 became a year of In the Food & Water division the demand situation was mixed.
The weakness in the transactional business which started already
operational stability. After a several years of in mid-2022, continued. The business volume with channel partners
exceptional volatility due to the pandemic decreased, especially in China. On the other hand, the project
business was exceptionally strong and with the recent acquisition
and geopolitical turmoil, global supply chains of Desmet the division had a record year with an order intake of
normalized, and customer service and delivery 26.4 BSEK, 20% higher than in 2022. The division will enter 2024
with a strong order book for projects, and a lower utilization rate in
lead times improved through the year. Cashflow
certain production units.
was a good indicator of the improved business
conditions and increased to a record level of The Energy division continued to grow with support from the
global energy transition and demand for energy efficient solutions.
10 BSEK for the full year. Although it was At the same time the traditional natural gas business had a strong
expected, it did confirm the strength of recovery, as a needed transition fuel away from fossil dependency.
The first signs of a growing global capital allocation towards the
Alfa Laval´s operating model. energy transition became evident with orders being booked in key
verticals like hydrogen production, carbon capture, and e-fuels.
The market conditions were generally favorable across all three From a climate point of view, the transition is going too slow, but
divisions, but still with some demand fluctuations. gradually the pace of final investment decisions is increasing. On
the negative side, after a number of years of strong demand the
In the Marine division demand was strong in all key areas and European heat pump market weakened significantly in the second
resulted in an order intake of 24 BSEK, a growth of 23% compared half of 2023 due to lower gas prices and the termination of certain
to 2022. Contracting of new ships continued on a good level and will government subsidy programs. The order intake of 20.4 BSEK,
likely reach approximately 2000 vessels when the final count is ready. also a new record level, was strong given the market conditions.
The mix was good, with a strong re-bound for product tankers.
The trend towards green fuels, and multi-fuels, continued and had The total order intake of 70.7 BSEK, corresponding to a growth of
a positive impact on orders in many parts of the business. Service 21%, confirms the competitiveness of the current product portfolio.
grew to a new record level, impacted by the high utilization levels During several years Alfa Laval´s growth rate has been above market
of the merchant fleet and freight rates being high in almost all areas. average, leading to stronger market positions and scale advantages.

6 CEO comments
The financial strength of the group is key to sustain the increased and a safer working environment. In 2023 that trend was broken
technology investments with the intent to lead the ongoing industrial and the number of accidents remained flat versus the previous
transformation. Innovative solutions and capabilities, in industry year, amounting to 85 recorded accidents with a minimum of one
and in Alfa Laval, are needed at a faster pace than ever before. day of sick leave. Still, we have confidence in the ongoing program
for improved safety at work and expect the positive trend to return
The biggest transformation decision made in Alfa Laval in 2023 in 2024. With many of the operating units being completely accident
was to form a dedicated business unit for Fuel cell and Electrolyzer free for years, we know it can be achieved.
technology. The plate technology needed in the hydrogen economy
is a version of what Alfa Laval has done for decades in the heat The financial performance of the group was satisfactory, with record
exchanger businesses. If the project is successful, it will be an high earnings and EPS. The Adjusted EBITA grew to 10.2 BSEK an
important addition as a new technology platform for the Group. In increase of 24%. EPS grew to 15.31 SEK, an improvement of 41%
parallel the development in earlier announced projects continue compared to 2022, resulting in a proposal to the AGM to increase
as planned. The Oceanbird wind propulsion solution for large ships the dividend from 6 SEK to 7.50 SEK. The operating cashflow fully
is advancing well and the first pilot installation is expected early financed the ongoing capacity investment program, amounting to
2025. The OceanGlide project, aiming to reduce water friction under 2.5 BSEK during the year. In addition, loans have been repaid and
the ship´s hull is in commercial phase with several orders signed in the cash position has been strengthened. With a strong balance
2023. The recently launched “single use” separation solution for sheet and ROCE above the target level of 20 % for the first time in
the biotech industry is in the early stage of market penetration and many years, the group is in a healthy position to continue the
grew well during the year. There are many more projects in the pipe- growth journey.
line, providing Alfa Laval with a future toolbox to lead the industrial
transformation towards 2030. The target to reach 10 BSEK from On a divisional level the Energy division had a very strong year with
these new technologies remains, as communicated at the Capital a record high Adjusted EBITA margin of 20.7%. All business units
Markets Day in 2022. improved the performance compared to 2022. The Marine division
started the year on a low margin but improved in the 2nd half of the
The internal sustainability work has continued with increased year, as had been guided. With a strong margin of 18% in the fourth
efforts and resources during 2023. As a company that is helping quarter and a solid order book for 2024. The margin challenge from
customers to reach their stainability targets, we must also lead in early 2022 is now behind us. Finally, the Food & Water division
implementing our own sustainability strategy. The full scope is had a good profitability in the beginning of the year but ended on
included in the sustainability section, but I would like to comment the low side with a 14.3% Adjusted EBITA margin in the fourth
on two important priorities, carbon emissions and safety. quarter. The division has performed well in most aspects, but the
mix of lower transactional volumes and higher share of project
Our target for carbon emissions is to reach net zero by 2030 for invoicing had some impact on the margin development.
scope 1 and 2. Despite growing activities and production volumes
the emissions decreased in 2023, well in line with plans. The most In all 2023 was a strong year for Alfa Laval. Even more important
important progress during the year was clear road maps for all is that we enter 2024 stronger than ever. The product portfolio
business units for how specifically to reach their targets by 2030. continues to improve, the large capacity expansion program has
The action plans are now established, owned, and reported by the progressed and eliminated all short-term bottlenecks, market
line of business. We will treat sustainability reporting with the positions have been strengthened, and the balance sheet is strong
same rigor and process as the financial reporting. The alliances to with a net debt of just around 0.6. We look forward to continuing
secure the supply of fossil-free metals have continued to grow. As to lead the industrial transition towards 2030 and beyond.
our suppliers continue to ramp-up their capacity, Alfa Laval will
start to grow a range of net-zero products. The main challenge
remaining is the scope 3 use phase. Alfa Laval´s large installed Lund, February 2024
base of rotating equipment consumes a significant amount of
energy during operation.Part of the electricity at our customer´s
sites is fossil-dependent and will for some time weigh on Alfa Laval´s
scope 3 impact. More energy efficient solutions are available to
improve the situation, but it will be a gradual process. National
energy strategies away from coal and gas are needed for us to Tom Erixon
reach the scope 3 targets. President & CEO

During many years the safety trend in Alfa Laval was positive. From
an elevated frequency of work-related accidents, a focused work
on culture, processes, and investments has yielded positive results

CEO comments 7
15

Life on land
Alfa Laval has provided a cooling solution
that protects the world’s largest seed collec-
tion stored to provide a backup if a natural
catastrophe, environmental damage or war
would deplete the Earth’s crop diversity.

2023 in brief
Amounts in SEK million
unless otherwise stated +/- %6) 2023 2022 2021 2020 2019
Order intake 21% 70,742 58,645 45,718 39,833 44,119
Net sales 22% 63,598 52,135 40,911 41,468 46,517
Adjusted EBITDA 1) 22% 11,780 9,678 8,305 8,365 9,062
Adjusted EBITA 2) 24% 10,221 8,229 7,114 7,231 7,989
Adjusted EBITA 2), % 16.1 15.8 17.4 17.4 17.2
Result after financial items 40% 8,650 6,179 6,142 4,977 7,221
Return on capital employed, % 21.0 17.3 20.0 19.1 23.0
Return on shareholders’ equity, % 17.6 13.5 15.8 12.7 21.3
Earnings per share, SEK 41% 15.31 10.89 11.38 8.47 13.08
Dividend per share, SEK 7.50 3) 6.00 6.00 5.50 0
Free cash flow per share, SEK 4) 16.50 3.52 9.71 15.76 9.28
Solidity, % 45.4 43.9 50.3 47.8 43.1
Net debt to EBITDA, times 0.85 1.47 0.87 0.48 0.88
Number of employees 5) 5% 21,321 20,300 17,883 16,882 17,497

1)
djusted EBITDA – Operating income before depreciation and amortiza-
A 3)
Board proposal to the Annual General Meeting.
tion of step-up values, adjusted for items affecting comparability. 4)
Free cash flow is the sum of cash flow from operating and investing activities.
2)
Adjusted EBITA – Operating income before amortization of step-up values, 5)
Number of employees at year-end.
adjusted for items affecting comparability. 6)
Percentage change between 2022 and 2023.

8 2023 in brief
Order intake Sales Adjusted EBITA
Order intake amounted to SEK 70,742 million in Net sales amounted to SEK 63,598 million in Adjusted EBITA amounted to SEK 10,221 million
2023, a growth of 21 percent to 2022. Organic 2023, a growth of 22 percent to 2022. Organic in 2023, a growth of 24 percent to 2022. The
order intake grew 11 percent. sales growth was 12 percent. adjusted EBITA margin was 16.1 percent.

SEK MILLION SEK MILLION SEK MILLION %

40
80,000 80,000 12,000

30
60,000 60,000 9,000

20
40,000 40,000 6,000

10
63,598
44,119

39,833

45,718

58,645

70,742

20,000

10,221
41,468

52,135
46,517

20,000 3,000

8,229
7,989
40,911

7,231

7,114
0
0 0 0
19 20 21 22 23 19 20 21 22 23 19 20 21 22 23

70,742 63,598 10,221 16.1%

Order intake, SEK million Net sales, SEK million Adjusted EBITA, SEK million Adjusted EBITA, margin

Development per quarter

2,817
18,385 18,405
17.1%
16.6%
2,611
15.9%
17,839
17,032 14.9%
16,920
15,768 2,406
15,880 2,369

14,111

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Order intake, SEK million Net sales, SEK million Adjusted EBITA, SEK million Adjusted EBITA, margin

2023 in brief 9
Drivers for growth
In a changing world we face new challenges, but also opportunities. Global trends
in food, transportation and energy are fuelling growth in areas that are new for us.
Climate change is one such example. The quest for greener and more sustainable
energy sources is also creating new needs and with it interesting business oppor-
tunities. The same is true of changes in the food market, where the need for clean
water must be secured and the search for new raw materials intensifies as consumers
demand products with a lower carbon footprint.

Climate Energy
There is a growing realization among communities, Global energy needs are on the rise. At the same time,
businesses and citizens that the world needs to emissions must be reduced to meet agreed climate
make major changes in order to manage climate targets aimed at mitigating global warming. This
change. This transition will increasingly take place in challenge can be tackled in two ways: by focusing on
collaborative partnerships between organizations – efficient usage and increasing recycling of the energy
via new technology, guidelines and decisions – to currently generated, and by replacing current sources
ensure that solutions and measures are both long of energy with new sources that have a significantly
term and effective. lower carbon footprint.

We offer technical solutions that optimize customers’ Our solutions for green power generation, low-carbon
processes and use of resources, which is crucial to hydrogen production and usage, renewable fuel pro-
reducing companies’ carbon footprint. Helping our duction, refineries, green chemicals and other industries
customers become more energy and resource effi- play an important role in the transition to more energy
cient – and thus reduce their carbon footprint – is one efficient processes in industry, both now and in the
of the driving forces for Alfa Laval. development of new forms of energy in the longer term.

Water Environmental legislation

Water is an increasingly scarce natural resource in Human impact on the environment is resulting in
many parts of the world. Rising demand for fresh increasingly stringent legislation. Meanwhile, com-
water and the challenges posed by climate change panies are being encouraged to make voluntary
are having a major impact on both the Earth’s popu- efforts to improve their sustainability performance.
lation and ecosystems.
Alfa Laval offers products and solutions to help cus-
Alfa Laval’s solutions and technologies help reduce tomers monitor and manage the implementation of
water consumption in industrial processes and new regulations and guidelines relating to areas
improve water quality. These technologies can also such as energy needs and emissions from shipping.
significantly increase the amount of recycled water.

10 Drivers for growth

Food Global trade
A growing middle class and increasing urbanization International trade connects a world where raw
continue to be strong global trends. As a result, materials are extracted in one country and processed
demand for ready-made food and resource-efficient in another, and where the finished products are
supply chains is increasing. At the same time, more transported to customers all over the world.
and more consumers want the products they eat
and drink to have minimal environmental impact. Increasing international trade brings growing demands
for efficient global value chains. For more than a
Today’s hygienic applications for the food industry century, Alfa Laval has been supplying products and
include separators, heat exchangers, pumps and systems to the marine industry, including separators
valves. These products meet stringent hygiene for cleaning fuel in engine rooms, heat exchangers
requirements, help optimize the use of raw materials that generate fresh water, pumping systems to clean
and create sustainable alternatives as the world’s ballast water and technology to reduce the sulphur
population expands. content of ship exhaust gases.

Clean water
and sanitation
Alfa Laval offers a wide range of tech-
nologies to treat wastewater and
generate fresh water. These solutions
contribute to improved access to
clean water around the globe.

Drivers for growth 11

Goals and outcomes
Financial targets
Alfa Laval aims to realize its business purpose, while at the same time
meet its financial targets established with regard to growth, profitability
and capital utilization. By achieving or exceeding these targets, Alfa Laval
creates the necessary scope for its continued favourable development
as well as generating increased value for its shareholders in the form of
an annual dividend and by maximizing the value of the company.

Financial benchmarks
In addition to its financial targets, Alfa Laval also has a number of financial benchmarks reflecting the company’s ambitions
with respect to the net debt / EBITA ratio and cashflow from operating activities. Further information on the financial
benchmarks can be found on page 136.

Sustainability targets
Alfa Laval’s environmental and social
targets aim to drive efficiency and
behavioural change to achieve better
results in the long term. The table on the
next page contains the company’s
sustainability targets. More details
and information about the progress
are presented on pages 46–79.

12 Goals and outcomes

Goal Goal Goal

5% 15% 20%
Growth Profitability Capital utilization
Alfa Laval’s goal is to achieve average annual Alfa Laval is to achieve an operating margin – The goal is to have a return on capital em-
sales growth of at least 5 percent measured adjusted EBITA – of 15 percent measured over ployed of at least 20 percent. The target re-
over a business cycle. The target was set in a business cycle. This target was established flects the company’s ambition to optimize the
light of the longer-term demand trends for based on the company’s ambitions for growth, capital utilization by balancing investments
Alfa Laval’s key technologies, the prevailing investments and portfolio development, while and operating working capital.
business scenario and against the backdrop also taking historical margins into consideration.
of Alfa Laval’s achievements in recent years.

Outcome 2023 Outcome 2023 Outcome 2023

22% 16.1% 21.0%

30 20 25

20
20 15

15
10 10
10

0 5
5

-10 0 0
19 20 21 22 23 19 20 21 22 23 19 20 21 22 23

Area Targets Target Year Trend*

Carbon emissions 50% reduction Scope 1 & 2 emissions 2023 (base year 2020)

Carbon emissions 95% reduction Scope 1 & 2 emissions, 50% reduction Scope 3 emission 2030 (base year 2020)

Energy 5% improvement in energy efficiency (MWh/k direct hours) 2023 (base year 2020)

Water 5% reduction of water withdrawal at sites located in water stressed areas 2023 (base year 2020)

Water 100% recirculation of water at sites located in water stressed areas 2030

Waste 85% recycling of waste Recurring

Waste Zero waste to landfill 2030

Materials 30% recycled material content in products 2030

Diversity 35% female employees 2025

Diversity 25% female managers 2025

Diversity <70% homogeneity (gender and nationality) in highest management groups 2025

Health & Safety <1.5 Lost Time Injury Frequency Rate (LTIFR) 2025

Chemicals No unauthorized chemicals used Recurring

100% of employees trained in Business Principles, Anti-Bribery, Anti-Corruption

Ethics Recurring
and whistleblowing

*Trend to achieving target based on results 2023 Well aligned with target Progress made towards target Not aligned with target

Goals and outcomes 13

Our purpose and how
we create value
Our purpose provides the motivational force in our daily activities. Dedicated to outstanding
customer service, an inspiring and embracing workplace, and with sustainability in our
DNA, we define our purpose as accelerating success for our customers, people and planet.

The resources How we apply them…

we employ…
Strategic priorities
Business
Sustainability and digitization boost our three key areas
– Customers

1,563 R&D investments, SEKm

– Products
– Services

2,440 Capex investments, SEKm

Technology leadership
36 Manufacturing sites Growing number of applications based on our three
core technologies
> 4,200 Patents
– Separation
– Heat transfer
– Fluid handling
> 600 Distributors

Three divisions – global presence

Human
Three industry based divisions served by a common
sales and service organization

>100 Present in number of countries

– Energy
– Food & Water
– Marine

21,321 Employees

We apply our recourses to develop and broaden appli-

Natural cation of our three leadership technologies heat transfer,
fluid handling and separation and take them to market
through our three industry based divisions Food & Water,
301,673 Energy consumption, MWh
Energy and Marine and a large network of distributors.

21,850
Our operational focus addresses macro trends while
In direct material purchases, SEKm leveraging our technology leadership and global market
presence through the prioritized areas of products,

747,212 Water consumption, m3

services, customers, sustainability and digitization.

14 Our purpose
To create
stakeholder value.
Customers
– Energy savings.
– Lower total cost of ownership.
– Increased productivity.
– High level of innovation.

Investors
Financial targets:
– Growth of 5%
– Adjusted EBITA-margin of 15%
– Return on capital employed of 20%

Employees
–O pportunities to learn and develop in the Alfa Laval Group.
–A n organization that promotes respect, diversity and is
free from discrimination.
– Alfa Laval strives to be a workplace that is free from
accidents and work-related illness.

Based on our Suppliers & partners

Business Principles…
– A reliable and ethical partner.
– On-time deliveries.
– Broad market access.
Alfa Laval’s four Business Principles describe – A global supply chain with strong local presence.
the way we must act within society whilst
achieving our business goals. Society
– Alfa Laval has a target to be carbon neutral by 2030.
Caring
– Recycling of 100% of the water used in sites located in
We care about every individual’s rights and water-scarce regions by 2030.
opportunities including their safety and well-being. – In 2021 alone, Alfa Laval heat exchangers reduced
energy use in heating and cooling applications by around
Committed 50 GW while reducing 25 million tonnes of CO2 emissions.

We are committed to ethical conduct within

our organization and in all external business
relationships. Honesty, integrity and respect
for others are values that we live and work by.

Transparency
We engage in open dialogue with all our
stakeholders to develop business relationships
built on trust.

Planet
We are in a unique position as our products
make a significant contribution to reducing
the environmental impact of industrial pro-
cesses. We also have a responsibility to con-
tinuously reduce the environmental impact in
all areas of our value chain.

Our purpose 15
Strategic priorities
To achieve its vision, implement its business purpose and attain
its growth, profitability and capital utilization goals, Alfa Laval
has established various strategic priorities that encompass
customer collaboration, a focus on products and working to
further strengthen the aftermarket offering.

Customers
At Alfa Laval, we strive to always meet our customers’ high expectations
when it comes to quality, service, interaction and sustainability.

Products
Alfa Laval is, and has always been, a product-driven company. A strong focus
on research and development (R&D) will remain the single most important
factor for market leadership and organic growth.

Service
Alfa Laval continuously develop its service business in order to fully leverage
its large installed base, fuel growth and improve the customer experience.

16 Strategic priorities
7

ffordable and
A
clean energy
Alfa Laval’s products are involved throughout
the renewable energy production process, from
heating and cooling to mixing and separation.

Strategic priorities 17
Customer Relevance
Growth through customer relevance means that Alfa Laval’s products are central. But customers
we shall deliver outstanding customer experiences also prioritize other criteria when they evaluate
and retain technological leadership in our field. their overall experience with a supplier. By meeting
We always work to drive progress and anticipate the customer’s expectations and needs, from the
the best way forward, for our customers and for initial contact and the sales process to delivery
the environment. By building seamless solutions and even aftermarket, the conditions are created
with relentless innovation, we can overcome the for a positive customer experience. This makes it
toughest challenges and drive change together. more likely that Alfa Laval will become their first
choice for their next procurement.
Customer relevance starts day one in any business
relationship. For Alfa Laval, it is all about under- Alfa Laval works broadly to simplify customer
standing the true needs of our customers. Customers collaboration. This requires an organizational
should feel that Alfa Laval offers the best possible structure to ensure short decision-making and
overall experience with an attention to detail at faster customer responses and increased on-time
every step – from initial contact and technology deliveries. It also involves the establishment of
expertise to subsequent service needs once the three standardized business models to address
products are in operation. customers’ differing needs, challenges and pur-
chasing processes.
Doing business with Alfa Laval should be easy.
Customers want us to be a partner working closely 1. Standard – sale of standardized components
together throughout their business process. Our through channels and online, with a focus on
global reach and strong local market presence, in easy accessibility and lead times.
combination with deep end-customer understanding
through a commitment to service, product develop- 2. Configured – defined from standard components,
ment and customer care, allows us to build long- we are able to customize the product to suit
term relationships. We aim to respond quickly and specific customer needs.
professionally to customer and offer appropriate
solutions on time. This is true irrespective of whether 3. Project – customized systems and solutions for
the solution is a standardized component or a more customers with specific requirements.
advanced system for customers with specific needs.
To be truly successful, we have to look beyond just Adapting to new demands
selling and servicing products and solutions. We How we do business and what is required from us
work relentlessly to make the purchasing process when doing business are changing rapidly, both
as convenient and responsive as possible and to by the introduction of new tools and processes
have a truly solution-oriented approach to urgent and through legislation and regulations. Our
or unexpected events. ambition is to ensure that all customer interaction,
whether digital or physical, is as seamless as possible
In our endeavour to optimize our customers’ processes and supports the increasingly stringent and
as a company that is easy to do business with, ambitious sustainability requirements.

18 Strategic priorities – Customers

Putting our customers first
Our innovative solutions support industries to purify, refine and recycle materials. We are committed to optimizing our customers’ processes,
to drive responsible growth and progress. We are responsive to our customers’ needs – always going that extra mile to support them in
achieving their business goals and sustainability targets.

Action Interaction Satisfaction

We are agile in handling changes in customer We create an outstanding customer experience We bring high value to our customers
behaviours and needs – We always put our customers first in everything – We go the extra mile to exceed expectations
– We make decisions and own them, always with we do – We seek and take feedback to continually improve
our customers in mind – We spend time to build meaningful relationships – We relentlessly explore better ways to add value
– We are focused and fast – We communicate clearly and simply – We do our utmost to benefit and satisfy our
– We are pro-active and take the initiative – We actively seek opportunities to delight customers
– We are bold and unafraid to try new ways of – We inspire and engage people while fostering a
working culture of accountability and ownership
– We adapt to meet changing customer needs

Climate action
13
Alfa Laval works to minimize climate impact
throughout the value chain. Our diverse
products improve energy efficiency which, in
turn, lowers the consumption of fossil fuels
and reduces carbon emissions.

Strategic priorities – Customers 19

Product leadership
Product development and engineering expertise is at the core Meeting customer needs often involves optimizing an industrial
of Alfa Laval and is the most important factor to secure the process in which our technology is essential in promoting
company’s strong position and enable profitable growth. With energy efficiency, durability and productivity. The pace of our
increased customer emphasis on improving existing processes development efforts has been increasing in recent years.
and exploring new technology areas at an accelerated R&D investment now accounts for about 3 percent of sales
pace, our commitment to develop highly reliable, efficient and covers not only new technologies and products, but also
and sustainable products and solutions that meet their new product improvements and upgrades to meet industry
needs and requirements is more relevant than ever before. standards. With a rapidly growing demand for more efficient
solutions and the development of entirely new technologies
As societies, industries and citizens strive to take better care such as hydrogen, power-to-x and wind propulsion for marine
of the planet we have inherited, great technological steps vessels, we continue to accelerate our investments in innovation.
have been taken and many more will be needed to ensure the
more efficient and sustainable use of the world’s resources. Our core technologies as a platform for growth
Our equipment is a key enabler in many areas such as the Our deep technology competence in the core areas of fluid
energy transition, wastewater treatment and production and handling, separation and heat transfer has been the driver
usage of new alternative fuels. Being a technology leader in for our successful historic performance and will remain as the
our industries means that we are well positioned to push foundation for future growth. As we see new technologies and
industry standards in areas where we believe we can make new applications develop rapidly, Alfa Laval needs to make
a difference for customers, people and the planet. sure that it continues to invest throughout its product portfolio.

I ndustry, innovation
and infrastructure
Alfa Laval invests heavily in research and development.
The company launches 100 new products per year and
has over 4,200 patents.

20 Strategic priorities – Products

AlfaNova GL50 Methanol-fueled steam boilers Life-cycle Assessment Solution

Power-to-X and fuel cells will play an important Methanol is emerging as a frequently chosen The Alfa Laval Life-cycle Assessment Solution
role in the global transition to green energy alternative fuel that can assist the marine in- is a subscription-based software solution that
stored in hydrogen and derivatives such as dustry in reducing emissions and achieving calculates, analyses and validates the environ-
ammonia, methanol, and methane. AlfaNova decarbonization targets. Alfa Laval's portfolio mental impact of food and beverage products,
GL50 with its patented AlfaFusion technology, of multi-fuel boiler systems has now expanded offering full supply-chain transparency. It will
is the first Alfa Laval heat exchanger specially to include methanol-fueled steam boilers. help food and beverage customers to specify
developed for fuel cell systems and advanced These are the world’s first boiler systems that necessary data demonstrating their environ-
electrolyzer solutions where it increases effi- offer the fuel flexibility to accommodate mental impact and compliance with the
ciency and minimizes energy losses. methanol as fuel. coming EU directives.

This includes more traditional industries where the cooling systems and the shift to more advanced
development of new and improved generations of cooling solutions in data centres – which all require
products helps existing customers to improve, as well heat transfer equipment to achieve greater energy
as in completely new industrial partnerships and efficiency. The opportunities related to decarbonization
technology areas likely to play a part in the emerging are notable in growing areas such as the use of multi-
energy landscape. We call this Evolve, Expand, Explore. fuel solutions in the marine industry, increased need
for biofuels in the transportation sector and carbon
Evolve capture in emission-intense applications. Product
Evolve includes the majority of Alfa Laval's product development mainly focuses on the specific engineering
and service portfolio, with solutions and customers in challenges attributable to the respective end-customer
end-markets where Alfa Laval has been a leading requirements with our key technology platforms as a base.
solution provider for decades. Large parts of Alfa
Laval's product platforms and product programmes Explore
have been replaced over the past five years and we The industry is now at the cusp of breaking a number
continuously work to improve operational efficiency of technological boundaries in the urge to find ways
and enhance performance. Product development for to reduce carbon emissions. In several of these devel-
solutions in this category is tilted towards constant opment projects, completely new competences,
progression rather than technological leaps. technology assets and metallurgical knowledge are
required. Investments in these new technology pro-
Expand grammes have accelerated in recent years to make
Expand covers end-markets that are growing at an Alfa Laval a technological leader as well as being
accelerated pace driven by the greater emphasis on considered a committed partner. Opportunities in areas
energy transition and decarbonization. These markets such as hydrogen, fuel cells, wind propulsion for marine
are rapidly expanding Alfa Laval’s addressable market vessels and long-duration energy storage can be signif-
for its core technology portfolio. The need for energy icant over the coming decade, and a focus on product
efficiency solutions is illustrated by growth in heat development in all these areas remain a priority.
pumps, the development of district heating and district

Strategic priorities – Products 21

Service excellence
When turning to Alfa Laval for services and support, we strive for A broader service scope
customers to experience readiness, reliability and great expertise Growth in the service business is driven by our high pace in innovation,
that save time and money – while making a responsible choice for with demand for new and more sustainable technologies that drive
safety and environment. Combined with our unparalleled product the adaptation of services to meet new needs. At the same time,
and application knowledge, this is why Alfa Laval is a trusted service new generations of products are equipped with more serviceability,
partner. Our experts are your asset, working tirelessly to bring you digital capabilities and contracted services as part of the purchase
performance and peace of mind. proposition. This creates more opportunities to touch more products,
more often.
Alfa Laval aims to always be available to customers when and
wherever needed. With a local presence in more than 100 countries, Strategically located service centres and partners ensure that local
we are ready to service and support our customers at all times. expertise and equipment are close to our customers whenever they
A comprehensive and continuously growing network of people need us. Our local service centres provide preventive maintenance
and competence where service and maintenance are performed and innovative service solutions that improve processes, minimize
by skilled technicians is an integral part of our offering. unplanned downtime and improve the operating economy of the
equipment. Our service centres engage in well-developed sustain-
The Alfa Laval 360° Service Portfolio ability activities, where the focus is on low water consumption,
The services and solutions in the Alfa Laval 360° Service Portfolio treatment of process water and the safe disposal of chemicals
help customers to get the best return on their equipment investment and cleaning fluids as a value-add service.
throughout its life cycle. We partner with them in every aspect,
from start-up, maintenance and support to improvements and In recent years, Alfa Laval has built dedicated service organizations
monitoring services over time. to tend to the needs of our customers. The International Marine
Service organization was established in 2019 and comprises an
Our offering international marine service team of more than 200 technicians
Technical documentation supporting marine customers with the availability of fast and com-
With our accurate technical documentation, customers can petent global service 24/7 – every day of the year. This approach
ensure proper equipment handling in their day-to-day operations ensures outstanding service experience and enables Alfa Laval to
and perform maintenance procedures correctly. Having the right meet its brand promise to customers.
documentation on hand also facilitates certification and auditing
when needed – and shortens lead time when ordering spare parts. The growing demand for digital ways of working creates opportunities
to serve customers in new ways. Digital tools are being introduced
Troubleshooting in the service business that enable service engineers to connect to
Our skilled and experienced troubleshooters are the direct route to customer equipment, identify needs and provide preventive main-
solving any issue related to customer equipment. Working on site tenance. The introduction of more digital services also improves the
or remotely, they find the cause of unplanned shutdowns and help productivity of the service organization, as more routine matters
customers get the best possible operation from their equipment. are handled remotely and the time spent on site at the customer
can be focused on developing the customer relationship.
Training
Purchasing Alfa Laval equipment means buying reliability. But peace
of mind depends just as much on the equipment’s operators. Our
Service Order intake, SEK million
skilled training experts extend and develop their competence for
increased and prolonged performance.
SEK MILLION

Spare parts 20,000

Using Alfa Laval genuine spare parts ensures optimal productivity.

Manufactured with knowledge and precision, our parts deliver function 15,000

and uptime that prolong equipment life and lower ownership cost.
We deliver them on time worldwide through an extensive logistics 10,000

network.
5,000
12,864

16,640
12,824

19,551
11,773

0
2019 2020 2021 2022 2023

22 Strategic priorities – Service

Responsible
consumption
and production
Alfa Laval’s ambition is to make every new
product more efficient than its predecessor
from a life cycle perspective. Many of our
products contribute to turning waste into
value in different production processes.

360° Service Portfolio

Start-up services Maintenance services Monitoring services Improvement services Support services
Commissioning Calibration Condition audit Equipment upgrades Exclusive stock
Commissioning supervision Preventive maintenance Condition monitoring Redesign Remote support
Installation Reconditioning Performance audit Replacement and Retrofit Technical documentation
Installation supervision Cleaning services Training
Repair Troubleshooting
Spare parts
Service kits
Service tools
Exchange

Service centres

>100
More than 100 service centres with the capacity
to deliver services in over 160 countries.

Service centres.
Large and mature installed base that needs to be maintained and renewed.
A combination of fast-growing markets and established niche applications.
Installed base that is growing rapidly.

Strategic priorities – Service 23

World-leading
in three key
technologies
Alfa Laval’s operations are based on three key technologies – heat
transfer, separation and fluid handling. These technologies play a key
role in a number of industrial processes and Alfa Laval commands
a world-leading position in all three areas.

24 Key technologies
Heat transfer
Heating and cooling are basic needs for both individuals and most industrial processes. In a large number of
industries, heat transfer solutions are essential for heating, cooling, ventilation, evaporation and/or condensation.
All of this can be achieved efficiently using a heat exchanger. Therefore, heat transfer products from Alfa Laval are
now found in numerous areas – within everything from food production and marine environmental solutions to the
creation of a pleasant indoor climate or hot tap water in private households with a heat pump or air-conditioner.
Heat exchangers are a key technology in various new clean energy solutions to drive emission reduction, such as
green hydrogen, energy storage and fuel cells.

Separation
Separation is the technology that represents the origin of the Alfa Laval we see today. The business began in 1883,
based solely on separation, and this technology remains a core feature to this day. With precision and a high
degree of reliability, liquids, solid particles and gases are separated from one another, which is a requirement in a
large and growing number of industry applications.

Fluid handling
The transportation and regulation of fluids in an efficient and safe manner is crucial to many industries. Alfa Laval
focuses on fluid handling products, such as pumps and valves for food and pharmaceutical industries with stringent
hygiene requirements and on pumping systems for the marine industry and the offshore market.

Life below water

14 Alfa Laval offers a whole range of products in the areas
of energy and environment that contribute to reducing
marine pollution and protecting marine biodiversity.

Key technologies 25
Heat transfer

A technology at the heart of the energy transition

How it works The problems that it solves
Heating and cooling are basic and essential needs in societies, busi- Energy efficiency is today one of the most important ways of
nesses and homes around the world and the requirements for reducing global emissions. This can be achieved through innovative
more energy efficient and sustainable solutions are increasing. heat transfer technologies that reduce energy consumption and by
Heat exchangers transfer heat or cold – often from one fluid to using more efficient solutions in existing processes, such as solutions
another – safely and efficiently. Every unique application has its that capture and reuse waste heat for other purposes. Alfa Laval has
specific needs and requirements for optimized temperature control. solutions in both of these areas, in which industries and societies
Alfa Laval’s main product is the compact plate heat exchanger, must now work together to accelerate developments to save energy
which is more energy efficient compared to alternative solutions. and reduce carbon emissions. The pace of innovation to find new
Our extensive offering of plate heat exchangers – gasketed, brazed and clean energy sources is accelerating. This means not only new
and welded – are each designed to not only withstand different opportunities for Alfa Laval, but also a responsibility to make sure
pressure, temperature levels and challenging environments but that we keep up with the technological development to allow for
also specified hygiene and safety requirements. the transition to clean energy solutions in the years to come. With
the industry’s broadest product portfolio, Alfa Laval offers efficient
solutions that are easy to service and maintain. This reduces costs
and lessens the impact on the environment.

ustainable cities
S
and communities
Alfa Laval provides solutions for energy efficient
district heating and cooling — often using waste
heat as well as thermal storage solutions.

26 Key technologies – Heat transfer

Business units with heat transfer products in their range Sales

Energy Division Share of group sales

– Brazed & Fusion Bonded Heat Exchangers
– Gasketed Plate Heat Exchangers
– Welded Heat Exchangers

Food & Water Division

40%
– Food Heat Transfer
– Food Systems
– Hygienic Fluid Handling

Market position
Marine Division
– Marine Separation & Heat Transfer Equipment
– Boilers

30–35 percent of the global market

Key technologies – Heat transfer 27

Separation

Our technology origin more relevant than ever before

How it works The problems that it solves
Separation is used to separate liquids from other liquids and solid The needs of our customers’ businesses are the driving force behind
particles from liquids or gases and is a key technology in many our innovative solutions, which are reliable and help increase pro-
industries, such as food, dairy, water treatment and pharmaceuticals, ductivity, sustainability and digitalization. As an invention originally
as well as in shipping and chemical production. Alfa Laval’s separation developed to separate cream from milk, the technology is now
products are dominated by high-speed separators and decanter used in a wide range of applications such as advanced pharma-
centrifuges. Separators have high rotation speeds, are generally ceutical production, purifying wastewater and biofuel production.
mounted vertically and can separate small particles from liquids There are numerous benefits, including improvements in product
and gases. Decanter centrifuges are normally mounted horizontally, quality and guaranteeing the performance of industrial processes,
operate at lower speeds and are used to separate larger particles or satisfying strict hygiene and safety requirements. And just as
from liquids. Other separation products include membrane filters, important, the separation process also helps boost efficiency,
which are the established solution for separating very small particles, which cuts costs and reduces environmental impact.
and belt filter presses, which are used for mechanical dewatering,
mainly of municipal wastewater.

28 Key technologies – Separation

Business units with separation products in their range Sales

Energy Division Share of group sales

– Energy Separation

Food & Water Division

– High Speed Separators
– Decanters
16%
– Food Systems

Marine Division
– Marine Separation & Heat Transfer Equipment
Market position

25–30 percent of the global market

Good health
and well-being
Alfa Laval delivers hygienic equipment
that enables efficient and safe production
in the pharmaceutical industry.

Key technologies – Separation 29

Fluid handling

The art of taking control

How it works these systems facilitate filling and sampling, and simplify cleaning
Fluid handling is all about transporting, controlling and regulating and monitoring. As a result, our solutions help to both maximize plant
fluids and other product flows. Pumps drive the flow of liquids, while uptime and minimize costs in a customer’s business. The technology
valves control the flow by opening, closing and redirecting. Alfa is used in a large variety of industries, for example, in the manufac-
Laval’s offering includes centrifugal, liquid ring and rotary lobe pumps, turing and processing of food, beverages and pharmaceuticals, as
a broad range of hygienic valves and hygienic tank equipment well as in shipping and in offshore. For hygienic food and water
ranging from mixers to cleaning equipment. Correctly specified, applications, the offering includes various valves for increased control,
the equipment not only provides safe and efficient processes, but but also mixers used for mixing of milk, wine, juice, yoghurt, desserts
also optimizes the use of resources and reduces waste. and fruit drinks. For the Marine industry, products and solutions include
submerged, hydraulic pumping systems for product and chemical
The problem that it solves tankers and tank cleaning technologies. For the offshore industry,
Optimized fluid handling increases the yield of a manufacturing or the offering includes pumping systems for collecting sea water for
processing operation, satisfies hygiene requirements, improves various onboard applications, water injection in drill holes and fire
energy efficiency and reduces the amount of waste. As well as extinguishing, which contribute to safe and efficient operations.
increasing productivity and ensuring quality in flow processes,

Zero hunger
Alfa Laval’s products and solutions improve
shelf life, reduce waste and make food
production hygienic and safe.

30 Key technologies – Fluid handling

Business units with fluid handling products in their range Sales

Food & Water Division Share of group sales

– Food Systems
– Hygienic Fluid Handling

Marine Division
– Pumping Systems
20%

Market position

10–15 percent of the global market

Key technologies – Fluid handling 31

Three business divisions
with customer needs
front and centre
Alfa Laval’s business concept is to persistently optimize performance in
customer processes. To achieve this, the Group has a solid product offering,
a high level of technical expertise and an agile structure that ensures a sound
understanding of customer needs, buying behaviour and processes.

Food & Water

The Food & Water Division works with products and
systems for food and water applications, for example
in industries such as food, pharmaceuticals, biotech,
brewing, dairy and water treatment.

Share of Group order intake

37%

32 Division overview
Energy
The Energy Division focuses on solutions to promote
greater energy efficiency, in both financial and environ-
mental terms. Customers include companies operating
in data centres, renewable energy, heating, ventilation
and refrigeration, oil and gas extraction, refining,
petrochemicals and power generation.

Share of Group order intake

29%

Marine
The Marine Division specializes in solutions for shipping
customers, including shipping companies, shipyards,
engine manufacturers and companies involved in off-
shore oil and gas exploration.

Share of Group order intake

34%

Division overview 33
Food & Water 2023

Growth despite uncertain macro-economic conditions

After a couple of years of strong growth driven by low interest Innovation enables more sustainable use of resources
rates and supportive structural trends, demand normalized in The need for more sustainable ways of producing, transporting
2023 as a consequence of a weaker macro-economic environ- and consuming goods is affecting Alfa Laval’s offering as well as
ment in several regions. Despite a less favourable investment the setting of new requirements in the applications and industries
environment, order intake increased by 20 percent and reached that we serve. Significant reductions in energy consumption have
a new record level of SEK 26 billion in 2023 driven by the 2022 been achieved in the new separation technology portfolio, both
acquisition of Desmet, continued investments in the biofuel for high-speed separators and decanters, where new products
industry and good growth in service. can typically reduce energy consumption by as much as 50
percent. Water and waste treatment remains a prioritized area,
The market is still benefitting from growing structural demand where improved products help reduce customers’ water con-
trends such as new foods, more efficient water treatment and sumption or make water treatment processes more efficient.
biofuels as part of fuel blending. However, the weaker macro- Zero liquid discharge is one such example, where water is
economic activity impacted most end markets and several recovered from wastewater for reuse in customers’ processes
geographic markets. The pipeline of projects continued to and residual waste streams are significantly reduced.
develop positively but higher interest rates and increased
uncertainty in some cases caused customers to postpone The recently introduced CultureOne is the first premium separator
decisions. The somewhat weaker macro-economic conditions portfolio offered to single-use biopharma processing. The tech-
were partly compensated by the recent focus on innovation nology allows companies to bring more medicine to the market
and building an even stronger market presence, both though through improved yield and in a safer way through flexible factories.
direct sales channels and through a broader partner network, In addition, CultureOne uses 40-80 percent less water, energy
which allowed the division to strengthen its market position in and cleaning agents compared to less efficient filter-based
several technologies and end markets during the year. harvesting methods, whilst also only using much less plastics.

Demand remained strong in the biofuel sector, both in bioethanol A new generation of control tops was introduced during the year,
and biodiesel. For bioethanol and biodiesel, regulations stipulating which is a technology used to operate actuators on valves to
a higher blending of petrol in regions such as North America, ensure safe valve opening and closing. Alfa Laval has over 20
South America and India continue to drive investments. Alfa years of experience in the field and maintains a leading position
Laval’s historical presence and offering in this growing market through continuous innovation. The latest version, V50/V70
was complemented by the wider offering and presence by has been developed with a clear mission to help customers
Desmet, with competence and know how in renewable fuels save water, chemicals and energy. During the year, process
and the biofuel industry. customers around the world chose several of Alfa Laval’s digital
solutions to upgrade existing equipment which resulted in
Investments also continued in technical infrastructure for water significant environmental and financial savings.
treatment applications in many geographical markets, with several
countries prioritizing investments in the area. The increased The digital transition of sales continues, including the configuration
need for more efficient water and wastewater treatment is of products, ordering and support. To support this trend, the
driven not only by new regulations and lower operational costs, division continues to expand its e-commerce platform, which
but water scarcity and environmental concerns in general. enables more business to be fully conducted in a digital, secure
and efficient way. Digitalization is also having an impact on service
A weaker demand was seen in the pharma and biotech industry, and maintenance work, with more products being connected and
albeit coming from an exceptionally high level after strong growth monitored via sensors and cameras. This kind of remote support
in recent years. Demand also normalized in the dairy and brewery saves time, facilitates problem solving, simplifies preventive
sectors as customers adapt to a new interest rate environment. service and ultimately gives the customer more reliable uptime.

The service business developed strongly during the year with 11

percent growth and today represents 24 percent of the division. Number of Aftermarket’s share
A positive effect was seen from a stronger market presence, a employees of the division

8,283 24%
structured approach of how to reach the installed base of Alfa
Laval equipment and the wider development of value-added
and field services.

34 Food & Water Division

Order intake

SEK MILLION

30,000

20,000

10,000

26,368
21,909
16,664
13,814
0
Order intake
2020 2021 2022 2023

ORDER INTAKE, BUSINESS SEGMENTS

SEK MILLION

Desmet
30,000 25%
Decanters 13%
Food Heat Transfer 14%
20,000
Food Systems 10%
High Speed Separators 13%
Hygienic Fluid Handling
10,000 25%

26,368
21,909
16,664
13,814
Sales
ORDER
0 INTAKE, END MARKETS
Dairy 2020 2021 2022 2023
17%
SEK MILLION
Prepared food & beverage 17%
Oils & Fats
30,000 30%
Pharma & Biotech 6%
Ethanol, starch & sugar 9%
20,000
Waste & Water 7%
Protein 6%
Brewery
10,000 5%

25,280
20,691
14,640
13,414

Other 3%

0
Sales 2020 2021 2022 2023

Adjusted operating profit /margin

SEK MILLION

30,000
SEK MILLION %
15.6 20
4,000
20,000 16.7
18.2 18.3
15
3,000

10,000
25,280
20,691
14,640 2,680
13,414

10
2,000

0 5
3,458
2,436

3,942

1,000
2020 2021 2022 2023

0 0
Adjusted operating
2020 2021 profit
2022/margin
2023

Adjusted operating profit Adjusted operating margin

SEK MILLION %
15.6 20
4,000
16.7
18.2 18.3
15
3,000

10
2,000

5
2,680

3,458
2,436

3,942

1,000

0 0
2020 2021 2022 2023

Adjusted operating profit Adjusted operating margin

Food & Water Division 35

Revolutionizing beer – high-quality brews from concentrate

36 Food & Water Division

The future of beer has arrived, and it’s in the form of beer
concentrate – a new generation of beer that’s every bit as
good as the fresh draft beer poured straight from the tap.
This remarkable innovation, supported by extensive taste
tests, is transforming the way we enjoy our favourite brews.

The secret behind this breakthrough lies in a high-pressure,

low-temperature process, which yields a top-notch concentrate.
Once rehydrated, this concentrate retains the exact taste,
aroma, and alcohol content of the original beer, making it
indistinguishable from the fresh brew.

This brewing revolution is being driven by Alfa Laval and its

pioneering beer processing system “Revos.” What makes
this system truly exceptional is its ability to deliver the same
great-tasting beer and beverages from concentrate while
simultaneously addressing critical environmental concerns.

By adopting a high-pressure, low-temperature process, Alfa

Laval has not only created a high-quality concentrate but
also paved the way for a more sustainable beer production
and distribution process. The Revos system significantly
reduces emissions, water consumption, and energy costs,
making it a more sustainable choice for both beer makers
and beer enthusiasts.

One of the major issues in the beer supply chain has always
been the transportation inefficiencies associated with hauling
heavy kegs and bulky containers to bars, cafes, and restaurants.
This outdated approach is not only fossil-fuel intensive but
also wasteful. Beer is, after all, primarily water, which makes
transporting it in its traditional form an inefficient practice.

This is where beer concentrate can really make a difference.

Transporting concentrate is up to six times more efficient
than transporting regular beer and beverages. By embracing
the concentration system, beer manufacturers, as well as bars,
cafes, and restaurants, can significantly reduce transport
costs and their carbon footprint. Moreover, it helps to reduce
costs related to packaging, storage, shipping, and refrigeration.

The introduction of beer concentrate is a true win-win for

society. It not only enables a more sustainable beverage
supply but also ensures that beer lovers can enjoy their
favourite brews without compromise. Cheers to a more
sustainable future in beer production and distribution!

Food & Water Division 37

Energy 2023

An energy market in rapid transition

Strong dynamics in the energy market As efforts continue in Europe to reduce gas dependency, electri-
The need for improved energy efficiency in societies, industries, fying residential heating by substituting gas boilers with more
and households in all parts of the world remain as the single most efficient and environmentally friendly heat pumps is a key
important driver of growth in the Energy division. In addition, a action. Heat exchangers play an important role in the overall
maintained high activity level in the oil and gas sector and increased efficiency of the system. With a strong global footprint, long-
investments into the new energy landscape drove order intake term relationships and a broad product portfolio to manage
growth of 18 percent to a new record level of SEK 20 billion in 2023. the full range of refrigerants, Alfa Laval is well positioned to
support customers in this growing sector.
2023 marked a year in which the division initiated the first steps
of the significant capacity increases announced for the coming Accelerating the energy transition
years. The increase in production capacity reached a historical The shift to alternative fuel and energy solutions is accelerating.
high which was a vital response to a sustained high demand To speed-up the journey to net zero, where heat transfer opti-
and ensures the ability to serve customers in the best possible mization is a key enabler, the focus on innovation is high in the
way. Several years with exceptionally high growth in the Brazed Energy division. This resulted in a large amount of product
and Gasketed business units created bottlenecks in parts of the launches during the year and the heat exchanger product port-
production system that are now being better balanced as new folio now represents the most comprehensive range of heat
capacity gradually comes on-line. The growing demand for exchangers in the company’s history. Investments in innovation
energy-efficient applications and the decarbonization of heating will increase significantly going forward and can be catego-
is expected to continue, and Alfa Laval will continue to invest in rized into two primary focus areas:
sufficient capacity to serve and support this transition in the years
to come. The division also successfully executed on restructuring – The first one covers incremental as well as more radical inno-
measures in the Welded business unit to better balance the vations of the existing portfolio and will also include optimization
organization to the new demand levels in the oil and gas industry. in the supply chain and manufacturing landscape.

Energy efficiency and the electrification of heating – The second focus area addresses certain technological and
Sales of products and services related to energy efficiency account scalability gaps in the transforming energy landscape. The
for more than 80 percent of the division’s business and is evident hydrogen market is one example where there are high innovation
in all industries. Annually, it contributes to 100 GW and 50 million needs. The Division has been present in the hydrogen market
tonnes CO2e in emission savings. The need for more advanced in recent years, pioneering products and technologies in the
and energy efficient solutions drive demand for new equipment areas of electrolyzers and fuel cells. Recognizing the potential,
as well as for services and expertise. Alfa Laval has decided to establish a new Business Unit
responsible for Electrolyzers & Fuel Cell Technologies, and is
The importance of energy efficiency in reducing emissions is driving developing new products in hydrogen applications in collaboration
increased demand for services and ensuring the smooth operation with industry leaders. Drawing upon the company’s extensive
for customers during the lifetime of their equipment. Service offers expertise in heat transfer, metallurgy and industrialization, Alfa
a significant growth potential with continuous expansion, Laval is uniquely positioned to accelerate the hydrogen economy.
including the development of new service models and partner-
ships with customers to support them in reducing emissions. To drive these two innovation categories forward, a new inno-
Product sales are increasingly linked to long-term maintenance vation centre will be built in Lund, Sweden, to significantly
agreements that include energy audits to identify energy savings increase R&D capabilities and the pace of innovation.
in the customer’s equipment to ensure optimal usage.

There are also areas where energy efficiency and water supply Number of Aftermarket’s share
are connected, such as in clean hydrogen production. Excess heat employees of the division

5,902 26%
from the electrolyser can be used for desalination and provide
the clean water needed in the hydrogen production process
from sea- or river water instead of valuable portable water.

38 Energy Division
Order intake

SEK MILLION

25,000

20,000

15,000
Order intake
10,000

20,414
13,675

17,294
11,952
SEK MILLION
5,000

25,000
0
2020 2021 2022 2023
20,000
ORDER INTAKE, BUSINESS SEGMENTS
15,000
Gasketed Plate Heat Exchangers 39%
10,000
Brazed & Fusion Bonded Heat Exchangers 28%

20,414
13,675

17,294
11,952
5,000 Heat Exchangers
Welded 21%
Energy Separation 12%
0
2020 2021 2022 2023

ORDER INTAKE, END MARKETS

Sales
HVAC & Refrigeration 38%
Process industries 20%
Oil &
SEK Gas
MILLION 14%
Refinery 8%
20,000
Power 8%
Other 12%
15,000

Sales
10,000
12,383

19,269
15,074
12,187

5,000
SEK MILLION

20,000
0
2020 2021 2022 2023
15,000
Adjusted operating profit /margin
10,000
SEK MILLION %
12,383

19,269
15,074
12,187

5,000 25
5,000
20.7
19.4 20
0
4,000
16.9
2020 16.6
2021 2022 2023
15
3,000

Adjusted operating profit /margin10

2,000
2,050

3,986
2,927

5
2,061

SEK MILLION
1,000 %
25
0
5,000
0
2020 2021 2022 20.7
2023 20
19.4
4,000
Adjusted16.9 16.6
operating profit Adjusted operating margin
15
3,000

10
2,000
2,050

3,986
2,927

5
2,061

1,000
0
0
2020 2021 2022 2023

Adjusted operating profit Adjusted operating margin

Energy Division 39
Helping data centres keep cool

40 Energy Division
With digitalization and data-centric operating processes as funda-
mental enablers to create net-zero industries, optimizing data
centres is crucial to creating a more sustainable society. Data centre
servers, which are responsible for managing and transmitting vast
amounts of data globally, generate large quantities of excess heat
that must be efficiently removed to ensure seamless, uninterrupted
operations. Alfa Laval, a pioneer in heat exchanger technology,
has emerged as a key player in addressing this critical aspect of
data centre management.

Alfa Laval's heat exchangers play a crucial role in maintaining optimal

server temperatures. Not only do they efficiently cool servers, but
they also convert the challenge of excess heat into district heating
and even to help produce food by heating greenhouses and fish farms.
However, many data centres around the world do not currently
recycle excess data centre heat, which highlights a huge
untapped potential.

Projections indicate that by 2030, if all data centres adopted waste

heat recovery, 3,000 TWh of energy could be saved – equivalent
to heating 300 million European homes. The Nordic region stands
out as an ideal candidate for such waste heat solutions due to its
well-established district heating infrastructure. Several successful
installations, including a Danish data centre where Alfa Laval's
heat exchangers annually provide domestic heating to more than
7,000 households, showcase the substantial benefits of this
innovative approach.

With almost 100 years of experience in thermal technology,

Alfa Laval has become a trusted partner in designing reliable and
sustainable cooling systems for data centres. The company’s
industry-leading plate heat exchangers that offer optimal heat
transfer efficiency are not only paving the way for greener data
centres but also enabling net-zero industries around the world.

Energy Division 41
Marine 2023

A larger and more resilient business

Order intake grew 23 percent in 2023 driven by an increased in excess of 5 percent. We see a strong demand for these solutions
share of tankers in the ship contracting mix, a strong offshore as the industry recognizes that any future fuel will be more
market, a good development in services and a growing demand expensive than the current ones and implementing energy
for our multi-fuel solutions. As our portfolio broadens and with efficiency measures makes sound economic sense.
the increased complexity coming from new fuel solutions in recent
years, Alfa Laval continues to increase content onboard vessels. A wider and deeper digital offering
In 2023, we further strengthened our Digital offering. This include
After 12 months of margin pressure driven by both external cir- StormGeo’s roll-out of the EU-ETS emission measurement
cumstances and internal imbalances, a great emphasis in 2023 solution within its fleet performance management suite to enable
was on making sure that actions to improve profitability devel- ship operators to comply with new EU legislative requirements
oped as expected. The programme launched in 2022 to address that will come into effect in 2024. The roll-out of Flood analytics
operational inefficiencies was implemented. The Boilers and and a warning solution in StormGeo’s Terra suite helps land-
Gas Business Unit have been merged into one with a consequent based facilities to mitigate the impact of extreme weather
leaner management structure and lower cost base. Manufacturing events. In addition, we took over NSI’s bunker trading platform
in Aalborg, Denmark, was relocated to China with a better supply and coupled it with StormGeo’s bunker routing service to
chain and footprint. Furthermore, the ballast water business has enable customers to not just optimize a vessel’s route around
been right-sized to balance cost with the normalized demand bunkering fuel but also buy/trade bunkers on this same digital
level as the retrofit of existing vessels with these systems is almost platform in one seamless solution.
completed. These initiatives together with a strong growth in
service, an improved production load in the pumping systems We continue to invest in our digital infrastructure to improve the
business in the second half of the year, and good profitability in digital customer journey and enable data driven services,
our growing multi-fuel portfolio helped improve the profitability which increase operational efficiency across the value chain.
of the division to 14.9 percent for the year. The customer portal launched in 2022 to monitor Alfa Laval’s
pumping equipment in real time continues to grow and more
The race to zero is on than 2,000 ships used this platform at the end of 2023, which
In July 2023, the International Maritime Organization revised its is twice as many as in 2022. As with other digital services, the
greenhouse gas strategy and now aims for the industry to be portal helps optimize use, simplify maintenance and in the lon-
net zero around 2050, which is a step change from its previously ger term, improve overall operating efficiency for the customer.
stated ambition of a 50 percent reduction in 2050. The race to Alfa Laval’s ballast water systems are now supplied as con-
zero is on and the industry pathway to get there will involve nected assets by default and an increasing number of these
implementing increased energy efficiency measures and are now coming on-line as customers recognize the off-hire risk
deploying cleaner energy. There is however an industry consensus connected to a non-operational or defective ballast water sys-
that green fuels will not be available at scale for shipping in the tem during cargo operations. Implementation of a Customer
short to medium term, that the the energy transition in shipping Relationship management system and connecting this with
will be a multi-fuel and multi-decade one. The Marine division our Installed Base tool has enabled our service support team to
is enabling this transition in three distinct dimensions. Foremost, identify the service and upgrade needs of our customers with a
we aim for our own offer to be carbon neutral by 2030 to lead couple of clicks rather than a demanding manual process.
the energy transition in shipping and help our customers to
mitigate their scope 3 upstream emissions. In relation to the
fuel transition, we are developing our existing portfolio to be Number of Aftermarket’s share
multi-fuel capable to future proof our customers’ assets and a employees of the division
new range of fuel pumping systems for methanol and gas was

5,655 33%
launched in 2023. A triple digit number of multi-fuel solutions
are now deployed and operational. Finally, we added several new
energy saving technologies into our portfolio that attenuate the
energy intensity of sailing vessels. Oceanbird, our wind propulsion
collaboration with Wallenius, OceanGlide, our air lubrication
solution and StormGeo, our digital solution are three good
examples of solutions that can each reduce fuel consumption

42 Marine Division
Order intake

SEK MILLION

25,000

Order intake
20,000

15,000
SEK MILLION
10,000
25,000

23,960
14,067

19,442
15,379
5,000
20,000
0
15,000
2020 2021 2022 2023

10,000

23,960
ORDER INTAKE, BUSINESS SEGMENTS

14,067

19,442
15,379
5,000
Heat & Gas systems 21%
0 Systems
Pumping 40%
2020 2021 2022 2023
Water, Wind & Fuel solutions 35%
Digital Solutions 4%

ORDER INTAKE, END MARKETS

Shipbuilding and shipping 67%

Sales
Offshore 18%
Engine power 6%
SEK MILLION
Other 9%

20,000

Sales
15,000

SEK MILLION
10,000

20,000
13,888

19,049
16,370
15,867

5,000

15,000
0
2020 2021 2022 2023
10,000

Adjusted operating profit /margin

13,888

19,049
16,370
15,867

5,000

SEK MILLION %
0
2020 2021 2022 2023 25
5,000
21.2 20.2
20
Adjusted
4,000 operating profit /margin
14.7 14.9 15
3,000
SEK MILLION %
10
2,000 25
5,000
2,836
3,369

2,399

21.2 5
2,811

1,000 20.2
20
4,000
0 14.7 0
14.9 15
3,000
2020 2021 2022 2023
10
Adjusted operating profit
2,000 Adjusted operating margin
2,836
3,369

2,399

5
2,811

1,000

0 0
2020 2021 2022 2023

Adjusted operating profit Adjusted operating margin

Marine Division 43
Setting sail toward a sustainable future

44 Marine Division
In a world where sustainability is an ever-more urgent concern,
A.P. Moller–Maersk has embarked on a ground-breaking
voyage to introduce the world’s first methanol-fuelled
container vessel. With Alfa Laval’s innovative solutions for
methanol as fuel, this vessel embodies the way pioneering
technologies and equipment can facilitate shipping com-
panies’ adaptation to the evolving energy landscape and
environmental regulations.

Methanol is increasingly emerging as a viable marine fuel,

aligning with the shipping industry’s pursuit of cleaner and
more sustainable energy sources. When produced from
renewable resources, methanol has the potential to signifi-
cantly reduce CO2 emissions. Moreover, its compliance with
the International Maritime Organization’s (IMO) stringent
emission regulations has sparked widespread interest in its
adoption as a marine fuel.

With the ambitious target of achieving net-zero greenhouse

gas emissions by 2040, A.P. Moller–Maersk, a renowned
Danish shipping and logistics powerhouse, is swiftly propelling
itself toward the adoption of novel technologies, state-of-
the-art vessels, and clean fuels.

Operating a vessel powered by methanol requires thorough

attention to onboard equipment, safety and user-friendliness.
The 172-meter-long ship is equipped with an array of Alfa
Laval's products and solutions, including FCM Methanol
fuel supply system, methanol-ready steam boiler system,
freshwater generator, heat exchangers, and separators.
These components are meticulously designed to accom-
modate methanol as a fuel source while simultaneously
enhancing vessel efficiency through energy savings and a
reduced carbon footprint.

Over the years, Alfa Laval has established itself as a pioneering

solution provider by expanding its capabilities for alternative
fuels and energy-efficient solutions. Through its firm commit-
ment to research and development, combined with an
unparalleled service network, Alfa Laval supplies its customers
and partners with innovative, sustainable technologies to help
navigate the transition towards a cleaner, more environ-
mentally responsible future.

Marine Division 45
Pioneering positive
impact
Recognizing the fact that we live in a world with finite natural resources,
Alfa Laval is pioneering innovative technologies and solutions to help cus-
tomers unlock the full potential of these resources. Alfa Laval is uniquely
positioned to play an essential role in enhancing the efficient use of energy,
food, water, and other critical resources on which we all depend, and in
this way also contributing to a more sustainable and decarbonized world.

46 Sustainability Report 2023

Innovating for tomorrow
Together with our customers we are innovating solutions to In the Marine Division, we are actively supporting the switch
meet tomorrow’s demands on more circular business models to carbon-neutral shipping by developing products for new and
with a limited climate impact. Each of Alfa Laval’s divisions more sustainable fuel types. Alfa Laval provides pioneering
have exciting possibilities ahead, with opportunities to solutions that reduce the need for fossil fuels and improves
change the way our customers do business and support energy efficiency in the marine sector, helping sustainably
them on their journey to a fossil-free and less resource-in- transport cargo and people around the world.
tensive future.
Partnerships for sustainable innovation
In the Energy Division, we partner with many industries to The transformation towards a more sustainable business
optimise energy efficiency and reduce emissions with new and society requires extensive collaboration between many
generations of heat exchangers, but also extending the different stakeholders. Alfa Laval seeks out strong partner-
useful life of already installed products with our service ships with suppliers who also want to contribute to this
offering. We are also contributing to a new energy landscape, transformation, for instance by innovating materials with a
driving the shift towards cleaner energy with a leading range low carbon footprint or providing services that increase the
of products to produce biofuels, hydrogen power, and for circularity of products and resources.
energy storage.
By establishing the Alfa Laval Innovation House at our facilities
In the Food & Water Division, we are also seeing a significant in Copenhagen, we are aiming to accelerate the transformation
demand for more energy-efficient products. As separators and by supporting start-ups that focus specifically on sustainability
pumps are typically always in use and have comparatively innovations. Partnering with other local organizations,
long lifetimes, Alfa Laval can make a significant contribution Alfa Laval Innovation House hosts several start-up companies
to customers’ energy efficiency by developing products with intent on solving a variety of resource and energy efficiency
a low energy intensity. In addition, Alfa Laval products help issues that can produce new knowledge and potentially
customers recover and reuse water while reducing waste also be a foundation for new business ideas.
water to a minimum.

Sustainability reporting
Alfa Laval’s Sustainability Report according to the GRI Standards,
including the Statutory Sustainability Report (with EU Taxonomy
disclosures) according to the Swedish Annual Accounts Act, is found
on pages 46–79 in this Annual Report.

Supplementary sustainability information to ensure reporting in

accordance with the GRI Standards (including a GRI index) is found
in the separate document “Sustainability notes” published on our
corporate website www.alfalaval.com.

Alfa Laval’s sustainability reporting covers the 2023 calendar year

and focuses on material topics and activities in line with stakeholder
concerns. It covers the entire Alfa Laval group and all wholly owned
subsidiaries. Sustainability reports for previous years are available at
www.alfalaval.com/about-us/sustainability/a-matter-of-trust/
sustainability-reports/

For more information about Alfa Laval sustainability activities

and reporting, please contact
Anna Celsing, VP Group Sustainability
Tel: + 46 730 55 48 00
e-mail: [email protected]

Sustainability Report 2023 47

Sustainability strategy
sets key priorities
The sustainability strategy established in 2021 remains highly relevant
and continues to guide Alfa Laval activities. Organized around four central
themes, the strategy sets the agenda and indicates key priorities for the
business to focus on until 2030. Group targets are in place for all material
issues, some with a deadline in 2023, others in 2025. Science-based
carbon emission reduction targets have been set for 2030.

48 Sustainability Strategy
We exist to accelerate the success
of our customers, people and planet
The purpose of the sustainability strategy is to focus on those areas where Alfa Laval has
the largest impact and wants to show leadership as a company. The strategy is divided
into four main areas – caring, committed, circularity and climate. These areas reflect the
environment, social and governance (ESG) issues that are most significant and where
Alfa Laval can contribute most.

Each area includes a vision that sets out the ambition. For the different areas, Alfa Laval
has also set long- and short-term targets which are followed up through relevant perfor-
mance metrics to ensure continuous progress and to meet potential challenges through
action. Where applicable, Alfa Laval will encompass the whole value chain in its ambitions
including how the products and technologies we put on the market contribute to the
sustainable transformation of business and society.

The sustainability section of the annual report for 2023 follows the structure of the 4C
sustainability strategy. Each section provides an overview of focus areas, targets, processes,
governance and how we follow-up on progress.

Climate Circularity

Net-zero emissions Circular business

Alfa Laval aims to achieve net-zero carbon Alfa Laval is dedicated to safeguarding the
emissions in own operations and the value value of natural resources throughout
chain by 2050. its value chain.

In focus In focus
– Scope 1 emissions – Improving process efficiency
– Scope 2 emissions – Extending product life span
– Scope 3 emissions – Reuse and recycling

Caring Committed

Safe inclusive culture Ethical conduct

Alfa Laval promotes a safe, inclusive culture Alfa Laval is committed to honest, respectful
both within the company and in its relation- and ethical conduct within its organization, as
ships with external partners. well as in all external business relationships.

In focus In focus
– Health & Safety – Business principles
– Inclusion & Diversity – Anti-Bribery, anti-corruption
– Human rights – Whistleblowing

Sustainability Strategy 49
Targets and achievements
Alfa Laval’s sustainability targets aim to drive efficiency and behavioural
change to achieve better results in the short- and long term. The table
below shows the company’s sustainability targets. Progress on the tar-
gets is presented in more detail within each section of the report as well
as in the Sustainability Notes document available on www.alfalaval.com.

Trend to achieving target Read

Area Targets Target Year based on results 2023 more

Carbon 2023
50% reduction Scope 1 & 2 emissions p. 52-57
emissions (base year 2020)

Carbon 95% reduction Scope 1 & 2 emissions 2030

p. 52-57
emissions 50% reduction Scope 3 emission (base year 2020)

2023
Energy 5% improvement in energy efficiency (MWh/k direct hours) p. 58-61
(base year 2020)

5% reduction of water withdrawal at sites located in water stressed 2023

Water p. 58-61
areas (base year 2020)

Water 100% recirculation of water at sites located in water stressed areas 2030 p. 58-61

Waste 85% recycling of waste Recurring p. 58-61

Waste Zero waste to landfill 2030 p. 58-61

Materials 30% recycled material content in products 2030 p. 58-61

Diversity 35% female employees 2025 p. 66-67

Diversity 25% female managers 2025 p. 66-67

<70% homogeneity (gender and nationality)

Diversity 2025 p. 66-67
in highest management groups

Health & Safety <1.5 Lost Time Injury Frequency Rate (LTIFR) 2025 p. 62-64

Chemicals No unauthorized chemicals used Recurring p. 62-64

100% of employees trained in Business Principles,

Ethics Recurring p. 68-71
Anti-Bribery, Anti-Corruption and whistleblowing

Well aligned with target Progress made towards target Not aligned with target

50 Targets, Stakeholder engagement

Assessment of sustainability focus areas
Materiality assessment Alfa Laval shareholders participate in Annual General Meetings
Alfa Laval regularly conducts a materiality assessment to review the and investors are invited to annual capital markets days. Alfa Laval’s
sustainability issues with greatest significance and ensure that the potential to effectively respond to future sustainability challenges
company’s sustainability strategy remains relevant. This assessment is one of the topics discussed at these meetings. In addition, we
is typically informed by interactions with internal and external answer numerous ESG questionnaires during the year, and submit
stakeholders to fully capture material sustainability impacts, risks, responses to rating organizations such as CDP and EcoVadis. These
and opportunities. The materiality assessment is validated by information requests from investors and analysts also provide input
Group Management and the Board of Directors. to our materiality assessment.

During 2023, Alfa Laval has initiated activities to align with the EU Employees are encouraged to give feedback directly to their managers
Corporate Sustainability Reporting Directive (CSRD) to be able and through recurring employee surveys. Suppliers are important
to publish compliant sustainability statements in the 2024 annual partners for Alfa Laval’s business success. Regular interaction with
report. The European Sustainability Reporting Standards (ESRS) them results in mutual development. Alfa Laval has an open dialogue
that are a part of the CSRD regulations mandate that a double with the communities in which the company operates, including
materiality assessment shall be carried out to identify sustainability collaboration with universities and local governments.
topics on which to report.

Alfa Laval has performed such an assessment of sustainability

impacts as well as financial risks and opportunities as required by
ESRS, and this largely confirms that the focus areas of the current
sustainability strategy are material topics. In addition, some new
potentially material topics have been identified and will be analysed Dialogues with key stakeholders
in more detail. The assessment also highlights the financial mate-
Alfa Laval’s stakeholder engagement builds on both formal
riality of Alfa Laval’s business opportunities in helping customers and informal dialogues. Most of these dialogues occur as part
improve their energy and resource efficiency and reduce carbon of everyday business and sustainability topics are frequently
emissions. We will disclose full details of the double materiality part of these conversations.
assessment in the 2024 sustainability statements.
Two stakeholder groups in particular – customers and investors
- stand out in this area and are increasingly asking more in-
Stakeholder engagement
depth questions on Alfa Laval sustainability strategy, actions
Alfa Laval has identified customers, shareholders and investors, and performance.
employees and future employees, and business partners as priority
groups for engagement on sustainability issues. We have selected Some of the issues raised in the past year include:
the stakeholder groups that make up our value chain and that can – Climate change adaptation and climate-related risks
provide meaningful insights on our company’s sustainability strategy. – Climate change mitigation and carbon emissions
– Resource efficiency and circular economy
– Business opportunities related to sustainability
We have regular contact with all these significant stakeholder – Health and safety performance
groups throughout the year, and frequently address various aspects – Diversity and inclusion in the workforce
of Alfa Laval’s sustainability strategy in these dialogues. Customer – Human rights and supplier business conduct
contact is typically handled by the business units, and in addition
we regularly conduct customer surveys, which provide in-depth Stakeholder dialogues continue to be an important part of
the Alfa Laval sustainability agenda and the results of these
understanding of how customers perceive the company, including
dialogues inform and validate our strategy. Input from various
how Alfa Laval contributes to sustainable business development. stakeholder dialogues has also been valuable in the double
materiality assessment that is presently being conducted.

Targets, Stakeholder engagement 51

Climate

Strengthening
our climate
commitments
Alfa Laval’s climate commitment has been strengthened
significantly during 2023, with a science-based validation of
our climate targets, collaboration with external partners both
up- and downstream in our value chain, and introducing
new and more energy efficient products on the market.

52 Climate
Validation of science-based targets
Alfa Laval has committed to a near-term science-based target to reduce scope 1 and 2
carbon emissions by 95 percent and scope 3 value chain emissions by 50 percent by 2030
(compared with a 2020 baseline). Furthermore, we have committed to achieve net-zero
emissions in all scopes by 2050. Both the near-term and long-term targets have been
validated by the Science-Based Targets Initiative (SBTi) in 2023, ensuring that Alfa Laval's
climate ambitions are in line with the latest science and contribute to meeting the
1.5-degree target defined in the Paris Agreement.

Progress on emission reduction targets

Operational emissions (scope 1 and 2) have been reduced by 52 percent since 2020 and we
have therefore achieved our 2023 target and are on track towards the near-term target (2030).
Value chain emissions (scope 3) have continued to increase, mainly due to a growing business and
larger volumes of products put on the market. An error in the calculation of downstream emissions
was identified in 2023, resulting in an increase in emissions compared to what was reported in
2022. This has also affected the baseline (2020) and emissions of previous years.

Scope
Scope 3 Upstream 1&2 Scope 3 Downstream

482,058 41,373,847

2020

789,555 43,764,689

2023

241,029 20,686,923
Target
2030

Climate 53
Operational emissions
Fossil fuels for heating and electricity production are the main sources of greenhouse gas emissions from
operations (scope 1 and 2). Replacing these fuels with renewable sources and using energy more efficiently
are high priorities for Alfa Laval in the short- to medium-term.

tCO2e

50,000

40,000

30,000

20,000
11,568

10,000

0
2020 2021 2022 2023

Scope 1 Scope 2 (market-based)

Reaching the target 2023 electricity agreements, from fossil-based to

Alfa Laval continues the journey to analyze the renewable sources at our sites. Now more than 60
energy consumption on sites globally to find savings percent of our sites use energy from renewable
opportunities. We are currently working on five sources and 97 percent of the electricity came
sites where we analyze patterns and trends more from renewable sources in 2023 compared with
thoroughly together with an external partner. The 80 percent in 2020.
analysis is performed on a bi-monthly basis in
Ronneby, Pune, Qingdao, Jiangyin and Richmond. Alfa Laval is continuously expanding its
During 2023, Alfa Laval has mapped the natural self-generating production capability especially
gas consumption in our facilities to formulate a from solar plants where we have added capacity
strategy on how to phase out the gas usage, and in Italy and Sweden during the year. In 2023, we
we will continue the work in 2024. started installation of solar panels on the roofs in
Monza, which will generate approximately 575 MWh
Switching to renewable sources of electricity per year when fully operational, corresponding to
During 2023, emissions from scope 2 were reduced almost 60 percent of the site’s annual electricity
by 78 percent (versus the baseline in 2020). The consumption. Alfa Laval will continue the journey
decrease can mainly be attributed to changing to produce its own electricity in the coming years.

Introducing the Climate Playbook

The Climate Playbook sets out four important steps towards more energy-
efficient operations that will help us reach our near-term climate target.

1. Control 2. Analyze 3. Optimize 4. Modify

To have control of energy con- To analyze energy patterns To optimize ways of working To modify existing infrastruc-
sumption data by installing and trends to identify energy based on identified energy ture and invest in new equip-
Alfa Laval Energy Management savings opportunities. savings opportunities. ment or technologies.
(ALEM).

54 Climate
Energy efficiency improvements at Alfa Laval in Denmark
By applying the Climate Playbook methodology, Alfa Laval in Kolding, Denmark, has reduced total energy use by
almost 3,000 MWh (close to 25 percent) in the past year.

Control Optimize
The starting point was to increase the number of Change of human behaviour and control of facility
energy measure points to establish a baseline under- energy use was in focus and several activities were
standing of the site’s energy usage and pattern, and initiated. For example, energy use during Christmas
all in all, approximately 4,000 points were identified. could be reduced by 30 percent by reminding
The establishment of the baseline was performed employees to switch off lights and machines when
across all departments on the site. not at work.

4,000 points were identified Human behavior and

Facility controlling campaigns

Analyse
From the extensive list, the top 50 energy users were Modify
detected. These were analysed with local site manager, In the modify stage, the ventilation units in the pro-
facility management and real estate. Results from duction facility were replaced – this gave greater
the analysis showed a high degree of energy usage opportunity for adjusting ventilators. The higher con-
not linked directly to production, e.g. lighting and trolling resulted in a 50 percent reduction of energy
ventilation were turned on in non-working hours. consumption in the ventilation system.

High degree of energy usage Ventilation units replaced – 50 percent

not linked directly to production reduction of power consumption

Climate-related risks and opportunities

According to the recommendations from the Task Force on also see opportunities in this transition, providing energy efficient
Climate-related Financial Disclosures (TCFD), companies should products that help customers mitigate climate impacts.
disclose information on climate-related risks and opportunities
relevant for investors. Alfa Laval aims to apply the TCFD recom- Alfa Laval has carried out an initial in-house assessment of physical
mendations, and we include disclosures on the management of climate-related risks and we are currently in the process of
climate-related risks and opportunities, including governance, updating this analysis with more granular data using a third-
strategy, targets and metrics in the annual report and separate party solution. The updated analysis will cover all Alfa Laval
sustainability notes. locations around the world and provide valuable insights
regarding the need for local adaptation solutions based on
In the transition to a low-carbon economy, there are regulatory state-of-the-art climate projections.
and market pressures to reduce carbon emissions. In response
to this, Alfa Laval has set a science-based target aiming for a
95% reduction of scope 1 and 2 emissions by 2030 (with a
2020 baseline) and 50% reduction of scope 3 emissions. We

Climate 55
Scope 3 – Upstream
Upstream value chain emissions tCO2e

Greenhouse gas emissions upstream are 800,000

mainly embodied in the materials Alfa Laval

purchase from suppliers, representing about 600,000
80 percent of emissions. Steel and copper are
some of the most significant raw materials 400,000
-50%
used in Alfa Laval products, and we are aiming
to reduce the impacts from metals manufac-

540,036
482,058

789,555
664,727
200,000
turing by purchasing increasing quantities of
steel and copper with a low carbon footprint. 0
Net Zero

2020 2021 2022 2023 2030 2050

Targets

Collaboration with Boliden

Alfa Laval has teamed up with Boliden, a Swedish mining energy which gives the raw material one of the lowest
and smelting company, to use their Low-Carbon copper carbon footprints of any refined copper in the world.
to produce heat exchangers. The cooperation will enable The copper will mainly be used in Alfa Laval’s brazed
Alfa Laval to produce heat exchangers with a reduced heat exchangers which are used for heating, cooling,
carbon footprint, and help achieve our science- based evaporation and condensing in numerous applications,
climate targets. including heat pumps. By using Boliden’s copper, the
carbon footprint of the heat exchangers will be reduced
“To drive the transition towards a more sustainable society compared to other available alternatives.
it's vital that we find partnerships and collaborations that
complement the ambitions that we have as a company. “With our Green Transition Metals, we create a foundation
Bringing together Boliden’s copper and our energy- for Europe’s climate transition as they represent some of
efficient heat exchangers means we can contribute to the most sustainable options on the market. If we want to
the industry’s transformation towards net zero,” says enable the society of tomorrow, we need to start today.
Tom Erixon, President and CEO of Alfa Laval. And Alfa Laval is now utilizing the fact that our offering is
available today, and by that they are part of leading the
The cooperation with Boliden is part of Alfa Laval’s strategic industry”, says Mikael Staffas, CEO of Boliden.
ambition to reduce the environmental impact of raw
materials. Boliden’s Low-Carbon copper is produced
from copper mined in the north of Sweden and recycled
material such as electronic waste, using renewable

56 Climate
Scope 3 – Downstream
Downstream value chain emissions tCO2e

Customers’ use of Alfa Laval products is the 60,000,000

single largest source of downstream emissions,
accounting for around 98% of total greenhouse 45,000,000
gas emissions. Innovating products that use
less energy during their lifetime is essential for 30,000,000 -50%
Alfa Laval to reach our near-term and net-zero

43,764,689
41,776,654
41,373,847

45,587,911
target. In 2023, we discovered a calculation 15,000,000
error for products in use emissions. Emissions
for 2020-2022 have been recalculated, but we 0
Net Zero

have not yet formally restated the baseline or 2020 2021 2022 2023 2030 2050

target year emissions. Targets

New product installation

Chelsea Sugar aimed to reduce carbon emis- “It is the ability of Chelsea to evolve and adapt to
sions with a new evaporation system installed changing times, which has enabled us to thrive
and activated during 2023. and grow over the past 138 years. Today, one of
our biggest challenges is that we must develop
Alfa Laval’s Mechanical Vapour Recompression an increasingly sustainable operation and business,
(MVR) technology enabled Chelsea to turn to and the environmental impact of our sugar pro-
wind, solar or another renewable power source duction is an important part of this,” says Graeme
and thereby cut carbon emissions from this part Smith (GM Operations ANZ) from Chelsea.
of the process to near zero. This also lowered nat- “Our relationship with Alfa Laval goes back many
ural gas usage at the sugar refinery by drastically years, and it is the strength of our interaction and
reducing the input steam demand of the evapo- the mutual confidence in our competences, which
rator and cutting energy consumption of the has now enabled Chelsea to take on the journey
evaporator plant by 76 percent. In concentrating in making the business even more sustainable.”
the sugar from 65 percent to 78 percent dry solids,
the energy consumption of the MVRs was reduced
to 36 Wh/kg whereas in the existing TVR system,
the energy consumption is around 190 Wh/kg.
Overall, the refinery’s equipment upgrades reduces
energy consumption for the whole site by 9%, and
CO2 emissions by 11%.

CO2 emissions reduced

11%

Climate 57
Circularity

Efficient use of
natural resources
In a circular economy materials, products and services are
kept in use for as long as possible at their highest value and
waste is limited to a minimum. Using resources efficiently
and adopting more circular business models are important
ambitions for Alfa Laval and key enablers to deliver on several
sustainability targets.

58 Circularity
Addressing circularity has become increasingly important. The
extraction and processeing of raw materials comes with a signifi-
cant climate impact. Therefore efforts to become more resource
efficient and circular as a business are a key to reach climate targets.
In addition, increased circularity has positive impacts on biodiversity,
the availability of fresh water and air pollution.

At Alfa Laval we are dedicated to safeguarding the value of natural

resources throughout the value chain, and we are continuously
working on improving our understanding of the opportunities of a
circular economy in the different parts of the value chain. We have
chosen to focus on three main areas to promote circularity:

1 Improving process efficiency

2 Extending product life span
3 Reuse and recycling

Recycle/reuse materials
– Design for recycling
– Partnerships

Process efficiency
– Reuse water
1 – Energy efficiency
– Reduce waste

2
Extending
product life span
– Regular service
of products

Circularity 59
1 Improving process efficiency
Alfa Laval is continuously making efforts to use resources more
efficiently in our operations. We have set specific targets for water
consumption, energy efficiency, and waste recycling covering our
manufacturing sites worldwide.

Water consumption, m3
Water
While Alfa Laval does not use significant amounts of water, we are 300,000

present in water-stressed areas where even limited water with-

drawals can be problematic. Alfa Laval has set a target for 2030
200,000
to recycle 100 percent of the water used on sites located in water-
stressed areas. In the shorter term, the target for 2023 was to
reduce water withdrawn in these areas by 5 percent (baseline
100,000

256,500

253,265
262,679
2020) and we achieved this target with a 16 percent reduction at

301,972
our sites included in the baseline.
0
2020 2021 2022 2023

Energy Energy/kDirect Hours

Alfa Laval is continuously working with energy efficiency at all our 50

sites, also as a means to reach our climate targets. Our short-term

40
target for 2023 was to improve energy efficiency - expressed as
energy use per direct working hours - by 5 percent compared with 30
a 2020 baseline. This target was achieved with a 16 percent
improvement in energy efficiency at sites included in the baseline. 20
42.80

39.99
44.34

36.10

0
2020 2021 2022 2023

Waste Waste recycled,%

Alfa Laval’s waste management approach is based on the waste 100

Target, 85%
hierarchy, supporting circularity by favouring the prevention and
reduction of waste and increasing reuse and recycling. The ambi- 75

tion is to divert as much waste as possible from landfill, aiming to

have zero landfill waste by 2030. Our target is also to maintain a 50
high (85 percent or more) level of recycling. In 2023, we managed
to recycle 81 percent of waste from operations, and more work is 25
83%

83%

79%

needed to create internal awareness on resource efficiency and

81%

appropriate waste management. 0

2020 2021 2022 2023

60 Circularity
Water initiatives at Alfa Laval Brazil
2 xtending product
E As the focus on water as a scarce and valuable resource intensifies,
life span companies around the world are increasing their efforts to implement
Keeping products in use at their highest value water-saving measures in industrial production. At the Alfa Laval
for as long as possible is the foundation of circu- production site in São Paulo, Brazil, 100 percent of the water used
larity. Many Alfa Laval products have a lifespan operationally is now being reused and zero water is drawn from
of over 20 years. By designing products that the public supply following the successful implementation of a
are easy to maintain, repair, upgrade, and series of water-capture and recycling initiatives.
refurbish, in combination with offering service,
the lifespan of our products can be extended The first of these initiatives was launched in 2008 when a decision
and resources saved. was made to return the water used in heat-exchanger hydrotesting
to a collection tank for reuse rather than sending it down the drain.
Today, service expertise is provided through a This system is a closed loop with only rainwater being added to
global team of nearly 3,000 professionals. the tank during the year.
They are trained in providing technical support,
maintenance, repairs and problem-solving for The next step, in 2015, saw the construction of a 128-metre deep
customers to ensure optimal performance along well on site, which has cut the annual water bill while further
with continued productivity and product durability. boosting overall water security. Today, no water is drawn from the
public supply.

In the on-site service centre, where plates come in for cleaning and
3 euse and
R maintenance, fresh mains water was previously used to clean the

recycling plates following treatment in an acid bath. But in 2021, a water tank
was installed to collect the wastewater for treatment and reuse.
Despite a long lifetime all products will reach
an end of life, in some cases since they have Today all the water used for testing and cleaning heat exchangers,
been operating for decades and in other cases high-speed separators and decanters is either immediately re-
since newer and more energy efficient equip- circulated for reuse or first undergoes a treatment process prior to being
ment motivate a replacement. Product design recycled and reused. This process can be repeated multiple times.
is important for making the products easy to
disassemble, to reuse parts and finally recycled
as valuable raw materials. Alfa Laval is contin-
uously looking into business models, partner-
ships and possibilities to increase the reusability
and recycling of our products.

In addition, we are continuously working on

sourcing recycled materials. The target for
recycled materials is that at least 30 percent
of the materials used in products should come
from recycled sources. Already now we have data
indicating that more than 30 percent of the
material used comes from recycled materials.
This will allow us to re-assess the target and
potentially raise our ambition.

Circularity 61
Caring

Creating a great
place to work
A safe and inclusive culture where each employee is
treated with respect are the foundation of a workplace
that attracts and retains the best people.

Health and safety (H&S) is a top priority at Alfa Laval. We are In August, one of our employees was tragically involved in a fatal
continuously working to improve our H&S performance and traffic accident while crossing the street in Singapore during a
monitor this closely. A new H&S policy was launched during the service assignment. The fatality is included in the number of
year, and it emphasizes our vision: “We return home safely – every LTIs. Other lost time injuries were mainly related to slips, trips
day”. The extensive safety programme launched in 2022 con- and falls, lifting and use of personal protective equipment.
tinued during the year focusing on leadership and safety culture.
Good health and well-being
Targets and progress The pandemic put additional focus on health and well-being,
Alfa Laval has updated its targets for 2023-2025 and the Group and Alfa Laval continued that work during 2023. Several pilots
target is to be below 1.5 in LTIFR (“lost-time injury frequency rate”) were initiated in a broader and slightly more structured way of
before the end of 2025 with a milestone of 2.2 at the end of working with health and wellbeing. An evaluation of the pilot
2023. The vision and long-term target remains. In 2023, the projects and new working procedures will be done as the pilots
total number of LTIs increased to 90 (87) with 3,650 (2,707) are concluded.
lost working days, and an LTIFR of 2.45 (2.60). This means the
milestone for the LTIFR reduction target was not met, even if During the year, Alfa Laval conducted a global employee survey,
significant progress was made. Continued focus and work is and health and well-being was an important topic in the survey.
needed to fulfill our targets and long-term aspirations. More information on the survey is presented later in this chapter.

62 Caring
Improved safety in China
Several initiatives were initiated in 2023 to increase
safety awareness, involve management teams, and
strengthen the safety performance and culture in China.

All three manufacturing sites conducted Job Safety

Analysis updates for all working posts to increase
risk identification and effective risk communication.
All employees were encouraged to report risks in
the workplace, which resulted in more than 6,455
hazard and risk observations during the first ten
months. Increased focus on follow-up resulted in a
closing rate of 92 percent.

Participation in Gemba Walk and more than 651

"I Care Walk & Talks" were initiated to increase leader-
ship involvement and the activities resulted in over
405 risk observations by the management teams.

Other initiatives to increase safety awareness in the

workplace included the development of a checklist
with safety rules for high-risk operations, a hand safety
manual and distribution of hand safety posters to
all operators to improve employee hand safety
consciousness.

Since 2022, a New Employee Safety Training pro-

gram is in place to secure that before starting any
work, new employees participate in 24 hours of
training on site, workshop and team levels.

Reducing the use of hazardous chemicals

The initiatives greatly improved the safety trend for
To reduce the use of hazardous chemicals is important for the
lost time injuries (LTI) and minor injuries (MI) in
health, safety and well-being of Alfa Laval employees. This is a
JiangYin, Kunshan and Qingdao compared to the
prioritized focus area and part of the continuous improvement
same period last year.
work for all our sites. The substitution of hazardous substances
is guided by internal procedures and the Alfa Laval Group
2021: 6 LTI with 368 lost days and 506 MI
Restricted Substance List, which is the primary tool for us to
2022: 3 LTI with 438 lost days and 172 MI
control the use of hazardous chemical substances.
2023: 2 LTI with 84 lost days and 46 MI

This year we actively phased out all chemical products

To secure the increased safety performance and
reported in 2023 containing unauthorized substances, which
culture over time, the safety leadership initiatives and
are substances listed as banned on the Alfa Laval Group
employee empowerment will continue and be actively
Restricted Substance List.
followed-up in a new safety KPI chart. Safety awards
will be issued to further encourage employee
involvement, safety improvement and reporting.

Caring 63
Continued focus on safety performance
Health and Safety priorities The initiative "I Care Walk & Talk” continued during the year. It is
During the year, Alfa Laval has had a continued high focus on the focused on leaders and other key stakeholders for them to demon-
three main areas of safety: people (safe culture), safe technology, strate visible leadership on the shopfloor and talk with employees
and safe processes. about safe and unsafe behaviours.

Safe culture Towards the end of the year, we took the next step for safety and
Promoting behavioural change is necessary to create a culture an updated safety strategy was prepared and approved. Focus is
focused on safety in the workplace, which concerns all employees. to ensure operational excellence with a few selected tools and
Managers have a particularly important role in leading the develop- methods. It also emphasizes the work with safety culture, and
ment towards a better safety culture and acting as safety role more specifically leadership. This next step creates a platform for
models. All employees must also take responsibility for their own us to achieve our ambitious targets in this area.
health and safety.
Safe technology and equipment
During the year, work with behavioural aspects continued and An important part of Alfa Laval’s safety work is to ensure safe
focused on some significant areas. For example, a method called machines and equipment. Risk assessments are therefore carried
Last Minute Risk Assessment (LMRA) was implemented, intended out regularly to identify hazards and measures to reduce risks.
to increase a person’s safety awareness just before he/she starts
to work on a task and thereby reduces the risk for accidents. The Safe processes
methodology aims to create a safety culture where the employees A new H&S policy was launched during the year and implemented
are constantly assessing their workplace and their own activities in the organization. Alfa Laval has also continued to implement
to detect hazards as a natural part of their daily work. relevant major hazard standards and there has been a particular
focus on working in confined spaces.

2021 2022 2023

0 0 Fatality 1

113 87 Lost Time Injury 89*

1,294 920 Minor injuries 914

5,294 4,640 Near misses 4,541

13,568 18,888 Hazards / risk observations 26,974

*Excluding fatality

64 Caring
Commitment to respect human rights
Accelerating success for our customers, people and Policy and Human Rights Report.
planet is at the heart of everything we do. Our respect for New trainings on human rights have
human rights – including the International Bill of Human also been developed and introduced
Rights and the core conventions of the International this year.
Labour Organization – is embedded in our organization
and expressed in our Business Principles. The Human Rights Policy sets the
commitments on human rights with
We work actively to avoid causing or contributing to nega- a special focus on health and safety,
tive human rights impacts by following recommended due freedom of association, freedom of
diligence frameworks, such as the UN Guiding Principles expression, discrimination and
on Business and Human Rights and the OECD Guidelines harassment, child labour, forced
for Multinational Enterprises. labour and anti-bribery and
anti-corruption.
Embedding human rights in our company
In 2022, we embarked on a project to identify improve- The Human Rights Report captures
ment areas in our human rights due diligence processes, how human rights due diligence is
focusing on own operations and first tier suppliers. Based conducted in Alfa Laval. This high-
on an analysis of salient human rights risks, a roadmap lights our way of working to identify
was developed, and key internal stakeholders were identi- and assess human rights risks,
fied to drive prioritized activities. prevent and mitigate negative
impacts, provide remediation
During 2023, we have taken a number of actions to further where necessary and monitor
embed human rights in the way we do things. Two key and report our progress.
milestones were the launch of Alfa Laval’s Human Rights

Human Rights Due Diligence Framework

5 Communicate
5 2 Identify & assess
how impacts are adverse impacts in
addressed operations, supply
chains & business
1 relationships
2 6 Provide for or
Embed responsible
cooperate in
business conduct into
remediation when
4 policies & management
systems
appropriate

3 Cease,
prevent or
4 Track
implementation
mitigate adverse
and results 3 impacts

Caring 65

Building an inclusive culture

Inclusion and diversity is high on the agenda at Alfa Laval and our journey towards an inclusive
and diverse workplace continued during 2023, focusing on some key activities.

Alfa Laval’s vision is to be recognized as an inclusive partners. Alfa Laval’s workplace demonstrates a
workplace where diversity is essential to achieve set of behaviours and unique values that make
the company’s objectives. The composition of our people feel valued, respected, and involved. They
people should reflect the diversity of the markets reach their full potential based on competence,
where we operate and society at large. experience and performance. All traits and elements
people bring to the workplace help to build strong
We promote a safe, inclusive culture both within and diverse teams.
our company and in our relationships with external

Ambitions
Our ambitions towards 2025 are:

35%
employees to be women
25%
managers to be women
<70%
homogeneity in senior management team

66 Caring
Towards an inclusive and diverse workplace
Progress on inclusion and diversity targets This is just a selection of examples and there are many more local
In 2023, Alfa Laval had women comprising 22 (21) percent of our initiatives that are driven by the business, HR, and/or employees
total employee base and 22 (22) percent women representation themselves, while receiving full support from top management.
in our managerial population, which is still well below our target
levels. For new hires, the proportion of women was 33 (34) percent Learning
in the white-collared talent pool, showing our commitment to During 2023, Alfa Laval continued its education and training
increase the representation of women in the company. activities for leaders and employees globally in themes such as
“Becoming an inclusive leader”, “Acting inclusively” and “Over-
Being an international company, Alfa Laval aims to be a highly coming implicit bias”. All employees are encouraged to take the
diverse and inclusive organization. In 2023, homogeneity in senior “Global inclusive course”, and “Becoming an inclusive leader” is
management teams, from a gender and citizenship (nationality) aimed at managers on all levels throughout the company.
perspective, reached 71 (70) percent, marginally above the target. In September 2023, the North Europe cluster held a Learning
In the annual engagement survey ‘VOICE’, the dimension of inclusive Festival week and one of the sessions was specifically about
leaders was scored 72 by the employees, which represents a “Living Diversity Together”.
noticeable increase from last year (69).
In 2023 trainings were supported by Alfa Laval’s Learning Portal,
Local I&D action plans eLearning tools, and through Teams and live sessions in several
There is no single recipe in making the change to become a truly business units.
inclusive and diverse workplace, which is why Alfa Laval has built
its Inclusion and Diversity (I&D) strategy on a long list of initiatives: Networks
awareness and change management, education and training, Diversity networks and employee resource groups have been initi-
culture and leadership, people processes, local activities, targets ated by employees and supported by Alfa Laval throughout the
and data, and communication. company. Examples include “W@lfa Women network” that started
in Tumba in 2017 and in 2023 has been expanded to our sites at
Alfa Laval continues the I&D journey by building awareness in the Lund, Eskilstuna, and Ronneby in Sweden. The “Young@Alfa Laval”
organization through workshops, initiatives, forums and networks. network has members in Lund and Tumba.
For example, in 2023, I&D workshops were held at the sites of San
Bonifacio (Italy), Ronneby (Sweden), Richmond (US) and JiangYin Communications
(China) targeting the managerial population. Communications is crucial in keeping I&D high on the agenda and
keeping up the momentum by showcasing initiatives and underlining
Another initiative called “Unleashing HER Power” has been driven the importance of having an inclusive and diverse workplace
by Alfa Laval North East Asia to support the attraction, development among leaders and employees in the whole organization.
and retention of female talents. The program is intended to help
female employees achieve self-driven development by sharing, Communication activities in 2023 focused on sharing to the broader
listening ad interacting. audience the many initiatives via testimonials from participants in
trainings, workshops, networks and to showcase local initiatives.
In Sweden, Alfa Laval has initiated a partnership with Teknikkvinnor,
a Swedish network reaching over 35,000 women with a technical Listening
or engineering education. The current focus is to gain further In 2023, Alfa Laval conducted its employee engagement survey
understanding of how diversity contributes to company success, “VOICE” to allow all employees to make themselves heard and
why inclusion is important to create a diverse environment, and contribute to making Alfa Laval an even more inclusive and attrac-
strengthen our managers’ ability to have inclusive communication. tive workplace. This year as many as 86 percent of Alfa Laval
employees completed the survey and the score on engagement
This partnership also opens the door for Alfa Laval to use Teknik- was 78 (78).
kvinnor’s network to advertise and be seen as an employer who
promotes and values diversity.

Caring 67
Committed

Committed to ethical
business conduct
Alfa Laval is committed to doing business in an ethical and transparent
way and also expects this of business partners. The Alfa Laval Business
Principles set out fundamental rules of behaviour that all employees
should adhere to when conducting business. By aspiring to our Business
Principles, we can also find many opportunities to contribute to a
more sustainable future and accelerate success for our customers,
people and planet.

The Business Principles apply to all companies in In 2023, a new Business Principles training was
the Alfa Laval Group and apply to all employees, rolled out to improve employee awareness and
including temporary employees and consultants. increase knowledge on the Business Principles.
They also guide the relationships with business
partners, such as suppliers and customers. Alfa Laval’s Business Principles incorporate the
‘Protect, Respect and Remedy’ concept of the
There are internal guidelines available to help United Nations Guiding Principles on Business
employees interpret the Business Principles, and Human Rights, the OECD Guidelines for
with concrete examples for how they should be multi-national enterprises and the concepts in the
implemented in everyday work life for everyone UK Modern Slavery Act. The Business Principles
at Alfa Laval. are approved by the Alfa Laval Board.

68 Committed
Alfa Laval Business Principles
There are four fundamental Business Principles - Caring, Committed, Transparency, Planet - that cover a number
of topics that are essential to responsible and sustainable business conduct.

Caring Committed Transparency Planet

We care about every individual’s We are committed to ethical con- We engage in open dialogue with We are in a unique position be-
rights and opportunities including duct within our organization and in all our stakeholders to develop cause our products make a signifi-
their safety and well-being. We are all external business relationships. business relationships built on cant contribution to reducing the
a global company, and we firmly High ethical standards guide our trust. Trust also requires that we environmental impact of industrial
believe that diversity maximizes behaviour, and honesty, integrity are careful not to reveal or commu- processes. We also have a respon-
the potential of every employee and respect for others are values nicate confidential information. sibility to continuously reduce our
and we care about every individu- that we live and work by. environmental impact in all areas
al’s rights and opportunities. of our value chain.

The Business Principle covers: The Business Principle covers: The Business Principle covers: The Business Principle covers:
– Human rights – Anti-bribery and anti-corruption – Protection of personal data – Environmental impact
– Inclusion and diversity – Non-complicity – Confidential information – Continuous improvement
– Health and safety – Conflict of interest – Accounting and verification – Precautionary principle
– Freedom of association – Fair competition – Company assets
– Child and forced labour – Export control and trade sanctions
– Working conditions – Political contributions

Committed 69
Ensuring compliance with laws, regulations
and Alfa Laval Business Principles

Conducting business with honesty, integrity, and respect for others Reporting breaches
is fundamental for Alfa Laval. This means that we not only follow the Alfa Laval encourages its people to report any concern about actual
applicable laws and regulations in the countries in which we operate, or potential violation of the Business Principles or the law, and any
but we are also determined to follow the highest ethical standards unethical conduct. Reporting concerns to your manager is always
of business conduct. Alfa Laval carefully monitors the development the first step. If this is not an option, Alfa Laval has a company-wide
of international legislation, social standards, and voluntary initiatives, whistleblowing system, which enables both internal and external
including those concerning anti-bribery, anti-corruption, and stakeholders to report suspected breaches anonymously. Alfa
conflicts of interest. Laval’s whistleblowing system is a secure and efficient tool that
enables employees to combat fraud and uphold the good reputation
The compliance and ethics program has been furthered developed of the company. The system complies with the EU data privacy
in 2023, and a Three Lines of Defence model has been implemented regulation (GDPR) and EU Whistleblower Protection Directive.
to clarify roles and responsibilities in applying the Alfa Laval Business
Principles and underlying governing documents. The governing Informing people about Alfa Laval’s whistleblowing system and
documents are policies, directives, and procedures. Adherence to encouraging people to report is an ongoing process . In some
the governing documents is mandatory for all employees in the countries, Alfa Laval has established a hotline for whistleblower
Alfa Laval Group. support, along with a web-based supporting system.

Governance Anti-bribery and anti-corruption

The Three Lines of Defence concept is the cornerstone of good Alfa Laval has zero-tolerance for any form of bribery and corruption.
governance. This is a model to secure compliance and a good working The international scope of Alfa Laval’s sales organization means
environment, identify gaps and secure that remedial actions are that Alfa Laval is active in several countries where there is a high risk
taken on discovered deficiencies. The first line of defence includes of corruption. One of many tools used by Alfa Laval in assessing
managers at a global level and the second line is corporate functions risk is the Transparency International Corruption Perception Index.
with an oversight role. The third line of defence involves internal
audits, external auditors, and external regulators. In 2023, Alfa Laval launched an updated ABAC policy which out-
lines the expectations the company has on all employees. The new
At Alfa Laval, the three lines of defence are set up so that the second policy is aligned with the ISO 37001 on Anti-bribery management
line creates compliance demands, checks and controls called systems to prepare for possible future certification of Alfa Laval's
Minimal Internal Control Requirements (MICR). These requirements anti-bribery and anti-corruption program. The launch of the updated
are sent to the first line of defence, who shall explain how they intend policy was accompanied by several ABAC webinars attended by
to act to comply. This information is collected by the second line of more than 2,000 people. A new ABAC e-learning course was also
defence and used as a tool for risk assessment. Based on this risk launched during the year - it is available to all employees and the
assessment, internal audit programmes are compiled. Internal audits expectation is that every employee takes this training at least
challenge both the first and second line of defence by making sure every second year to maintain awareness.
that the first line of defence is compliant and that the second line
of defence use controls that are effective. Securing compliance is Training in focus
thus made both by acting on deficiencies in the first line or by Proportion of employees trained in anti-corruption (as of July 2023)
keeping g overning documents created by the second line of presented below. New courses were introduced during the year
defence updated. and will be reported in 2024.

80%
The Risk and Compliance Board is the corporate oversight body.
This board is appointed by Group Management to be responsible
Group Management
for reviewing the effectiveness of risk management and compliance

77%
processes within the company. The Board secures identification,
assessment, mitigation, and monitoring of enterprise-wide risks.
They also ensure implementation and administration of the com- White collars
pany’s policies, directives, and ethical programmes, including the

48%
Business Principles.

Blue collars
All managers are responsible for ensuring compliance with Alfa
Laval’s policies, including the Anti-Bribery and Anti-Corruption
Besides the ABAC e-learning, there are also class-room trainings
(ABAC) Policy and the implementation of local guidelines. Line
held for certain groups of employees based on risk assessments
managers are continuously trained to keep up their awareness of
and on demand from the organization. In these trainings the par-
the latest developments in Alfa Laval corporate policies and global
ticipants get the chance to get deeper knowledge and involve in
compliance programmes.
discussions on the subject.

70 Committed
Anti-bribery and anti-corruption process

Top level commitment Risk assessment

– Group ABAC Policy – Enterprise Risk Management
– Risk Compliance Board – Risk assessment in supply chain
– Corporate self-assessment

Proportionate procedures Communication & training

– Risk management actions – ABAC information available on the intranet
– Supplier contracts include ABAC clause – ABAC training for employees
– ABAC training for suppliers

Due diligence Monitoring & review

– Third parties screening, compliance screening – Internal audit
– Due diligence on mergers and acquisitions – Whistleblowing function
– Annual Sustainability Reporting

Committed 71
Responsible sourcing
Alfa Laval has the responsibility to ensure that sourced materials
and resources meet the company’s ethical standards. Alfa Laval’s
sustainability commitments also apply to our suppliers.

Global sourcing with a local presence Supplier risk assessment includes an initial screening of new sup-
Alfa Laval has more than 40 production sites and distribution centres pliers and annual screening of existing suppliers to identify suppliers
in Europe, Asia, and Americas. Each of these is supplied with raw with the highest risk of breaches of the Business Principles for
materials, components, services and other inputs from global and targeted actions.
local suppliers.
Risks are managed depending on the characteristics of the identi-
The central sourcing organization defines the strategy for supply and fied risk. A corrective action plan is created, and preventive actions
supplier management, while the responsibility for the sourcing of include targeted activities and a follow-up programme. Mitigation
products and services is executed locally. Sustainability is an integral activities are developed with a case-by-case approach supported
part of the commodity strategies and strategic supplier programmes. by the Supplier Risk and Compliance Council.

Responsible sourcing Risk analysis is not only about mitigating risks for the company.
The sustainability expectations on our suppliers are based on the Through increased knowledge about sustainability risks, it is possible
Alfa Laval Business Principles for Suppliers and clearly stated in to become more proactive and work together with suppliers towards
our supplier agreements. Suppliers are expected to acknowledge innovation and sustainable business growth that can create benefits
the Business Principles and are accountable for following and fully in the entire value chain.
incorporating the Business Principles into their own supply chain.
Supplier evaluation and engagement
The Responsible Sourcing Programme steering committee sets the Alfa Laval’s sourcing process outlines how we develop our existing
focus areas for delivering on Alfa Laval’s overall sustainability agenda supplier base and evaluate potential suppliers across our organization.
in respect to activities that require collaboration with suppliers. It is important for Alfa Laval to onboard suppliers that can deliver
to our expectations and share our sustainability ambitions.
Climate action was a sustainability focus area for the sourcing
organization in 2023. Alfa Laval has a responsibility to help our Evaluation tools such as questionnaires, sustainability programme
customers reduce emissions, we make the same effort ourselves evaluation and audits are used to assess new and existing suppliers.
and expect climate actions to be taken also by our suppliers. Supplier engagement to promote sustainable sourcing also includes
activities such as workshops for suppliers, and a supplier award
The Supplier Risk and Compliance Council sets the direction for recognizing outstanding sustainability practices.
targeted initiatives to secure governance. They also play an inte-
gral role in following up results to enable continuous improvements. Supplier audits
Alfa Laval has clear sourcing KPIs and a robust follow-up programme
Risk analysis and mitigation including three types of audits for the supply chain, Business
Responsible sourcing includes identifying, assessing, and managing Principles and special processes.
supply chain risks. Risk exposure is reduced through clear expec-
tations, risk management and a structured way of working with In a supply chain audit, Alfa Laval’s internally certified auditor verifies
mitigation and follow-up. supplier capabilities to deliver products and material according to
Alfa Laval’s requirements. Special process audits typically target
To identify risk areas, the sourcing organization uses macro risk trend the suppliers’ manufacturing methods.
reports, external insights for critical risk indicators, for example anti-
corruption, environmental and working conditions indexes, and Business Principles audits are an important part of the Responsible
internal data and insights. Risks can also be identified continuously Sourcing Programme and include areas such as environment, health
through supplier evaluation activities, reported incidents, risk analysis, and safety, human and labour rights, and anti-corruption efforts.
the whistleblower mechanism or follow-up activities such as audits.

72 Committed
Climate action in focus
Most common deviations in supplier audits 2023 In 2023, several sourcing activities were initiated to
contribute to the Alfa Laval scope 3 climate target to
Other, 9%
reduce greenhouse gas emissions by 50 percent by
PPE, 6%
Health & Safety, 27%
2030 (with a 2020 baseline).
Chemical handling, 8%

As an example, an impact-based project was initiated

Environmental protection, 10%
with suppliers specifically targeting greenhouse gas
Overtime/low payment, 28%
reductions. A questionnaire was sent out to 50 focus
Emergency preparedness 12%
suppliers representing about 70 percent of the emis-
sions from purchased goods and services. The intention
was to collect supplier-specific data on emissions
and enquire about any activities to reduce emissions,
emphasizing that this would be an important contri-
In particular, the Business Principles audits highlight six critical areas:
bution to reducing Alfa Laval's carbon footprint.
child labour, young labour, forced labour, freedom of association,
health and safety, fire protection and environment. Deviations in
Another example of climate action during 2023 is our
any of these areas require immediate correction, both from new
sourcing managers in the distribution centres working
and established suppliers.
with customers and suppliers to change air freight
orders to sea or rail transport with the aim of reducing
Suppliers with serious breaches have a limited time to implement
greenhouse gas emissions. Short-term initiatives target
the necessary improvements, supported by an effective supplier
close collaboration with customers and suppliers to
development programme, while the case is escalated and monitored.
change existing air freight orders to sea or rail, if pos-
Non-compliance without corrective action can lead to phase-out
sible. The long-term goal is to reach more sustainable
or termination of the supplier agreement with Alfa Laval.
solutions for freight already when placing the order and
avoid transport modes with a high climate impact.
A total of 73 Business Principles audits were performed in 2023,
mainly in China, India and Mexico, countries with a large supplier
base and many manufacturing units. Suppliers targeted for Business
Principles audits are selected based on the risk assessment process.

The most common deviations discovered in the Business Principles

audits in recent years have been in the areas of health and safety,
overtime/low payment, emergency preparedness and environ-
mental protection.

Continuous improvement
Alfa Laval believes in continuous improvement as a dynamic rather
than a static process. We recognize the need to work with our
development areas and stay informed about coming sustainability
directives and legislation.

In 2023, some 60 sourcing employees participated in the supplier

auditor courses in Lund, Richmond, Jiangyin, and Kunshan, to
take the first steps toward becoming internally certified auditors
and secure the audit process regionally. An audit app was also
released to support the audit process.

The Alfa Laval Business Principles for Suppliers is continuously

reviewed to secure alignment with legislation and other directives.
In 2023, a review of the documentation was initiated to align with
the updated OECD Guidelines for Multinational Enterprises on
Responsible Business Conduct. We expect our suppliers to show
the same dedication to continuous improvements and to show
progress in all areas covered by our Business Principles for Suppliers.

Conflict minerals
Alfa Laval has a policy specifically targeting conflict minerals to
secure that the minerals used are not sourced from mines that
finance armed groups guilty of human rights violations. A supplier
assessment platform is used to increase transparency.

Committed 73
Assessing supplier risk
The following three areas guide our risk assessment of suppliers

Biodiversity impacts
and dependencies
Taking account of the recently released recommen-
Country risk dations from the Taskforce on Nature-related Financial
Risk related to human rights breaches or bribery/
Disclosures (TNFD). Alfa Laval is taking steps to better
corruption in the country where the supplier is
based. understand our biodiversity impacts and dependencies
on natural capital assets.

An initial evaluation using the publicly available

ENCORE database shows that while Alfa Laval’s
direct dependencies on ecosystem services are limited,
our operations may have material impacts on bio
diversity loss, for instance through water use, green-
house gas emissions and waste from production.
Impacts in the supply chain are even more significant,
particularly beyond tier 1, for instance in mining operations.

Based on the initial analysis, Alfa Laval has developed

Product & production process risk a roadmap for addressing biodiversity impacts in the
Risk related to occupational health and safety coming years. Starting with the direct impacts from
or environmental impacts associated with operations, most of these are already addressed in
supplier production processes. our sustainability strategy with reduction targets to
2023 and beyond in place. We will continue to take
action to reduce water use, increase recycling of
waste, and limit greenhouse gas emissions.

In the value chain, many Alfa Laval products have a

potential positive biodiversity impact downstream by
helping customers improve energy and resource
efficiency. In the upstream value chain, we are working
closely with suppliers to source materials with lower
environmental and biodiversity impacts, and in the
longer term will consider more explicit supplier
requirements for example on water use and waste
Governance & policies management.
Risk based on analyses and screenings of the
supplier’s available documentation of policies
and governance.

74 Committed
EU taxonomy
reporting
For 2023 the taxonomy reporting covers the
following substantial contribution criteria:

– Climate change mitigation and carbon emission. Many of the technical

– Climate change adaptation screening and DNSH criteria are also very difficult
– Sustainable use and protection of water and for a manufacturing company to fulfil, simply
marine resources because they usually are designed for the pro-
– Pollution prevention and control ducers and not the equipment manufacturers
– Transition to a circular economy that sell to the producers.
– Protection and restoration of biodiversity and
ecosystems In addition, Alfa Laval and not the least the Marine
Division sells products and systems into the fossil
Alfa Laval has concluded that the company does energy area to reduce energy consumption and
not have activities related to “Pollution prevention carbon emission, but these important contribu-
and control” and “Protection and restoration of tions to environmental sustainability are outside
biodiversity and ecosystems”. the scope of the EU taxonomy.

The company: In summary, the products and systems that Alfa

Laval manufacture and sell have a very important
– does not perform, role in reducing energy consumption and carbon
– does not finance and emissions – BUT the taxonomy does not cover this!
– is not exposed to research, development,
demonstration and expansion, erection, renova- During 2023 a work has been done to better identify
tion, operation or safe operation concerning the net sales, the operational expenses and the
investments that fits within the economic activities
nuclear related or fossil gas related activities. The specified in the taxonomy. Earlier only an end-
company is however selling components and service market based (industry based) approach was
to companies covered by the above description. used, but that has now been supplemented by a
more product oriented approach. This has
Alfa Laval has after a thorough analysis arrived at increased the coverage within 3.6 “Manufactur-
the conclusion that the company does not have ing of other low carbon technologies” with about
any environmentally sustainable activities that 3 percentage units. For the new area “Circular
are covered by the economic activities specified economy” also specific after market offerings
in the taxonomy or meets the technical screening have been identified, which has replaced what was
criteria or fulfils the Do Not Substantially Harm earlier reported on 5.1 “Construction, extension
(DNSH) criteria. The reason for this is that the EU and operation of water collection, treatment and
taxonomy does not really fit for a manufacturing supply systems” and 7.3 “Installation, maintenance
company. As an example, the EU taxonomy works and repair of energy efficiency equipment” within
well for companies that produce biodiesel, but it “Climate change mitigation”. The reason for this
does not at all work for a company that manufac- change was that the new area better fits Alfa
tures the equipment that the biodiesel producers Laval’s aftermarket business. It is foremostly the
need for their production. The same thing applies addition of the economic activity 5.1 “Repair,
for the service that Alfa Laval sells to biodiesel refurbishment and re-manufacturing” within
producers. The first problem is that the economic “Circular economy” that accounts for the large
activities listed in the taxonomy are not covering increase in the coverage within the taxonomy.
all business activities of Alfa Laval, which makes
it impossible to report them as environmentally The key performance indicators according to the
sustainable despite that our products are helping EU taxonomy are presented in the following tables.
our customers to reduce their energy consumption

EU Taxonomy Reporting 75
Net sales

Consolidated Substantial contribution criteria Do not significantly harm criteria (DNSH)

Category transitional activity (T)

Category enabling activity (E)
Proportion of net sales 2023

Water and marine resourses

Biodiversity and ecosystems

Proportion of net sales 2022

Climate change adaptation

Climate change mitigation

Circular economy (CE)

Minimum safeguards
Net sales 2023

Pollution (P)

Pollution (P)
(CCM)

(CCM)
(CCA)

(CCA)
Code

(BE)

(BE)
(W)

(W)
Economic activities
SEK
millions % Yes; No; N/A Yes; No % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
Net sales of environmentally sustainable
activities (taxonomy-aligned) (A.1) – – –
Of which enabling – – –
Of which transitional – – –
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
Taxonomy eligible (EL) or non-eligible (N/EL) activity
Manufacturing of renewable energy CCM
technologies 3.1 120 0.2% EL N/EL N/EL N/EL N/EL N/EL 0.2%
Manufacturing of equipment for the CCM
production and use of hydrogen 3.2 202 0.3% EL N/EL N/EL N/EL N/EL N/EL 0.1%
Manufacturing of energy efficiency CCM
equipment for buildings 3.5 5,077 8.0% EL N/EL N/EL N/EL N/EL N/EL 7.8%
Manufacturing of other low carbon CCM
technologies 3.6 8,916 14.0% EL N/EL N/EL N/EL N/EL N/EL 11.0%
Construction, extension and operation of
water collection, treatment and supply CCM
systems 5.1 – – EL N/EL N/EL N/EL N/EL N/EL 2.3%
Installation, maintenance and repair of CCM
energy efficiency equipment 7.3 – – EL N/EL N/EL N/EL N/EL N/EL 0.8%
Data-driven solutions for GHG emissions CCM
reductions 8.2 246 0.4% EL N/EL N/EL N/EL N/EL N/EL –
Software enabling physical climate risk CCA
management and adaptation 8.4 114 0.2% N/EL EL N/EL N/EL N/EL N/EL –
Urban waste water treatment W 2.2 815 1.3% N/EL N/EL EL N/EL N/EL N/EL –
Production of alternative water resources
for purposes other than human CE
consumption 2.2 401 0.6% N/EL N/EL N/EL N/EL EL N/EL –
Repair, refurbishment and
re-manufacturing CE 5.1 14,957 23.5% N/EL N/EL N/EL N/EL EL N/EL –
Net sales of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2) 30,848 48.5% 22.9% 0.2% 1.3% – 24.1% – 22.2%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Net sales of taxonomy-non-eligible activities 32,750 51.5%
TOTAL 63,598 100.0%

The taxonomy eligible economic activities in Alfa Laval that are covered The above table on net sales can be summarized as follows:
by the taxonomy have primarily been identified based on what end-
Proportion of net sales / Total net sales
markets (industries) each division sell into. For the economic activity Consolidated split on
3.6 ”Manufacturing of other low carbon technologies” within ”Climate Environmentally Taxonomy-eligible but not
sustainable (taxonomy- environmentally sustainable
change mitigation” a more product oriented approach has however 2023 aligned) criteria (not taxonomy-aligned) criteria
also been used, where primarily sales of brazed, gasketed and welded
heat exchangers have been included provided that they are not sold to Climate change mitigation (CCM) – 22.9%

nuclear or fossil fuels or already are covered by the identified end-markets Climate change adaptation (CCA) – 0.2%
Water and marine resourses (W)
(industries). Specific products have also been used to identify sales – 1.3%
Pollution (P) – –
within 8.2 ”Data-driven solutions for GHG emissions reductions” and
Circular economy (CE) – 24.1%
8.4 ” Software enabling physical climate risk management and adap-
Biodiversity and ecosystems (BE) – –
tation”. For 5.1 ”Repair, refurbishment and re-manufacturing” a selection
Total – 48.5%
of aftermarket offerings have been used to identify the sales that qualify
within ”Circular economy”.

The net sales figures relate to contracts with customers. The bulk of the
taxonomy eligible economic activities are primarily relating to the
Energy Division and secondly to the Food & Water Division.

76 EU Taxonomy Reporting
Operational expenditure

Consolidated Substantial contribution criteria Do not significantly harm criteria (DNSH)

Category transitional activity (T)

Operational expenditure 2023

Category enabling activity (E)

Water and marine resourses

Biodiversity and ecosystems

Climate change adaptation

Climate change mitigation

Proportion of operational

Proportion of operational
Circular economy (CE)

Circular economy (CE)

Minimum safeguards
expenditure 2023

expenditure 2022
Pollution (P)

Pollution (P)
(CCM)

(CCM)
(CCA)

(CCA)
Code

(BE)

(BE)
(W)

(W)
Economic activities
SEK
millions % Yes; No; N/A Yes; No % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
Operational expenditure of
environmentally sustainable activities
(taxonomy-aligned) (A.1) – – –
Of which enabling – – –
Of which transitional – – –
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
Taxonomy eligible (EL) or non-eligible (N/EL) activity
Manufacturing of renewable energy CCM
technologies 3.1 41 2.3% EL N/EL N/EL N/EL N/EL N/EL 0.2%
Manufacturing of equipment for the CCM
production and use of hydrogen 3.2 36 2.0% EL N/EL N/EL N/EL N/EL N/EL 1.5%
Manufacturing of energy efficiency CCM
equipment for buildings 3.5 87 4.8% EL N/EL N/EL N/EL N/EL N/EL 4.2%
Manufacturing of other low carbon CCM
technologies 3.6 65 3.6% EL N/EL N/EL N/EL N/EL N/EL 2.4%
Construction, extension and operation of
water collection, treatment and supply CCM
systems 5.1 – – EL N/EL N/EL N/EL N/EL N/EL 0.8%
Installation, maintenance and repair of CCM
energy efficiency equipment 7.3 – – EL N/EL N/EL N/EL N/EL N/EL 0.7%
Data-driven solutions for GHG emissions CCM
reductions 8.2 60 3.3% EL N/EL N/EL N/EL N/EL N/EL –
Software enabling physical climate risk CCA
management and adaptation 8.4 0 0.0% N/EL EL N/EL N/EL N/EL N/EL –
Urban waste water treatment W 2.2 81 4.5% N/EL N/EL EL N/EL N/EL N/EL –
Production of alternative water resources
for purposes other than human CE
consumption 2.2 1 0.1% N/EL N/EL N/EL N/EL EL N/EL –
Repair, refurbishment and
re-manufacturing CE 5.1 60 3.3% N/EL N/EL N/EL N/EL EL N/EL –
Net sales of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2) 431 23.9% 16.0% 0.0% 4.5% – 3.4% – 9.7%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Operational expenditure of taxonomy-
non-eligible activities 1,373 76.1%
TOTAL 1,804 100.0%

Operational expenditure relates to direct costs for: The following table shows how the eligible operational expenditure has
– training and other HR adaptation (conversion and transformation) developed from 2022 to 2023.
needs,
Consolidated Operational expenditure split on cost types
– research and development,
SEK millions 2023 2022
– building renovation,
Training and other HR adaptation (conversion
– short term lease, and transformation) needs 0 0
– maintenance and repair and Research and development 311 107
– other direct expenditures for day-to-day servicing of assets or prop- Building renovation 25 5
erty, plant & equipment by Alfa Laval or third parties. Short term lease 27 5
Maintenance and repair 45 25
The above table on operational expenditure can be summarized as follows: Other direct expenditures for day-to-day
servicing of assets or property, plant &
equipment by Alfa Laval or third parties 23 10
Proportion of net sales / Total net sales
Consolidated split on Total 431 152
Environmentally Taxonomy-eligible but not
sustainable (taxonomy- environmentally sustainable
2023 aligned) criteria (not taxonomy-aligned) criteria
The major part of the operational expenditure refer to research and
Climate change mitigation (CCM) – 16.0% development, which is a high priority area to support the company’s
Climate change adaptation (CCA) – 0.0% future growth in the sustainability area. The largest part of the
Water and marine resourses (W) – 4.5% increase in operational expenses is due to an increased spending
Pollution (P) – –
on research and development within the sustainability area.
Circular economy (CE) – 3.4%
Biodiversity and ecosystems (BE) – –
Total – 23.9%

EU Taxonomy Reporting 77
Investments

Consolidated Substantial contribution criteria Do not significantly harm criteria (DNSH)

Category transitional activity (T)

Proportion of investments 2023

Category enabling activity (E)

Water and marine resourses

Biodiversity and ecosystems

Climate change adaptation

Climate change mitigation

Proportion of operational
Circular economy (CE)

Circular economy (CE)

Minimum safeguards
Investments 2023

expenditure 2022
Pollution (P)

Pollution (P)
(CCM)

(CCM)
(CCA)

(CCA)
Code

(BE)

(BE)
(W)

(W)
Economic activities
SEK
millions % Yes; No; N/A Yes; No % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
Investments of environmentally
sustainable activities (taxonomy-
aligned) (A.1) – – –
Of which enabling – – –
Of which transitional – – –
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
Taxonomy eligible (EL) or non-eligible (N/EL) activity
Manufacturing of renewable energy CCM
technologies 3.1 22 0.7% EL N/EL N/EL N/EL N/EL N/EL 1.1%
Manufacturing of equipment for the CCM
production and use of hydrogen 3.2 48 1.6% EL N/EL N/EL N/EL N/EL N/EL 0.3%
Manufacturing of energy efficiency CCM
equipment for buildings 3.5 832 28.0% EL N/EL N/EL N/EL N/EL N/EL 3.3%
Manufacturing of other low carbon CCM
technologies 3.6 85 2.8% EL N/EL N/EL N/EL N/EL N/EL 2.3%
Construction, extension and operation of
water collection, treatment and supply CCM
systems 5.1 – – EL N/EL N/EL N/EL N/EL N/EL 0.2%
Installation, maintenance and repair of CCM
energy efficiency equipment 7.3 – – EL N/EL N/EL N/EL N/EL N/EL 0.8%
Data-driven solutions for GHG emissions CCM
reductions 8.2 24 0.8% EL N/EL N/EL N/EL N/EL N/EL –
Software enabling physical climate risk CCA
management and adaptation 8.4 23 0.8% N/EL EL N/EL N/EL N/EL N/EL –
Urban waste water treatment W 2.2 67 2.2% N/EL N/EL EL N/EL N/EL N/EL –
Production of alternative water resources
for purposes other than human CE
consumption 2.2 27 0.9% N/EL N/EL N/EL N/EL EL N/EL –
Repair, refurbishment and
re-manufacturing CE 5.1 88 2.9% N/EL N/EL N/EL N/EL EL N/EL –
Investments of taxonomy-eligible but
not environmentally sustainable
activities (not taxonomy-aligned
activities) (A.2) 1,216 40.7% 33.9% 0.8% 2.2% – 3.8% – 8.0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Operational expenditure of taxonomy-
non-eligible activities 1,770 59.3%
TOTAL 2,986 100.0%

Investments are defined as the sum of purchased and leased capital The following table shows how the eligible investments have developed
investments. from 2022 to 2023.

Consolidated Investments split on assets

Taxonomy eligible investments and operational expenditure relate to:
SEK millions 2023 2022
– assets or processes associated with taxonomy eligible economic
Property, plant & equipment 1,153 173
activities and
Internally generated intangible assets 36 5
– purchase of output from taxonomy eligible economic activities and
Licenses and other intellectual property rights 0 0
individual measures to become low-carbon or reduce greenhouse
Capitalised right-of-use assets 27 12
gas provided that the measures are implemented and operational
Total 1,216 190
within 18 months.

The above table on investments can be summarized as follows: The increase in investments is partly due to a more product oriented
way to identify which investments that taxonomy eligible than last
Proportion of net sales / Total net sales
Consolidated split on year. The increase is however primarily a reflection of Alfa Laval’s
Environmentally Taxonomy-eligible but not intention to grow in the environmental and sustainability area.
sustainable (taxonomy- environmentally sustainable
2023 aligned) criteria (not taxonomy-aligned) criteria Internally generated intangible assets are relating to capitalised
development costs within research and development and IT.
Climate change mitigation (CCM) – 33.9%
Climate change adaptation (CCA) – 0.8%
Water and marine resourses (W) – 2.2% The investments are mainly focusing on increasing production
Pollution (P) – – capacity for existing and new products that reduce energy con-
Circular economy (CE) – 3.8% sumption and carbon emissions for our customers and to reduce
Biodiversity and ecosystems (BE) – – Alfa Laval’s own energy consumption and carbon emissions.
Total – 40.7%

78 EU Taxonomy Reporting
Auditor’s Limited Assurance Report on Alfa Laval AB´s
Sustainability Report and statement regarding the
Statutory Sustainability Report
This is the translation of the auditor’s report in Swedish.

To Alfa Laval AB, Corp.id. 556587-8054

Introduction The firm applies International Standard on Quality Management 1,

We have been engaged by the Board of Directors of Alfa Laval AB which requires that we design, implement and operate a system of
to undertake a limited assurance engagement of Alfa Laval AB´s, quality management including policies or procedures regarding
Sustainability Report for the year 2023. The sustainability report compliance with ethical requirements, professional standards and
consists of information presented on pages 46–79 in the Annual and applicable legal and regulatory requirements. We are independent
Sustainability Report and the separate document Sustainability of Alfa Laval AB in accordance with professional ethics for accoun-
notes and GRI Content Index. Alfa Laval AB has defined the scope tants in Sweden and have otherwise fulfilled our ethical responsi-
of the Statutory Sustainability Report on page 47. bilities in accordance with these requirements.

Responsibilities of the Board of Directors The limited assurance procedures performed and the examination
and the Executive Management according to RevR 12 do not enable us to obtain assurance that
The Board of Directors and the Executive Management are respon- we would become aware of all significant matters that might be
sible for the preparation of the Sustainability Report including the identified in an audit. The conclusion based on a limited assur-
Statutory Sustainability Report in accordance with applicable ance engagement and an examination according to RevR 12 does
criteria and the Annual Accounts Act respectively. The criteria are not provide the same level of assurance as a conclusion based on
defined in the separate document Sustainability notes and GRI an audit.
Content index, and are part of the Sustainability Reporting Guide-
lines published by GRI (The Global Reporting Initiative), that are Our procedures are based on the criteria defined by the Board
applicable to the Sustainability Report, as well as the accounting of Directors and Executive Management as described above.
and calculation principles that the Company has developed. This We consider these criteria suitable for the preparation of the
responsibility also includes the internal control relevant to the Sustainability Report.
preparation of a Sustainability Report that is free from material
misstatements, whether due to fraud or error. We believe that the evidence obtained is sufficient and appropriate
to provide a basis for our conclusions below.
Auditor’s responsibility
Our responsibility is to express a conclusion on the Sustainability Conclusions
Report based on the limited assurance procedures we have per- Based on the limited review performed, nothing has come to our
formed and to express an opinion regarding the Statutory Sustain- attention that causes us to believe that the Sustainability Report is
ability Report. Our review is limited to the information in this docu- not prepared, in all material respects, in accordance with the criteria
ment and Sustainability notes and GRI Content Index, and to the defined by the Board of Directors and Executive Management.
historical information and does therefore not include future oriented
information. A Statutory Sustainability Report has been prepared.

We conducted our limited assurance engagement in accordance

with ISAE 3000 (Revised) Assurance engagements other than
audits or reviews of financial information. A limited assurance March 25, 2024
engagement consists of making inquiries, primarily of persons
responsible for the preparation of the Sustainability Report, and Ernst & Young AB
applying analytical and other limited assurance procedures. Our
examination regarding the Statutory Sustainability Report has Andreas Troberg
been conducted in accordance with FAR’s accounting standard Authorized Public Accountant
RevR12 The auditor’s opinion regarding the statutory sustainability
report. A limited assurance engagement and an examination Outi Alestalo
according to RevR 12 is different and substantially less in scope Specialist member of FAR
than an audit conducted in accordance with International Standards
on Auditing and generally accepted auditing standards in Sweden.

Auditor’s statement on the Sustainability Report 79

Alfa Laval’s share in 2023
Alfa Laval´s share in 2023 all trading in the share. Trading on CBOE Global Markets was the
During 2023, Alfa Laval's stock valuation has enjoyed a positive largest with 52.95 percent (56.35).
trend. The valuation has followed the general development of the
stock exchange, with a strong rise until the summer, followed by a The turnover of Alfa Laval shares decreased in 2023 and amounted
slightly falling rate until the end of October, and a strong price to 643 million shares (874). This trade meant that the stock’s
increase during the end of the year. turnover rate reduced 2023, to 1.56 times the number of shares
outstanding (2.1). In 2023, the average number of closings in Alfa
The share price was quoted at SEK 403.40 (301.10) at closing on Laval’s share reduced to 2,56 million shares per trading day (3.49),
the last trading day of the year – which is an increased valuation of including all marketplaces. Trading in the company’s stock corre-
SEK 102.30 since the start of the year. This corresponds to an sponded to a total transaction value of SEK 236.78 billion (252.42).
increase of 33.98 percent, compared to OMX Stockholm Industrials,
the industry index that Alfa Laval is part of, which increased with Dividend policy
25.09 percent during 2023. It is the Board’s goal to regularly propose a dividend that reflects
the Group’s development, financial status, and current and
The Stockholm Stock Exchange as a whole (OMXSPI) increased expected capital needs. In consideration of the Group’s ability to
by 15.49 percent. Alfa Laval therefore outperformed both the industry generate cash, the goal is that the dividend over a business cycle
and the stock market in general. The year’s highest closing price should correspond to 40–50 percent of the net profit. For 2023,
for Alfa Laval’s share, SEK 405.40, was recorded on 27 December. the Board proposes a dividend of SEK 7.50 (6.00) to the AGM.
The year’s lowest closing price, SEK 304.00, was noted on 3 January. The proposed dividend corresponds to 43.7 percent of earnings
Alfa Laval’s market value at the end of the year was SEK 166.74 per share (46.9), adjusted for excess value.
billion (124.62). The Alfa Laval share is listed on Nasdaq Stockholm
and is part of the stock exchange’s Large Cap segment in Stockholm The share capital
and the Nordics, as well as OMXS30, which includes the 30 most At the end of the year, the quota value amounted to SEK 2.70 (2.70)
traded shares in Stockholm. per share. All shares have equal voting value and give equal rights
to a share in the company’s assets. There are no issued options or
Long-term total return anything else that could mean dilution for the shareholders. The
Since Alfa Laval was relisted on the Stockholm Stock Exchange total number of shares at the end of the year was 413,326,315,
on 17 May 2002, the share, including reinvested dividend, has which is a decrease of 550,508 since the beginning of the year.
returned 2,591 percent. Over the listing period, this equates to an
average annual effective return of 17.38 percent. This can be com- Shareholders
pared to a 11.48 percent annual return for the Stockholm Stock At the end of 2023, Alfa Laval had 54,098 shareholders (54,245),
Exchange during the same period (SIX Return Index). which equates to a decrease of 147 shareholders (+10,109). The ten
largest owners controlled 61.48 percent of the shares (63.07),
Share turnover excluding trustee- registered shares. The largest shareholder is
Alfa Laval’s shares are not only traded on Nasdaq Stockholm, but Winder Holding AG, which on 28 February 2023 acquired all shares
also on the Chicago Board Options Exchange (CBOE) Global from Tetra Laval B.V. During the year, three additional owners joined
Markets, the London Stock Exchange and Turquoise Europe, to the ten largest – these are Deutsche Bank Trust Company America,
name a few of the larger alternative marketplaces. In 2023, the AMF Tjänstepension, and Första AP-fonden.
Stockholm Stock Exchange accounted for 25.8 percent (23.9) of

Price trend, January 1 – December 31, 2023 Total return, May 17, 2002 – December 31, 2023

Number of
SEK shares (000s) SEK
500 20,000 700

600
400
15,000
500

300
400
10,000
200 300

200
5,000
100
100

0 0 0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
jan feb mar apr may jun jul aug sep oct nov dec

Alfa Laval Total share turnover per month Alfa Laval incl. reinvested dividends
OMX Stockholm Index (incl. trading on alternative SIX Return
SX Industrials Index marketplaces and OTC trading)
Source: Bloomberg

Source: Bloomberg

80 The share
Ownership distribution by size at December 31, 2023 Ownership categories at December 31, 2023

No. of No. of shares Holding, %

No. of share- No. of
shareholders holders, % shares Holding, % Financial companies 73,250,338 17.72%

1–500 45,326 83.78% 4,819,871 1.17% Other financial companies 704,471 0.17%

501–1,000 4,108 7.59% 3,295,831 0.80% Social insurance funds 9,026,615 2.18%

1,001–5,000 3,518 6.50% 7,904,650 1.91% Government 1,030,250 0.25%

5,001–1,0000 473 0.87% 3,488,217 0.84% Municipal sector 40,400 0.01%

10,001–20,000 143 0.26% 1,779,583 0.43% Trade organizations 3,481,229 0.84%

20,001–50,000 83 0.15% 1,512,106 0.37% Other Swedish legal entities 5,286,227 1.28%

50,001– 447 0.83% 390,602,283 94.50% Uncategorized legal entities 48,642 0.01%

Total 54,098 100.00% 413,326,315 100.00% Shareholders domiciled abroad 299,540,081 72.47%
(legal entities and individuals)
Source: Euroclear
Swedish individuals 20,994,288 5.08%
Source: Euroclear

Data per share Ten largest shareholders at December 31, 20235)

2023 2022 2021 2020 2019 Capital/ Change in

voting holding in 2023,
Share price at year-end, SEK 403.3 301.10 364.40 226.30 235.90
No. of shares rights,% percentage points
Highest paid, SEK 405.4 382.70 388.80 257.20 242.40
Winder Holding AG 122,037,736 29.53 29.53
Lowest paid, SEK 304 234.80 219.60 149.60 165.05
State Street Bank and Trust
Shareholders’ equity, SEK 90.43 86.27 77.11 70.24 66.15 Company 30,621,679 7.41 0.10
Earnings per share 15.31 10.89 11.38 8.47 13.08 BNY Mellon 26,204,470 6.34 2.58
Dividend, SEK 1) 7.50 6.00 6.00 5.50 – Alecta 23,221,464 5.62 -1.09
Free cash flow, SEK 2) 15.68 -5.38 0.57 16.10 10.00 Northern Trust Company 16,046,652 3.88 -0.01
Price change during the year, % 33.98 -17.40 61.00 -4.07 24.39 JP Morgan Chase 14,379,572 3.48 -0.13
Dividend as % of EPS, % 48.99 55.10 52.72 64.94 – Norges Bank 6,627,441 1.60 0.04
Direct return, % 3) 1.86 1.99 1.65 2.43 – Deutsche Bank Trust Company
America 5,491,642 1.33 1.33
Share price/shareholders’ equity, 4.46 3.49 4.73 3.22 3.57
multiple AMF Tjänstepension 5,000,000 1.21 1.21
P/E ratio 4) 26.34 27.65 32.02 26.72 18.04 Första AP-fonden 4,490,170 1.09 1.09
No. of shareholders 54,098 54,245 44,136 43,334 41,147 Total ten largest shareholders 254,120,826 61.48 -1.59

Source: Bloomberg, Euroclear, Alfa Laval Source: Euroclear

1)
Board motion to the Annual General Meeting. 5)
The table is adjusted for nominee-registered shares.
2)
Free cash flow is the sum of cash flow from operating and investing activities.
Measured as the proposed dividend in relation to closing price on the last trading day.
3)

The direct return for 2023 is calculated based on the board’s proposal to the general meeting.
4)
Closing price on the last trading day in relation to earnings per share.

Dividend and percentage Geographic distribution of the free float, Share turnover on various
of adjusted EPS6) % of capital and voting rights8) marketplaces 2023

SEK % %
43.7
8 80 100 5
4
46.2 46.9
54.3
6 60 75 3

4 40 50

1
2
2 20 25
6.0

6.0
5.5

7.5

0 0 0
19 20 21 22 23 19 20 21 22 23 1 CBOE Global Markets 53%
2 Nasdaq OMX 25%
Dividend7) Percentage of adjusted EPS Sweden USA Other 3 London Stock Exchange 9%
4 Turquoise Europe 3%
6)
Adjusted for step up amortization net of taxes. 8)
Excluding Winder Holding (Switzerland 29.5%). 5 Other 10%
7)
Board motion to the Annual General Meeting.

Source: Alfa Laval Source: Euroclear Source: Bloomberg

The share 81
Corporate Governance
Corporate Governance Report 2023 82
Share and ownership structure 85
Annual General Meeting 86
Annual General Meeting for the 2023 fiscal year 86
Nominating Committee 88
Board of Directors 90
Committees 92
The company’s auditors 93
Remuneration to auditors 93
Board of Directors and auditors 94
President and Group management 96
Areas of responsibility 97
Remuneration to senior executives 97
Operational control 97
Group management meetings in 2023 97
Board of Directors’ report on internal control 98
Control environment 98
Risk assessment 99
Control structures 99
Information and communication 99
Follow-up 99
Auditor’s statement on the Corporate Governance Report 100

Alfa Laval as a company

Alfa Laval AB
The company’s business name is Alfa Laval AB (publ). The company is listed on
Nasdaq Stockholm and the registered office of the Board of Directors is in Lund,
Sweden. The object of the company’s operations is to, directly or through sub-
sidiaries and joint venture companies in and outside Sweden, develop, manufacture
and sell equipment and installations, primarily in the areas of separation, heat
transfer and fluid handling, and to administer fixed and movable property, and other
related operations. Alfa Laval’s fiscal year runs from January 1 to December 31.

The company’s share capital shall amount to no less than SEK 745,000,000 and
no more than SEK 2,980,000,000. The number of shares shall be no less than
298,000,000 and no more than 1,192,000,000. The Articles of Association do not
include any limitations regarding the number of votes a shareholder can cast at a
general meeting. Nor do they contain any specific rules regarding the appointment Alfa Laval’s currently prevailing Articles
and dismissal of Board members or changes to the Articles of Association. The of Association were adopted at the
Annual General Meeting on April 27,
Articles of Association include a right for the Board of Directors to collect proxies
2021 and are available in their entirety on
in accordance with Chapter 7, Section 4 of the Swedish Companies Act and to
decide that shareholders may vote in advance of a general meeting. www.alfalaval.com

82 Artikelnamn
Corporate Governance Report 2023

Responsible,
sustainable and
effective
Corporate governance identifies what the decision- including Alfa Laval, to voluntarily take initiatives
making process at Alfa Laval looks like and the aimed at improvements. At Alfa Laval, such initiatives
structures that regulate how the company is governed. are, inter alia, reflected in the Group’s Business Principles.
Sound corporate governance is an essential basis for Alfa Laval’s four Business Principles, Planet, Trans-
ensuring that, from a shareholder perspective, Alfa Laval parency, Caring and Committed, guide all of the Group’s
is governed responsibly, sustainably and effectively. work and describe how Alfa Laval is to act in society
As a Swedish public limited liability company with and how the individual business goals are to be
shares listed on Nasdaq Stockholm, the framework achieved – in other words, ethically and sustainably.
for Alfa Laval’s corporate governance is dictated by Adhering to the Business Principles means that there
external rules as set out, inter alia, in the Swedish are many occasions and situations where Alfa Laval
Companies Act, the Swedish Annual Accounts Act, can contribute to a more sustainable future and to the
the Nordic Main Market Rulebook for Issuers of success of Alfa Laval’s customers, people and the
shares (‘Main Market Rulebook’) and the Swedish planet. All employees at Alfa Laval are to comply with
Corporate Governance Code (‘the Code’). the Business Principles and are encouraged to bring
to light anything that conflicts with these principles,
These provisions are supplemented by internal principles either to their immediate supervisor, the HR department
and regulations, including governing documents with or through the whistleblower tool ‘Speak up!’ Alfa
guidelines and instructions as well as procedures for Laval’s Business Principles also contain a distinct
control and risk management. At Alfa Laval, these Code of Conduct.
internal governing documents include the Articles of
Association, the Board and CEO instructions as well As a part of its internal work, Alfa Laval regularly reviews
as Alfa Laval’s Business Principles and governing its governing documents to ensure they are relevant
policies. This Corporate Governance Report describes and consistent with applicable laws and developments
Alfa Laval’s corporate governance for 2023. The in terms of, for example, the Group’s Business Principles.
report has been prepared in accordance with the During the last years, Alfa Laval’s Business Resilience
Swedish Annual Accounts Act and the Code, and Management Policy, Intellectual Property Right Policy,
has been reviewed by the company’s Auditors. Data Privacy Policy, Inclusion & Diversity Policy,
Insider Policy, Bid Process for Contract Based Sales
Acting in society and reaching business goals Policy, Information Security Policy and Export Control
In today’s society, human impact on our planet is in and Trade Sanctions Policy have been reviewed and
constant focus. As new legislation becomes increasingly revised. A new Sourcing Policy was adopted in 2023,
stringent, a sustainability paradigm is taking deeper root which sets the standard for Alfa Laval Global Sourcing
in society. This paradigm is leading many companies, regarding the purchase of goods and services.

Corporate Governance Report 83

Corporate governance

1
Shareholders
Vote at general meetings.

6 2 3

Auditors Nominating Committee

General meeting
The supervisory body for reviewing ac- Submits proposals to the Annual General
Alfa Laval’s highest decision-making body.
counting and financial statements. The Meeting regarding the appointment of
Elects the Board of Directors and auditors as
Auditors prepare the Audit Report and Chairman, Board members and Auditors as
well as establishes the Articles of Association.
submit statements regarding the Cor- well as compensation to non-executive
porate Governance Report and whether Board members.
the Annual General Meeting should decide
on discharge of liability for the Board
members as well as approve the income
statement and balance sheet. 4
Board of Directors
The Board manages the company on behalf of
the company’s shareholders and thus bears the
ultimate responsibility for the organization and
administration of the company. Appoints the
President/CEO.

5 5
Audit Committee Remuneration Committee
Prepares part of the Board’s work. Prepares part of the Board’s work.

Goals
Strategies
Policy documents
Business Principles

Reports

Internal audit President and CEO

Directs the daily operations and is responsible for
Reviews and implements
ensuring that the Board has access to the necessary
improvements to the internal con-
information and supporting documentation for its
trol, conducts internal audits –
decision-making purposes. Responsible for pre-
which are reported to the Audit
paring and monitoring compliance with the goals,
Committee – and proposes plans
policies and strategic plans of the company and
for the coming six to eight months.
the group, such as the Business Principles.

Group management
Supports the President in delegating certain
responsibilities and authorities. Group manage-
ment includes the three divisional managers as
well as the heads of global sales & service,
finance, HR and Group Affairs (including Legal &
Compliance, Risk, Patent, Corporate Development
and Sustainability).

Staff functions
Responsible for financial, HR, legal,
sustainability, communication,
business development and IT issues.
Divisions
Alfa Laval has three industry-based sales divisions:
Food & Water, Energy and Marine.

84 Corporate Governance Report

1 Share and ownership structure

At December 31, 2023, Alfa Laval had 413,326,315 shares Ownership categories at December 31, 2023
allocated among 54,098 shareholders according to Euroclear
Sweden’s share register. Alfa Laval has only one class of No. of shares Holding, %
shares and each share corresponds to one vote. Winder Financial companies 73,250,338 17.72%
Holding AG was the largest owner, with 29.53 percent of Other financial companies 704,471 0.17%
the shares in Alfa Laval at year-end, and the only owner Social insurance funds 9,026,615 2.18%
with a holding larger than 10 percent. The second largest Government 1,030,250 0.25%
owner was Alecta with 5.62 percent, followed by Norges Municipal sector 40,400 0.01%
Bank with a holding of 1.60 percent. Swedish private owner-
Trade organizations 3,481,229 0.84%
ship amounted to 5 percent and other ownership accounted
Other Swedish legal entities 5,286,227 1.28%
for 95 percent of the total ownership of Alfa Laval's shares.
Uncategorized legal entities 48,642 0.01%
For more information about Alfa Laval’s share, share perfor-
Shareholders domiciled abroad 299,540,081 72.47%
mance and owner ship structure, please refer to the Share (legal entities and individuals)
section on pages 80–81.
Swedish individuals 20,994,288 5.08%

Source: Euroclear

Total number of shareholders

60,000

Ten largest shareholders at December 31, 2023*

45,000

Capital/ Change in
30,000
voting holding in 2023,
No. of shares rights,% percentage points
54,098
54,346
43,334

44,136
41,147

15,000
Winder Holding AG 122,037,736 29.53 29.53

State Street Bank and Trust Company 30,621,679 7.41 0.10 0

19 20 21 22 23
BNY Mellon 26,204,470 6.34 2.58
Source: Euroclear
Alecta 23,221,464 5.62 -1.09
Northern Trust Company 16,046,652 3.88 -0.01
Dividend and percentage
JP Morgan Chase 14,379,572 3.48 -0.13
of adjusted EPS*
Norges Bank 6,627,441 1.60 0.04
SEK %
Deutsche Bank Trust Company America 5,491,642 1.33 1.33 54.3 43.7 60
8
AMF Tjänstepension 5,000,000 1.21 1.21 46.2 46.9
45
Första AP-fonden 4,490,170 1.09 1.09 6

Total ten largest shareholders 254,120,826 61.48 -1.59

30
4
Source: Euroclear
15
* The table is adjusted for nominee-registered shares. 2
6.0

6.0
5.5

7.5

0 0
19 20 21 22 23
Dividend** Percentage of adjusted EPS

*Adjusted for step up amortization net of taxes.

**Board motion to the Annual General Meeting.

Source: Alfa Laval

Corporate Governance Report 85

2 General meetings
Shareholders exercise their voting rights at general meetings. The Notice of the Annual General Meeting is published as an announce-
general meeting is Alfa Laval’s highest decision-making body. At the ment in the Swedish Official Gazette and on the company’s web-
general meeting, the Board of Directors and Auditors are elected, site not more than six and not less than four weeks prior to the
and the Chairman of the Board is appointed. Decisions are also Annual General Meeting.
made regarding compensation to the Board of Directors, discharge
of the Board members and the president from liability as well as 2023 Annual General Meeting
adoption of the income statement, balance sheet, Executive The 2023 Annual General Meeting of Alfa Laval AB was held on
Remuneration Policy and distribution of the company’s profit. April 25, 2023 at Scandic Star Lund, Glimmervägen 5, Lund,
Sweden.
In case the Articles of Association or the applicable instructions for
the Nominating Committee are to be changed, such resolutions The notice of the Meeting was issued on March 21, 2023. Share-
are also decided by the general meeting. holders who wished to participate in the Annual General Meeting
could either participate by advance voting or at the venue in person
Each shareholder who is listed in the register of shareholders and has or by a proxy.
notified the company of their participation is entitled to participate
in a general meeting and vote according to their shares. Shareholders A total of 297,730,427 votes and shares were registered at the
are entitled to be represented by a proxy at the meeting. Most proposals Meeting. Dennis Jönsson, Chairman of the Board, was appointed
addressed at a general meeting are decided by a simple majority. as Chairman of the general meeting.
However, certain resolutions require a qualified majority, such as
changes to the Articles of Association or repurchase of shares. The Meeting adopted the agenda proposed in the convening
Every shareholder, regardless of the size of their holding, is entitled notice and decided on the below resolutions in accordance with
to have an item brought up at a general meeting. the proposals from the Nominating Committee and the Board of
Directors. The CEO of the company held a presentation during the
Alfa Laval’s ordinary general meeting (the Annual General Meeting) general meeting which was published on Alfa Laval’s website
is held annually within six months of the end of the fiscal year. after the Meeting.
Normally, the Annual General Meeting takes place in late April in
Lund. The date and location of the Annual General Meeting are The minutes from the 2023 Annual General Meeting, the notice
announced not later than in conjunction with the publication of and all other information related to the Meeting are available at
the interim report for the third quarter. www.alfalaval.com/investors/corporate-governance/.

86 Corporate Governance Report

2024 Annual General Meeting
The Annual General Meeting of Alfa Laval AB (publ) will be held on Thursday, April 25, 2024,
at 4:00 p.m. at Stadshallen in Lund (Lund City Hall). The notice of the 2024 Annual General
Meeting will be published not earlier than March 14 and not later than March 28, 2024.
Notice of the Annual General Meeting will be inserted as an announcement in the Swedish
Official Gazette and on the company’s website. An announcement that the notification has
been issued will thereafter be published in Dagens Nyheter. Supporting documentation will
be published on Alfa Laval’s website well in advance of the general meeting. Copies of the
documents will also be sent to those shareholders who request them and state their address.

Resolutions passed by the 2023 Annual General Meeting Rausing, Henrik Lange, Jörn Rausing, Lilian Fossum Biner,
– The Meeting adopted the income statement and balance sheet Ray Mauritsson and Ulf Wiinberg as Board members, to elect
as well as the consolidated income statement and consolidated Anna Müller and Nadine Crauwels as new members of the
balance sheet, as presented in the 2022 Annual Report. Board, as well as to re-appoint Dennis Jönsson as Chairman
of the Board.
– The Meeting resolved on a dividend of SEK 6 per share, with
April 27, 2023, as record date. – The Meeting resolved for the time up to the end of the Annual
General Meeting 2024, to re-elect the Authorized Public
– The Meeting resolved to discharge all individuals who held Accountant Karoline Tedevall and to elect the Authorized
positions in Alfa Laval AB as Board members, deputy members Public Accountant Andreas Troberg as the company’s Auditors,
or president during 2022 from liability in respect of their man- as well as to re-elect the Authorized Public Accountants
agement of the company’s business for the 2022 fiscal year. Henrik Jonzén and Andreas Mast as deputy Auditors.

– The Meeting approved the remuneration report prepared by – The Annual General Meeting resolved to reduce the share
the Board of Directors. capital by cancellation of 550,508 shares, repurchased
under Alfa Laval’s share buy-back programme, and that the
– The Meeting resolved that the number of Board members reduction amount was to be transferred to the company’s non-
elected by the Meeting was to be nine, with no deputy mem- restricted equity. This led to a reduction of the share capital
bers. This resolution led to an increase in the number of Board by SEK 1,485,377.34. Simultaneously the general meeting
members by one compared with the previous year. The Meeting resolved to restore the share capital with SEK 1,485,377.34
also resolved that the number of Auditors was to be two with by way of a bonus issue without issuing new shares and that
two deputy Auditors. the amount was to be transferred from the company’s
non-restricted equity. The resolutions were supported by
– The Meeting resolved on compensation to non-executive Board shareholders holding at least two-thirds of both votes cast
members in an amount of SEK 7,150,000 with an additional and the shares represented at the Meeting.
compensation to the Chairman and other members of the
Audit Committee and the Remuneration Committee. – The Meeting resolved, in accordance with the Board of Directors’
proposal included in the notice, to amend the Executive Remu-
– The Meeting resolved, for the time up to the end of the 2024 neration Policy adopted by the Annual General Meeting 2021.
Annual General Meeting, to re-elect Dennis Jönsson, Finn

The 2024 Annual General Meeting pertains to the 2023 fiscal year. The 2023 Annual General Meeting pertains to the 2022 fiscal year.

Corporate Governance Report 87

3 Nominating Committee

Work of the Nominating Committee Work of the Nominating Committee ahead of the 2023
The Nominating Committee prepares and submits proposals to the Annual General Meeting
Annual General Meeting regarding candidates for Board members In respect of the Annual General Meeting 2023, the Nomination
and Chairman of the Board as well as the company’s Auditors. Committee consisted of Dennis Jönsson and five members
The Nominating Committee’s task also includes preparing pro- appointed by the largest shareholders in Alfa Laval as of August
posals to the Annual General Meeting regarding compensation to 31, 2022. Please see the below table Nominating Committee
non-executive Board members, additional compensation to mem- ahead of the 2023 Annual General Meeting for more information.
bers of the committees and to propose a Chairman of the Annual
General Meeting. Rules for the Nominating Committee´s work and The work of the Nominating Committee began with a statutory
composition are provided in the Code and in specific instructions meeting where Jörn Rausing was elected Chairman and Emma
adopted by the 2018 Annual General Meeting. The instructions apply Adlerton, Chief Legal Officer and Secretary to the Board of Alfa
until further notice and stipulates, inter alia, that the Nominating Laval AB, was appointed Secretary to the Nomination Committee.
Committee is to consist of a minimum of five members appointed Due to Jörn Rausing’s position as a Board member of Alfa Laval AB,
by the largest shareholders as of August 31, and that the Chairman his role as Chairman is a deviation from the Code. The Nominating
of the Board should be part of the Nominating Committee. Committee considered this in its decision and deemed Jörn Raus-
ing to be particularly well suited to lead the work of the Committee
Every year, the composition of the Nominating Committee is and obtain the best possible results for the company’s owners.
announced in a press release, in the third-quarter interim report
and on Alfa Laval’s website. In conjunction with this, information is Ahead of the general meeting 2023, the Nominating Committee held
also provided about how shareholders can propose candidates for eight formal meetings, which were partly digital, and had contact
the Board. by e-mail. The following items were addressed at the meetings:

Assessing strengths and future needs – Composition of the Board of Directors and the need for new
The Nominating Committee’s proposal for candidates to the members.
Board of Directors is, among other things, based on the annual
evaluation of the Board’s work. The evaluation is prepared by the – The Code’s requirement concerning that an even gender balance
Chairman of the Board and is intended to provide the Nominating within the Board should be aimed for. Due to this, the Nominating
Committee with a deeper understanding of the Board’s work Committee decided that the strive to reach an even gender balance
methods, its work climate and its need for particular Board com- in the Board of Directors will continue to be prioritized during the
petence considering the company’s strategy. Moreover, as a mem- coming years.
ber of the Nominating Committee, the Chairman of the Board can
easily keep the Nominating Committee informed about the com- – The Chairman of the Board presented the results of the latest
pany’s strategy and future challenges. In connection with the pre- digital Board evaluation.
paratory work to present a proposal for the Board, the Nominating
Committee can also conduct interviews with individual Board – Interviews were carried out with all members of the Board,
members about the Board work and can, when deemed appropri- except for such members who also were members of the
ate, call upon the assistance of external resources in its search for Nomination Committee.
suitable candidates.

Nominating Committee ahead of the 2023 Annual General Meeting

Name Representing Shareholding in Alfa Laval, %*

Jörn Rausing Tetra Laval International S.A. 29.5

Anna Magnusson Alecta Pensionsförsäkring 6.7

Lennart Francke Swedbank Robur Funds 2.5

Anders Oscarsson AMF Insurance and Funds 2.6

Javiera Ragnartz SEB Funds 1.8

*As of August 31, 2022.

88 Corporate Governance Report

Composition and work of the Nominating
Committee ahead of the 2024 Annual
General Meeting
Ahead of the 2024 Annual General Meeting, the
Nominating Committee included Finn Rausing
(Winder Holding), Daniel Kristiansson (Alecta
Tjänstepension Ömsesidigt), Lennart Francke
(Swedbank Robur Funds), Anders Oscarsson
(AMF Insurance and Funds), Javiera Ragnartz
(SEB Funds) and Dennis Jönsson (Chairman of the
Board of Alfa Laval AB). Finn Rausing was elected
Chairman and Emma Adlerton, Chief Legal Officer
and Secretary to the Board of Alfa Laval AB, was
appointed secretary. Due to Finn Rausing’s position as
Board member of Alfa Laval AB, his role as Chairman
of the Nominating Committee is a deviation from the
Code. The Nominating Committee considered this in its
decision, and deemed Finn Rausing to be particularly
well suited to lead the work of the Committee and obtain
the best possible results for the company’s owners.

The composition of the Nominating Committee was

published in a press release on September 27, 2023.

The information was also included in Alfa Laval’s

third-quarter interim report, which was published on
October 25, 2023. The total holding of the share-
holders appointing the Nominating Committee rep-
resented 42.4 percent of the number of shares in the
company on August 31, 2023. Information about
how to submit proposals for Board candidates to the
Nominating Committee was published along with
the composition of the Nominating Committee.

– Report from the president and CEO Tom Erixon on Alfa Laval’s Directors consists of three women and six men up until the Annual
operations and his view on the company’s strategy and challenges. General Meeting 2024. This corresponds to a women proportion
of 33 percent. The Nomination Committee noted in its reasoned
– Compensation to the Board members, including additional statement that this is still lower than desired, and that the strive to
compensation to members of the Audit Committee and the reach an even gender balance in the Board of Directors will continue
Remuneration Committee. to be prioritized during the coming years. Further information is
available in the Nominating Committee’s reasoned statement
After an overall assessment, the Nominating Committee decided prepared ahead of the 2023 Annual General Meeting.
to propose to the Annual General Meeting, re-election of all the
Board members that were available for re-election and election of Election of auditors
Anna Müller and Nadine Crauwels as new members of the Board. Ahead of the 2023 Annual General Meeting, the Nominating
The Nomination Committee´s proposal meant that the Board of Committee also held a meeting where Henrik Lange, Chairman of
Directors would comprise of nine members elected by the general the Audit Committee, was invited. Henrik Lange presented the
meeting up until the end of the Annual General Meeting 2024. In work of the Audit Committee during the year and the work with
considering the proposal, the Nominating Committee applied the Auditors elected by the Annual General Meeting. Based on the
Rule 4.1 of the Code as diversity policy. In the recent years, the Audit Committee’s recommendation, the Nominating Committee
Nomination Committee has strived for an even gender balance decided to propose to the Annual General Meeting 2023, re-election
within the Board of Directors in accordance with the ambitions of Karoline Tedevall and the election of Andreas Troberg as the
communicated by the Swedish Corporate Governance Board. company’s Auditors for the coming year.
Following the Nominating Committee’s proposal, the Board of

Corporate Governance Report 89

4 Board of Directors

The Board of Alfa Laval manages the company on behalf of the The Board conducts its work primarily within the framework of formal
shareholders and bears the ultimate responsibility for the organization Board meetings. Approximately eight ordinary Board meetings are
and administration of the company. The work and responsibilities held every year and extraordinary meetings are held when needed.
of the Board are governed by the Swedish Companies Act, the Recurring agenda items at these meetings include health and
Swedish Board Representation (Private Sector Employees) Act, safety, earnings results, order trends, investments, sustainability
Alfa Laval’s Articles of Association, the Main Market Rulebook and and business development. The company’s President prepares an
the Code. The Board is also responsible for establishing Board and agenda for each meeting in consultation with the Chairman of the
CEO instructions in writing. These instructions describe the Board’s Board. When relevant, the work of each committee is presented by
work assignments, the committees to be established within the its respective Chairman at the meetings.
Board and the allocation of work between the Board, the commit-
tees, and the President. Further, the Board instructions define the Employees in the company are also invited to Board meetings as
role of the Chairman of the Board. To enable the ongoing assess- presenters and experts. The company’s Chief Financial Officer
ment of the company’s financial position, the Board instructions participates in all meetings, as does the Chief Legal Officer, who
include separate instructions regarding the financial reporting to serves as Secretary to the Board. Within some areas, the Board of
be submitted to the Board. Directors conducts its work through the Audit Committee and the
Remuneration Committee. More information about the work of
In accordance with Alfa Laval AB’s Articles of Association, the each committee of the Board is presented below.
Board of Directors is to comprise a minimum of four and maximum
of ten members, with a maximum of four deputy members. The Responsibilities of the Chairman of the Board
members are elected annually by the general meeting for a period The Chairman of the Board directs the work of the Board in a
until the next Annual General Meeting. In order to safeguard the manner that ensures that it complies with prevailing laws and
best interests of the company and its owners, the Board members regulations as well as internal instructions. The Chairman must
shall devote the required time and care to the assignment and ensure that the Board work is well organized and conducted effi-
have the necessary competence. Additionally, the trade-union ciently, and that the Board fulfills its tasks. In dialogue with the
organizations appoint three employee representatives to the company’s President, the Chairman monitors operational devel-
Board as well as deputy employee representatives. opments and is responsible for ensuring that the other Board
members continuously receive all information necessary for the
The Board’s work includes establishing and evaluating Alfa Laval’s work of the Board to be performed in the most effective manner.
overall long-term objectives and strategies. This is accomplished The Chairman ensures that the Board’s decisions are executed
by establishing business and financial plans, reviewing and and represents the company in ownership issues.
approving financial statements, adopting guidelines, making deci-
sions on issues relating to acquisitions and divestments, deciding Moreover, the Chairman is responsible for introductory education
on major investments as well as significant changes to Alfa Laval’s for new Board members and the annual evaluation of the Board’s
organization and operations. Moreover, the Board appoints, evalu- work. The Chairman participates in evaluation and development
ates, and dismisses the company’s President and establishes the matters with respect to the Group’s senior executives.
instructions for the President with respect to the daily operations.
The Board of Directors is also responsible for Alfa Laval’s corporate
governance and Business Principles.

Compensation of Board members and attendance at Board meetings during 2023

Name Present Compensation*
Appointed by the AGM Dennis Jönsson 8 1,950,000

Lilian Fossum Biner 8 650,000

Nadine Crauwels (elected at the Annual General Meeting 2023) 5 650,000
Henrik Lange 8 650,000
Ray Mauritsson 8 650,000
Maria Moræus Hanssen** 3 –
Anna Müller (elected at the Annual General Meeting 2023) 5 650,000
Finn Rausing 8 650,000
Jörn Rausing 8 650,000
Ulf Wiinberg 7 650,000
Employee representatives Henrik Nielsen 7 –
Bror García Lantz 8 –
Johan Ranshög 8 –
Stefan Sandell (deputy member) 8 –
Total 8 7,150,000

Chairman *The compensation recognized pertains to the period between two AGMs. ** Declined re-election at the AGM 2023.

90 Corporate Governance Report

Compensation of the Board Moreover, the Board regularly monitored the Group’s earnings and
Compensation to the Board is determined by the Annual General financial position, and risk management as well as discussed the
Meeting based on a proposal from the Nominating Committee. Group’s strategy and business plan. Investment and operational
The Chairman as well as other members of the Audit Committee restructuring issues and follow-ups of previous investments were
and the Remuneration Committee receive supplementary com- also addressed at the Board meetings in 2023.
pensation. No Board or committee member is entitled to pension
payments from the company. Evaluation of the Board’s work and Board education
Each year, an evaluation is made of the Board in order to lay the
Composition of the Board after the 2023 Annual General foundation for well-functioning and effective governance. The
Meeting evaluation is carried out by the Chairman of the Board, some years
The Board elected by the 2023 Annual General Meeting consists of in combination with external resources. Recurring areas of the
nine members, with no deputy members. The Board’s assignment evaluation include the Board’s work methods, its work climate and
lasts until the end of the 2024 Annual General Meeting. The Board its access to and need for particular Board competence. The eval-
also includes three employee representatives with three deputy uation is the foundation of the work of the Nominating Committee,
employee representatives, appointed by the trade-union organizations. both in terms of proposals for Board members and in terms of
compensation. In 2023, the Chairman’s annual evaluation was
Alfa Laval’s Board of Directors demonstrates both diversity and carried out through the customary interviews with Board members
breadth of competence, knowledge, and experience. The Chairman and through a digital platform. During the interviews, the Board
and the members have a broad operational experience within an members were asked to answer several questions related to various
industry that is relevant for Alfa Laval and within strategic devel- areas relevant to the Board’s work.
opment areas for the company. The members of the Board have
gained experience in previous and current Board assignments in New Board members are to go through a comprehensive introduction
other companies as well as from senior positions held at other programme within six months of their election. The programme
companies. In the last years, the collective skills of the Board have includes an introduction to the company and any other training
been expanded with experience from product development, net- agreed on by the Chairman and the individual member. In addition,
work solutions, and retail and consumer goods companies. Fur- an educational field trip takes place each year for the entire Board.
thermore, since the 2020 Annual General Meeting, the Board has The Board attended a field trip to Bergen, Norway during the fall.
a new Chairman, with thorough experience in successfully leading The trip included a visit to the StormGeo site, to the Framo head-
a large international company in a sector that is significant and quarter including the Framo service workshop, as well as an aqua-
relevant for Alfa Laval. More information about the Board members culture farm. The purpose of the visit was, among other things, to
is available on page 94–95 and on Alfa Laval’s website. give the Board a deeper dive into some of the Marine Division
applications and products.
All members of the Alfa Laval Board elected by the Annual General
Meeting 2023 are considered independent of the company and its
management. All members are also considered independent of the
company’s major shareholders, except Finn Rausing and Jörn Rausing,
who cannot be considered independent due to their relationship
with the largest shareholder in Alfa Laval AB, Winder Holding AG.

Work of the Board in 2023

Work of the Board in 2023 The Board held eight Board meetings
in 2023, including eight ordinary meetings and none extraordinary.
Recurring items addressed at the Board meetings throughout the
year included health and safety, the impact on the company due to
the Russian invasion of Ukraine, inflation, earnings results, order trends,
investments, sustainability, business development and acquisitions.

Another important area was climate and sustainability issues, with

a focus on the Group’s sustainability goals, product development
to meet customers’ sustainability-related goals and on strategic
partnerships and acquisitions to position Alfa Laval for a more
sustainable future. As a part of this focus, Alfa Laval acquired full
ownership of Marine Performance Systems (MPS) The acquisition
strengthens Alfa Laval´s position to support the decarbonization in
the marine industry. Also, Alfa Laval entered into a strategic joint
venture with Aalborg CSP, a concentrated solar power technology
company, to accelerate the development of long duration energy
storage solutions. The Board of Directors was also regularly
updated and involved in Alfa Laval’s internal sustainability efforts
during 2023 (see pages 46–79). In addition, the Board also
approved the Sustainability Report 2023.

Corporate Governance Report 91

5 Committees

The Board instructions stipulate that there must be a Remuneration – the finance policy and capital structure strategy, the update of
Committee and an Audit Committee that report to the Board. the EMTN program and the company’s Treasury Policy,
Members of the committees are appointed annually from within
the Board at the statutory meeting. – review of the outcome of the self-assessment in 2023 of
managers regarding internal control points,
Audit Committee
The Audit Committee’s work and responsibilities – the review of the Sustainability Report,
Through the Audit Committee, the Board procures auditing services,
maintains ongoing contact with the company’s auditors and works – International tax compliance projects initiated by the EU and
to ensure that a sound internal control function and formalized OECD,
procedures are in place to enable monitoring and assessment of
the company’s financial situation. – follow-up on non-audit-services,

The Audit Committee ensures compliance with the principles for – Upcoming CSRD reporting for 2024, including a limited review
financial reporting and internal control. The Committee formulates of the preparations,
guidelines for the company’s financial reporting and follow-up,
and has the right to determine the focus of the internal audit. The – the reporting of environmentally sustainable activities in 2023
Committee examines the procedures for reporting and financial according to the EU taxonomy.
controls as well as the work, qualifications and independence of the
external auditors. The Committee also follows up the effectiveness – propose auditors for the Annual General Meeting
of the internal control systems and reviews the company’s financial
reports. For further information regarding the responsibilities of the
Audit Committee, refer to ‘The Board of Directors’ report on internal
control’ on page 98–99.

The Audit Committee’s composition and work in 2023

In 2023, the Audit Committee comprised Henrik Lange (Chairman),
Dennis Jönsson and Lilian Fossum Biner with the Group Controller
serving as secretary. The company’s Chief Financial Officer, the Audit Committee: fees and attendance
Head of the Internal Audit Function and the company’s auditors
also participate in the Committee’s meetings. Name Present Compensation

Henrik Lange 6 300,000

The Audit Committee held 6 meetings during 2023, out of which Lilian Fossum Biner 6 150,000
5 were digital. Recurring items addressed at meetings included
Dennis Jönsson 6 150,000
financial reports and a debriefing from the external auditors, planning
Total 6 600,000
external and internal audits, internal control processes, and Group
provisions and allocations. In addition, the following were discussed: Chairman

92 Corporate Governance Report

Remuneration Committee
The Remuneration Committee’s work and responsibilities
6 The company’s Auditors
Through the Remuneration Committee, the Board deter-
mines salaries and remuneration for the President and
senior executives. The Remuneration Committee is involved The Auditors’ work and responsibilities
in recruitment, appointments, and matters pertaining to The Auditors comprise a supervisory body appointed every
other conditions of employment relating to the President year by the Annual General Meeting. In accordance with
and Group management. The Committee is responsible for Alfa Laval AB’s Articles of Association, the company must
preparing the Executive Remuneration Policy to be resolved have at least one but not more than two Auditors and not
on by the Annual General Meeting and for submitting pro- more than two deputy Auditors. An authorized public
posals to the Board regarding the remuneration report, accountant or a registered auditing firm must be appointed.
which is to be prepared by the Board of Directors each fiscal
year and be presented to the Annual General Meeting for The assignment includes the following areas:
approval. In addition, the Committee submits proposals to – auditing the accounting and financial statements of indi-
the Board on matters regarding salary and employment vidual companies,
terms for the President and for senior executives reporting – evaluating the accounting policies applied,
directly to the President. – assessing the administration of company management,
– reviewing the interim report for the third quarter,
The Remuneration Committee’s composition and – evaluating the overall presentation in the Annual Report,
work in 2023 – review of sustainability report, and
In 2023, the Remuneration Committee comprised Dennis – review of compliance with the principles for remuneration
Jönsson (Chairman), Jörn Rausing and Ulf Wiinberg. to senior executives.
President Tom Erixon and Pascale Gimenez, Executive Vice
President Human Resources, also participate in the Com- The results of the auditors’ work – the Audit Report – are
mittee´s meetings. Minutes were taken separately or communicated to shareholders in the Annual Report and at
directly in the corresponding Board minutes. the Annual General Meeting. In addition, the Auditors pres-
ent a statement regarding the proposed discharge from lia-
The Remuneration Committee held two meetings in 2023. bility, which is included in the agenda of every Annual General
Recurring items addressed included the objectives of short- Meeting, along with the adoption of the income statement
term (STI) and long-term (LTI) incentive plans as well as and balance sheet. The Auditors also present a statement
compensation to senior executives. In addition, the following regarding the Corporate Governance Report.
items were also addressed:
Auditors elected at the 2023 Annual General Meeting
– A proposal to the Board regarding a remuneration report At the Annual General Meeting, 2023, the Authorized Public
for 2022 that were presented at the 2023 Annual General Accountant Karoline Tedevall was re-elected and the
Meeting. The report describes how the Executive Remu- Authorized Public Accountant Andreas Troberg was
neration Policy was applied in 2022. elected as the company’s Auditors and Henrik Jonzén and
Andreas Mast were re-elected as deputy auditors. The
company has assessed that none of the elected Auditors or
their deputies have any relationship to Alfa Laval or any
company related to Alfa Laval, which could affect their
independent status. In 2023, the entire Board of Directors
Remuneration Committee: fees and attendance received a report from the company’s external auditors on
one occasion, which took place without the President or
Name Present Compensation anyone in Group management being present. The Audit
Dennis Jönsson 2 75,000 Committee received separate reports on six occasions.
Jörn Rausing 2 75,000

Ulf Wiinberg 2 75,000

The company’s auditors are remunerated according to
approved invoices. Refer to Note 7 on page 153.
Total 2 225,000

Chairman

Corporate Governance Report 93

Board of Directors and auditors

Appointed by the Annual General Meeting

Dennis Jönsson Ulf Wiinberg Henrik Lange

Chairman since 2020. Board member since 2013. Board member since 2018.
Born: 1956. Born: 1958 Born: 1961
Formerly President and CEO of Tetra Pak. President of X-Vax Inc. Formerly CEO of H. Previously President and CEO of
Education: BSc. Econ from Stockholm Lundbeck A/S, Director of Wyeth Gunnebo AB; held several senior positions
University. Pharmaceuticals, EMEA/Canada & within the SKF Group, including Industry
BioPharma, and a number of other senior Division Manager and CFO, and served as
Board member: ICC Sweden positions in Wyeth. CEO of Johnson Pump AB.
Independent of the company and major Education: Courses at Colombia Education: BSc. Econ. from the
shareholders. University (IBM) and University of Gothenburg School of Business,
Number of shares in Alfa Laval: Pennsylvania - Wharton Economics and Law
210,000* (210,000**) Chairman of the Board: Hansa Board member: Velux A/S, Trelleborg AB,
Biopharma AB and Sigrid Therapeutics. BDR Thermea Group B.V, Dunkerstiftelserna,
Board member: UCB Pharma and Traction AB and The German-Swedish
Agenus Inc. Chamber of Commerce.

Independent of the company and major Independent of the company and major
shareholders. shareholders.

Number of shares in Alfa Laval: Number of shares in Alfa Laval:

20,000* (20,000**) 6,000* (6,000**)

Finn Rausing Jörn Rausing Nadine Crauwels

Board member since 2000. Board member since 2000. Board member since 2023.
Born: 1955 Born: 1960 Born: 1971
Education: B.L., MBA from INSEAD. Head of Mergers and Acquisitions (M&A) Holds the position as President Sandvik
Board member: Tetra Laval Group, in the Tetra Laval Group. Machining Solutions and Executive Vice
DeLaval Holding AB and Excillum AB. Education: BSc. Econ. President at Sandvik.

Independent of the company. Board member: Tetra Laval Group, Held several senior positions in
Ocado PLC and DeLaval Holding AB. Switzerland and Belgium, mainly in
Number of shares in Alfa Laval: Sandvik Coromant AB.
–* (–**) Independent of the company.
Education: MSc, Mechanical
Number of shares in Alfa Laval: Engineering, Production, from the
–* (–**) University of Leuven (KU Leuven),
Belgium.
Independent of the company and major
shareholders.
Number of shares in Alfa Laval:
920* (–**)

*Holdings on December 31, 2023. **Holdings on December 31, 2022.

94 Corporate Governance Report

Ray Mauritsson Lilian Fossum Biner Anna Müller
Board member since 2020. Board member since 2021. Board member since 2023.
Born: 1962 Born:1962 Born: 1967
President and CEO, Axis AB. Previously CFO at Axel Johnson AB and Holds the position as President and CEO
Former positions include several different Senior Vice President and Head of HR AB Volvo Penta.
leading positions in Axis Communications and Organizational Development for Has held several senior positions within
AB and Tac (today part of Schneider Electrolux Group. AB Volvo including Senior Vice President
Electric). Education: M.Sc. in Finance and Europe North & Central at Volvo Trucks,
Education: MSc. Engineering Physics, International Business, Stockholm School and served as Managing Director at Ford
Lund University Faculty of Engineering. of Economics. Motor Company AB.
Executive MBA, Lund University School of Board member: LeDap AB, Röko AB, Education: BSc, International Business &
Economics. Scania AB, Carlsberg Group A/S, Economics from Linköping University.
Independent of the company and of major Givaudan SA and a-connect AG. Independent of the company and major
shareholders. Independent of the company and major shareholders.
Number of shares in Alfa Laval: shareholders. Number of shares in Alfa Laval:
6,000* (6,000**) Number of shares in Alfa Laval: 130* (–**)
800* (800**)

Employee representatives Deputy employee representatives

Leif Norkvist
Deputy member since 2009.
Born: 1961
Employed by Alfa Laval since 1993.
Deputy employee representative for the Swedish
Metal Workers’ Union (IF Metall).

Stefan Sandell
Deputy member since 2005.
Born: 1971
Employed by Alfa Laval since 1989.
Henrik Nielsen Johan Ranhög Bror García Lantz
Employee representative since 2015. Employee representative since 2021. Employee representative since 2012. Deputy employee representative for the Swedish
Organization for Managers (Ledarna).
Born: 1968 Born: 1964 Born: 1965
Employed by Alfa Laval since 1994. Employed by Alfa Laval since 2016. Employed by Alfa Laval since 1990.
Johnny Hultén
Employee representative for the Employee representative for the Employee representative for the Deputy member since 2017.
Swedish Metal Workers’ Union (IF Swedish Confederation of Swedish Union of Clerical and
Metall). Professional Associations (SACO). Technical Employees in Industry Born: 1961

Number of shares in Alfa Laval: Number of shares in Alfa Laval: (Unionen). Employed by Alfa Laval since 1977.
50* (50**) 101* (101**) Number of shares in Alfa Laval: Deputy employee representative for the Swedish
100* (100**) Metal Workers’ Union (IF Metall).

*Holdings on December 31, 2023. **Holdings on December 31, 2022.

Auditors Deputy Auditors

Andreas Troberg Karoline Tedevall Henrik Jonzén Andreas Mast

Authorized Public Accountant, EY. Authorized Public Accountant, EY. Authorized Public Accountant, EY. Authorized Public Accountant, EY.
Born: 1976 Born: 1978 Born: 1977 Born: 1979
Company auditor since 2023. Company auditor since 2018. Deputy auditor since 2018. Deputy auditor since 2020.

Corporate Governance Report 95

President and Group management

Fredrik Ekström Thomas Møller Joakim Vilson Tom Erixon

Chief Financial Officer. President, Energy Division. Senior Vice President, Global Sales & President and CEO.
Born: 1975 Born: 1974 Service. Born: 1960
Employed by Alfa Laval since 1998. Employed by Alfa Laval since 2002. Born: 1965 CEO since March 1, 2016.
Chief Financial Officer since 2022. President of the Energy Division since Employed by Alfa Laval since 1990. Former positions include President and
Former positions include several interna- 2021. Former positions include President Former positions include Executive Vice CEO of OVAKO AB
tional positions in Alfa Laval, most recently Business Unit Decanters, Water & Waste President in charge of the Central and and President of Sandvik Coromant.
as President Business Unit Brazed & Segment Manager and Market Unit Eastern Europe, Latin America, Middle Chairman of the Board: Afry AB.
Fusion Bonded Heat Exchangers. Power Manager. East and Africa Regions, Head of Mid
Europe Region and Head of the Process Education: MA Law from the University of
Education: MBA, University of Illinois at Education: BSc. Eng. Lund in Sweden and MBA Business
Industry segment.
Urbana Champaign, USA. Number of shares in Alfa Laval: Administration from IESE in Spain.
6,800* (4,800**) Education: BSc. Eng.
Number of shares in Alfa Laval: Number of shares in Alfa Laval:
3,000* (2,000**) Number of shares in Alfa Laval: 129,200* (101,200**)
7,520* (6,520**)

Pascale Gimenez Nish Patel Emma Adlerton Sameer Kalra

Senior Vice President, Human Resources. President, Food & Water Division. General Counsel & Secretary to President, Marine Division.
Born: 1966 Born: 1962 the Board of Directors. Born: 1962
Employed by Alfa Laval since August 1, Employed by Alfa Laval since 1984. Born: 1973 Employed by Alfa Laval since 2011.
2018. Former positions include Executive Vice Employed by Alfa Laval since 2008. Previously Managing Director FRAMO
Former positions include Senior Vice President in charge of the Western Europe General Counsel and Secretary to the AS, Executive Vice President- Sales and
President of Human Resources at various and North America Regions, and Head of Board of Directors since 2015; President Marketing – Aalborg Industries AS
units within Sandvik and Electrolux. India and the UK. of Group Affairs (Sustainability, Corporate Education: Marine engineer and MBA.
Education: Master’s degree in marketing Education: BSc. Eng. Development, Legal & Compliance, Risk
& Patent). Former positions include senior Number of shares in Alfa Laval:
from ESSEC Business School and a Number of shares in Alfa Laval: 12,500* (10,500**)
degree in engineering from the Institut legal counsel in the Alfa Laval Group and
47,552* (47,552**) attorney at law.
Supérieur Agricole de Beauvais.
Number of shares in Alfa Laval: Education: Master Laws (LL.M), Lund
200 * (–) University.
Number of shares in Alfa Laval:
2,500* (1,000**)

*Holdings on December 31, 2023. **Holdings on December 31, 2022.

96 Corporate Governance Report

Areas of responsibility Remuneration to senior executives, pensions
The President directs the daily operations and is responsible for ensuring that the Board of and severance pay/termination of employment
Directors has access to the necessary information and supporting documentation for its de-
The Executive Remuneration Policy for the President and
cision-making purposes. The President is also responsible for ensuring that the company’s
other members of Group management was adopted at the
accounting complies with applicable laws and regulations, and shall prepare and monitor
Annual General Meeting 2021 and amended at the Annual
compliance with the goals, policies and strategic plans of the company and the Group, such
General Meeting 2023. For additional information, refer to
as the Business Principles. The President has the support of Group management, to which
pages 151–153 and 181–183.
responsibilities and authority are delegated. The members of Group management include a
head of global sales and service, three divisional managers and the heads of HR, Group Affairs
(Sustainability, Corporate Development, Legal & Compliance, Risk & Patent) and Finance.

Operational control
Alfa Laval’s operational control model comprises a matrix in which the Group’s divisions are presented vertically, intersecting with the Group’s geographic regions,
which are presented horizontally.

President and CEO*

Communications Corporate Business

HR* Finance* Legal* & Sustainability
Development

Global Sales & Service* Food & Water* Energy* Marine*

*Members of Group management

Group management meetings in 2023

Group management held eight scheduled meetings in 2023 during which concerning the future direction with regard to organic growth and growth
minutes were taken. In addition, quarterly reviews were performed to discuss the through acquisitions. In 2023, Group management addressed health and
business developments in the divisions and regions. These reviews addressed safety, business development in divisions and regions with deeper reviews in
the business climate, earnings, earnings projections for the next 12 months specific countries, research and development, sustainability, investment re-
and specific issues affecting the respective business areas. Separate strategy quirements, and acquisition opportunities.
meetings were also held to address, among other areas, management’s proposals

Corporate Governance Report 97

Board of Directors’ report
on internal control
The Board is responsible for the internal control of the company, with the aim of safeguarding
its assets and thus the interests of the shareholders. Through sound internal control, the Board
ensures the reliability of Alfa Laval’s reporting and its compliance with legislation, regulations,
applicable accounting policies and the company’s Business Principles. All communication and
financial reporting are to be correct, relevant, objective and transparent.

Control environment Group management is responsible for managing and maintaining

The control environment includes the internal governance instru- the internal control systems required to manage significant risks in
ments adopted by the Board for the company’s daily operations. the company’s operating activities. Management is also responsible
The control instruments comprise policy documents, which are for clearly ensuring that all employees understand the requirements
continuously assessed, reviewed and updated. These documents for and the individual’s role in maintaining sound internal control.
include, for example, the Board’s instructions, the President’s
instructions, reporting instructions, the company’s finance policy, Alfa Laval follows the 3 lines of defence model to ensure a stan-
business principles, investment policy and communication policy. dardized and comprehensive approach to governance and risk
management and establish adequate levels of ownership and
The Board has overriding responsibility for financial reporting, accountability. The first line of defence is represented by the business
among other things, and must therefore assess the performance operations which implement and maintain the control activities.
and earnings of the operations through a package of reports The second line is represented by various group and oversight
including results, forecasts and analyses of key indicators. The functions who also set directions, define policy and procedures, and
Board also reviews the company’s interim reports and year-end have functional oversight. The third line is represented by the internal
report and shall meet with the external auditors at least once a audit function that has the responsibility of providing independent
year without the presence of the President or other members of and objective assurance over the internal control activities performed
Group management. by the first and second line.

The President is subject to instructions issued by the Board and is The Board’s Audit Committee is tasked with ensuring compliance
responsible for ensuring an effective control environment. The with the principles for financial reporting and internal control. The
President is also responsible for the ongoing control work and for Committee follows up the effectiveness of the internal control system
ensuring that the company’s accounting complies with legislation and reviews the financial procedures to ensure that the information
and that the management of assets is adequately performed. The can be traced back to underlying financial systems and that it is in
President is also responsible for ensuring that all Board members line with legislation and relevant standards.
regularly receive sufficient information to be able to assess the
company’s financial position.

98 Corporate Governance Report

The Committee examines procedures for reporting and financial Control structures
controls as well as addressing the company’s financial reports. It Control structures are in place in all areas of the organization in
also monitors, evaluates and discusses significant issues related to order to prevent, identify and adjust errors or deviations. They
accounting and financial reporting. The Committee evaluates and manage the risks that the Board and management consider to be
manages information pertaining to disputes and potential impro- significant to the business, internal control and financial reporting.
prieties, and assists management with identifying and evaluating These structures comprise both an organization with clearly defined
mainly financial and similar risks that are relevant to the operations roles that enables an effective and – from an internal control per-
in order to ensure that the focus is on managing these risks. It also spective – appropriate division of responsibility, and specific control
reviews the company’s information security system and the con- activities that enable the identification and timely prevention of
tingency plans in place to ensure delivery of financial information. risks becoming a reality. Control activities also include clearly
defined decision-making processes and a policy for decision-making
The Audit Committee has the right to determine the focus of the with respect to, for example, investments, agreements, acquisitions
internal audit and is responsible for ensuring the efficiency of the and divestments, earnings analyses and other forms of analytical
function by assessing its activities, resources and structure. The reviews, reconciliations, inventory-taking and automatic controls
Committee is also responsible for reviewing the results and rec- in the IT systems.
ommendations of the internal audit to ensure that they are handled
in an appropriate manner. It is responsible for reviewing the internal Information and communication
audit plan every six months to ensure that it addresses the relevant The company’s regulations, guidelines and manuals are commu-
risk areas and for ensuring that there is suitable coordination nicated through several internal channels and the efficiency of this
between the internal and external audit. The Audit Committee communication is monitored on an ongoing basis. There are formal
holds regular meetings with the external auditors and reviews their and informal information channels that enable employees to com-
work, qualifications and independence, and the results of this municate important information to relevant recipients and ultimately,
review are reported to the company’s Nominating Committee on if necessary, to the Board of Directors. Clear guidelines have also
an annual basis. The Audit Committee supports the Nominating been established for external communications, the aim of which is
Committee in its work to nominate auditors and conducts an annual to provide the most accurate and relevant overview possible while
review of the proposed scope of the audit. Reports are provided to at the same time ensuring that all obligations are met.
the Board regarding internal meetings as well as meetings with
the internal auditors, the external auditors and various specialists Follow-up
in Group management and its support functions. The Committee The internal control process is mainly followed up by two bodies:
is responsible for reviewing significant results from the external the Audit Committee and the Internal Audit Function. The Audit
audit and the recommendations issued by the external auditors as Committee establishes the principles that apply for the company
a result. It is also responsible for establishing guidelines that with respect to accounting and financial reporting, and monitors
ensure the independence of the external auditors. compliance with these regulations.

The internal auditors review and implement improvements to the The Committee meets with the external auditors to obtain information
internal control function, conduct internal audits – which are reported about the focus and scope of the audit and to discuss results and
to the Audit Committee – and propose plans for the coming six to coordination of the external and internal audits. In addition, the
eight months. The internal auditors also issue reports from individual Committee establishes the direction, scope and time schedules
audits to the appropriate members of Group management. Proce- for the work of the internal audit team, whose audits are reported
dures are in place for performing regular reviews of the agreed to the Audit Committee and continuously to Group management
actions to guarantee that specific actions are taken following the so that any necessary measures may be taken. The scope of the
internal audit. These are based on an agreed schedule set with internal audit includes, among other factors, operational efficiency,
the party responsible for the individual activities. The Internal Audit compliance with regulations and guidelines, and the quality of
Function comprises of internal auditors, internal specialist resources financial reporting from the subsidiaries.
and external auditors. Internal audits encompass a broad spectrum
of functions and issues determined by the Board. The areas audited Alfa Laval has implemented a management testing process for
include: compliance with the systems, guidelines, policies and key internal controls over business processes in the company. The
processes established for the Group’s business operations; the managers and key employees evaluated their compliance through
existence of systems to ensure that financial transactions are carried a control self-assessment test for important internal controls in
out, archived and reported in an accurate and lawful manner; and these business processes and will perform this on an annual basis.
opportunities to improve management control, the company’s Based on the results, the internal controls framework will be
profitability and the organization, which may be identified during strengthened and assist in risk-based valuation of the business
audits. In 2023, 37 internal audits were performed. processes at Alfa Laval.

Risk assessment
Within the framework of the company’s operating activities and Lund, March 2024
review functions, procedures are in place for risk assessments per- Board of Directors
taining to the financial reporting. These procedures aim to identify
and evaluate the risks that may affect internal control. The proce-
dures encompass risk assessments in conjunction with strategic
planning and acquisition activities as well as processes for identi-
fying amendments to the accounting policies to ensure that they
are accurately reflected in the financial reporting.

Corporate Governance Report 99

Auditor’s report on the
corporate governance
statement
To the general meeting of the shareholders of Alfa Laval AB (publ), corporate identity number 556587-8054

Engagement and responsibility Standards on Auditing and generally accepted auditing standards
It is the Board of Directors who is responsible for the corporate in Sweden. We believe that the examination has provided us with
governance statement for the year 2023 on pages 82-99 and sufficient basis for our opinions.
that it has been prepared in accordance with the Annual
Accounts Act. Opinions
A corporate governance statement has been prepared. Disclosures
The scope of the audit in accordance with chapter 6 section 6 the second paragraph
Our examination has been conducted in accordance with FAR’s points 2-6 the Annual Accounts Act and chapter 7 section 31 the
auditing standard RevR 16 The auditor’s examination of the cor- second paragraph the same law are consistent with the annual
porate governance statement. This means that our examination of accounts and the consolidated accounts and are in accordance
the corporate governance statement is different and substantially less with the Annual Accounts Act.
in scope than an audit conducted in accordance with International

Lund, March 25 2024

Andreas Troberg Karoline Tedevall

Authorized Public Accountant Authorized Public Accountant
Ernst & Young AB Ernst & Young AB

100 Auditor’s report on the corporate governance statement

Financial statements
Board of Directors’ Report 102
Consolidated cash flows 117
Comments to the consolidated cash flows 118
Consolidated comprehensive income 119
Comments to the consolidated
comprehensive income 120
Consolidated financial position 122
Comments to the consolidated
financial position 124
Changes in consolidated equity 124
Comments on changes
in consolidated equity 125
Parent company cash flows 126
Parent company income 126
Parent company financial position 127
Changes in parent company equity 128
Notes to the financial statements 129
Accounting principles 129
Objectives, policies and processes
for managing capital 136
Financial risks 137
Operational risks 142
Notes 148
Auditor’s report 184

Ten-year overview 188

Definitions 190
Board of Directors’ Report
The Board of Directors and the President of Alfa Laval AB (publ) hereby submit their annual report for the year of
operation January 1, 2023 to December 31, 2023.

The information in this annual report is such information that Alfa Laval Exchangers and Welded Heat Exchangers. The Food & Water Division
AB (publ) must publish in accordance with the Securities Market Act. consists of six Business Units: Decanters, Food Heat Transfer, Food
The information was made public by publishing the annual report on Systems, Hygienic Fluid Handling, High Speed Separators and Desmet.
Alfa Laval’s website on March 28, 2024 at 10.00 CET. The Marine Division consists of four Business Units: Pumping Systems,
Alfa Laval AB is a public limited liability company. The seat of the Board Water, Wind & Fuel Solutions, Heat & Gas Systems and Digital Solutions.
is in Lund and the company is registered in Sweden under corporate
registration number 556587-8054. The visiting address of the head Material factors of risk and uncertainty
office is Rudeboksvägen 1 in Lund and the postal address is Box 73, The main factors of risk and uncertainty facing the Group concern the
221 00 Lund, Sweden. Alfa Laval’s website is: www.alfalaval.com. business cycle, the consequences of Russia’s war on Ukraine and other
geo-political tensions, the price development of metals, inflationary
Financial statements pressures, the interest rate development and volatile fluctuations in ma-
The following parts of the annual report are financial statements: the Board jor currencies. For additional information, see the sections on financial
of Directors’ Report, the ten-year overview, the consolidated cash flows, the and operational risks and the section on critical accounting principles,
consolidated comprehensive income, the consolidated financial position, the section on key sources of estimation uncertainty and the section on
the changes in consolidated equity, the parent company cash flows, the judgements under accounting principles.
parent company income, the parent company financial position, the
changes in parent company equity and the notes. All of these have been Acquisition of businesses
audited by the auditors. 2023
The Corporate Governance Report, which also has been reviewed by On March 2, 2023, Alfa Laval acquired an additional 38.7 percent of
the auditors, is to be found on page 82. StormGeo’s subsidiary Climatempo in Brazil from the minority owners.
The statutory sustainability report for the parent company and the Alfa Laval’s ownership thereby increased from 51 percent to 89.7 percent.
consolidated Group, which also has been reviewed by the auditors, is to The transaction is reported as a change within the equity.
be found on pages 46–79. Supplementary sustainability notes are to be In 2021, Alfa Laval acquired a minority stake of 16.5 percent in the
found on Alfa Laval’s website Alfa Laval - Publications. The supplemen- Netherland-based company Marine Performance Systems (MPS) with
tary sustainability notes were published on the website at the same an option to acquire the remaining part later. Now Alfa Laval has executed
time as the annual report. that option and completed the acquisition to own 100 percent of MPS.
The closing date for the acquisition was March 21, 2023. MPS’ innovative
Ownership and legal structure technology significantly reduces the friction from vessels when sailing,
Alfa Laval AB (publ) is the parent company of the Alfa Laval Group. resulting in fuel savings. Friction between the hull and the water when
The company had 54,178 (54,346) shareholders on December 31, sailing is the most significant driver of a vessel’s fuel consumption, and
2023. The largest owner is Winder Holding AG, Switzerland (formerly the cost of fuel represents up to 60 percent of a vessel’s operating costs.
Tetra Laval International SA, Switzerland), who owns 29.5 (29.5) per- Fuel consumption has a direct impact on greenhouse gas emissions, as
cent. Next to the largest owner, there are nine institutional investors with reducing 1 ton of fossil fuel consumption equals the reduction of approxi-
ownership in the range of 7.4 to 1.7 percent. These ten largest sharehold- mately 3 tonnes of CO2 emissions. Marine Performance Systems’ air lu-
ers owned 61.3 (63.0) percent of the shares. brication technology generates micro bubbles under a ship’s hull, reducing
friction between the vessel and the water by 50-70 percent and enabling
Operations substantial fuel cost savings and improvement in overall ship efficiency,
Alfa Laval is a world leader in heat transfer, centrifugal separation and during normal service speed. The technology was first tested on a sea-
fluid handling, and is active in the areas of Energy, Marine, and Food & going vessel in 2020 and the fuel savings have been confirmed by the
Water, offering its expertise, products, and service to a wide range of in- shipowner based on several months of operation. The patented solution
dustries in some 100 countries. The company is committed to optimizing can be installed on vessels of any size or fuel type at point of building or
processes, creating responsible growth, and driving progress to support retrofitted on already operating vessels. Since the acquisition Alfa Laval
customers in achieving their business goals and sustainability targets. has launched the Alfa Laval OceanGlide product that creates an even layer
Alfa Laval is engaged in the development, production and sales of products of micro air bubbles across the vessel’s flat bottom area, which reduces
and systems based on three main technologies: separation/filtration, drag by up to 75 percent. Since Alfa Laval OceanGlide needs few com-
heat transfer and fluid handling. pressors and no large hull penetrations it can be easily installed.
Alfa Laval’s business is divided into three Business Divisions ”Energy”, On July 31, 2023 Alfa Laval acquired 100 percent of a European service
”Food & Water” and ”Marine” that sell to external customers and are re- provider. The company will operate under its own name as an independent
sponsible for the manufacturing of the products and one division channel.
“Operations & Other” covering procurement and logistics as well as On July 31, 2023 Alfa Laval acquired 51 percent of the Danish com-
corporate overhead and non-core businesses. These four divisions con- pany Header-coil Company A/S that develops and manufactures heat
stitute Alfa Laval’s four operating segments. exchangers and steam generation system equipment components
The customers to the Energy Division purchase products and systems based on its header-coil design for the concentrated solar power (CSP)
for energy applications, whereas the customers to the Food & Water industry, thermal energy storage etc.
Division purchase products and systems for food and water applications.
The customers to the Marine Division purchase products, systems and 2022
digital solutions for marine and offshore applications. On September 13, 2022 Alfa Laval announced that it has acquired
The three Business Divisions are in turn split into a number of Business BunkerMetric, a Scandinavian software company that develops advanced
Units. The Energy Division consists of four Business Units: Brazed & Fusion decision support tools for marine bunker vessels. The acquisition is part
Bonded Heat Exchangers, Energy Separation, Gasketed Plate Heat of Alfa Laval’s strategy to expand its digital marine service offering and will

102 Board of Directors’ Report

Board of Directors’ Report
be part of the recently acquired StormGeo, a global leader in weather Orders received
intelligence software and decision support services. BunkerMetric, head-
quartered in Denmark, supports ship operators in finding the best bunker BnSEK BnSEK
quarter 12 months
procurement plan and improving voyage margins by using sophisticated
algorithms. The optimization tools, together with StormGeo’s advanced 20 75
route services, will enable ship owners to streamline operations to help
them improve their bottom line. BunkerMetric’s procurement optimization
16 60
tool will become a subscription service within StormGeo’s existing offering.
On August 31, 2022 Alfa Laval announced that it has closed the ac-
12 45
quisition of Scanjet, a leading global supplier of tank cleaning equipment
and solutions for marine, offshore and industrial applications. The acquisition
will extend Alfa Laval’s broad tanker offering, creating a more comprehen- 8 30
sive product portfolio for cargo tanks. Scanjet’s intelligent tank manage-
ment solutions will be a valuable complement to Alfa Laval’s sustainable 4 15
marine offering as they reduce the water usage and energy consumption
connected with tank cleaning. Adding Scanjet to Alfa Laval’s portfolio will 0 0
support customer efficiency at every stage of cargo handling. Scanjet Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
has global presence with factories in Sweden, Poland and Indonesia. 2021 2022 2023
On August 2, 2022 Alfa Laval announced that it has closed the ac- Order intake per quarterl Orders received rolling 12 months
quisition of Desmet, part of the Desmet Ballestra Group, a world leader in
engineering and supplying processing plants and technologies for edible
oils and biofuel sectors. The acquisition will strengthen Alfa Laval’s position Orders received amounted to SEK 70,742 (58,645) million during 2023.
in the renewable energy arena and complement its offering within edible
oils. Headquartered in Brussels, Belgium, Desmet employs around 1,000
people in Europe, India, Southeast Asia, North America and Latin America. Order bridge
The acquired business was a part of the Desmet Ballestra Group and had Consolidated
a turnover of approximately EUR 300 million in 2021. The operational units SEK millions/% 2023 2022
and brands of Rosedowns and Stolz are included in the transaction. The Order intake last year 58,645 45,718
Desmet Ballestra Group was owned by Financière DSBG and ultimately Organic 1) 10.5% 14.4%
controlled by Kartesia and Farallon. The acquisition will operate as a stand- Structural 1) 6.3% 3.8%
alone entity within the Food & Water Division of Alfa Laval. It strengthens Currency 3.8% 10.1%
Alfa Laval’s position in the markets for edible oils, biofuels, and plant- and Total 20.6% 28.3%
animal-based proteins for food and feed. The acquisition will have a Order intake current year 70,742 58,645
positive impact on earnings per share and be marginally decretive to
1)
Change excluding currency effects.
Alfa Laval’s EBITA margin. “The acquisition will be an excellent fit for our
offering of specialized processing equipment designed to increase both
Orders received from the aftermarket Service constituted 27.6 (28.4)
yield and quality of customers’ end products,” says Tom Erixon, President
percent of the Group’s total orders received for 2023.
and CEO of Alfa Laval. “It will add know-how and expertise to accelerate
future innovations within food, feed and biofuels – and strengthen our
Order bridge Service
ability to support the transformation towards renewable fuels.”
Consolidated

Investments in joint ventures and other companies SEK millions/% 2023 2022
During 2023 Alfa Laval acquired additional shares in Malta Inc for SEK Order intake last year 16,640 12,864
50 million (-), whereby the ownership increased from 18.3 percent to 19.2 Organic 1) 11.9% 15.4%
percent. During 2022 Alfa Laval acquired shares for an additional SEK 13 Structural 1) 0.7% 2.7%
million in the Swedish company Liquid Wind, which gave a 5.2 percent Currency 4.9% 11.3%
ownership in the company. The company develops electro-fuel facilities Total 17.5% 29.4%
to produce renewable clean fuels. Order intake current year 19,551 16,640
During 2023 Alfa Laval made a capital contribution of SEK 62 (40) 1)
Change excluding currency effects.
million into AlfaWall Oceanbird, which is a joint venture together with
Wallenius to supply innovative wind propulsion solutions for cargo ves- • Organic: change excluding acquisition/divestment of businesses.
sels and other ship types. Alfa Laval also made a capital contribution of • Structural: acquisition/divestment of businesses.
• Service: Parts and service.
SEK 1 (-) million into Stadion Laks, which is a joint venture together with
the Norwegian fish farming company Lingalaks to develop pumping
technology for more sustainable fish farming.

Sale of real estate

During 2023 the property in Eastbourne in the UK has been sold for
SEK 71 (15) million with a realised result of SEK 68 (-7) million.
The property in Singapore, the property in Alonte in Italy, the properties
in Camberley and Cwmbran in the UK and four smaller properties in India
are for sale and are expected to be sold within the next year. These have
therefore been classified as current assets held for sale with SEK 59
(100) million. The fair value of the properties for sale exceeds the book
value by approximately SEK 373 (246) million.

Board of Directors’ Report 103

Large orders
Large orders are orders with a value over EUR 5 million. The volume of large orders is an important indicator of the demand situation and is therefore
monitored separately within Alfa Laval. A large volume of large orders normally also means a good load in the factories. During 2023 Alfa Laval has re-
ceived the following large orders:

Large orders (>EUR 5 million)

Division Order Total per Business Unit
Business Unit Order Delivery amount 2023 2022
Scope of supply received in date SEK millions
Energy
Welded Heat Exchangers
Air coolers for a gas plant in the US. Q1 2023 70
Wet surface air cooler for a polypropylene plant in the U.S. Q2 2024 143
Spiral heat exchangers for a refinery in India. Q2 2024 86
Heat exchangers for an LNG terminal in China. Q3 2024 76
Air coolers for propylene condensers to an ethane plant in the U.S. Q3 2024 248 623 224
Energy Separation
Zero liquid discharge system to a recycling plant in the U.S. Q4 2024 71 71 93
Gasketed Plate Heat Exchangers
Heat exchangers for a hydrogen plant in the Middle East. Q1 2023 63
Heat exchangers for district heating in China. Q1 2023 119
Plate heat exchangers for a petrochemical plant in the Middle East. Q2 2023 105
Heat exchangers for data centres in the U.S. Q3 2024 72
Heat exchangers for a fertilizer plant in Australia. Q4 2024 70 429 313
Food & Water
Decanters
Ashbrook winkle presses for a sludge processing plant in the U.S. Q2 2026 68 68 78
Food Systems
Equipment for a pharmaceutical plant in Malaysia. Q2 2023 59
Pre-treatment systems for a bio fuel plant in South Korea. Q2 2024 87
Equipment for a juice mixing plant in Denmark. Q4 2025 324
Equipment for edible oil processing plant in Mexico. Q4 2025 120
Refining equipment for palm oil plant in Nigeria. Q4 2024 61 651 1 ,284
Desmet
Equipment for soy bean extraction in the US. Q1 2024 208
Equipment for sunflower oil refinery in Kazakhstan. Q1 2024 58
Vacuum dryer for a canola oil extraction plant in Australia. Q2 2024 85
Steam jet ejector and separator for a biodiesel plant in Indonesia. Q2 2024 83
Refining equipment for an oilseed refinery in the U.S. Q2 2024 334
Preparation equipment for a soybean and canola seed plant in the U.S. Q2 2024 214
Extraction and water degumming equipment for a soybean and canola seed plant in the U.S. Q2 2024 146
Pretreatment and refining equipment for a soybean and sunflower refinery in the U.S. Q2 2024 159
Equipment for a palm oil fractionation plant in Indonesia. Q2 2024 152
Equipment for a palm oil fractionation plant in Indonesia. Q3 2024 66
Equipment for a canola pre-pressing plant in Canada. Q3 2025 142
Equipment for a canola oil extraction plant in Canada. Q3 2025 118
Equipment for a canola oil refinery plant in Canada. Q3 2025 208
Pre-treatment equipment for a biodiesel plant in Bolivia. Q3 2024 76
HVO pre-treatment equipment for a biofuel plant in Australia. Q3 2024 402
HVO pre-treatment equipment for a biofuel plant in Thailand. Q3 2024 113
Equipment for a rapeseed pressing plant in Poland. Q3 2023 76
Equipment for an oleochemical plant in Indonesia. Q4 2024 237
Equipment for an oleochemical plant in Indonesia. Q4 2024 244
Equipment for an oleochemical plant in Indonesia. Q4 2024 74
Equipment for a rapeseed preparation and extraction plant in Lithuania. Q4 2025 176
Refining equipment for a tropical oil refinery in Guatemala. Q4 2025 113
Equipment for a vegetable oil refinery in the Netherlands. Q4 2025 251 3,735 350

104 Board of Directors’ Report

Board of Directors’ Report
Large orders (>EUR 5 million), continued
Division Order Total per Business Unit
Business Unit Order Delivery amount 2023 2022
Scope of supply received in date SEK millions
Marine
Heat & Gas Systems
Boiler system for a FSRU* in Europe. Q2 2024 69
Waste heat recovery and back-up boiler system for a paper mill in Europe. Q2 2024 200
Waste heat recovery system for a gas turbine plant in the Caribbean. Q3 2024 240 509 219
Pumping Systems
Firewater pumps for FPSO** vessels in South America. Q1 2024 820
Seawater lift pumps for FPSO** vessel in Australia. Q1 2023 135
Firewater pumps for oil platform in Norway. Q1 2024 161
Water injection and firewater pumps for oil platform in Norway. Q1 2024 218
Cargo oil pumps for FPSO** vessels in South America. Q1 2024 393
Sea water lift pumps to an FPSO** vessel outside West Africa. Q2 2024 66
Sea water lift pumps to an FPSO** vessel outside South America. Q2 2024 62
Cargo pumps to an FPSO** vessel outside South America. Q2 2024 123
Fire water pumps for an FPSO** vessel in China. Q3 2024 69
Sea water lift pumps for an FPSO** vessel in Singapore. Q3 2025 68
Sea water lift pumps for an FPSO** vessel in Singapore. Q3 2024 128
Sea water lift pumps for an FPSO** vessel in Singapore. Q3 2024 127
Sea water lift pumps for an oil platform in Norway. Q3 2025 86
Cargo pumps for an FPSO** vessel in China. Q3 2025 185
Suction pump system for an offshore wind farm in Taiwan. Q4 2025 277 2,918 1,326
Totalt 9,004 3,887

* Floating Storage Regasification Unit. ** Floating Production, Storage and Offloading.

Order backlog December 31 Net sales

Net sales amounted to SEK 63,598 (52,135) million during 2023.
BnSEK
Sales bridge
50
45.3 Consolidated
SEK millions/% 2023 2022
40 37.0
13.2
Net sales last year 52,135 40,911
30 12.5 Organic 1) 12.3% 10.9%
23.0
Structural 1) 5.3% 6.7%
20 5.6 Currency 4.4% 9.8%
32.1
24.5 Total 22.0% 27.4%
10 17.3 Net sales current year 63,598 52,135

0
1)
Change excluding currency effects.

2021 2022 2023

For delivery during next year For delivery later than next year Net invoicing relating to Service constituted 30.3 (30.0) percent of the
Group’s total net invoicing for 2023.

Sales bridge Service

Excluding currency effects and adjusted for acquisition and divestment Consolidated
of businesses the order backlog was 19.0 percent higher than the order SEK millions/% 2023 2022
backlog at the end of 2022. Net sales last year 15,688 12,144
Organic 1) 17.2% 15.0%
Structural 1) 0.7% 2.9%
Currency 5.2% 11.3%
Total 23.1% 29.2%
Net sales current year 19,308 15,688

1)
Change excluding currency effects.

Board of Directors’ Report 105

Operating segments
Energy Division
The division targets customers in HVAC and refrigeration markets as well as process industries such
as chemicals, petrochemical industry and the oil & gas industry. Focus is on increased energy efficiency,
waste heat recovery and sustainable solutions.

The Energy Division consists of four Business Units: Brazed & Fusion Bonded Heat Exchangers, Energy Separation, Gasketed Plate Heat Exchangers
and Welded Heat Exchangers.

Energy Division
Consolidated
SEK millions 2023 2022
Orders received 20,414 17,294
Order backlog 1) 10,075 8,517
Net sales 19,269 15,074
Operating income 2) 3,927 2,761
Adjusted EBITA 3) 3,986 2,927
Adjusted EBITA margin 4) 20.7% 19.4%
Depreciation 372 352
Amortisation 59 166
Investments 5) 992 535
Assets 1) 19,263 17,330
Liabilities 1)
7,433 6,574
Number of employees 1) 5,902 5,457
1)
At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.

Quarterly development Order intake 2023 split per end market*/business unit

BnSEK %

6 30 Power 8%

Refinery 8%
5 25
Energy
Separation HVAC &
4 20
Refrigeration 38%

Other 12% Welded Heat

3 15 Gasketed
Exchangers
Plate Heat
Exchangers
2 10
Brazed & Fusion
Bonded Heat
1 5 Exchangers

0 0 Oil & Gas 14%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2022 2023
Process industry 20%
Orders received Net sales Adjusted EBITA margin

* “Process industry” consists of inorganic chemicals, metals, petrochemicals and pulp &
paper and “Other” mainly consists of manufacturing and mining.

106 Board of Directors’ Report

Board of Directors’ Report
Order intake Net sales

Order bridge Sales bridge

Consolidated Consolidated
SEK millions/% 2023 2022 SEK millions/% 2023 2022
Order intake last year 17,294 13,675 Net sales last year 15,074 12,383
Organic 1) 13.2% 17.0% Organic 1) 22.7% 12.4%
Structural 1) 0.1% – Structural 1) 0.1% –
Currency 4.7% 9.5% Currency 5.0% 9.3%
Total 18.0% 26.5% Total 27.8% 21.7%
Order intake current year 20,414 17,294 Net sales current year 19,269 15,074
1)
Change excluding currency effects.
1)
Change excluding currency effects.

The Energy Division reported a good growth in order intake during the year Net sales grew in almost all end markets. Aftermarket sales grew some-
compared to last year. Demand has been very strong for energy efficiency what faster than capital sales. There has been capacity constraints during
solutions and there has been a strong interest in Alfa Laval’s solutions most parts of the year, but the ability to invoice and work through the
for clean energy and circularity, which has resulted in a growing number backlog has improved during the year.
of orders. Order intake was strong across most geographical markets.
The strongest growth was in North and Latin America and in India and
Adjusted EBITA
the Middle East.
The largest end market, HVAC* & Refrigeration, continued to grow, Income bridge
but towards the end of the year the growth slowed down. The biggest Consolidated
growth came from products for heat pumps. There was also continued SEK millions 2023 2022
investments in data centres driving demand for products for cooling. Adjusted EBITA last year 2,927 2,050
Demand from customers in the process industries grew mainly from
Volume 1) 1,292 514
sectors like chemicals, metals and pulp & paper. Underlaying factors
Mix 1) 123 496
included investments in production of green hydrogen and renewable
chemicals. During the year prices for oil and gas have stabilized on a Costs 1) -411 -251
level that stimulates continued investments in production. As a conse- Currency 55 118
quence, demand for products and services in especially gas has been Adjusted EBITA current year 3,986 2,927
strong during the year. The refinery sector is recovering from low levels 1)
Change excluding currency effects.
and grew significantly during the year.
The aftermarket grew well in the year. A positive development was
seen across most industries and geographical markets. The adjusted EBITA increased compared to last year. The increased net
sales had a large positive volume effect. The mix effect was positive due
* Heating, Ventilation & Air Conditioning.
to a higher service share, a more profitable product mix and our ability to
balance fluctuations in the commodity markets. The overhead costs in-
Order intake 2023 split on: creased due to increased sales activities, costs related to investments
and inflationary pressure. Currency had a positive impact.

After Sales & Service 26%

Capital Sales 74%

Board of Directors’ Report 107

Food & Water Division
The division offers different types of products for heat transfer, separation and hygienic fluid handling
and targets customers in food, pharmaceuticals, biotech, vegetable oils, brewery, dairy and body care
products. In addition, the division focuses on public and industrial water treatment as well as waste-
water and waste treatment.

The Food & Water Division consists of six Business Units: Decanters, Food Heat Transfer, Food Systems, Hygienic Fluid Handling, High Speed
Separators and Desmet.

Food & Water Division

Consolidated
SEK millions 2023 2022

Orders received 26,368 21,909

Order backlog 1) 15,977 14,381

Net sales 25,280 20,691

Operating income 2) 3,698 3,339

Adjusted EBITA 3) 3,942 3,458

Adjusted EBITA margin 4) 15.6% 16.7%

Depreciation 502 449

Amortisation 244 119

Investments 5) 472 360

Assets 1) 20,376 21,196

Liabilities 1) 8,295 8,291

Number of employees 1) 8,283 8,052

1)
At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.

Quarterly development Order intake 2023 split per end market/business unit

Other 3%
BnSEK % Brewery 5%

8 24 Protein 6% Oils & Fats 30%

7 21 Food
Pharma &
Systems
Biotech 6%
6 18 Hygienic Fluid
High Speed
Handling
Separators
5 15 Waste &
Water 7%
4 12
Decanters
3 9
Ethanol, Starch Food Heat Desmet
2 6 Transfer
& Sugar 9%

1 3 Dairy 17%

0 0
Prep. Food &
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Beverage 17%
2022 2023

Orders received Net sales Adjusted EBITA margin

108 Board of Directors’ Report

Board of Directors’ Report
Order intake Net sales

Order bridge Sales bridge

Consolidated Consolidated
SEK millions/% 2023 2022 SEK millions/% 2023 2022
Order intake last year 21,909 16,664 Net sales last year 20,691 14,640
Organic 1) 0.0% 11.8% Organic 1) 5.2% 13.0%
Structural 1)
15.4% 7.5% Structural 1) 12.0% 15.4%
Currency 5.0% 12.2% Currency 5.0% 12.9%
Total 20.4% 31.5% Total 22.2% 41.3%
Order intake current year 26,368 21,909 Net sales current year 25,280 20,691
1)
Change excluding currency effects. 1)
Change excluding currency effects.

The organic growth was flat compared to last year despite generally weaker Net sales increased compared to last year, secured through a 2023
macro-economic conditions, where high inflation and geo-political uncer- opening backlog being solid and benefitting from a more normalized
tainty impacted the propensity to investment for several customers and supply chain after several years of disruption. Sales of capital equip-
industries. However, primarily the sustainability related areas were dis- ment was solid, but aftermarket sales were very strong during the year,
connected from the weaker macro-economic activity and grew, thereby which changed the mix somewhat. Net sales grew above average in
compensating for declining areas. The division held on to its market pharma, water, ethanol, protein, prepared food as well as brewery and
shares through a strong presence and technological leadership in many was flat or contracted somewhat in dairy and oils & fats.
areas, a result of the innovation focus and R&D spending since several
years back. Geographically, Europe was showing a somewhat higher Adjusted EBITA
activity and the North American market a somewhat lower activity, to a
large extent due to a non-repeat of a very large order in 2022. Asia Income bridge
overall was unchanged but held back by a lower activity in China.
Consolidated
The order intake for dairy was almost unchanged, following previous years
of significant capacity build up in the industry, both in the industrialised SEK millions 2023 2022
and the developing part of the world. The pharma and biotech market Adjusted EBITA last year 3,458 2,680
was down after several years of constant growth. A short-term satura-
Volume 1)
1,097 1,496
tion post the pandemic years has been noted, with previously ordered
additional capacity now being commissioned. This is evident not least Mix 1)
-261 -420
in China. The trend is however still to invest in upgrading national supply Costs 1) -490 -582
chains in the pharma sector to avoid vulnerability in future critical or high Currency 138 284
demand situations. The waste & water industry contracted slightly. Many
Adjusted EBITA current year 3,942 3,458
countries prioritize the water sector, approving governmental support to
encourage investments but releasing funding typically takes longer than 1)
Change excluding currency effects.
planned. The activity in traditional oils & fats was good. The ever more
important HVO* technology for biodiesel also grew and combined with the
growth in ethanol, they represented an important part of the sustainability The adjusted EBITA increased compared to last year, mainly driven by a
related business. The growth in ethanol is very much driven by environ- positive volume effect. The negative mix effect is explained by the mix
mental regulation. One example being higher blending requirements in between product groups, a higher share of large projects with higher
petrol globally, not least in the U.S., Brazil and India, but also higher oil project related costs and the Desmet project business, partly mitigated
prices driving demand for alternative fuels. The brewery sector was down by the higher service share. Costs increased as a result of general infla-
and not comparable with last year with the largest order ever of SEK 721 tionary pressure and an overall high business activity, partly mitigated
million, for a new brewery in North America last year. Overall new capacity by a positive currency effect.
addition in the industry has been somewhat lower during the year.
The aftermarket was strong across almost all key industries. Growth was
solid for parts, but even stronger for service scopes. A wider presence and a
structured approach of addressing the installed base of equipment following
several years of strong new sales, contributed to the overall growth.

* Hydrotreated Vegetable Oil.

Order intake 2023 split on:

After Sales & Service 24%

Capital Sales 76%

Board of Directors’ Report 109

Marine Division
The division’s customers include shipowners, shipyards, manufacturers of diesel and gas engines, as
well as companies that work with offshore extraction of oil and gas. The offering includes pumping
systems, boilers, heat transfer equipment, high speed separators, digital solutions and several different
environmental products, including systems to clean ballast water and exhaust gases.

The Marine Division consists of four Business Units: Pumping Systems, Water, Wind & Fuel Solutions, Heat & Gas Systems and Digital
Solutions.

Marine Division
Consolidated
SEK millions 2023 2022

Orders received 23,960 19,442

Order backlog 1) 19,273 14,122

Net sales 19,049 16,370

Operating income 2) 2,178 1,741

Adjusted EBITA 3) 2,836 2,399

Adjusted EBITA margin 4) 14.9% 14.7%

Depreciation 336 312

Amortisation 658 658

Investments 5) 336 235

Assets 1) 29,856 30,932

Liabilities 1) 7,998 7,241

Number of employees 1) 5,655 5,465

1)
At end of period. 2) Excluding comparison distortion items. 3) Alternative performance measure. 4) Adjusted EBITA/net sales. 5) Excluding new leases.

Quarterly development Order intake 2023 split per end market/business unit

BnSEK %
Engine Power 6%
8 24
Other 9%
7
20
Digital
6 solutions
16
5 Heat & Gas
Systems
4 12 Pumping
Offshore 18%
systems
3
8
2
4 Water, Wind &
1 Fuel solutions
Ship Building &
0 0 Shipping 67%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2022 2023

Orders received Net sales Adjusted EBITA margin

110 Board of Directors’ Report

Board of Directors’ Report
Order intake Net sales

Order bridge Sales bridge

Consolidated Consolidated
SEK millions/% 2023 2022 SEK millions/% 2023 2022
Order intake last year 19,442 15,379 Net sales last year 16,370 13,888
Organic 1) 19.9% 14.8% Organic 1) 11.7% 7.4%
Structural 1)
1.6% 3.3% Structural 1) 1.5% 3.4%
Currency 1.7% 8.3% Currency 3.2% 7.1%
Total 23.2% 26.4% Total 16.4% 17.9%
Order intake current year 23,960 19,442 Net sales current year 19,049 16,370
1)
Change excluding currency effects.
1)
Change excluding currency effects.

The order intake for the Marine Division increased compared to last Net sales were at a higher level than last year. Sales growth for service
year. Growth was driven by a stronger demand in most product areas and for most product groups in capital sales, offset the lower sales for
and in the service business. PureBallast.
The underlying market sentiment related to the building of new ves-
sels was on a higher level compared to last year. New contracting has
Adjusted EBITA
been driven primarily by tankers and vehicle carriers, supported by a fair
level of contracting in the other ship segments as well. The increased Income bridge
shipbuilding activity has been further supplemented by a continued Consolidated
growing demand for sustainability related solutions which mitigate CO2 SEK millions 2023 2022
emissions, including solutions around energy efficiency and low and Adjusted EBITA last year 2,399 2,811
zero carbon fuels. Demand for PureBallast has as expected eased further
Volume 1)
774 527
as fewer vessels remain to be retrofitted before the approaching 2024
Mix 1)
-286 -503
regulatory deadline and the market gets more oriented to new vessels.
Multi-fuel capable solutions continue to gain traction. Order intake for Costs 1) -67 -539
offshore increased significantly compared to last year and the underly- Currency 16 103
ing market sentiment in this area remained strong due to increased oil Adjusted EBITA current year 2,836 2,399
prices and new projects to safeguard long term energy supply. 1)
Change excluding currency effects.
Order intake for service improved compared to last year. Growth was
driven by strong activity levels in both shipping and offshore, a growing
environmental installed base and regulatory compliance related ser- The adjusted EBITA increased compared to last year, where the first half
vices. High freight rates in most vessel segments and the need to keep of the year was still burdened by unbalanced factory loads and invoicing
vessel assets in good operational readiness resulted in increased on- of backlog with lower margin yields due to uncompensated cost increases
board maintenance and higher demand for spare parts and service. from the date of booking. The second half of the year benefitted from
higher invoicing volume, a more balanced factory load, the impact of re-
structuring activities that were announced in the fourth quarter 2022
Order intake 2023 split on: and a margin accretive mix. The cost continued to be impacted by infla-
tionary pressure but was partially offset by a positive currency effect.

After Sales & Service 33%

Capital Sales 67%

Board of Directors’ Report 111

Operations & Other
Operations and Other covers procurement and logistics as well as corporate overhead and non-core
businesses.

Operations & Other Reconciliation between Divisions and Group total

Consolidated Consolidated
SEK millions 2023 2022 SEK millions 2023 2022
Orders received 0 0 Adjusted EBITA
Order backlog 1) 0 0 Total for divisions 10,203 8,277
Net sales 0 0 Amortisation -965 -943
Operating income 2) -565 -507 Comparison distortion items – -767
Adjusted EBITA 3) -561 -507 Consolidation adjustments * 18 -48
Depreciation 349 336 Total operating income 9,256 6,519
Amortisation 4 0 Financial net -606 -340
Investments 5) 640 723 Result after financial items 8,650 6,179
Assets 1) 1,986 1,983 Assets **
Liabilities 1) 885 1,097 Total for divisions 71,481 71,441
Number of employees 1) 1,481 1,326 Corporate*** 10,807 9,808

At end of period. 2) Excluding comparison distortion items. 3) Alternative performance

1) Group total 82,288 81,249
measure. 5) Excluding new leases. Liabilities **
Total for divisions 24,611 23,203
The decreased adjusted EBITA in 2023 is mainly due to a higher activity Corporate*** 20,299 22,342
level driven by the high sales and order level. Group total 44,910 45,545

* Difference between management accounts and IFRS. ** At the end of the period.
*** Corporate refers to items in the statement on financial position that are interest bearing
or are related to taxes.

Information about geographical areas

All comments are excluding currency effects.
Western Europe including Nordic Latin America
The order intake in the region showed growth compared to last year. The region showed strong growth in order intake compared to last year.
Energy showed growth in almost all markets, driven by a high demand Energy had a high demand in refinery and oil & gas in most countries in
from the power and HVAC industries. However, the HVAC demand the region. Food & Water reported strong growth in most countries in
slowed down during the year. Food & Water grew well in Benelux, France the region primarily driven by oils & fats and ethanol, starch & sugar.
and Nordic, particularly in protein and prepared food & beverage. Marine Marine showed strong growth in most countries in the region primarily
grew in Nordic, Benelux and United Kingdom supported by good devel- driven by engine power. Service order intake had a strong growth.
opment in shipbuilding and shipping. Service had a good development
and grew. Asia
The region reported strong growth in order intake compared to last year.
Central and Eastern Europe Energy reported growth and it was particularly high in the Middle East,
The region reported growth in order intake compared to last year in almost India and Thailand driven by oil & gas and power. HVAC in China had a
all markets. In Energy the growth was primarily driven by continued demand good start of the year, but the demand slowed down during the year.
for HVAC and refrigeration. However the HVAC demand slowed down Growth in Food & Water was particularly high in Indonesia, Thailand
during the year. Food & Water reported growth in most of the countries and India driven by a continued demand in oils & fats and brewery.
in the region primarily driven by protein and ethanol, starch & sugar. Marine reported good growth in China, Taiwan and Malaysia driven by
Marine reported a decline in the region, mainly driven by less demand increased order intake from both shipbuilding and shipping. Service
for PureBallast within shipbuilding. Service order intake grew strongly. developed well and grew.

North America Africa and Oceania

North America reported strong growth in order intake compared to last The order intake in the region showed growth compared to last year.
year. In Energy the growth was particularly strong for oil & gas and refin- Energy had a high demand in power and process industry in Australia
ery in the U.S. Food & Water noted growth for oils & fats and ethanol, and Africa. Food & Water reported growth in the region driven by protein
starch & sugar. Marine reported growth in engine power. Service order and brewery. Marine reported a weaker demand for oil & gas. Service
intake had a strong growth. order intake was weaker than last year.

112 Board of Directors’ Report

Board of Directors’ Report
Orders received 2023

+16%

+11%
+4% +23%

+22%

7 1

5 +29%

3
+49%

4
= Compared to 2022 excluding currency effects

1 Nordic 8%
2 Western Europe 19%
3 Central- & Eastern Europe,
excluding Russia 5%
4 Asia 41%
5 Latin America 5%
6 North America 19%
7 Africa & Oceania 3%
Orders received 2022

+24%

+22%
+16% +39%

+22%

7 1
6

5
+20%

3
+6%

4
= Compared to 2021 excluding currency effects
1 Nordic 8%
2 Western Europe 21%
3 Central- & Eastern Europe,
excluding Russia 5%
4 Asia 41%
5 Latin America 4%
6 North America 19%
7 Africa & Oceania 2%

Board of Directors’ Report 113

3,344
824
9,000 2,948
6,000 819
3,344
2,948
6,000
3,000 5,819 6,233

3,000
0 5,819 6,233

2022 2023
0
Nordic 2022Western Europe 2023
Central & Eastern Europe Asia
North America Latin America Other
Nordic Western Europe Central & Eastern Europe Asia

Personnel The distribution of the number

North America of employeesOther
Latin America by personnel category at
The number of employees is measured and reported as full time equivalents. year end is:
The parent company does not have any employees.
The Group has on average had 20,803 (19,002) employees. At the end Employees – by category
of December 2023, the Group had 21,321 (20,300) employees. The Employees
Number
– by category
employee turnover rate excluding temporary employees for 2023 is 5.9
Number 80
22,000
(6.9) percent. The highest employee turnover rate in 2023 is found in 935
20,000 1,225 80
management & administration and manufacturing, logistics & procurement. 22,000
854
2,355
18,000 935
Alfa Laval has the ambition to develop the employees on all levels 20,000 1,225
2,000
2,540
2,355
16,000 854
within the Group. The largest part of the competence development 18,000 2,293
2,000
14,000
16,000
2,540
3,867
takes place in the daily work when our employees continuously get 2,293
12,000
14,000
3,350
more demanding tasks as well as get the opportunity to participate in 3,867
10,000
12,000 3,350
different projects together with more experienced colleagues. Local
8,000
10,000
training and development efforts in the different factories and sales
6,000
8,000 11,544
companies around the world are equally important, for instance ALPS 10,578
4,000
6,000 11,544
(Alfa Laval Production System) that is based on the well-known con- 10,578
2,000
4,000
cepts of Lean and Six Sigma and also on ALPAS (Alfa Laval Product & 0
2,000
Application School). The ALPAS trainings are designed and developed Dec 31, 2022 Dec 31, 2023
0
by the product responsible Business Unit.
Dec 31, 2022 Dec 31, 2023
All training programmes and development projects are performed Manufacturing, logistics & procurement Sales & marketing Service
Management & Administration R&D Acquired during
within the Alfa Laval Academy framework, to ensure they follow the Alfa Manufacturing, logistics & procurement Sales & marketing Service
the year
Laval Learning Principles. Further examples of such training pro- Management & Administration R&D Acquired during
the year
grammes are Challenger (for young talents with international leader-
ship potential), Evolve (training and mentor programme for employees The productivity by employee has developed as follows:
with high potential in leadership positions), Project Management, Employees – Productivity development
Information Security (mandatory training via E-learning), Inclusion &
Employees
SEK – Productivity development
Diversity (for all employees), Pure Leadership (for middle management) thousands
SEK
and Drive (for senior management). 3,500
thousands
Alfa Laval has a global certification in “Learning Facilitation 3,500
3,057
3,000
Capabilities” called “Licence to Train” to secure quality and consistency 2,675 2,744
3,057

in the way we deliver our learning programmes internally as well as to- 3,000
2,500 2,423 2,417
2,349 2,744
2,675
wards customers and partners. 2,500 2,423 2,417
2,000 2,349
Alfa Laval is promoting inclusion and diversity at all levels to give all
2,000
employees fair and equal opportunities for development and career. 1,500
While we consciously work towards increasing the share of female 1,500
1,000
managers and the share of female employees in the total workforce,
leadership programs like Challenger, Evolve and Drive are important to 1,000
500
drive the shift in leadership and inclusion to reach the goal. 500 400 459 421 408 433 491
0
400
2018 459
2019 421
2020 408
2021 433
2022 491
2023
The distribution of the number of employees by region is: 0
2018 EBITA/average
Adjusted 2019 2020
number of employees 2021 2022 2023

Average number of employees – by region Net sales/average

Adjusted number
EBITA/average of employees
number of employees

Net sales/average number of employees

Number
20,803 145
21,000 19,002
146 893
815 1,913
18,000
1,801 The improvement for 2019 was impacted by the change programme that
15,000 was launched during the autumn 2016 but reinforced by the stronger
7,451
6,654
demand within primarily environmental products and the weakening of
12,000
the Swedish krona. The deterioration during 2020 and 2021 is explained
9,000 819
824
by the consequences of the COVID-19 pandemic and the stronger
2,948
3,344 Swedish krona. The improvement during 2022 is explained by the in-
6,000
creased sales and the weakening of the Swedish krona. The weaker
3,000 5,819 6,233 development of the profitability during 2022 is due partly to increased
raw material prices in combination with invoiced backlog taken prior to
0
2022 and the Desmet project business and partly to capacity imbalances
2022 2023
in the supply organization and the impact of the transition from fossil to
Nordic Western Europe Central & Eastern Europe Asia sustainable energy solutions for parts of the Marine Division and the
North America Latin America Other Business Unit for Welded Heat Exchangers in the Energy Division. The
latter was being addressed in the announced restructuring programme.
In 2023 there was a marked increase in both adjusted EBITA and net
sales per employee. The increase of adjusted EBITA per employee was
Employees – by category primarily driven by the improvements yielded by the restructuring programs,
a positive mix effect from service business offsetting higher project invoicing
Number
and the increased volume impact of sales that increased with 22 percent.
80
22,000
935
20,000 1,225
2,355
854
18,000
2,000
2,540
16,000
114 Board of Directors’ Report
14,000
2,293
3,867
12,000 3,350

10,000
8,000
Board
Förvaltningsberättelse
of Directors’ Report
The latter offset absorption imbalances in some manufacturing units, Alfa Laval has developed an internal training programme to give sales-
negative currency and material hedges and inflationary pressure. The people and purchase departments knowledge on legal business practice.
increased net sales per employee was driven by more than half by the
organic sales growth, 22 percent by currency and 24 percent by struc- Environment
tural additions. One of Alfa Laval’s four business principles is: ”Optimizing the use of natural
The distribution of employees per country and per municipality in resources in the most efficient manner is our business.” The company’s
Sweden and between males and females can be found in Note 5 in the products make a significant contribution to reducing the environmental
notes to the financial statements. The specification of salaries, wages, impact of industrial processes and are used to produce renewable energy.
remunerations, social costs and pension costs are provided in Note 6 in All sites have an environmental management system in place. More
the notes to the financial statements. than 95 percent of the delivery value comes from production sites with
ISO 14001 certification.
Remuneration policy for executive officers The subsidiary Alfa Laval Corporate AB is involved in operational ac-
The remuneration policy for executive officers is established by the tivities that are subject to an obligation to report and compulsory licensing
Annual General Meeting, see further description in Note 6 and the com- according to Swedish environmental legislation. The permits mainly
plete policy in Note 37. relate to the manufacturing of heat exchangers in Lund and Ronneby
The Board of Directors decided in 2023 to implement six of the modi- and the manufacturing of separators in Eskilstuna. The impact on the
fied cash based long-term incentive programme for maximum 95 senior external environment is through limited discharges into the air and water
managers in the Group including the Chief Executive Officer and the and through waste and noise.
persons defined as executive officers. The outcome of the modified pro- The foreign manufacturing sites within the Alfa Laval Group are engaged
gramme depends on how the adjusted EBITA margin and the net sales in operational activities with a similar effect on the external environment.
growth have developed during a three-year period, with a 50/50 weight To what extent this activity is subject to an obligation to report and/or
between the targets. This means that there will be no award during the compulsory licensing according to local environmental legislation varies
first two years since it is first in year three that it can be determined to from country to country. Alfa Laval has an overall intention to operate
what extent the targets have been achieved. Maximum outcome is well within the limits that are set by local legislation.
awarded when the targets are exceeded. The remuneration from the
modified long-term incentive programme can constitute maximum 25, Russia’s war on Ukraine
40 or 50 percent of the fixed remuneration depending on position. Alfa Laval had a factory and a sales company in Russia and a sales
Payment to the participants in the programme is made after year three company in Ukraine. Historically the order intake from the markets in
and only provided that they are still employed at the date of payment. Russia and Ukraine has been approximately SEK 1 billion per year,
equivalent to 2 percent of the total order intake for the company. When
Research and development the war started on February 24, 2022, the total order backlog in Russia
As the result of an intensive and consistent commitment over many years and Ukraine amounted to approximately SEK 750 million. In addition,
to research and development, Alfa Laval has achieved a world-leading Alfa Laval companies in other countries had orders from Russian end
position within the areas of separation and heat transfer. The product customers of SEK 360 million. Since then, the order backlog has been
development within fluid handling has resulted in a strong market posi- re-assessed and as a result orders of SEK 973 million have been removed
tion for a number of products. In order to strengthen the Group’s position from the order backlog. This is mainly due to sanctions, but also when
and to support the organic growth, by identifying new applications for Alfa Laval has assessed that the company will not be able to deliver or
existing products as well as developing new products, research and de- get paid. Also orders where Alfa Laval supplies equipment to ship yards
velopment is always an activity of high priority. Research and develop- in other countries building ships for ship owners under sanctions have
ment is conducted at approximately twenty facilities around the world. been removed from the order backlog.
The costs for research and development have amounted to SEK 1,563 In the interim reports and the annual report for 2022 a detailed description
(1,356) million, corresponding to 2.5 (2.6) percent of net sales. was made of how Alfa Laval has calculated and provided for the com-
Excluding currency effects and acquisition/divestment of businesses, pany’s costs for cancelled orders, late delivery fees, accounts receivable
the costs for research and development have increased by 7.9 percent that we do not believe we will get paid for, foreign exchange losses and
compared to last year. advance payments to suppliers in Russia and Ukraine where we do not
expect any delivery or the advance being repaid to us.
Ethics and social responsibility Before the war, Alfa Laval had a competent team of approximately 230
Two of Alfa Laval’s four business principles are: ”Respect for human employees in Russia and 10 employees in Ukraine. At December 31, 2023
rights is fundamental” and ”High ethical standards guide our conduct”. the number of employees in Russia had decreased further down to 6. Alfa
This means that Alfa Laval respects human rights and the very different Laval’s assessment is that the longer-term implications of the war on the
social cultures in which the company works and supplies its products Russian market are of such a magnitude that the company in the fourth
and services and that Alfa Laval conducts its business with honesty, in- quarter 2022 provided for a closure of the operations. The total cost for
tegrity and respect for others. these provisions amounted to SEK 400 million and was reported as a
Globalisation gives Alfa Laval new business opportunities for in- comparison distortion item in the first quarter 2022 with SEK 327 million
creased sales as well as lower costs for manufacturing the products. But and in the fourth quarter 2022 with an additional SEK 73 million.
when part of the supply chain is moved to countries with lower costs the
company is often confronted with ethical questions in a more obvious Asbestos-related lawsuits
manner. Health, security and working conditions for the employees at The Alfa Laval Group was as of December 31, 2023, named as a co-defendant
the company’s suppliers are some of Alfa Laval’s main topics. When Alfa in a total of 427 asbestos-related lawsuits with a total of approximately
Laval procures products from quickly growing economies like China and 427 plaintiffs. Alfa Laval strongly believes the claims against the Group
India it is important for the company to secure that the cost reduction are without merit and intends to vigorously contest each lawsuit.
opportunities are not at the expense of those performing the work in Based on current information and Alfa Laval’s understanding of these
each country. Alfa Laval regards it as an obligation to make sure that its lawsuits, Alfa Laval continues to believe that these lawsuits will not
suppliers develop quickly if the work, health and security conditions are have a material adverse effect on the Group’s financial condition or re-
not acceptable. sults of operation.

Board of Directors’ Report 115

Restructuring program Cancellation of repurchased shares and a corresponding
A restructuring program covering parts of the Marine Division and the bonus issue
Business Unit for Welded Heat Exchangers in the Energy Division was On March 21, 2023 when the notice to the Annual General Meeting
initiated in the fourth quarter 2022 to adjust capacity imbalances in the was sent the number of repurchased shares was 550,508. The Annual
supply organization and manage the impact as we transit from fossil to General Meeting 2023 decided to cancel these repurchased shares.
sustainable energy solutions. The program was completed during 2023. Cancellation of the shares means that the share capital will decrease
with SEK 1 million. At the same time the Annual General Meeting decided
Result for the parent company to increase the share capital through a bonus issue of the same amount
The parent company’s result after financial items for 2023 was SEK 4,271 without issuing any new shares. In this way the size of the share capital
(95) million, out of which dividends from subsidiaries SEK 4,037 (62) was restored and the company did not have to obtain permission from
million, net interests SEK 252 (44) million, realised and unrealised ex- Bolagsverket or if disputed the local court to cancel the repurchased
change rate gains and losses SEK -1 (2) million, costs related to the listing shares. This means that the number of shares has developed as follows:
SEK -4 (-4) million, fees to the Board SEK -9 (-9) million, cost for annual
report and annual general meeting SEK -1 (-1) million and other operating Specification of number of shares
income and operating costs the remaining SEK -3 (1) million. Change of Number
tax allocation reserve has been made with SEK -48 (578) million. Number of shares at January 1, 2023 413,876,823
Group contributions amount to SEK 1,314 (509) million. Tax on this
Cancellation of re-purchased shares at May 15, 2023 -550,508
year’s result amount to SEK -271 (-241) million. Net income for the year
Number of shares at December 31, 2023 413,326,315
was SEK 5,266 (941) million.

Outlook for the first quarter

Unrestricted equity for the parent company
In the fourth quarter and full year 2023 report issued on February 6, 2024
The unrestricted equity of Alfa Laval AB (publ) was SEK 9,293 (6,507)
the President and Chief Executive Officer Tom Erixon stated:
million.

“We expect demand in the first quarter to be somewhat lower compared

Disclosure on share related information
to the fourth quarter.”
Paragraph 2a in chapter 6 of the Swedish Annual Accounts Act requires
listed companies to disclose certain information relating to the company’s Earlier published outlook (October 25, 2023):
shares in the Board of Directors’ Report. This information is found in the “We expect demand in the fourth quarter to be about the same as in the third
following paragraphs, in the “Changes in consolidated equity” and in Note 6. quarter.”

Proposed disposition of earnings Date for the next financial reports 2024
The Board of Directors propose a dividend of SEK 7.50 (6.00) per share Alfa Laval will publish financial reports at the following dates:
corresponding to SEK 3,100 (2,480) million and that the remaining in- Interim report for the first quarter April 25
come available for distribution in Alfa Laval AB (publ) of SEK 6,193 Interim report for the second quarter July 23
(4,027) million be carried forward, see Note 40. Interim report for the third quarter October 24
The Board of Directors are of the opinion that the proposed dividend
is consistent with the requirements that the type and size of operations,
the associated risks, the capital needs, liquidity and financial position
put on the company.

116 Board of Directors’ Report

Board of Directors’ Report
Consolidated cash flows

Consolidated cash flows

SEK millions Note 2023 2022
Operating activities
Operating income 9,256 6,519
Adjustment for depreciation and amortisation 2,524 2,392
Adjustment for other non-cash items -419 105
11,361 9,016
Taxes paid -1,933 -1,834
9,428 7,182
Changes in working capital:
Increase(-)/decrease(+) of receivables -1,319 -2,155
Increase(-)/decrease(+) of inventories -652 -3,140
Increase(+)/decrease(-) of liabilities 2,373 2,058
Increase(+)/decrease(-) of provisions -661 -654
Increase(-)/decrease(+) in working capital -259 -3,891

9,169 3,291
Investing activities
Investments in fixed assets (Capex) -2,440 -1,853
Divestment of fixed assets 90 20
Acquisition of businesses 17 -337 -3,685
-2,687 -5,518
Financing activities
Received interests and dividends 168 99
Paid interests -489 -290
Realised financial exchange gains 52 68
Realised financial exchange losses -536 -147
Repurchase of shares – -661
Dividends to owners of the parent -2,480 -2,480
Dividends to non-controlling interests -18 -12
Increase(-) of financial assets -555 -457
Decrease(+) of financial assets 11 1,002
Increase of loans 2,400 12,546
Amortisation of loans -4,096 -6,575
-5,543 3,093

Cash flow for the year 939 866

Cash and cash equivalents at the beginning of the year 4,352 3,356
Translation difference in cash and cash equivalents -156 130
Cash and cash equivalents at the end of the year 26 5,135 4,352

Free cash flow per share (SEK) * 16.50 3.52

Capex in relation to net sales 3.8% 3.6%
Average number of shares** 413,326,315 413,637,227

* Free cash flow is an alternative performance measure. It is the sum of cash flows from operating activities, investments and divestments of fixed assets.
** Average number of shares has been impacted by repurchase of shares.

Board of Directors’ Report 117

Comments to the consolidated cash flows

For further comments on certain individual lines in the cash flow statement, Heat exchangers
reference is made to Notes 17 and 26. Investments have been made in machines for increased capacity and
manufacturing of new products and in productivity enhancing equipment
Cash flows from operating activities in Ronneby in Sweden, San Bonifacio in Italy and Jiang Yin in China for
The increase in cash flows from operating activities in 2023 is explained by brazed heat exchangers. Additional investments have been made in
the increase in operating income and the lower increase in working capital. Jiang Yin in China, Satara in India and in Lund in Sweden in equipment
to widen the product range and increase the productivity for gasketed
Cash and cash equivalents heat exchangers.
The item cash and cash equivalents is mainly relating to bank deposits
and liquid deposits. High speed separators
Continued capacity investments in machining equipment for separators have
Cash flow been made in Eskilstuna in Sweden, Krakow in Poland and Pune in India.
Cash flow from operating and investing activities amounted to SEK 6,482
(-2,227) million during 2023. Out of this, acquisitions of businesses Decanters
were SEK -337 (-3,685) million. Capacity and productivity enhancing investments have been made in
Nakskov in Denmark.
Adjustment for other non-cash items
Other non-cash items are mainly referring to realised gains and losses in Pumps and valves
connection with sale of assets. These have to be eliminated since the Capacity and productivity enhancing investments have been made in
cash impact of divestments of fixed assets and businesses are reported Kolding in Denmark and Kunshan in China. The complete transfer of
separately under cash flow from investing activities. manufacturing from Eastbourne in UK to Kolding in Denmark was finalised
during the year.
Working capital
Working capital increased by SEK 259 (3,891) million during 2023, Depreciations
mainly due to build-up of inventories related to the volume growth and Depreciation, excluding allocated step-up values, amounted to SEK 1,559
build-up of work in progress. (1,449) million during the year.

Investments Acquisitions and disposals

Investments in property, plant and equipment amounted to SEK 2,440 For a further analysis of the impact on the cash flow by acquisitions and
(1,853) million during 2023. disposals, see Note 17.
A number of structural changes in the form of new or improved buildings
including move of production and productivity increasing investments Free cash flow per share
for improved cost and availability have been implemented or started The free cash flow per share is SEK 16.50 (3.52).
during the year, among others in Lund in Sweden, Satara in India, Kolding
in Denmark and Jiang Yin, Kunshan and Qingdao in China. Examples
of investments made for the individual product groups are as follows:

118 Financial statements

Consolidated comprehensive income

SEK millions Note 2023 2022
Net sales 1, 2, 3, 4, 36 63,598 52,135
Cost of goods sold 9 -42,714 -34,489
Gross profit 20,884 17,646

Financial statements
Sales costs 5, 6, 9 -6,342 -5,634
Administration costs 5, 6, 7, 9 -2,880 -2,305
Research and development costs 9 -1,563 -1,356
Other operating income 8 932 772
Other operating costs 8, 9 -1,827 -2,652
Share of result in joint ventures 34 52 48
Operating income 9,256 6,519

Dividends and other financial income and costs 10 13 5

Interest income and financial exchange rate gains 11 448 267
Interest expense and financial exchange rate losses 11 -1,067 -612
Result after financial items 8,650 6,179

Tax on this year's result 16 -2,220 -1,574

Other taxes 16 -49 -36
Net income for the year 6,381 4,569

Other comprehensive income:

Items that will subsequently be reclassified to net income
Cash flow hedges 54 -346
Translation difference -2,040 1,872
Deferred tax on other comprehensive income 16 -31 211
Sum -2,017 1,737
Items that will subsequently not be reclassified to net income
Revaluations of defined benefit obligations -125 329
Market valuation of external shares 16 -2 -13
Deferred tax on other comprehensive income 23 -109
Sum -104 207
Comprehensive income for the year 4,260 6,513

Net income attributable to:

Owners of the parent 6,330 4,503
Non-controlling interests 51 66
Earnings per share (SEK) 15.31 10.89
Average number of shares* 413,326,315 413,637,227

Comprehensive income attributable to:

Owners of the parent 4,224 6,427
Non-controlling interests 36 86

* Average number of shares has been impacted by repurchase of shares.

Financial statements 119

Comments to the consolidated
comprehensive income
For comments on the individual lines in the consolidated comprehensive In order to illustrate the quarterly development, the last 12 quarters are
income statement, reference is made to Notes 1 to 16 and Notes 34, 36 shown below for four of the parameters in the income analysis:
and 38. For comments on the operating segments, see Note 1.
As a basis for comments on the various main items of the consoli- Net sales & Adjusted gross margin
dated comprehensive income statement, please find a comparison be-
tween the last two years: BnSEK %

18 42
Income analysis
Consolidated 15 35

SEK millions 2023 2022

12 28
Net sales 63,598 52,135
Adjusted gross profit * 21,849 18,589 9 21

- adjusted gross margin (%) * 34.4 35.7

6 14
Expenses ** -10,069 -8,911
- in % of net sales 15.8 17.1 3 7
Adjusted EBITDA * 11,780 9,678
0 0
- adjusted EBITDA margin (%) * 18.5 18.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Depreciation -1,559 -1,449 2021 2022 2023
Adjusted EBITA * 10,221 8,229 Net sales Adjusted gross margin in %
- adjusted EBITA margin (%) * 16.1 15.8
Amortisation of step-up values -965 -943
Comparison distortion items – -767
Adjusted EBITA
Operating income 9,256 6,519

BnSEK %
* Alternative performance measures. ** Excluding comparison distortion items.

3,0 20
The gross profit margin has been negatively affected by under-absorption in
manufacturing units where demand has shifted quickly and negative material
2,4 16
and currency hedges. Some of these negative impacts are offset by net
positive mix effects that are further reinforced by the increase of invoicing.
Sales and administration expenses amounted to SEK 9,222 (7,939) 1,8 12

million, which corresponded to 14.5 (15.2) percent of net sales. Excluding

currency effects and acquisition/divestment of businesses, sales and 1,2 8
administration expenses were 7.8 percent higher than last year.
The costs for research and development have amounted to SEK 1,563 0,6 4
(1,356) million, corresponding to 2.5 (2.6) percent of net sales. Excluding
currency effects and acquisition/divestment of businesses, the costs for re- 0,0 0
search and development have increased by 7.9 percent compared to last year. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Earnings per share was SEK 15.31 (10.89) for 2023. The corresponding 2021 2022 2023

figure excluding amortisation of step-up values and the corresponding Adjusted EBITA Adjusted EBITA margin in %
tax, was SEK 17.15 (12.78).

The changes that have impacted the development of adjusted EBITA

during the year are presented in the following table. Comparison distortion items
Income bridge Consolidated
Consolidated SEK millions 2023 2022
SEK millions 2023 2022 Other operating costs
Adjusted EBITA last year 8,229 7,114 Comparison distortion items:
Volume 1) 3,157 2,684 - Provision for financial consequences of
Mix 1) -518 -582 Russia's war on Ukraine – -400

Costs 1) -854 -1,545 - Restructuring costs – -367

Currency 207 558 Net comparison distortion items – -767

Adjusted EBITA current year 10,221 8,229

The comparison distortion items during 2022 were relating to costs
1)
Change excluding currency effects. triggered by Russia’s war on Ukraine and for a restructuring project for
parts of the Marine Division and the Business Unit for Welded Heat
Exchangers in the Energy Division.

120 Financial statements

Consolidated financial net and taxes
The financial net for 2023 was SEK -337 (-219) million, excluding realised and unrealised exchange rate losses and gains. The main elements of costs
were interest on the debt to the banking syndicate of SEK -26 (-18) million, interest on the bilateral term loans of SEK -132 (-20) million, interest on
the corporate bonds of SEK -125 (-127) million, interest on the commercial paper programme of SEK -16 (-10) and a net of dividends, changes in fair
value and other interest income and interest costs of SEK -38 (-44) million.
The net of realised and unrealised exchange rate differences was SEK -269 (-121) million.
The tax on the result after financial items was SEK -2,269 (-1,610) million in 2023.

Accumulated translation differences *

Consolidated

SEK millions

Financial statements
Pre-tax effect on change
Year Main explanation to translation differences Change Accumulated by hedging measures
Formation of the Group
2000 The EUR was appreciated by 6 %, which
affected the EUR based acquisition loans -94 -94 -312
2001 The USD was appreciated by 10.7 % 97 3 -105
2002 The USD was depreciated by 16.7 % -190 -187 165
2003 The USD was depreciated by 17.5 % -38 -225 195
2004 The USD was depreciated by 9.0 % -103 -328 -19
2005 The USD was appreciated by 20.3 %
and the EUR was appreciated by 4.8 % 264 -64 -65
2006 The USD was depreciated by 13.5 %
and the EUR was depreciated by 4.0 % -269 -333 56
2007 The USD was depreciated by 5.7 %
whereas the EUR was appreciated by 4.7 % 224 -109 13
2008 The USD was appreciated by 20.5 %
and the EUR was appreciated by 16.2 % 850 744 -468
2009 The USD was depreciated by 7.5 %
and the EUR was depreciated by 6.0 % -392 352 220
2010 The USD was depreciated by 5.7 %
and the EUR was depreciated by 12.9 % -554 -202 99
2011 The USD was appreciated by 1.4 %
whereas the EUR was depreciated by 0.8 % -254 -456 34
2012 The USD was depreciated by 5.8 %
and the EUR was depreciated by 3.6 % -798 -1,254 214
2013 The USD was appreciated by 0.3 %
and the EUR was appreciated by 4.1 % 39 -1,215 -83
2014 The USD was appreciated by 20.5 %
and the EUR was appreciated by 6.3 % 439 -776 -1,033
2015 The USD was appreciated by 6.6 %
whereas the EUR was depreciated by 4.0 % -1,056 -1,832 301
2016 The USD was appreciated by 8.6 %
and the EUR was appreciated by 4.6 % 1,882 50 -643
2017 The USD was depreciated by 9.4 %
whereas the EUR was appreciated by 2.8 % -1,339 -1,289 -207
2018 The USD was appreciated by 8.8 %
and the EUR was appreciated by 4.2 % 641 -648 -571
2019 The USD was appreciated by 4.2 %
and the EUR was appreciated by 2.1 % 632 -16 -288
2020 The USD was depreciated by 12.2 %
and the EUR was depreciated by 3.7 % -2,454 -2,470 313
2021 The USD was appreciated by 10.2 %
and the EUR was appreciated by 1.5 % 1,681 -789 -165
2022 The USD was appreciated by 15.6 %
and the EUR was appreciated by 8.9 % 1,872 1,083 -946
2023 The USD was depreciated by 4.5 %
and the EUR was depreciated by 0.9 % -2,040 -957 89

* Reported against other comprehensive income. Prior to 2009 these translation differences were reported against equity.

Financial statements 121

Consolidated financial position

ASSETS

SEK millions Note 2023 2022

Non-current assets
Intangible assets 17, 18
Patents and unpatented know-how 2,376 2,633
Trademarks 1,438 1,978
Licenses, renting rights and similar rights 113 18
Internally generated intangible assets 626 530
Goodwill 25,069 26,258
29,622 31,417
Property, plant and equipment 17, 19
Real estate 3,339 3,611
Machinery and other technical installations 2,734 2,423
Equipment, tools and installations 1,150 1,058
Construction in progress and advances to suppliers
concerning property, plant and equipment 2,090 1,089
Right-of-use assets 2,456 2,529
11,769 10,710
Other non-current assets
Other long-term securities 13, 14, 20 542 475
Pension assets 27 239 201
Derivative assets 13, 14, 15 167 95
Deferred tax assets 16 1,720 1,895
2,668 2,666

Total non-current assets 44,059 44,793

Current assets
Inventories 21 14,950 14,775

Assets held for sale 19 59 100

Current receivables
Accounts receivable 13, 22, 36 10,282 9,717
Current tax assets 811 763
Other receivables 13, 23 5,372 5,338
Prepaid costs and accrued income 13, 24 578 495
Derivative assets 13, 14, 15 314 605
17,357 16,918
Current deposits
Other current deposits 13, 25 728 311

Cash and cash equivalents 13, 26 5,135 4,352

Total current assets 38,229 36,456

TOTAL ASSETS 82,288 81,249

122 Financial statements

Consolidated financial position, continued
EQUITY AND LIABILITIES

SEK millions Note 2023 2022

Equity
Attributable to owners of the parent
Share capital 1,117 1,117

Financial statements
Other contributed capital 2,770 2,770
Other reserves -1,910 196
Retained earnings 35,056 31,299
37,033 35,382

Attributable to non-controlling interests 12 345 322

Total equity 37,378 35,704

Non-current liabilities
Liabilities to credit institutions etc 13, 29 9,829 13,362
Lease liabilities 13, 35 1,473 1,549
Provisions for pensions and similar commitments 27 1,090 1,192
Provision for deferred tax 16 2,372 2,293
Other provisions 28 337 450
Derivative liabilities 13, 14, 15 53 140
Total non-current liabilities 15,154 18,986

Current liabilities

Other current liabilities

Liabilities to credit institutions etc 13, 29 3,444 1,700
Advances from customers 7,975 6,634
Accounts payable 13 4,871 4,891
Notes payable 13 334 423
Current tax liabilities 989 893
Lease liabilities 13, 35 1,128 1,122
Other liabilities 13, 30 6,096 5,269
Other provisions 28 1,757 2,164
Accrued costs and prepaid income 13, 31 2,636 2,770
Derivative liabilities 13, 14, 15 526 693
Total current liabilities 29,756 26,559

Total liabilities 44,910 45,545

TOTAL EQUITY AND LIABILITIES 82,288 81,249

Financial statements 123

Comments on the consolidated financial position
For comments on the individual lines in the statement on financial position, Return on equity
reference is made to Notes 12 to 36. For comments on the operating Net income in relation to the average equity was 17.6 (13.5) percent
segments, see Note 1. during the year.

Capital employed Solidity

The average capital employed including goodwill and step-up values The solidity, that is the equity in relation to total assets, was 45.4 (43.9)
amounted to SEK 48,753 (43,060) million during the year. percent at the end of the year.

Return on capital employed Net debt

The return on average capital employed including goodwill and step-up The net debt was SEK 10,011 (13,070) million at the end of the year.
values amounted to 21.0 (17.3) percent during the year.
Net debt to EBITDA
Capital turnover rate Net debt in relation to EBITDA was 0.85 (1.47) times at the end of December.
The capital turnover rate calculated on the average capital employed including
goodwill and step-up values amounted to 1.3 (1.2) times for the year. Debt ratio
The debt ratio, that is the net debt in relation to equity, was 0.27 (0.37)
times at the end of December.

Changes in consolidated equity

Changes in consolidated equity
Attributable to: Owners of the parent Non-controlling interests Total
Other reserves
Other
Share contributed Cash flow Market valuation Translation Retained Translation Retained
SEK millions capital capital hedges of external shares differences Revaluations earnings Subtotal differences earnings Subtotal

As of December 31, 2021 1,117 2,770 148 217 -808 -1,285 29,937 32,096 28 220 248 32,344
2022
Comprehensive income
Net income – – – – – – 4,503 4,503 – 66 66 4,569
Other comprehensive income – – -276 -41 1,993 248 – 1,924 20 – 20 1,944
Comprehensive income – – -276 -41 1,993 248 4,503 6,427 20 66 86 6,513
Transactions with shareholders

Repurchase of shares – – – – – – -661 -661 – – – -661

Cancellation of repurchased shares -15 – – – – – 15 – – – – –

Bonus issue of shares without
issuing any new shares 15 – – – – – -15 – – – – –
Non-controlling interests in
acquired companies – – – – – – – – – 0 0 0

Dividends to owners of the parent – – – – – – -2,480 -2,480 – – – -2,480

Dividends to non-controlling
interests – – – – – – – – – -12 -12 -12
As of December 31, 2022 1,117 2,770 -128 176 1,185 -1,037 31,299 35,382 48 274 322 35,704
2023
Comprehensive income
Net income – – – – – – 6,330 6,330 – 51 51 6,381
Other comprehensive income – – 45 -2 -2,047 -102 – -2,106 -15 – -15 -2,121
Comprehensive income – – 45 -2 -2,047 -102 6,330 4,224 -15 51 36 4,260
Transactions with shareholders
Cancellation of repurchased shares -1 – – – – – 1 – – – – –
Bonus issue of shares without
issuing any new shares 1 – – – – – -1 – – – – –
Decrease of non-controlling interests – – – – – – -93 -93 – -27 -27 -120
Non-controlling interests in acquired
companies – – – – – – – – – 32 32 32
Dividends to owners of the parent – – – – – – -2,480 -2,480 – – – -2,480
Dividends to non-controlling
interests – – – – – – – – – -18 -18 -18
As of December 31, 2023 1,117 2,770 -83 174 -862 -1,139 35,056 37,033 33 312 345 37,378

124 Financial statements

Specification of changes in number of shares and share capital
Change in Total share
Change in Total number of share capital capital SEK
Year Event Date number of shares shares SEK millions millions
2000 Company formation March 27, 2000 10,000,000 10,000,000 0.1 0.1
New issue of shares August 24, 2000 27,496,325 37,496,325 0.3 0.4
2002 Bonus issue of shares May 3, 2002 37,496,325 74,992,650 0.4 1
Bonus issue of shares May 16, 2002 – – 749 750

Financial statements
New issue of shares May 16, 2002 3,712,310 78,704,960 37 787
New issue of shares May 17, 2002 32,967,033 111,671,993 330 1,117
2008 Cancellation of repurchased shares May 27, 2008 -4,323,639 107,348,354 -43
Bonus issue of shares May 27, 2008 – 107,348,354 43 1,117
Split 4:1 June 10, 2008 322,045,062 429,393,416 – 1,117
2009 Cancellation of repurchased shares July 9, 2009 -7,353,950 422,039,466 -19
Bonus issue of shares July 9, 2009 – 422,039,466 19 1,117
2011 Cancellation of repurchased shares May 16, 2011 -2,583,151 419,456,315 -7
Bonus issue of shares May 16, 2011 – 419,456,315 7 1,117
2022 Cancellation of repurchased shares May 16, 2022 -5,579,492 413,876,823 -15
Bonus issue of shares May 16, 2022 – 413,876,823 15 1,117
2023 Cancellation of repurchased shares May 15, 2023 -550,508 413,326,315 -1
Bonus issue of shares May 15, 2023 – 413,326,315 1 1,117

Comments on changes in consolidated equity

The articles of association of Alfa Laval AB (publ) state that the share The articles of association stipulate that members of the Board are elected
capital should be between SEK 745,000,000 and 2,980,000,000 and at the Annual General Meeting. Election or discharge of members of the
that the number of shares should be between 298,000,000 and Board is otherwise regulated by the provisions in the Swedish Companies
1,192,000,000. Act and the Swedish Corporate Governance Code. According to the
At January 1, 2023 the share capital of SEK 1,116,719,930 was divided Companies Act changes in the articles of association are decided at
into 413,876,823 shares. At the Annual General Meeting 2023, 550,508 general meetings of shareholders.
shares have been cancelled, which decreased the share capital with The senior credit facility with the banking syndicate and the corporate
1,485,377. At the same time a bonus issue was made with the same bonds each contain conditions that give the lenders the opportunity to
amount without issuing any new shares, which restored the size of the terminate the loans and declare them due and payable if there is a
share capital. At the end of the year the share capital of SEK 1,116,719,930 change of control of the company through an acquisition of more than
was divided into 413,326,315 shares. 50 and 30 percent respectively of the total number of shares.
The company has only issued one type of shares and all these have The possibilities to distribute unappropriated profits from foreign
equal rights. There are no restrictions in law or in the articles of association subsidiaries are limited in certain countries due to local legislation.
in the negotiability of the shares. These limitations are not material. The limitations relate to:
The only shareholder holding more than 10 percent of the shares is Winder
Holding AG, Switzerland (formerly Tetra Laval International SA, Switzerland), – the existence of general restrictions concerning restricted equity in
who owns 29.5 (29.5) percent. The employees of the company do not many countries,
own any shares in the company through company pension trusts.
– that subsidiaries in for instance China and India cannot take up loans
No restrictions exist in how many votes that each shareholder can
to pay dividends, which limits the size of the dividends and
represent at a general meeting of shareholders. The company has no
knowledge of any agreements between shareholders that would limit – rules on interest deduction limitations and thin capitalisation in many
the negotiability of their shares. countries, for instance the U.S., Denmark and Norway limit the possi-
bilities for these countries to increase debt to pay dividends.

Financial statements 125

Parent company cash flows

SEK millions 2023 2022
Cash flow from operating activities
Operating income -17 -13

Taxes paid -244 -307

-261 -320
Changes in working capital:
Increase(-)/decrease(+) of receivables -2,058 1,430
Increase(+)/decrease(-) of liabilities 5 8
Increase(-)/decrease(+) in working capital -2,053 1,438

-2,314 1,118
Cash flow from investing activities
Investment in subsidiaries – –
– –
Cash flow from financing activities
Received interests 252 44
Repurchase of shares – -661
Received dividends from subsidiaries 4,037 62
Paid dividends -2,480 -2,480
Received group contribution 510 1,896
Paid group contribution -1 0
2,317 -1,139

Cash flow for the year 3 -21

Cash and cash equivalents at the beginning of the year – 21
Cash and cash equivalents at the end of the year 3 –

Parent company income

Parent company income *
SEK millions 2023 2022
Administration costs -14 -14
Other operating income 1 2
Other operating costs -4 -1
Operating income -17 -13

Dividends from subsidiaries 4,037 62

Interest income and similar result items 252 46
Interest expenses and similar result items -1 0
Result after financial items 4,271 95

Change of tax allocation reserve -48 578

Group contributions 1,314 509
Result before tax 5,537 1,182
Tax on this year's result -271 -241
Net income for the year 5,266 941

* The parent company income statement also constitutes its comprehensive income statement.

126 Financial statements

Parent company financial position

SEK millions Note 2023 2022
ASSETS
Non-current assets
Financial non-current assets
Shares in group companies 20 4,669 4,669

Financial statements
Current assets
Current receivables
Receivables on group companies 9,266 6,402
Current tax assets 112 139
Other receivables 4 2
9,382 6,543

Cash and cash equivalents 3 –

Total current assets 9,385 6,543

TOTAL ASSETS 14,054 11,212

EQUITY AND LIABILITIES

Equity
Restricted equity
Share capital 1,117 1,117
Statutory reserve 1,270 1,270
2,387 2,387
Unrestricted equity
Profit brought forward 4,027 5,566
Net income for the year 5,266 941
9,293 6,507

Total equity 11,680 8,894

Untaxed reserves
Tax allocation reserve, taxation 2018 – 391
Tax allocation reserve, taxation 2019 698 698
Tax allocation reserve, taxation 2020 614 614
Tax allocation reserve, taxation 2021 99 99
Tax allocation reserve, taxation 2022 491 491
Tax allocation reserve, taxation 2024 439 –
2,341 2,293
Current liabilities
Liabilities to group companies 30 22
Accounts payable 0 1
Other liabilities 3 2
33 25

TOTAL EQUITY AND LIABILITIES 14,054 11,212

Financial statements 127

Changes in parent company equity

SEK millions Share capital Statutory reserve Unrestricted equity Total

As of December 31, 2021 1,117 1,270 8,707 11,094

2022

Comprehensive income

Net income – – 941 941

– – 941 941

Transactions with shareholders

Repurchase of shares – – -661 -661

Cancellation of repurchased shares -15 – 15 –

Bonus issue of shares 15 – -15 –

Dividends – – -2,480 -2,480

As of December 31, 2022 1,117 1,270 6,507 8,894

2023

Comprehensive income

Net income – – 5,266 5,266

– – 5,266 5,266

Transactions with shareholders

Cancellation of repurchased shares -1 – 1 –

Bonus issue of shares 1 – -1 –

Dividends – – -2,480 -2,480

As of December 31, 2023 1,117 1,270 9,293 11,680

The share capital of SEK 1,116,719,930 (1,116,719,930) is divided among 413,326,315 (413,876,823) shares.

128 Financial statements

Notes to the financial statements

Material accounting principles

The accounting principles mentioned below are only the ones that are to IAS 19 ”Employee Benefits”. This means that the plan assets are valued
material for the parent company and the consolidated group. at fair value and that the present value of the benefit obligations in the
defined benefit plans is decided through yearly actuarial calculations
Basis of preparation made by independent actuaries. If the value of the plan assets starts to
The consolidated financial statements have been prepared on a historical decrease at the same time as the actuarial assumptions increase the
cost basis, except for certain financial instruments including derivatives benefit obligations the combined effect could result in a substantial deficit.
that are valued at fair value. The statements are presented in SEK millions, The monetary magnitude comes from the fact that the deficit is the dif-
unless otherwise stated. ference between two large numbers. The effect on profit and loss however
only affects other comprehensive income and not net income. The risk has
Statement of compliance been limited since many of these defined benefit schemes are closed for
Alfa Laval applies International Financial Reporting Standards (IFRS) new participants and replaced by defined contribution schemes.
as adopted by the European Union. Furthermore, recommendation RFR 1 The Group’s reporting of provisions according to IAS 37 means that
”Supplementary accounting principles for consolidated groups” from the SEK 2,094 (2,614) million is reported as other provisions. This constitutes
Council for Financial Reporting in Sweden is applied. Alfa Laval follows 2.5 (3.2) percent of the Group’s assets and is important for the assessment
the Guidelines on Alternative Performance Measures issued by ESMA of the Group’s financial position, not the least since provisions normally are
(European Securities and Markets Authority). based on judgements of probability and estimates of costs and risks. If the
The accounting and valuation principles of the parent company comply accounting principles for provision would be changed sometime in the future,
with the Swedish Annual Accounts Act and the recommendation RFR 2 this could have a substantial impact on the Group’s financial position.
”Accounting for legal entities” issued by the Council for Financial
Reporting in Sweden. Key sources of estimation uncertainty

Accounting principles
The key source of estimation uncertainty is related to the impairment
Changed/implemented accounting principles test of goodwill, since the testing is based on certain assumptions
The company has chosen to only comment the changed accounting concerning future cash flows. See the section on critical accounting
principles that are material for the company’s financial reporting. During principles above for further details.
2023 the changed rules concerning deferred tax related to assets and
liabilities arising from a single transaction been implemented. This relates Judgements
to the accounting for a right-of-use asset and a corresponding lessee liability In applying the accounting policies Management has made various
in connection with a lease. The deferred tax is to be calculated separately judgements, apart from those involving estimations, that can significantly
for the asset and the liability and be reported gross in the notes but reported affect the amounts recognised in the financial statements. These judge-
net in the statement of financial position. The size of the deferred tax asset ments mainly relate to:
and liability can be seen in note 16. In addition, the new rules on disclosure
of accounting policies in IAS 1 Presentation of Financial Statements have – probability in connection with business risks;
been implemented, which has meant that the section on accounting policies – the probable outcome of claims;
has been reduced. The description of material accounting policies and
– the probable outcome of litigations;
accounting policies where Alfa Laval has made a choice according to
the rules of the standards has however been kept. –d
etermination of percentage of completion in contracts with customers
During 2022 no changed accounting principles were implemented. recognised over time;
– recoverability of accounts receivable;
Alternative Performance Measures – obsolescence in inventory; and
In the annual report, alternative performance measures are used. See
– classification of financial instruments.
page 190 for definitions. Alfa Laval follows the Guidelines on Alternative
Performance Measures issued by ESMA (European Securities and
Markets Authority).
Business combinations - consolidation principles
The consolidated financial statements include the parent company Alfa
Laval AB (publ) and the subsidiaries in which it has a decisive influence.
Critical accounting principles
The statement on consolidated financial position has been prepared
IFRS 3 ”Business Combinations” means that goodwill and intangible
in accordance with the purchase method, which means that the book
assets with indefinite useful life are not amortised. They are instead
value of shares in the subsidiaries is eliminated from the reported equity
tested for impairment both annually and when there is an indication.
in the subsidiaries at the time of their acquisition. This means that the
The effect of IFRS 3 can be considerable for the Group if the profitability
equity in the subsidiaries at the time of acquisition is not included in the
within the Group or parts of the Group goes down in the future, since this
consolidated equity.
could trigger a substantial impairment write down of the goodwill according
The difference between the purchase price paid and the net assets
to IAS 36 “Impairment of Assets”. Such a write down will affect net income
of the acquired companies is allocated to the step-up values related to
and thereby the financial position of the Group. The reported goodwill is
each type of asset, with any remainder accounted for as goodwill.
SEK 25,069 (26,258) million at the end of the year. No intangible assets
During the first 12 months after the acquisition the value of the good-
with indefinite useful life other than goodwill exist.
will is often preliminary. The reason for this is that experience has shown
The Group has defined benefit plans, which are reported according

Accounting principles 129

that there is some uncertainty linked to the different components of the below this down to comprehensive income in a separate statement.
purchase price allocation concerning: Other comprehensive income is referring to items that are not trans-
actions with shareholders and relates to for instance cash flow hedges,
– primarily the calculation of the allocation to different intangible step-up market valuation of external shares, translation differences and revaluations
values, that are dependent on different judgemental questions and and deferred tax related to these.
estimations;
– the calculation of tangible step-up values, that are dependent on external Employee benefits
market valuations, which can extend in time before they can be finalised; Employee benefits are reported according to IAS 19 ”Employee Benefits”.
The present value of the benefit obligations in the defined benefit plans
– adjustments of the purchase price contingent on contractual terms,
is decided through yearly actuarial calculations made by independent
that are dependent on the final size of the operating capital at the
actuaries. The plan assets are valued at fair value. The net plan asset or
acquisition date, once this has been audited and the outcome has
liability is arrived at in the following way.
been approved by the parties; and
– the final value of the acquired equity, which is also dependent on the + the present value of the defined benefit obligation at December 31
audit of the acquired closing balance sheet.
- the fair value of the plan assets at December 31

Since the goodwill is a residual that emerges once all other parameters in = a net liability if positive / a net asset if negative
the purchase price allocation have been established, it will be preliminary
and open for changes until all other values are final. If the calculation per plan gives a negative amount, thus resulting in an
At acquisitions where there is a goodwill it should be stated what the asset, the amount to be recognised as an asset for this particular plan is
goodwill is relating to. Since goodwill by definition is a residual, this is the lower of the two following figures:
not always that easy. Generally speaking, the goodwill is usually relating
to estimated synergies in procurement, logistics and corporate overheads. – The above net negative amount.
It can also be claimed that the goodwill is relating to the acquired entity’s – The present value of any economic benefits available in the form of
ability to over time recreate its intangible assets. Since the value of the refunds from the plan or reductions in future contributions to the plan.
intangible assets at the time of acquisition only can be calculated on the This is referred to as the asset ceiling.
assets that exist then, no value can be attached to the patents etc. that
the operations manage to create in the future partially as a replacement The items that relate to the vesting of defined benefit pensions and gains
for the current ones and these are therefore referred to goodwill. and losses that arise when settling a pension liability and the financial
Goodwill and intangible assets with indefinite useful life are not am- net concerning the defined benefit plan are reported in the income
ortised. These assets are instead tested for impairment both annually statement above net income. Past service costs are recognised in the
and when there is an indication. The impairment test is made according income statement already when the plan is amended or curtailed.
to IAS 36 “Impairment on assets”. Actuarial gains and losses are accounted for currently in other com-
Transaction costs are reported in net income. If the value of an additional prehensive income. Changes in the obligations that relate to changes in
purchase price is changed the change is reported in net income. In business actuarial assumptions are accounted for in other comprehensive income.
combinations achieved in stages the goodwill is calculated and valued None of these actuarial items will ever be reported in operating income
when the acquirer obtains control over a business. If the acquirer previously but will instead remain in other comprehensive income.
has reported an equity interest in the company the accumulated change The return on plan assets is calculated with the same interest rate as
in value of the holding is recognised in net income at the acquisition date. the discount rate. The difference between the actual return on plan assets
Changes in holdings in subsidiaries, where the majority owner does not and the interest income in the previous sentence is reported in other
lose its decisive influence, are reported in equity. This means that these comprehensive income.
transactions no longer will generate goodwill or lead to any gains or losses. The difference between short and long-term remunerations focuses
In addition, the transaction will result in a transfer between owners of on when the commitment is expected to be settled rather than the link
the parent and non-controlling interests in equity. If the non-controlling to the employee’s vesting of the commitment.
interest’s share of reported losses is higher than its reported share of the Termination benefits are accounted for at the earliest of the following
equity, a negative non-controlling interest is reported. – the time when the benefit offer cannot be withdrawn, alternatively in
accordance with IAS 37 as a part of for instance restructuring the operations.
Comparison distortion items For Swedish entities the actuarial calculations also include future
Items that do not have any link to the normal operations of the Group or payments of special salary tax. The Swedish tax on returns from pension
that are of a non-recurring nature are classified as comparison distortion funds is reported currently as a cost in the profit and loss and are not in-
items. In the consolidated comprehensive income statement these are cluded in the actuarial calculation for defined benefit pension plans.
reported gross as a part of the most concerned lines but are specified The discount rate used to calculate the obligations is determined
separately in Note 8. To report these together with other items in the based on the market yields in each country at the closing date on high
consolidated comprehensive income statement without this separate quality corporate bonds with a term that is consistent with the estimated
reporting in a note would have given a comparison distortion effect that term of the obligations. In countries that lack a deep market in such
would have made it difficult to judge the development of the ordinary bonds the country’s government bonds are used instead.
operations for an outside viewer. Comparison distortion items affecting The costs for defined contribution plans are reported in Note 6.
operating income are reported as a part of operating income, while The Swedish ITP plan is a multi-employer plan insured by Alecta. It is
comparison distortion items affecting the result after financial items are a defined benefit plan, but since the plan assets and liabilities cannot
reported as a part of the financial net. be allocated on each employer it is reported as a defined contribution
plan according to item 30 in IAS 19. The construction of the plan does
Comprehensive income not enable Alecta to provide each employer with its share of the assets
Alfa Laval has chosen to report the items in other comprehensive income and liabilities or the information to be disclosed. The cost for the plan is
as a part of one statement over comprehensive income instead of reporting reported together with the costs for other defined contribution plans in
the result down to net income for the year in one statement and the result Note 6. Alecta reported a collective consolidation level at December 31,

130 Accounting principles

2023 of 178 (172) percent. The collective consolidation level is defined The fair values of holdings of bonds are arrived at using market prices
as the fair value of Alecta’s plan assets in percent of the insured pension according to level 1. The effect of the measurement at fair value is reported
commitments calculated according to Alecta’s actuarial assumptions, in net income. The fair value adjustment of these instruments is reflected
which are not in accordance with IAS 19. Such a surplus can be distributed directly on the item bonds in the statement of financial position.
among the employers or the beneficiaries, but there is no agreement The fair values of shares in external companies are arrived at using
concerning this that enables the company to report a receivable on Alecta. market prices according to level 1 or other inputs according to level 2.
The effect of the measurement at fair value is reported in other com-
Financial instruments prehensive income. The fair value adjustment of these instruments is
The reporting of financial instruments is governed by the following four reflected directly on the item other long-term securities in the statement
accounting and financial reporting standards: of financial position.
The fair values of the Group’s currency forward contracts, currency
– IFRS 9 ”Financial Instruments”; options, interest-rate swaps, metal forward contracts and electricity futures
– IAS 32 “Financial Instruments: Presentation”; are arrived at using market prices according to level 2. The fair value
changes are arrived at by comparing the conditions of the derivative
– IFRS 7 “Financial Instruments: Disclosures”; and
entered into with the market price for the same instrument at the closing
– IFRS 13 “Fair Value Measurement”. date and with the same maturity date. The effect of the measurement
at fair value is reported in other comprehensive income if the derivative
IFRS 9 means that the company’s business model and the characteristics constitutes an effective cash flow hedge and otherwise on the concerned
of the asset influence the classification and measurement of financial assets. line above net income. The fair value adjustment of these instruments is
Debt instruments are all financial instruments except derivatives and reported as derivative assets or derivative liabilities in the statement of
shares. The company´s purpose with holding a debt instrument is called financial position. The derivative assets or derivative liabilities are split
its business model. Depending on what business model a company is into a current and a non-current part depending on if the derivatives
using for managing its debt instruments the accounting treatment is mature within 12 months or after 12 months.
different. The following business models exist in IFRS 9: For each class of financial instruments disclosures shall be made on
credit risk and an analysis of financial assets that are past due or impaired.
– Held to collect – the debt instrument is held to maturity to collect the Within Alfa Laval credit risk is in reality mainly related to accounts receivable.
contracted cash flows (interest and principal). The disclosures just mentioned are therefore to be found in Note 22.
– Trading – the company trades with the debt instruments. IFRS 9 has a model for expected credit losses. It is a three steps
– Mixed model – a mix of the two above models. model that reflects changes in the credit risk. The steps are:

Accounting principles
Alfa Laval business model for managing its debt instruments is “Held to 1. Recorded at inception (normally an historical experience-based
collect”. This classification does not mean that we occasionally cannot percentage);
sell debt instruments before maturity even for large amounts or that we 2. For credit risks that have increased significantly since initial recognition
regularly cannot sell many small debt instruments before maturity. (the credit risk has increased significantly if the receivable is more than
Financial derivatives, holdings of bonds and external shares are ad- 30 days overdue; otherwise based on indications of the customer
justed to fair value. having payment difficulties or financial weakness); and
Both financial assets and financial liabilities are classified into three 3. Related to objective evidence of impairment (incurred losses).
different portfolios:
The model results in a provision for bad debts. Only at a final loss the
– Valued at fair value through profit or loss; receivable is written off.
– Valued at fair value through other comprehensive income and
– Valued at amortised cost. Government grants
Government grants are recognised in profit and loss over the same periods
The classification into different portfolios reflects the valuation of the in- as the costs the grants are intended to compensate for. The grants are
struments, i.e. if the instrument is valued at fair value or amortised cost recognised in the income statement as a deduction of these costs.
and also where in the statement of consolidated comprehensive income
that the valuation to fair value is reported. Group contributions to and from the parent company
The amortised cost is normally equal to the amount recognised upon The parent company is accounting for group contributions according to
initial recognition, less any principal repayments and plus or minus any the alternative rule in RFR 2 issued by the Council for Financial
effective interest adjustments. Reporting in Sweden. This means that both received and given group
Prepaid costs, prepaid income and advances from customers are not contributions are reported as appropriations in the income statement.
defined as financial instruments since they will not result in future cash flows.
Disclosures must be made on the methods and, when a valuation Hedge accounting
technique is used, the assumptions applied in determining the fair value Alfa Laval applies two types of hedge accounting: cash flow hedges
of each class of financial assets and liabilities. The methods are to be and hedges of net investments in foreign operations.
classified in a hierarchy of three levels:
Cash flow hedges
1. Quoted prices in active markets; Alfa Laval has implemented documentation requirements to qualify for
hedge accounting on derivative financial instruments.
2. Other inputs than quoted prices that are directly observable (prices)
The effect of the fair value adjustment of derivatives is reported as a
or indirectly observable (derived from prices); and
part of other comprehensive income for the derivatives where hedge ac-
3. Unobservable market data. counting is made (according to the cash flow hedging method) and
above net income only when the underlying transaction has been re-
alised. Hedge accounting requires the derivative to be appropriate and
expected to be effective regarding the identified risks.

Accounting principles 131

For the derivatives where hedge accounting is not made the fair value valua- In connection with the upcoming implementation of the Pillar II reporting,
tion is reported above net income. The fair value adjustment of derivatives is the loss carry-forwards in the Group’s companies will be taken into ac-
reported separately from the underlying instrument as a separate item called count irrespectively of the companies earning capability in accordance
derivative assets/derivative liabilities in the statement of financial position. with the Pillar II regulations.
The Group is continuing to assess the impact of the Pillar II income
Hedges of net investments in foreign operations taxes legislation on its future financial performance.
In order to finance acquisitions of foreign operations loans are raised, if
possible, in the same currency as the net investment. The loans thereby Inventories
constitute a hedge of the net investment in each currency. Exchange The Group’s inventory has been accounted for after elimination of inter-
rate differences relating to these loans are therefore booked to other company gains. The inventory has been valued according to the “First-
comprehensive income. In-First-Out” (FIFO) method at the lowest of cost or net realisable value,
taking into account obsolescence.
Income Taxes This means that raw material and purchased components normally
Current tax is the amount of income taxes payable (recoverable) in respect are valued at the acquisition cost, unless the market price has fallen.
of the taxable profit (tax loss) for a period. Current tax liabilities (receivables) Work in progress is valued at the sum of direct material and direct labour
for the current and prior periods are measured at the amount expected costs with a mark-up for the product’s share in capital costs in the man-
to be paid to (recovered from) the tax authorities, using the tax rates (and ufacturing and other indirect manufacturing costs based on a forecasted
tax laws) that have been enacted or substantively enacted by the closing assumption on the capacity utilisation in the factory. Finished goods are
date. In essence, this means that current tax is calculated according to normally valued at the delivery value (i.e. at cost) from the factory if the
the rules that apply in the countries where the profit was generated. delivery is forthcoming. Spare parts that can be in the inventory during
Deferred tax liabilities are the amounts of income taxes payable in future longer periods of time are normally valued at net realisable value.
periods in respect of taxable temporary differences. Deferred tax liabilities
are recognised for all taxable temporary differences, except for goodwill. Leasing
Deferred tax assets are the amounts of income taxes recoverable in Alfa Laval has decided to apply a practical expedient for leasing con-
future periods in respect of: (a) deductible temporary differences; (b) the tracts where the contract period is maximum 12 months or the leased
carry-forward of unused tax losses; and (c) the carry-forward of unused asset is of low value. With reference to the materiality rules in IAS 8.8,
tax credits. Deferred tax assets are recognised for all deductible temporary Alfa Laval has chosen to apply IFRS 16 for leases concerning buildings
differences to the extent that it is probable (>50 percent) that taxable and land, company cars and other vehicles, forklifts, large servers and
profit will be available against which the deductible temporary difference large printers. The present value for other leases is estimated to be non-
can be utilised. Deferred tax assets are recognised for the carry-forward material. The leasing fees for these leases are expensed as incurred.
of unused tax losses and unused tax credits to the extent that it is prob- Lease contracts can include both a leasing part and a service part.
able (>50 percent) that future taxable profit will be available against According to IFRS 16, the company in these cases can choose to separate
which the unused tax losses and unused tax credits can be utilised. them from each other and thus only recognise the leasing part in the balance
Deferred tax is booked related to temporary differences concerning sheet or capitalise the entire contract. Alfa Laval has chosen to exclude the
assets and liabilities arising from a single transaction. This relates to the service part from the lease accounting and it is instead expensed as before.
accounting for a right-of-use asset and a corresponding lessee liability When Alfa Laval is the lessee, leased assets are accounted for as right-
in connection with a lease. The deferred tax is to be calculated sepa- of-use assets and a corresponding financial payable to the lessor in the
rately for the asset and the liability and be reported gross in the notes statement on financial position. The leasing fee to the lessor is accounted
but reported net in the statement of financial position. The size of the for as financial cost calculated as interest on the outstanding payable
deferred tax asset and liability can be seen in note 16. and as amortisation of the payable. The right-of-use asset is depreciated
Deferred tax assets and liabilities are measured at the tax rates that are according to plan in the same manner as for purchased assets.
expected to apply to the period when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or Non-current assets (tangible and intangible)
substantively enacted by the closing date. Assets have been accounted for at cost, net after deduction of accumu-
If it is not any longer probable that sufficient taxable profits will be lated depreciation according to plan. Depreciation according to plan is
available against which a deferred tax asset can be utilised, then the based on the assets’ acquisition values and is calculated according to
deferred tax asset is reduced accordingly. the estimated useful life of the assets.

Pillar II Model Rules implications The following useful lives have been used:
The Group has applied the temporary exception issued by the IASB in Tangible:
May 2023 from the accounting requirements for deferred taxes in IAS
Computer programs, computers 3.3 years
12. Accordingly, the Group neither recognizes nor discloses information
Office equipment 4 years
about deferred tax assets and liabilities related to Pillar II income taxes.
Vehicles 5 years
Pillar II legislation has been enacted or substantively enacted in cer-
tain jurisdictions the Group operates. The legislation will be effective for Machinery and equipment 7–14 years
the Group’s financial year beginning 1 January 2024. The Group is in Land improvements 20 years
scope of the enacted legislation and has performed an assessment of Buildings 25–33 years
the Group’s potential exposure to Pillar II income taxes. Right-of-use assets depends on the lease term
The assessment of the potential exposure to Pillar II income taxes is based
Intangible:
on the most recent tax filings, country-by-country reporting, and financial
statements for the constituent entities in the Group. Based on the assessment, Patents and unpatented know-how 10–20 years
the Pillar II effective tax rates in most of the jurisdictions in which the Group Trademarks 10–20 years
operates are above 15 percent. However, there are a limited number of Licenses, renting rights and similar rights 10–20 years
jurisdictions where the transitional safe harbour relief does not apply and Internally generated intangible assets 5 years
the Pillar II effective tax rate is close to 15 percent. The Group does not
expect a material exposure to Pillar II income taxes in those jurisdictions.

132 Accounting principles

The depreciation is made according to the straight-line method. In measuring the provision:
Any additions to the purchase price in connection with investments in
non-current assets or acquisitions of businesses are amortised over the – risks and uncertainties are taken into account;
same period as the original purchase price. This means that the time
– the provisions are discounted, where the effect of the time value of
when the asset is fully depreciated is identical regardless of when pay-
money is material. When discounting is used, the increase of the provi-
ments are made. This is a reflection of the fact that the estimated useful
sion over time is recognised as an interest cost;
life of the asset is the same.
Upon sale or scrapping of assets, the results are calculated in relation – future events, such as changes in law and technology, are taken into
to the net book value after depreciation according to plan. The result on account where there is sufficient objective evidence that they will occur;
sales is included in operating income. and
– gains from the expected disposal of assets are not taken into account,
Impairment of assets even if the expected disposal is closely linked to the event giving rise to
When there are indications that the value of a tangible asset or an in- the provision.
tangible asset with a definite useful life has decreased, there is a valuation
made if it must be written down according to IAS 36 ”Impairment of If a reimbursement of some or all of the costs to settle a provision is ex-
Assets”. If the reported value is higher than the recoverable amount, a pected (e.g. through insurance contracts, indemnity clauses or supplier’s
write down is made that burdens net income. When assets are up for warranties), the reimbursement is recognised:
sale, for instance items of real estate, a clear indication of the recoverable
amount is received that can trigger a write down. – when and only when, it is virtually certain that the reimbursement will
Goodwill is not amortised but is instead tested for impairment both be received if the obligation is settled. The amount recognised for the
annually and when there is an indication. The impairment test is made reimbursement must not exceed the amount of the provision; and
according to IAS 36 ”Impairment on assets”. –a
s a separate asset (gross). In the consolidated comprehensive income
The recoverable amount for goodwill is determined from the value in statement, however, the income related to the reimbursement is netted
use based on discounted future cash flows. For other assets the recov- against the cost for the provision.
erable amount is normally determined from the fair value less costs to
sell based on an observable market price.
Provisions are reviewed at each closing date and adjusted to reflect the
For the impairment testing of goodwill, three of Alfa Laval’s operating
current best estimate. If it is no longer probable that a payment to settle
segments, the three business divisions “Energy”, “Food & Water” and
the obligation will be incurred, the provision is reversed.
”Marine” have been identified as the cash-generating units within Alfa

Accounting principles
A provision must only be used for the purpose it was originally recog-
Laval. Technically a recently acquired business activity could be followed
nised for. Provisions are not recognised for future operating losses. An
independently during an initial period, but acquired businesses are normally
expectation of future operating losses is though an indication that certain
integrated into the divisions at a fast rate. This means that the independent
assets of the operation may be impaired. If a contract is onerous, the
traceability is lost fairly soon and then any independent measurement and
present obligation under the contract is recognised and measured as a
testing becomes impracticable. The net present value is based on the
provision, once the assets used in order to finalize the contract have
projected EBITDA figures for the next five years, less projected investments
been tested for impairment.
and changes in operating capital during the same period and thereafter
A provision for restructuring costs is recognised only when the general
the perceived expected average industry growth rate. The used discount
recognition criteria are met. A constructive obligation to restructure
rate is the pre-tax weighted average cost of capital (WACC).
arises only when there is:
Other operating income and other operating costs
– a detailed formal plan for the restructuring, identifying at least:
Other operating income relates to for instance commission, royalty and
license income. Other operating costs refer mainly to restructuring costs a) the business or part of a business concerned;
and royalty costs. b) the principal locations affected;
Comparison distortion items that affect the operating income are re-
c) the location, function and approximate number of employees
ported in other operating income and other operating costs.
who will be compensated for terminating their services;

Provisions d) the costs that will be undertaken; and

The Group is applying IAS 37 ”Provisions, Contingent Liabilities and e) when the plan will be implemented; and
Contingent Assets” for the reporting of provisions, contingent liabilities
and contingent assets. – a valid expectation in those affected that the restructuring will be carried out.

A provision is recognised when and only when: A management or board decision to restructure does not give rise to a
constructive obligation at the closing date unless the company has,
– there is a present legal or constructive obligation as a result of past before the closing date:
events;
– it is probable that a cost will be incurred in settling the obligation; and – started to implement the restructuring plan; or
– a reliable estimate can be made of the amount of the obligation. – communicated the restructuring plan to those affected by it in a suf-
ficiently specific manner to raise a valid expectation in them that the
The amount recognised as a provision is the best estimate of the cost restructuring will happen.
required to settle the present obligation at the closing date.
When a restructuring involves the sale of an operation, no obligation
arises for the sale until the company is committed to the sale, i.e.
through a binding sales agreement.

Accounting principles 133

A restructuring provision only includes the direct costs arising from the – Alfa Laval creates or enhances an asset that the customer controls as
restructuring, which are those that are both: the asset is created or enhanced. This is normally the case when Alfa
Laval performs the work at the customer’s premises, which mainly re-
– necessarily entailed by the restructuring; and lates to installation/commissioning; or
– not associated with the ongoing activities of the company. – Alfa Laval’s performance does not create an asset with an alternative
use to Alfa Laval and Alfa Laval has an enforceable right to payment
for performance completed to date.
Research and development
Research costs are charged to the result in the year in which they are in- Alternative use to Alfa Laval means if Alfa Laval can sell the equipment
curred. Development costs are charged to the result in the year in which to another customer. The number of engineering hours spent by Alfa Laval
they are incurred provided that they do not fulfil the conditions for in- on making a product or process solution customer specific with a unique
stead being capitalised according to IAS 38 ”Intangible Assets”. configuration is a good indication of whether there is an alternative use to
Alfa Laval or not. As a practical expedient, only orders of more than EUR
Revenue recognition 1 million and with more than 200 engineering hours are recognised over time.
Revenue from contracts with customers and revenues from leasing are In order to establish the performance over time an output or input
reported as “Net sales” in the statement of consolidated comprehensive method is used. In Alfa Laval output methods are more applicable to
income. ”Net sales” are referring to sales value less sales taxes, cancel- service and component deliveries, whereas input methods are more
lations, late delivery fees and discounts. Contracts with customers relate applicable to projects and module sales. Depending on the nature of
to sale of goods, services and projects. the project, the following methods are used:
IFRS 15 ”Revenue from Contracts with Customers” covers how revenue
recognition on contracts with customers shall be made. Revenue recog- Input methods:
nition is based on five steps: – The proportion that the project costs incurred for work performed to
date bear to the estimated total project costs.
1. Identify the contract with a customer.
– Surveys of work performed.
2. Identify the performance obligations in the contract.
3. Determine the transaction price. Considering the type of projects that Alfa Laval companies are involved
4. Allocate the transaction price to the performance obligations in the in, the first method is usually the preferred.
contract.
Output methods:
5. Recognise revenue when the entity satisfies a performance obligation.
– Completion of a physical proportion of the performance obligations.
A performance obligation is a promise in a contract with a customer to
transfer to the customer either: If a performance obligation is not satisfied over time it is satisfied at a
point in time. To establish the point in time when the customer obtains
– a good or service (or a bundle of goods or services) that is distinct; or control of a promised asset and Alfa Laval satisfies a performance obli-
gation, the following control criteria must be considered:
– a series of distinct goods or services that are substantially the same
and that have the same pattern of transfer to the customer.
– Alfa Laval has a present right to payment for the asset.

Two or more contracts entered into at or near the same time with the – The customer has legal title to the asset.
same customer are accounted for as a single contract if: – The customer has physical possession of the asset.
– The customer has the significant risks and rewards of ownership of
– the contracts are negotiated as a package; and/or the asset.
– the amount of consideration to be paid in the contracts are linked to – The customer has accepted the asset.
each other; and/or
– the goods or services in the contracts are a single performance obligation. Alfa Laval uses a variety of delivery terms depending on the customers
preference, including Ex Works. Alfa Laval’s preference is to use DAP
A contract modification is treated as a separate contract if added products (Delivered At Place) or DDP (Delivered Duty Paid) since these gives
or services: Alfa Laval better control that the customer really receives the goods in
working order.
– are distinct; and It is common that Alfa Laval provides a warranty in connection with
– have a stand-alone selling price. the sale. The nature of the warranty can vary significantly across con-
tracts. Normally warranties provide a customer with assurance that the
Alfa Laval shall recognise the revenue when the performance obligation related product will function as the parties intended according to the
has been satisfied by transferring control over a promised good or service agreed-upon specifications. This is an assurance-type warranty. Alfa
to the customer. Laval’s warranties normally cover a 12 months’ period and are accounted
Performance obligations can be satisfied either over time or at a for as a provision.
point in time.
Alfa Laval transfers control of a good or service over time and, therefore, Operating segments
satisfies a performance obligation and recognises revenue over time, if IFRS 8 means that the reporting of operating segments must be made
one of the following criteria is met: according to how the chief operating decision maker monitors the opera-
tions, which may deviate from IFRS. Furthermore, information according
– the customer simultaneously receives and consumes the benefits provided to IFRS for the company as a whole must be given about products and
by Alfa Laval’s performance as Alfa Laval performs. This is normally services as well as geographical areas and information about major
the case for Alfa Laval’s service offerings; customers.

134 Accounting principles

Alfa Laval’s operating segments are the divisions. The chief operating
decision maker within Alfa Laval is its Board of Directors.
As from 2023 the alternative performance measure “Adjusted EBITA”
has been added in the follow-up per division. The reason is that
Adjusted EBITA is the most important performance measure used for
the consolidated Group. In order to show how it is arrived at, information
on amortisation has been added by division (operating income by divi-
sion less amortisation by division equals Adjusted EBITA by division).
The difference between the adjusted EBITA for the operating segments
and the adjusted EBITA for the company as a whole is explained by one
reconciliation item - consolidation adjustments.

Transactions in foreign currencies

Receivables and liabilities denominated in foreign currencies have been
valued at year-end rates of exchange.
Within the Group, exchange gains and losses on loans denominated
in foreign currencies that finance acquisitions of foreign subsidiaries are
transferred to other comprehensive income as foreign currency translation
adjustments if the loans act as a hedge to the acquired net assets. There
they offset the translation adjustments resulting from the consolidation
of the foreign subsidiaries. In the parent company, these exchange dif-
ferences are reported above net income.
IAS 21 ”The Effects of Changes in Foreign Exchange Rates” covers
among other things the existence of functional currencies. Almost all of
Alfa Laval’s subsidiaries are affected by changes in foreign exchange
rates for their procurement within the Group. They do however usually sell
in their local currency and they have more or less all of their non-product
related costs and their personnel related costs in their local currency.
This means that none of Alfa Laval’s subsidiaries qualify for the use of

Accounting principles
another functional currency than the local currency, with the following
exception. Subsidiaries in highly inflationary countries report their closings
in the functional hard currency that is valid in each country.
In the consolidation, the foreign subsidiaries have been translated
using the current method. This means that assets and liabilities are
translated at closing exchange rates and income and expenses are
translated at the year’s average exchange rate. The translation difference
that arises is a result of the fact that net assets in foreign companies are
translated at one rate at the beginning of the year and another at year-
end and that the result is translated at average rate. The translation
differences are part of other comprehensive income.

Recently issued accounting standards

International Accounting Standards Board (IASB) has not issued any
new or revised accounting pronouncements, which may be applicable
on Alfa Laval and are effective for fiscal years beginning on or after
January 1, 2024.

International Accounting Standards Board (IASB) has not issued any

financial reporting interpretation developed by the International
Financial Reporting Interpretations Committee (IFRIC), which may be
applicable on Alfa Laval and are effective for fiscal years beginning on or
after January 1, 2024.

Otherwise Alfa Laval will further evaluate the effects of the application
of the new or revised accounting standards or interpretations before
each time of application.

Accounting principles 135

Objectives, policies and processes for managing
capital
Alfa Laval defines its managed capital as the sum of consolidated net debt and equity including the part that is attributable to non-controlling interests.
At the end of 2023 the managed capital was SEK 47,389 (48,774) million.
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern and provide an adequate return for
shareholders and benefits for other stakeholders.
When managing the capital, the Group monitors several measures including:

Measure

Target Target Outcome Average over last

Goal standard not set 2023 2022 3 years 5 years 8 years
Invoicing growth per year ≥5% * 22.0% 27.4% 16.0% 11.3% 7.5%
Adjusted EBITA margin ** 15% * 16.1% 15.8% 16.4% 16.8% 16.5%
Return on capital employed ** ≥20% 21.0% 17.3% 19.4% 20.1% 19.5%
Net debt to EBITDA ** ≤2.0 0.85 1.47 1.06 0.91 1.08
Cash flow from operating activities including
investments in fixed assets *** 10% 10.6% 2.8% 7.8% 9.5% 9.8%
Investments *** X 3.8% 3.6% 3.5% 3.3% 3.1%
Return on equity X 17.6% 13.5% 15.6% 16.2% 15.9%
Solidity X 45.4% 43.9% 46.5% 46.1% 43.5%
Debt ratio ** X 0.27 0.37 0.29 0.26 0.31
Interest coverage ratio ** X 23.1 27.9 29.8 29.9 30.2
Credit rating X BBB+ BBB+

* Average over a business cycle. Alternative performance measures. * In % of sales.

These measures are connected to each other as communicating vessels. – The company’s Euro Medium Term Note (EMTN) programme was in-
This means that if actions are taken that primarily aim at a certain measure, creased from EUR 1,500 million to EUR 2,000 million in November 2021.
they will also have an impact on other measures to a varying degree. It is Under the programme, four tranches of corporate bonds have been issued.
therefore important to consider the whole picture. Three of them of EUR 300 million each matures in June 2024, in February
In order to maintain a good capital structure, the Group may for instance 2026 and in February 2029 respectively, whereas the fourth of SEK 1,000
raise new loans or amortise on existing loans, adjust the amount of dividends million was raised in May 2023 and matures in November 2025.
paid to shareholders, return capital to shareholders, repurchase own
– The company’s commercial paper programme was increased from
shares, issue new shares or sell assets.
SEK 2,000 million to SEK 4,000 million in November 2021 with an
As examples on the Group’s active work with managing its capital
unchanged duration of 1-12 months.
the following can be mentioned:
– On April 22, 2021 Alfa Laval successfully refinanced the company’s re-
– On August 1, 2022 Alfa Laval raised two loans of EUR 100 million from volving credit facility with a EUR 700 million credit facility with a banking
Svensk Exportkredit that matures in 2027 and 2028 respectively and syndicate. The facility has a maturity of five years with a possibility to extend
one loan of EUR 100 million from Svenska Handelsbanken with maturity it for further two years and it includes a possibility to increase by EUR 200
in June 2024 that was repaid already on December 22, 2023. million. During 2023 also the second extension option of 1 year was utilised.

136 Accounting principles

Risks
Risks are divided into financial risks and operational risks, which are described below.
In order to handle and minimise the risks, Alfa Laval has established a comprehensive set of Group wide policies and an internal control framework.
To support the work with internal control an extensive set of minimum internal controls has been established.
During the year, managers and other key personnel have made a self-assessment based on a selection of the most important minimum internal controls.
Internal control is monitored by both internal audit and by the external auditors.

Financial risks
Financial risks are referring to financial instruments.

Financial instruments
Alfa Laval has the following financial instruments: cash and cash equivalents, deposits, trade receivables, bank loans, trade payables and a limited number of
derivative instruments to hedge primarily currency rates or interests, but also the price of metals and electricity. These include currency forward contracts,
currency options, interest-rate swaps, metal forward contracts and electricity futures. See Notes 13 and 14 for more information on these financial instruments.

Treasury policy
In order to control and limit the financial risks, the Board of Directors for the Group has established a treasury policy. The Group has an aversive attitude
toward financial risks, which is expressed in the policy. It establishes the distribution of responsibility between the local companies and the central finance
function in Alfa Laval Treasury International, what financial risks the Group can accept and how the risks should be limited.

Risk Explanation Mitigation

Financial risks

Price risk There are three different types of price risks: currency risk, interest risk and
market risk. See below.

Currency risk Due to the Alfa Laval Group’s international business activities and geographical
spread the Group is exposed to currency risks. The exchange rate movements
in the major currencies for the Group during the last years are presented
below (SEK/foreign currency):

Exchange rate fluctuations – UK pounds, Euro, US dollars

14
13
12
11
10
9
8
7
JAN 20 JUN 21 DEC 21 JUN 22 DEC 22 JUN 23 DEC 23
GBP EUR USD
Exchange rate fluctuations – Danish and Norwegian kronor

1.6
1.5
1.4
Risks
1.3
1.2
1.1
1.0
0,9
JAN 20 JUN 21 DEC 21 JUN 22 DEC 22 JUN 23 DEC 23
DKK NOK
Exchange rate fluctuations – Japanese yen, Korean won

JPY KRW
0.090 0.0090

0.085 0.0085

0.080 0.0080

0.075 0.0075

0.070 0.0070

0.065 0.0065
JAN 20 JUN 21 DEC 21 JUN 22 DEC 22 JUN 23 DEC 23
JPY KRW

Risks 137
Risk Explanation Mitigation

Currency risk is divided into transaction exposure and translation exposure.

Transaction Transaction exposure relates to currency risks that arise due to exchange Alfa Laval’s local sales companies normally
exposure rate fluctuations that affect the currency flows that are generated by the sell in domestic currency to local end customers
business activities. and have their local cost base in local currency.
During 2023 Alfa Laval’s sales to countries outside Sweden amounted to Exports from production and logistical centres
97.8 (97.7) percent of total sales. to other Group companies are invoiced in the
exporting companies’ domestic currencies,
The Group’s net transaction exposure at December 31, 2023 in the most except for Sweden, Denmark and the UK
important currencies before and after derivatives for the coming 12 months where the exports are denominated in EUR.
amounts to:
The Group is principally exposed to currency
risk from potential changes in contracted and
Net transaction exposure per currency pair at December 31, 2023
for the coming 12 months projected flows of payments and receipts. The
objective of foreign exchange risk management
SEK is to reduce the impact of foreign exchange
millions
movements on the Group’s income and financial
6,000 position.
5,000 The Group normally has natural risk coverage
through sales as well as costs in local currencies.
4,000
The treasury policy states that the local com-
3,000 panies are responsible for identifying and hed-
ging exchange rate exposures on all commercial
2,000 flows via Alfa Laval Treasury International.
1,000 Transaction exposure from firm committed
orders shall be hedged to 100 percent when
0 the value of the net exposure exceeds EUR
200,000. Furthermore, companies with yearly
-1,000
net exposure exceeding EUR 1,000,000 must
-2,000 hedge at least 50 percent of the next 12 months
net exposure concerning all uncommitted flows
-3,000
and committed flows below EUR 200,000.
-4,000 The total hedge must never exceed 100 percent.
EUR/USD EUR/SEK EUR/DKK USD/NOK EUR/JPY JPY/NOK EUR/CNY Other Longer hedging contracts of 13-24 months for
uncommitted exposures require special
Before derivatives After derivatives
approval.
Alfa Laval Treasury International can add to or
The positive bars are a reflection of: reduce the total hedging initiated by the local
– subsidiaries in Sweden and Denmark exporting in EUR; companies in the currencies that Alfa Laval has
commercial exposure up to but not exceeding
– subsidiaries in Norway exporting mainly in USD but also in JPY; and
100 percent and down to but not below 50
– subsidiaries in China exporting in EUR. percent of the commercial exposure for each
currency in a given time period.
The negative bars are a reflection of subsidiaries in mainly the U.S. and
Japan importing in EUR.
Currency contracts for projected flows are entered into continuously during
the year. For contract-based exposures the aim for the derivatives is to follow
the duration of the underlying contract. This means that the company expe-
riences the effects from the market currency rate movements with a varying
degree of delay.
If the currency rates between SEK and the most important foreign currencies
are changed by +/- 10 % it has the following effect on operating income, if
no hedging measures are taken:

Effect on operating income by exchange rate fluctuations excluding hedging measures

Consolidated
SEK millions 2023 2022
Exchange rate change against SEK + 10% - 10% + 10% - 10%
USD 676 -676 656 -656
EUR 352 -352 281 -281
CNY 144 -144 163 -163
NOK -338 338 -278 278
DKK -205 205 -209 209
JPY 41 -41 41 -41
Other -44 44 -28 28
Total 626 -626 626 -626

138 Risks
Risk Explanation Mitigation

Outstanding currency forward contracts and currency options for the

Group amounted to the following at the end of the year:

Outstanding currency forward contracts and currency options

Consolidated
Millions 2023 2022
Original Original
currency SEK currency SEK
Outflows:
USD -871 -8,698 -787 -8,230
EUR -957 -10,572 -506 -5,646
JPY -11,663 -823 -6,940 -548
SEK -137 -137 – –
NOK -1,269 -1,243 – –
DKK -93 -138 – –
CAD -42 -316 -14 -112
AUD -12 -80 -7 -50
CNY -10 -14 – –
PLN -7 -18 – –
NZD -2 -13 -1 -7
Total -22,052 -14,593
Inflows:
NOK 6,853 6,711 4,915 5,200
SEK 5,648 5,648 5,362 5,362
EUR 312 3,449 – –
CNY 2,058 2,895 1,487 2,236
DKK 1,232 1,827 1,136 1,703
USD 107 1,072 – –
GBP 7 83 2 31
JPY 4,348 307 – –
CAD 12 90 – –
NZD 1 6 – –
PLN – – 10 24
SGD 5 37 8 60
AUD 10 71 – –
Total 22,196 14,616

Risks

Risks 139
Risk Explanation Mitigation

Translation Translation exposure relates to the currency risks that arise due to the translation The translation differences are a central
exposure of the subsidiaries’ statements on financial position from local currency to SEK. responsibility and are managed by distributing
When the subsidiaries’ statements of financial position in local currency are the loans on different currencies based on the
translated into SEK a translation difference arises that is due to the current net assets in each currency and through cross
year being translated at a different closing rate than last year and that the currency swaps. Loans taken in the same cur-
comprehensive income statement is translated at the average rate during the rency as there are net assets in the Group,
year whereas the statement of financial position is translated at the closing decrease these net assets and thereby
rate at December 31. The translation differences are reported against other decrease the translation exposure.
comprehensive income. The translation exposure consists of the risk that the These hedges of net investments in foreign
translation difference represents in terms of impact on comprehensive income. operations work in the following way. Exchange
The risk is largest for the currencies where the Group has the largest net assets gains and losses on loans denominated in
and where the exchange rate movements against SEK are largest. The Group’s foreign currencies that finance acquisitions of
net assets or liabilities for the major currencies are distributed as follows: foreign subsidiaries are reported as a part of
other comprehensive income if the loans act
Net assets by currency
as a hedge to the acquired net assets. In other
SEK comprehensive income they offset the transla-
millions tion adjustments resulting from the consolida-
15,000 tion of the foreign subsidiaries. In the Group,
net exchange differences of SEK 89 (-946)
12,000 million relating to debts in foreign currencies
have been charged to other comprehensive
income as hedges of net investments in foreign
9,000
operations. The loans that hedge net invest-
ments in foreign operations are denominated
6,000 in EUR since this foreign currency has the largest
impact on the statement of financial position.
Since the Group uses part of its cash flows to
3,000
amortise the loans in order to improve the
financial net, the extent of this hedge tends to
0 decrease over time. A change in the net assets
NOK

CNY

SEK

USD

EUR/ DKK

INR

GBP

BRL

HKD

KRW

PLN

Other

of the foreign subsidiary over time can have

the same effect.

Net assets

The assets and liabilities in EUR and DKK are seen together since the rate
for DKK is fixed against the EUR.

Interest risk By interest risk is meant how changes in the interest level affect the financial The Group attempts to manage the interest
net of the Group and how the value of financial instruments vary due to risk by:
changes in market interest rates. – seeking a balance between floating and fixed
At December 31, 2023, the total debt portfolio of SEK 13,273 (15,062) million interest rates in the debt portfolio and
was split on loans with fixed interest of SEK 10,921 (11,392) and loans with – through the use of derivative financial instru-
floating interest rates of SEK 2,352 (3,670) million. ments such as interest rate swaps.
The Group has chosen not to hedge the loans with floating interest to fixed The high portion of loans with fixed interest rate
interest rate. at December 31, 2023 meant a low interest risk.
The average interest rate for all loans was 1.73 (1.30) during 2023. The treasury policy states that:
The average interest duration for all loans including derivatives was 25.7 – the interest rate risk is measured separately
(29.1) months at the end of 2023. for each main currency and for the total debt;
Calculated on an overall increase of market rates by 100 basis points (1 and
percentage unit), the interest net of the Group would change according to – the average interest duration for the total
the bar chart below. The reason why it was an income in 2023 was that portfolio should be between 6 and 36 months.
large parts of the cash and cash equivalents and the current deposits had
floating interest rates at the same time as the loans with floating interest
rates were of a lower magnitude.
Interest sensitivity analysis versus hedging % of floating rates

SEK millions %
30 20

20 15

26
10 10

0 5
-1

-10 0
2022 2023
Effect on interest costs/income Hedging %
at 1% increase in market rates of floating rates

140 Risks
Risk Explanation Mitigation

Market risk Market risk is defined as the risk for changes in the value of a financial The market risk for these is perceived as low.
instrument due to changed market prices. This applies only to financial For other financial instruments, the price risk
instruments that are listed or otherwise traded, which for Alfa Laval concern only consists of currency risk and interest risk.
bonds and other securities and other long-term securities totalling SEK 416
(387) million.

Liquidity risk and Liquidity risk is defined as the risk that the Group would incur increased Alfa Laval Treasury International is responsible
refinancing risk costs due to lack of liquid funds. for ensuring that:
Refinancing risk is defined as the risk that the refinancing of maturing loans – the Group has a sufficient liquidity reserve,
becomes difficult or costly. including cash and cash equivalents, short-
term investments and unutilized committed
In summary the maturity structure of the loans and the loan facilities is as
credit facilities,
follows:
– a too large part of the outstanding debt is not
maturing within the coming 12 month period
Maturity structure of Group funding
and

SEK millions
– the remaining average credit duration of the
22,000
Corporate bonds EUR total debt portfolio is not too short.
Local Facilities
20,000 Corporate bonds SEK
18,000 The loans of the Group are mainly long-term and
Local Facilities
only mature when the agreed loan period expi-
16,000 Corporate bonds EUR
Swedish Export Credit EUR
res. Since the maturity of the loans is distributed
14,000 over time the refinancing risk is reduced.
12,000 Alfa Laval has two loans of EUR 100 million from
Senior Facility EUR
10,000 Svensk Exportkredit that matures in 2027 and
8,000 Swedish Export 2028 respectively. The loan of EUR 100 million
Credit EUR from Svenska Handelsbanken with maturity in
6,000 Corporate
bonds EUR
June 2024, was repaid already on December
4,000 22, 2023.
2,000
Alfa Laval has a revolving credit facility of EUR
0 700 million corresponding to SEK 7,736 million
2024 2025 2026 2027 2028 2029 on December 31, 2023 with a banking syndicate.
Maturity year The facility has a maturity of five years from April
Non committed – Utilised 2023 and it includes a possibility to increase by
EUR 200 million. At December 31, 2023 the
Committed
facility was not utilised.
Committed & Utilised The commercial paper programme of SEK 4,000
million, was not utilised at December 31, 2023.
On December 31, 2023, Alfa Laval has four tranches
of corporate bonds listed on the Irish stock
exchange. Three of them of EUR 300 million each
that matures in June 2024, in February 2026
and in February 2029 respectively, whereas the
fourth of SEK 1,000 million was raised in May
2023 and matures in November 2025.

Risks

Risks 141
Risk Explanation Mitigation

Cash flow risk Cash flow risk is defined as the risk that the This risk is mostly linked to changed interest and currency rates. To the extent
size of future cash flows linked to financial that this is perceived as a problem, different derivative instruments are used
instruments is fluctuating. to fix rates. See description of exposure and hedging measures under interest
and currency risks. Maturity analyses of the contractual undiscounted cash
flows for loans (including interests) are shown in Note 29 and for currency
derivatives, interest derivatives, metal futures and electricity futures in Note 15.

Counterpart risk Counterpart risk is defined as the risk that the The Group has a bank strategy with the objective to establish, maintain
counterpart is not able to fulfill its contractual and develop strong bank relations at Group level. This in order to provide
obligations. the Group with long- term banking support, a relevant product range and
Financial instruments that potentially subject geographical coverage. The banks at Group level must have a credit rating
the Group to significant concentrations of from two rating institutions of minimum A.
credit risk consist principally of cash and cash The Group maintains cash and cash equivalents and current and non-current
equivalents, deposits and derivatives. investments with various financial institutions approved by the Group.
Received bank guarantees and letters of credit These financial institutions are located in major countries throughout the
move the credit risk from the customer to the world and the Group’s policy is designed to limit exposures to any one insti-
bank, but can still contain a credit risk, but now tution. The risk for a counterpart not fulfilling its commitments is limited
towards the bank. through the selection of financially solid counterparts and by limiting the
engagement per counterpart. The Group performs periodic evaluations of
the relative credit standing of those financial institutions that are considered
in its investment strategy. The Group does not require collateral on these
financial instruments.
The Group is exposed to credit risk in the event of non-performance by
counterparts to derivative instruments. The Group limits this exposure by
diversifying among counterparts with high credit ratings and by limiting the
volume of transactions with each counterparty. Furthermore, the Group has
entered into ISDA agreements (International Swaps and Derivatives
Association) with the counterparts in order to be able to offset assets and
liabilities in case of a counterparty default. Alfa Laval has never encountered
a counterparty default, which means that such an offset never has been made.
In total it is the Group’s opinion that the counterpart risks are limited and
that there is no concentration of risk in these financial instruments.

Operational risks
Risk Explanation Mitigation

Business risks

Credit risk/Risk The risk that the customer cannot pay for delivered goods due to financial Alfa Laval has established a Group Credit
for bad debts difficulties. Policy to manage and mitigate the credit risk.
The amount of accounts receivable being overdue is an indication of the The Group sells to a large number of customers
risk the company runs for ending up in a bad debt situation. in countries all over the world. That some of
The Group’s costs for bad debts and the overdues in percent of accounts these customers from time to time face pay-
receivable are presented in the following graph. ment problems or go bankrupt is unfortunately
part of reality in an operation of Alfa Laval’s
Costs for bad debts / overdues in % of accounts receivable
magnitude. All customers except Tetra Laval
represent less than 1 percent of net sales and
SEK millions %
thereby represent a limited risk. Alfa Laval
regularly collects credit information on new
120 12 customers and, if needed, on old customers.
10 Earlier payment habits have an impact on the
100
acceptance of new orders. On markets with
80 8 political or financial risks, the Group strives to
attain credit insurance solutions.
60 6
Accounts receivable constitutes the single
40 4 largest financial asset according to Note 13.
With reference to the above description, it is
20 2 management’s opinion that there is no material
116 91 concentration of risk in this financial asset.
0 0
2022 2023

Costs for bad debts in SEK millions

< 30 days
> 30 days but < 90 days
> 90 days

142 Risks
Risk Explanation Mitigation

Risk for claims The risk for the costs Alfa Laval would incur to rectify faults in products or Alfa Laval strives to minimize these costs
systems and possible costs for penalties. through an ISO certified quality assurance.
The Group’s net claim costs and their relation to net sales are found in the The major risks for claim costs appear in con-
following graph. nection with new technical solutions and new
applications. The risks are limited through
Claim costs in SEK millions and in % of net sales extensive tests at the manufacturing site and
at the customer site.
SEK millions %

500 2.5

400 2.0

300 1.5

200 1.0

100 485 435 0.5

0 0
2022 2023

Costs for claims & warranty in SEK millions

Claims & warranty in % of net sales

Economic risk

Competition The Group operates in competitive markets, which can impact the In order to address this competition, the Group
company’s development negatively. has for instance:
– organized the operations into divisions
based on business units in order to get a
customer focused market penetration;
– a strategy for acquisition of businesses in
order to for instance reinforce the presence
on certain markets or widen the Group’s pro-
duct offering;
– worked with creating a competitive cost level
based on its international presence; and
– worked with securing the availability of stra-
tegic metals and components in order to
maintain the ability to deliver.

Business climate In an overall economic downturn, the Group tends to be affected with a The fact that the Group is operating on a large
delay of six to twelve months depending on business division. The same number of geographical markets and within a
applies with an economic upturn. wide range of business units means a diversifi-
cation that limits the effects of fluctuations in
the business climate. Historically, fluctuations
in the business climate have not generated
decreases in orders received by more than
approximately 10-15 percent. The downturn in
the business climate in 2009 and 2010 however
Risks
meant a considerably larger decline in order
intake. This was partly due to the fact that the
decline happened abruptly from a very high
level of demand that was the culmination of a
long-lasting boom and that the price level in
connection with this peak was inflated by sub-
stantial increases in raw material prices.

Pandemics The outbreak of the COVID-19 pandemic proved to have a large impact on Global and local crisis management work and
the world economy and the international business climate. Lockdowns in obedience to advice, instructions and rules from
many regions within countries or in entire countries did during certain periods authorities are important to be able to short and
limit Alfa Laval’s ability to visit potential customers and perform service on long term handle the consequences of the
site at customers but did only to a limited extent impact the company’s pandemic.
supply chain and ability to manufacture products. Cost reduction programmes and the flexibility
Future pandemics can, depending on the rate of the spread of the infection in different national work time reduction sche-
and the risk for severe illness and death have smaller or larger consequences mes are important components to reduce
than COVID-19. costs to match the declining revenues.
Employees outside the manufacturing have to
a large extent been able to work from home.
Travelling has been severely restricted and has to
a large extent been replaced by digital meetings.

Risks 143
Risk Explanation Mitigation

Commodity prices The Group depends on deliveries of stainless steel, carbon steel, copper The Group is addressing this risk by securing long-
and titanium etc and on electricity for the manufacture of products. The term supply commitments and through fixed prices
prices in some of these markets are volatile and the supply of titanium from the suppliers during six to twelve months and
has occasionally been limited. There are a limited number of possible through derivatives for metals and electricity.
suppliers of titanium. The risk for severely increased prices or limited For metals:
supply constitutes serious risks for the operations. The possibilities to
– The exposures for the coming 12 months of expected
pass on higher input prices to an end customer vary from time to time
flows must be hedged between 30-70 percent.
and between different markets depending on the competition.
– In certain situations, exposures beyond 12 months
The below graph shows how much of the purchases of nickel and
can also be hedged.
copper that have been hedged during 2023 and how much of the
expected purchases during 2024 that were hedged at the end of For electricity the coming 12 months’ expected exposure
2023. The graph also presents to what extent the Group’s costs for shall be hedged between 30-90 percent and the
these purchases during 2024 would be affected if the prices would coming 13-24 months can be hedged up to 80 percent.
double from the level at December 31, 2023. During periods of large price increases the customer
price on titanium products has been linked to Alfa Laval’s
procurement costs for titanium. The Group has during
Sensitivity analysis and metal price hedging
certain periods experienced large price fluctuations for
many raw materials, but in particular for stainless steel,
SEK millions %
carbon steel, copper and titanium. During 2023 the
1,500 75 prices for nickel have decreased substantially. The price
volatility for the most important metals is presented below.
1,200 60
Nickel
900 45
USD/ton

600 30 55,000
50,000
45,000
300 15 40,000
35,000
30,000
0 0 25,000
Nickel Copper 20,000
15,000
Cost increase if current metal prices 10,000
increase by 100%, without hedging 5,000
0
16 17 18 19 20 21 22 23
Cost increase if current metal prices
increase by 100%, with hedging
Copper Year
Hedging 2023
USD/ton
Hedging 2024
12,000

10,000

8,000

6,000

4,000

2,000

0
16 17 18 19 20 21 22 23

Year
Aluminium

USD/ton
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
16 17 18 19 20 21 22 23

Year

The Group uses metal futures to secure the price on

strategic metals.

Supply chain During 2023 many companies have continued to experience the Alfa Laval has a global footprint with 37 major manu-
and logistical impacts and disturbances stemming from disrupted supply chains. facturing units across Europe, Asia, the US and Latin
disruptions Alfa Laval has suffered only limited continued impact from these dis- America. The company has well-established business
ruptions. However, the current geopolitical developments and accen- continuity plans and a global supply chain with alter-
tuated uncertainties, elevate the risk of new disruptions in coming years. native sourcing solutions for most products and services
and close collaboration with key suppliers.

144 Risks
Risk Explanation Mitigation

Legal and compliance risks

Non-compliance Alfa Laval’s global and diversified business Policies, procedures and training programmes are in place to ensure that legal
with socioeconomic means that the Group is required to adhere risks relating to its business activities are identified and that decisions are
or environmental to a variety of laws and regulations. Failure made on the appropriate level in the organisation. The legal counsel supports
legislation to meet socio-economic or environmental the business in identifying and handling these legal risks. A whistle-blowing
requirements could lead to legal and system is in place where employees can report any breaches of laws or Alfa
financial consequences, and negatively Laval policies anonymously without repercussions.
impact the company’s reputation.

Bribery and If Alfa Laval employees fail to comply with The Alfa Laval Anti-Bribery and Anti-Corruption Policy is applicable to all
corruption anti-bribery and anti-corruption laws, this employees within the Group. The policy sets procedures for preventing, detec-
could potentially lead to loss of business, ting, reporting and investigating acts of bribery and corruption. Training is a
financial penalties and reputational damage. focus area to ensure an understanding of the risks associated with improper
behaviour in this area.

Material source Alfa Laval uses metals that may originate Alfa Laval supports the US Securities and Exchange Commission’s rules and
or type from areas classified as “conflict areas”. other initiatives concerning conflict minerals. Alfa Laval established a Conflict
We manufacture products for customers Minerals Policy in 2013. Due diligence is conducted in our supply chain to minimise
with specific demands due to industry the risk that minerals originate from conflict areas (especially in the Democratic
standards, for example marine, food and Republic of Congo). Alfa Laval’s Supplier Risk & Compliance unit has processes
pharmaceutical customers. in place to identify risks and monitor potential high-risk suppliers. The Alfa Laval
Regulatory Operations unit monitors emerging legislation to ensure adherence
in prioritized areas.

Unfair competition Infringements of applicable competition The Fair Competition Policy provides guidelines to assist employees with how
and antitrust rules may result in Alfa Laval having to pay to adhere to competition law/antitrust laws, rules and regulation. Employees
fines and losing goodwill. working with sales or purchasing are obliged to comply with this policy.

Export control Breach of export control and trade san- The Alfa Laval Export Control Policy establishes rules for Group-wide handling
and trade sanction ction regulations can lead to a denial of of the relevant export control regulations, adherence to applicable trade sanctions
regulations trade privileges, criminal proceedings and and it ensures that no products or services supplied by Alfa Laval are used in
reputational damage. relation to weapons of mass destruction.

Risk for and in This risk for the costs the Group may incur Any estimated loss risks are provided for.
connection with in managing litigations, costs in connec-
litigations tion with settlements and costs for impo-
sed penalties. The Group is involved in a
few litigations, mainly with customers.

Asbestos-related The Alfa Laval Group was as of December Alfa Laval strongly believes the claims against the Group are without merit
lawsuits 31, 2023, named as a co-defendant in a and intends to vigorously contest each lawsuit.
total of 427 asbestos-related lawsuits Based on current information and Alfa Laval’s understanding of these lawsuits,
with a total of approximately 427 plaintiffs. Alfa Laval continues to believe that these lawsuits will not have a material
adverse effect on the Group’s financial condition or results of operation.

Supply chain risks

Business Principles Deviations could have an adverse impact Alfa Laval works to have a supply chain that follows laws and the company’s Risks
deviation in the on people, the environment and society that business principles. All suppliers sign contracts where they agree to abide by
supply chain could damage the company’s reputation. the Alfa Laval Business Principles. Suppliers are assessed based on a risk
analysis (country/process) and high-risk suppliers are regularly audited. All
employees within the procurement organisation and many suppliers are trained
in all areas that are covered by the business principles.

Human Rights The risk that the human rights of individuals Alfa Laval’s Business Principles build on the UN Global Compact, the OECD
breaches linked to Alfa Laval are violated. For Guidelines for multinational enterprises, the UN Guiding Principles for
example, child labour, forced labour and Business and Human Rights and incorporate the UK Modern Slavery Act.
freedom of association. Suppliers sign off on these business principles in their contracts with Alfa Laval.
High-risk suppliers are also audited that they follow the business principles.

Risks 145
Risk Explanation Mitigation

Production or product related risks

Risk connected The risk that a competitor develops a new Alfa Laval makes a deliberate investment in research and development aiming
to technical technical solution that makes Alfa Laval’s at being in the absolute frontline of technical development.
development products technically obsolete and there-
fore difficult to sell.

Risk for technically The risk for the costs Alfa Laval may incur Alfa Laval makes extensive testing and has an ISO certified quality assurance.
related damages in connection with a product delivered by The Group has product liability insurance. The number of damages is low and
the Group breaking down and causing few damages have occurred historically.
damages to life and property. The main risk
in this context concerns high-speed separa-
tors, due to the large forces that are invol-
ved when the bowl in the separator spins
with a very high number of revolutions. In a
breakdown the damages can be extensive.

Health & Safety Health and safety risks such as occupational The Alfa Laval Occupational Health & Safety (OHS) Policy guides the work
diseases and accidents. The risk that an together with our OHS Manual. The purpose with these is to safeguard a healthy
employee is injured or killed in a workplace and safe working environment by preventing accidents, occupational
accident. diseases and other health risks. We have a process to continuously monitor
high-risk areas in our operations, train employees and enforce changes.

Environmental risks

Major environmental An incident that causes a significant envi- The Alfa Laval Environmental Policy is applicable to the entire Alfa Laval
incident at a site ronmental damage could lead to long- Group. Environmental performance is monitored and measured through
term environmental impact, negative Environmental Management Systems. The large sites are ISO 14001 certified.
impact on people, fines and reputational Smaller sites work according to Environmental Management Systems where
damage to the company. risks are identified, and effective countermeasures are implemented.

Use of hazardous Using hazardous chemicals could lead to The Alfa Laval Group Restricted Substance List (former Alfa Laval Group
chemicals severe illness or have a serious negative Black & Grey List) is the primary tool to control the use of hazardous chemical
impact on our environment or society. substances. The list comprises legislations and global agreements deemed
relevant for our products and area of business with an annexed list of the con-
cerned substances. It is updated annually to reflect any legislative changes.
The substances in the Restricted Substance List is divided in three categories:
Banned, Restricted and Substances of Concerns.

Climate and water Climate change and water scarcity can Alfa Laval is working actively to mitigate the climate impact in its own opera-
lead to increased costs and constraints on tions and the value chain. Progress is being made towards the science-based
production. Apart from legislative and targets for 2030 to reduce scope 1 and 2 emissions by 95 percent and scope 3
other transition risks arising from society’s emissions by 50 percent from a 2020 baseline.
attempts to mitigate climate change, Alfa Alfa Laval does not use a significant amount of water, yet the target to
Laval faces potential physical climate- decrease water consumption in water-stressed areas by 5 percent from 2020
related risks from extreme weather events to 2023 was surpassed, achieving a 17 percent reduction.
that may impact asset and business
values. In late 2023, Alfa Laval carried out an in-depth assessment of climate related
physical risks based on IPCC climate scenarios. The results will be further
analysed and appropriate actions taken during 2024.

IT related risks

Loss of intellectual Loss of intellectual property, financial or Alfa Laval holds compulsory trainings on information security awareness.
property, financial or personal data due to for instance unaut- Policies describe what is confidential information and how the information
personal data horized access to Alfa Laval’s computer should be classified. Alfa Laval’s IT agreements contain the necessary
systems. Information Security components. Information security is also monitored in our
project model – feasibility, pre-study and project. A template is also sent at an
early stage to all potential suppliers to identify if there are any possible infring-
ements of information security.

146 Risks
Risk Explanation Mitigation

Human capital risks

Risk connected to Companies that do not succeed in attrac- To offer interesting positions, personal and professional development, a good
attracting and ting and retaining talents risk experiencing working environment and competitive compensation and benefits are prioritized
retaining talents an inferior development compared to areas within Alfa Laval.
companies that succeed with this.

Other risks

Business The risk that single units or functions Alfa Laval has a well-developed dialog with the local unions, which reduces
interruption risks within the Group can be hit by business the risk for conflicts and strikes where Alfa Laval is directly involved. It is however
interruption due to: more difficult to protect the company against conflicts in other parts of the
– strikes and other labour market conflicts; labour market, for instance within transportation.

– fires, natural catastrophes etc.; Alfa Laval is minimizing the following two risks through an active preventive
work at each site in line with the developed global policies in each area under
– computer access violations, lack of; supervision of manufacturing management, the Group’s Risk Management
backups etc.; and function, Real Estate Management, IT and HR.
– corresponding problems at major Problems at major sub-suppliers are minimized by Alfa Laval trying to use
sub-suppliers. several suppliers of input goods that when needed can cover up for a drop in
production somewhere else. The wish for long-term and competitive delivery
agreements however puts restrictions on the level of flexibility that can be
achieved. When there is a shortage, the total supply may be too limited to
allow exchangeability.
The production facility in Lund in Sweden, which is the Group’s largest is
together with some of our more important sites annually reviewed by third party
risk engineers to secure that our key production facilities are being evaluated and
protected to highest standard possible. All sites are part of the survey program
but with different frequency.

Political risk The risk that the authorities, in the countries The Group is mainly operating in countries where the political risk is considered
where the Group is operating, by political to be negligible or minor. The operations that are performed in countries where
decisions or administration make continued the political risk is deemed to be higher are not material.
operations difficult, expensive or impossible
for the Group.

Insurance risks These risks refer to the costs that Alfa Laval The Group strives to maintain an insurance coverage that keeps the risk level
may incur due to an inadequate insurance at an acceptable level for a Group of Alfa Laval’s size and still is cost efficient.
coverage for property, business interruption, At the same time a continuous work is going on to minimise the risks in the
liability, transport, life and pensions. operations through proactive measures.

Risks connected to The limited freedom of action that can be Alfa Laval’s strong solidity and profitability limits this risk.
credit terms imposed on the Group through restrictions
connected to credit terms in loan agreements.

Risks

Risks 147
Notes
Note 1. Operating segments
Alfa Laval’s business is divided into three Business Divisions ”Energy”, ”Food
Adjusted EBITA in management accounts
& Water” and ”Marine” that sell to external customers and are responsible
for the manufacturing of the products and one division “Operations & Other” Consolidated
covering procurement and logistics as well as corporate overhead and non-core SEK millions 2023 2022
businesses. These four divisions constitute Alfa Laval’s four operating segments. Energy 3,986 2,927
The customers to the Energy Division purchase products and systems for
Food & Water 3,942 3,458
energy applications, whereas the customers to the Food & Water Division
purchase products and systems for food and water applications. The cus- Marine 2,836 2,399
tomers to the Marine Division purchase products, systems and digital solutions Operations & Other -561 -507
for marine and offshore applications. Total 10,203 8,277
The three first Business Divisions are in turn split into a number of Business Reconciliation with Group total:
Units. The Energy Division consists of four Business Units: Brazed & Fusion
Amortisation -965 -943
Bonded Heat Exchangers, Energy Separation, Gasketed Plate Heat Exchangers
and Welded Heat Exchangers. The Food & Water Division consists of six Comparison distortion items – -767
Business Units: Decanters, Food Heat Transfer, Food Systems, Hygienic Fluid Consolidation adjustments * 18 -48
Handling, High Speed Separators and Desmet. The Marine Division consists Total operating income 9,256 6,519
of four Business Units: Pumping Systems, Water, Wind & Fuel Solutions, Heat Financial net -606 -340
& Gas Systems and Digital Solutions.
Result after financial items 8,650 6,179
The operating segments are only responsible for the result down to and
including operating income excluding comparison distortion items and for * Difference between management accounts and IFRS.
the operating capital they are managing. This means that financial assets
and liabilities, pension assets, provisions for pensions and similar commitments
and current and deferred tax assets and liabilities are a Corporate responsibility Assets / Liabilities
and not an operating segment responsibility. This also means that the financial Consolidated Assets Liabilities
net and income taxes are a Corporate responsibility and not an operating SEK millions 2023 2022 2023 2022
segment responsibility.
Energy 19,263 17,330 7,433 6,574
The operating segments are only measured based on their transactions
with external parties. Food & Water 20,376 21,196 8,295 8,291
Marine 29,856 30,932 7,998 7,241
Operations & Other 1,986 1,983 885 1,097
Orders received
Subtotal 71,481 71,441 24,611 23,203
Consolidated
Corporate 10,807 9,808 20,299 22,342
SEK millions 2023 2022
Total 82,288 81,249 44,910 45,545
Energy 20,414 17,294
Food & Water 26,368 21,909 Corporate refers to items in the statement on financial position that are interest
Marine 23,960 19,442 bearing or are related to taxes.
Operations & Other 0 0
Total 70,742 58,645 Investments
Consolidated
Order backlog SEK millions 2023 2022
Consolidated Energy 992 535
SEK millions 2023 2022 Food & Water 472 360
Energy 10,075 8,517 Marine 336 235
Food & Water 15,977 14,381 Operations & Other 640 723
Marine 19,273 14,122 Total 2,440 1,853
Operations & Other 0 0
Total 45,325 37,020 Depreciation and amortisation
Consolidated
Net sales SEK millions 2023 2022
Consolidated Energy 431 518
SEK millions 2023 2022 Food & Water 746 568
Energy 19,269 15,074 Marine 994 970
Food & Water 25,280 20,691 Operations & Other 353 336
Marine 19,049 16,370 Total 2,524 2,392
Operations & Other 0 0
Total 63,598 52,135

148 Notes
1
2
Note 2. Information about geographical areas Note 3. Information about products and services
3
Countries with more than 10 percent of either net sales, non-current assets
Net sales by product/service 4
or investments are reported separately.
Consolidated
5
Net sales SEK millions 2023 2022
Consolidated Own products within: 6
2023 2022 Separation 10,312 8,304 7
SEK millions % SEK millions % Heat transfer 25,311 20,149
8
To customers in: Fluid handling 13,024 11,584
Sweden 1,411 2.2 1,206 2.3 Marine environmental 3,596 3,995 9
Other EU 15,591 24.5 12,889 24.7 Other 0 0 10
Other Europe 5,076 8.0 4,812 9.2 Associated products 7,083 4,567
USA 10,613 16.7 8,784 16.9 Services 4,272 3,536
11
Other North America 1,327 2.1 1,081 2.1 Total 63,598 52,135 12
Latin America 3,578 5.6 2,388 4.6
The split of own products within separation, heat transfer and fluid handling 13
Africa 1,187 1.9 778 1.5
is a reflection of the current three main technologies. Marine environmental is 14
China 8,943 14.1 7,153 13.7
a product area basically outside the main technologies. Other is own products
South Korea 3,527 5.5 3,801 7.3 outside these four product areas. Associated products are mainly purchased 15
Other Asia 11,558 18.2 8,559 16.4 products that compliment Alfa Laval’s product offering. Services cover all
sorts of service and service agreements excluding spare parts. 16
Oceania 787 1.2 684 1.3
Total 63,598 100.0 52,135 100.0 17

Net sales are reported by country on the basis of invoicing address, which is
Note 4. Information about major customers 18
normally the same as the delivery address.
Alfa Laval does not have any customer that accounts for 10 percent or more of 19
net sales. Tetra Pak within the Tetra Laval Group is Alfa Laval’s single largest 20
Non-current assets customer with a volume representing 5.4 (4.0) percent of net sales. See Note
Consolidated 33 for more information. 21
2023 2022 22
SEK millions % SEK millions % Note 5. Employees* 23
Sweden 3,509 8.0 2,942 6.6
Denmark 5,354 12.2 5,348 11.9 Average number of employees - total 24
Other EU 9,219 20.9 8,829 19.7
Consolidated 25
Norway 13,689 31.1 15,393 34.4
Number of female Total number of
Other Europe 391 0.9 416 0.9 26
employees employees
USA 3,961 9.0 4,236 9.5 2023 2022 2023 2022 27
Other North America 154 0.3 158 0.4 Parent company – – – –
28
Latin America 352 0.8 379 0.8 Subsidiaries in Sweden (8) 745 653 2,904 2,625
Africa 7 0.0 9 0.0 Total in Sweden (8) 745 653 2,904 2,625 29
Asia 4,808 10.9 4,394 9.8 Total abroad (165) 3,890 3,586 17,899 16,377 30
Oceania 114 0.3 118 0.3 Total (173) 4,635 4,239 20,803 19,002
Subtotal 41,558 94.4 42,222 94.3 31
* Full time equivalents.
Other long-term securities 542 1.2 475 1.1 32
Pension assets 239 0.5 201 0.4 The figures in brackets in the text column state how many companies had 33
Deferred tax asset 1,720 3.9 1,895 4.2 employees as well as salaries and remunerations in 2023.
Total 44,059 100.0 44,793 100.0 34
Average number of employees – in Sweden by municipality 35
Investments Consolidated
36
Consolidated 2023 2022
Botkyrka 664 615 37
2023 2022
SEK millions % SEK millions % Eskilstuna 243 243 38
Sweden 576 23.6 641 34.6 Gothenburg 10 4
39
Lund 1,370 1,254
Italy 376 15.4 46 2.5
Other EU 333 13.7 252 13.6
Ronneby 404 328 40
Stockholm 16 14
Norway 256 10.5 150 8.1
Vänersborg 104 98
Other Europe 36 1.5 33 1.8
Other * 93 69
North America 153 6.3 124 6.7
Total 2,904 2,625
Latin America 39 1.6 23 1.2
* “Other” refers to municipalities with less than 10 employees and also includes employees
Africa 1 0.0 1 0.0
at branch offices abroad.
China 533 21.8 453 24.5
Other Asia 135 5.5 123 6.6
Oceania 2 0.1 7 0.4
Notes

Total 2,440 100.0 1,853 100.0

Notes 149
Average number of employees – by country/district
Consolidated
Number of female employees Total number of employees
2023 2022 2023 2022
Argentina 16 13 61 49
Australia 19 20 84 84
Belgium 40 18 155 80
Brazil 150 144 633 590
Bulgaria 8 4 21 11
Chile 6 7 32 32
Colombia 21 22 44 44
Denmark 502 482 1,937 1,875
Philippines 15 14 39 37
Finland 30 27 115 106
France 222 186 1,107 920
United Arab Emirates 27 26 110 111
Greece 11 9 34 31
Hong Kong 14 13 33 34
India 167 111 1,891 1,441
Indonesia 32 24 128 103
Iran – – – 0
Italy 183 168 795 759
Japan 67 62 248 242
Canada 23 21 106 100
China 843 823 3,945 3,776
Korea 54 55 319 306
Latvia 5 5 10 9
Lithuania 6 3 73 48
Malaysia 87 60 236 164
Mexico 15 13 74 59
Netherlands 99 84 369 353
Norway 262 248 1,277 1,213
New Zeeland 2 2 18 19
Panama 10 6 21 17
Peru 7 6 28 24
Poland 134 112 509 430
Portugal 4 4 9 8
Qatar – – 9 8
Romania 3 2 12 11
Russia 20 68 51 169
Saudi Arabia 1 1 38 38
Switzerland 3 3 10 10
Singapore 86 78 289 257
Slovakia 2 2 9 8
Slovenia 6 5 16 14
Spain 32 27 135 108
UK 85 82 414 387
Sweden 745 653 2,904 2,625
South Africa 17 16 43 43
Taiwan 27 20 52 46
Thailand 18 18 62 57
Czech Republic 5 5 26 25
Turkey 20 16 77 74
Germany 78 71 297 276
Ukraine 1 1 9 9
Hungary 4 2 11 11
USA 388 368 1,807 1,701
Vietnam 10 6 52 34
Austria 3 3 19 16
Total 4,635 4,239 20,803 19,002

Gender distribution
Consolidated
2023 2022
Total Male Female Total Male Female
number % % number % %
Board members (excluding deputies) 12 83.3 16.7 12 83.3 16.7
President and other executive officers 8 75.0 25.0 9 77.8 22.2
Managers in Sweden 356 73.9 26.1 325 75.7 24.3
Managers outside Sweden 2,348 79.3 20.7 2,157 79.7 20.3
Managers total 2,704 78.6 21.4 2,482 79.2 20.8
Employees in Sweden 2,904 74.3 25.7 2,625 75.1 24.9
Employees outside Sweden 17,899 78.3 21.7 16,377 78.1 21.9
Employees total 20,803 77.7 22.3 19,002 77.7 22.3

150 Notes
1
2
Note 6. Salaries and remunerations
3
Salaries and remunerations – total 4
Consolidated
SEK millions 2023 2022 5
Board of Directors, Presidents and Vice Presidents 377 326 6
- out of which, variable 72 74
Other 11,806 10,226 7
Total salaries and remunerations 12,183 10,552
8
Social security costs 2,080 1,762
Pension costs, defined benefit plans 56 106 9
Pension costs, defined contribution plans 841 707
10
Total personnel costs 15,160 13,127
11
The Group’s pension costs and pension liabilities relating to the Board of The performance targets were:
Directors, presidents and vice presidents amounts to SEK 30 (30) million 12
Long-term incentive plans
and SEK 244 (263) million respectively. SEK 66 (67) million of the pension 13
Performance targets
liabilities is covered by the Alfa Laval Pension Fund.
Threshold Maximum 14
Equity compensation benefits Adjusted EBITA margin (%) 14.0 17.0
During the period 2022 to 2023 no equity related benefits existed within 15
Net sales growth (%) 4 7
Alfa Laval. If achieved, the award is (%) 0 100 16
Variable remunerations The actual outcome and the resulting award were: 17
All employees have either a fixed salary or a fixed base salary. For certain personnel
categories the remuneration package also includes a variable element. This 18
relates to personnel categorises where it is customary or part of a market offer Long-term incentive plans
19
to pay a variable part. Variable remunerations are most common in sales related Consolidated
jobs and on higher managerial positions. Normally the variable part constitutes Outcome
20
Award
a minor part of the total remuneration package.
Plan 2021-2023 2021 2022 2023 Average in % 21
Adjusted EBITA
Cash-based long-term incentive programme 22
margin (%) 17.4 15.8 16.1 16.4 80.00
The Board of Directors decided in 2023 to implement step six of the modified
Net sales growth (%) -1 27 22 16 100.00
cash based long-term incentive programme for maximum 95 senior managers 23
in the Group including the Chief Executive Officer and the persons defined as Outcome Award
executive officers. The outcome of the modified programme depends on how Plan 2020-2022 2020 2021 2022 Average in % 24
the adjusted EBITA margin and the net sales growth have developed during Adjusted EBITA 25
the three-year period, with a 50/50 weight between the targets. This means margin (%) 17.4 17.4 15.8 16.9 96.67
that there will be no award during the first two years since it is first in year Net sales growth (%) -11 -1 27 5 33.33 26
three that it can be determined to what extent the targets have been Outcome Award
achieved. Maximum outcome is awarded when the targets are exceeded. The 27
Plan 2019-2021 2019 2020 2021 Average in %
remuneration from the modified long-term incentive programme can consti- 28
Adjusted EBITA
tute maximum 25, 40 or 50 percent of the fixed remuneration depending on margin (%) 17.2 17.4 17.4 17.3 100.00
position. Payment to the participants in the programme is made after year Net sales growth (%) 14 -11 -1 1 0.00
29
three and only provided that they are still employed at the date of payment (ex-
cept in case of termination of employment due to retirement, death or dis- 30
There are three opportunity levels in the plan and the award per opportunity
ability). If the employee resigns or is dismissed before the end of the three-year 31
level and the total cost for the plan was:
period, the employee will not be entitled to any pay-out. If the employee moves
to a position that is not eligible for this programme, a pro-rata payment will 32
be made after the end of the three year period. Paid remunerations from the Long-term incentive plans, Award
long-term incentive programme do normally not affect the pensionable in- 33
Consolidated
come or the holiday pay. 34
Outcome per maximum
In 2023 step four, five and six of the modified programme were running in
opportunity
parallel. Total cost 35
The outcome of step four covering the period January 1, 2021 – December 25% 40% 50% SEK millions Paid in
31, 2023 was: Plan 2021-2023 22.50% 36.00% 45.00% 51 2024 36
Plan 2020-2022 16.25% 26.00% 32.50% 36 2023 37
Long-term incentive plan 2021–2023 Plan 2019-2021 12.50% 20.00% 25.00% 27 2022
38
Outcome(%)
18 39
16
40
14 Actual
outcome 16.4
12
Actual
10
outcome 16
8
6
4
2
0
Threshold 33% 67% Max 100% Award
0%
Notes

Adjusted EBITA margin (%) Net sales growth (%)

Notes 151
Remuneration policy for executive officers differ between the Chief Executive Officer/Managing Director and the other
The remuneration policy for executive officers is established by the Annual executive officers, see the below table.
General Meeting. The complete policy is found in Note 37. The Board of Directors decided in 2023 to implement step six of the modi-
The remunerations to the Chief Executive Officer/Managing Director are fied cash based long-term incentive programme for maximum 95 senior man-
decided by the Board of Directors based on proposals from the agers in the Group including the Chief Executive Officer and the persons de-
Remuneration Committee according to the guidelines established by the fined as executive officers. The outcome of the modified programme depends
Annual General Meeting. The remunerations to the other members of Group on how the adjusted EBITA margin and the net sales growth have developed
Management are decided by the Remuneration Committee according to the during a three-year period, with a 50/50 weight between the targets. This
same guidelines. The principle used when deciding the remunerations to ex- means that there will be no award during the first two years since it is first in
ecutive officers is to offer a competitive remuneration where the remunera- year three that it can be determined to what extent the targets have been
tion package is mainly based on a fixed monthly salary, with an option for a achieved. Maximum outcome is awarded when the targets are exceeded.
company car and in addition to that a variable remuneration of up to 50 The remuneration from the modified long-term incentive programme can
percent of the salary (managing director up to 60 percent of the salary). constitute maximum 25, 40 or 50 percent of the fixed remuneration depending
The outcome of the variable remuneration depends on the level of fulfilment on position. Payment to the participants in the programme is made after year
of the established mainly financial targets and to a limited extent also quali- three and only provided that they are still employed at the date of payment.
tative objectives. The guidelines for pension, termination and severance pay

Salaries and remunerations to Group Management

Consolidated Group Management
Chief Executive Officer/President
Other executive officers
Tom Erixon
SEK thousands 2023 2022 2023 2022
Salary and remunerations
Fixed remuneration
Base salary 15,521 15,069 31,174 30,437
Other benefits 1) 443 445 2,577 2,846
Variable remuneration 2)
Variable salary 3,345 8,652 6,096 13,868
Cash-based long-term incentive programme 4,897 3,605 7,999 5,965
Total salary and remuneration 24,206 27,771 47,846 53,116
Pension costs
Retirement and survivors’ pension 3) 7,905 7,549 10,837 11,039
Life, disability and health care insurance 4) 42 41 493 445
Total pension costs 7,947 7,590 11,330 11,484
Total remuneration 32,153 35,361 59,176 64,600

Proportion of fixed and variable remuneration

Fixed remuneration including fixed pension costs 74% 65% 71% 65%
Variable remuneration including variable pension costs 26% 35% 29% 35%
Number of other executive officers at year end 7 8
Variable salary (STI)
Included Yes Yes
Un-guaranteed target of base salary 30% Not set
Maximum of base salary 60% 50%
Cash-based long-term incentive programme (LTIP)
Included Yes Yes
Current year award 5) 6,984 4,855 11,439 7,854
Vested unpaid awards at December 31 6,984 4,855 11,439 7,854
Commitment for early retirement 6) No Yes
Commitment for severance pay Yes 7) Yes 8)
Commitment for retirement and survivors' pension 9) 10)

1)
Value of company car, housing benefit, taxable daily allowances, holiday pay and pay- 8)
aximum 2 years’ salary. The commitments define the conditions that must be fulfilled in
M
ment for vacation taken in cash. order for them to become valid.
2)
Refers to what was paid during the year. 9)
Is not included in the ITP plan. He has a defined contribution benefit comprising 50 per-
3)
Defined contribution based. cent of the base salary. In addition, he may exchange salary and variable remunerations
4)
Defined benefit based. for a temporary old age and family pension.
5)
Based on current base salary. 10)
For salaries above 30 base amounts there is a defined contribution pension solution with
6)
From the age of 62. A defined contribution solution for early retirement with a premium of a premium of 30 percent of the pensionable salary above 30 base amounts. Until May 1,
15 percent of the pensionable salary. 2012 the executive officers also had a special family pension that represented a supple-
7)
If Alfa Laval terminates his employment: ment between the old age pension and the family pension according to ITP. For the per-
–before the age of 64, he will receive 24 months’ base salary sons that were executive officers on May 1, 2012 the special family pension has been con-
–after the age of 64 he will receive 12 months’ base salary. verted to a premium based supplementary retirement pension based on the premium
level in December 2011. In addition, they may exchange salary and variable remunera-
tions for a temporary old age and family pension.

152 Notes
1
2
One of the other executive officers in Group Management, Mikael Tydén has Note 7. I nformation on auditors
left Group Management on September 30, 2023 due to a re-organisation.
3
He will continue as Chairman of the Board for Tranter and LHE and focus on and auditors’ fee
industrial relations as Senior Technical Advisor to Tom Erixon. His costs are 4
included in the above table for the period he has been part of Group Management. The line “Group auditors” in the below table is referring to the auditors elected
One of the other executive officers in Group Management, Jan Allde left at Annual General Meeting of Alfa Laval AB (publ). The Annual General Meetings 5
the company on October 31, 2022 and his successor Fredrik Ekström joined 2022 and 2023 decided to elect EY as the Group’s auditors for the coming year.
6
Group Management on November 1, 2022. Their costs are included in the
above table for the period they were part of Group Management. Fees and expense compensation 7

Board of Directors Consolidated 8

For 2023, the Board of Directors receive a total fixed remuneration of SEK 7,975 SEK millions 2023 2022
9
(7,170) thousand, which is distributed among the members elected at the Audit engagements
Annual General Meeting that are not employed by the company. These 10
Group auditors 56 48
Directors do not receive any variable remuneration.
Other audit firms 2 1 11
Total 58 49
Remunerations to Board members * 12
Audit related services
Consolidated Group auditors 3 1 13
SEK thousands 2023 2022 Other audit firms 1 0 14
Fees by function: Total 4 1
Chairman of the Board 1,950 1,900 Tax services
15
Other members of the Board 650 635 Group auditors 7 9 16
Supplement to: Other audit firms 20 15
17
Chairman of the Audit Committee 300 300 Total 27 24
Other members of the Audit Committee 150 150 Other services 18
Chairman of the remuneration committee 75 75 Group auditors 4 3 19
Other members of the remuneration committee 75 75 Other audit firms 4 10
Fees by name:
20
Total 8 13
Dennis Jönsson Chairman 2,175 2,125 Expenses 21
Lilian Fossum Biner Member 800 785 Group auditors 0 0 22
Nadine Crauwels Member 650 – Other audit firms 0 0
Henrik Lange Member 950 935 Total 0 0
23
Ray Mauritsson Member 650 635 Total 24
Maria Moræus Hanssen Member – 635 Group auditors 70 61
25
Anna Müller Member 650 – Other audit firms 27 26
Finn Rausing Member 650 635 Total 97 87 26
Jörn Rausing Member 725 710 27
An audit engagement includes examining the financial statements, assessing
Ulf Wiinberg Member 725 710
the accounting principles used and significant estimates made by manage- 28
Total 7,975 7,170 ment, as well as evaluating the overall financial statement presentation. It also
* Elected at the Annual General Meeting and not employed by the company. includes an examination in order to give an opinion on the Board’s discharge 29
from liability. Audit related services are audit services that are outside the
The reported remunerations refer to the period between two Annual General 30
audit engagement. Tax services refer to advices given in connection with
Meetings. various tax matters. All other assignments are defined as other services. 31
The Chairman of the Board does not have any agreement on future retire- Expenses refer to reimbursements of travel costs, secretarial services etc.
ment or severance pay with Alfa Laval. 32
33
The audit committee and the remuneration committee have had the following
Note 8. Comparison distortion items
members during the last two years: 34
2023 2022 Comparison distortion items 35
Audit Committee: Consolidated
36
Chairman Henrik Lange Henrik Lange SEK millions 2023 2022
Other member Dennis Jönsson Dennis Jönsson 37
Other operating costs
Other member Lilian Fossum Biner Lilian Fossum Biner Comparison distortion items: 38
Remuneration committee: - Provision for financial consequences of Russia's
39
Chairman Dennis Jönsson Dennis Jönsson war on Ukraine – -400
Other member Ulf Wiinberg Ulf Wiinberg - Restructuring costs – -367 40
Other member Jörn Rausing Jörn Rausing Net comparison distortion items – -767
The members of the committees are appointed at the constituent meeting of
The comparison distortion items during 2022 were relating to costs triggered
the Board of Directors directly after the Annual General Meeting.
by Russia’s war on Ukraine and for a restructuring project for parts of the
Marine Division and the Business Unit for Welded Heat Exchangers in the
Energy Division.
Notes

Notes 153
Note 9. Depreciation and amortisation Note 11. I nterest income/expense and
financial exchange rate gains/losses
Split by function
Consolidated
Split on type of income/expense or gain/loss
SEK millions 2023 2022
Cost of goods sold -1,764 -1,606 Consolidated
Sales -355 -353 SEK millions 2023 2022
Administration -191 -229 Interest income
Research and development -16 -10 Leasing 3 5
Other income and costs -198 -194 Other interest 153 90
Total -2,524 -2,392 Exchange rate gains
Unrealised 240 104
Split by type of asset Realised 52 68
Consolidated Total 448 267
SEK millions 2023 2022 Interest expenses
Intangible assets Leasing -94 -87
Patents and unpatented know-how -419 -468 Other interest -412 -232
Trademarks -529 -451 Exchange rate losses
Licenses, renting rights and similar rights -13 -9
Unrealised -25 -146
Internally generated intangible assets -98 -94
Realised -536 -147
-1,059 -1,022
Total -1,067 -612
Tangible assets
Purchased assets In the Group, reported net exchange differences of SEK 89 (-946) million
Buildings and ground installations -260 -249 relating to debts in foreign currencies have been charged to other compre-
Machinery -444 -424 hensive income. These debts finance the acquisition of shares in foreign sub-
Equipment -257 -227 sidiaries and act as a hedge to the acquired net assets. The amount is
-961 -900 charged with tax resulting in a net after tax impact on other comprehensive
Leased assets income of SEK 71 (-751) million.
Right-of-use asset real estate -417 -384
Rigth-of-use asset machinery -16 -18 Split on type of income/expense or gain/loss
Rigth-of-use asset equipment -71 -68 Moderbolaget
-504 -470
SEK millions 2023 2022
Sum tangible assets -1,465 -1,370
Interest income
Total -2,524 -2,392
External companies 3 0
Subsidiaries 249 44
Note 10. D
ividends and other financial Exchange rate gains
Unrealised 0 2
income and costs Total 252 46
Interest costs
Split by type External companies -1 0
Consolidated Total -1 0
SEK millions 2023 2022
Dividends from other 3 0
Gain or loss on sale of marketable securities 14 2
Fair value changes in marketable securities -4 3
Total 13 5

Note 12. Non-controlling interests

Alfa Laval has the following subsidiaries with non-controlling interests. None of these non-controlling interests are material.
Specification of subsidiaries with non-controlling interests
SEK millions, unless otherwise stated Non-controlling Attributable to non-controlling interest
interest Net income Equity
Company name Country of domicile 2023 2022 2023 2022 2023 2022
Alfa Laval Aalborg Indústria e Comércio Ltda Brazil 0.5 0.5 0 0 1 0
ClimaTempo Participacoes SA Brazil 10.34 49 0 12 4 18
Agência Brasileira de Meteorologia Ltda Brazil 10.35 49.01 1 1 3 7
Climanet Serviços de Internet Ltda Brazil 10.34 49 0 -2 1 2
TV Meteorológica Ltda* Brazil – 70.42 – 0 – 1
Somar Meteorologia Ltda Brazil 10.34 49 0 1 0 1
Southern Marine Weather Services Ltda Brazil 10.34 49 0 0 0 2
Liyang Sifang Stainless Steel Products Co., Ltd. China 35 35 51 52 298 285
Alfa Laval Aalborg Header-coil Company A/S** Denmark 49 – -3 – 32 –
Ziepack SA France 49 49 2 2 6 6
Desmet Rosedowns GmbH Germany 20 20 0 0 0 0
AO Alfa Laval Potok Russia 0.0005 0.0005 0 0 0 0
Total 51 66 345 322
* Divested in 2023. ** Acquired in 2023.

154 Notes
1
2
Note 13. Classification of financial assets and liabilities
3
Financial assets 4
Measured at
Fair value through Amortised cost 5
Consolidated Valuation hierarchy level Profit or loss Other comprehensive income
6
SEK millions 2023 2022 2023 2022 2023 2022
Non-current assets 7
Other non-current assets
Other long-term securities 1 and 2 – – 280 270 – – 8
Derivative assets 2 20 – 147 95 – –
9
Current assets
Current receivables
10
Accounts receivable * – – – – 10,282 9,717 11
Notes receivable * – – – – 336 435
Other receivables * – – – – 5,036 4,903 12
Accrued income * – – – – 34 45
Derivative assets 2 14 111 300 494 – – 13

Current deposits 14
Deposits with banks * – – – – 586 187
15
Bonds and other securities 1 132 114 – – – –
Debt instruments * – – – – 4 3 16
Other deposits * – – – – 6 7
17
Cash and cash equivalents * – – – – 5,135 4,352
Total financial assets 166 225 727 859 21,419 19,649 18
19
Financial liabilities
Measured at 20
Fair value through Amortised cost
21
Consolidated Valuation hierarchy level Profit or loss Other comprehensive income
SEK millions 2023 2022 2023 2022 2023 2022 22
Non-current liabilities
Liabilities to credit institutions etc * – – – – 9,829 13,362 23
Lease liabilities * – – – – 1,473 1,549
24
Derivative liabilities 2 7 5 46 135 – –

Current liabilities 25
Liabilities to credit institutions etc * – – – – 3,444 1,700 26
Accounts payable * – – – – 4,871 4,891
Notes payable * – – – – 334 423 27
Lease liabilities * – – – – 1,128 1,122
Other liabilities 3 117 – – – 5,979 5,269 28
Accrued costs * – – – – 2,552 2,753
29
Derivative liabilities 2 25 94 501 599 – –
Total financial liabilities 149 99 547 734 29,610 31,069 30
31
* Valued at amortised cost. The result of the derivative instruments impacting net income is presented below:
Valuation hierarchy level 1 is according to quoted prices in active markets for identical assets 32
and liabilities. Result effect on net income of derivatives
Valuation hierarchy level 2 is out of directly or indirectly observable market data outside level 1. 33
Valuation hierarchy level 3 is out of unobservable market data. Consolidated
SEK millions 2023 2022 34
Derivatives measured through other comprehensive income only relate to Reported in cost of goods sold, relating to:
cash flow hedges. Other liabilities measured at fair value through profit or Currency forward contracts -734 -470 35
loss is relating to a liability for the seller’s earn-out possibility in connection Metal forward contracts -40 392
with an acquisition of businesses.
36
Electricity futures 11 40
All of the financial instruments above sum up either to the corresponding Derivative assets and liabilities measured at fair 37
item in the statement on financial position or to the item specified in the value through profit or loss -59 42
notes referred to in the statement on financial position. The risks linked to 38
Subtotal -822 4
these financial instruments including any concentrations of risk are presented
in the sections on risks on pages 137–147. Reported in interest income in the financial net,
39
relating to: 40
Result of financial instruments Currency swaps – 23
The result of the bonds and other current and non-current securities mea- Subtotal – 23
sured at fair value through profit or loss is found in Note 10 as fair value
changes in securities. Reported in exchange gains and losses in the
The result of financial assets measured at amortised cost is presented in financial net, relating to:
Note 11 as other interest income for deposits with banks, other deposits and Currency forward contracts and options -109 –
cash and cash equivalents. The other financial assets measured at amor- Derivative assets and liabilities measured at fair
tised cost do not generate a result but only a cash-in of the principal amount. value through profit or loss 43 -42
The result of the financial liabilities measured at amortised cost is pre- Subtotal -66 -42
sented in Note 11 as other interest costs for the liabilities to credit institutions Total impact on net income -888 -15
Notes

etc. The other financial liabilities measured at amortised cost do not gener-
ate a result but only a cash-out of the principal amount. The result of the derivative assets and liabilities measured at fair value through
other comprehensive income is reported as part of other comprehensive income
in the consolidated comprehensive income statement.

Notes 155
Note 14. Fair value of financial instruments Note 15. Maturity analysis of derivatives
The fair value changes in shares in external companies are made under other The future undiscounted cash flows for the different types of derivatives are
comprehensive income and amounts to SEK -2 (-13) million, see the consoli- shown in the following three graphs:
dated comprehensive income statement.
The fair value changes in marketable securities are made on the line dividends
and other financial income and costs in the consolidated comprehensive in- Maturity analysis for currency derivatives
come statement and amounts to SEK -4 (3) million, see Note 10.
The net of derivative assets and derivative liabilities in the consolidated financial SEK millions

position is a net liability of SEK -98 (-133) million, which is specified below: 7,000
6,000 5,401
4,995
5,000
Fair value of derivatives 4,000 3,563
Consolidated 3,000 2,649
2,000 1,808
1,230 1,190
Difference between 1,000 757
12
contracted rate 0
and current rate -1,000 -735
-10
-1,205 -1,173
Currency -2,000 -1,762
SEK millions pairs 2023 2022 -3,000 -2,616
-4,000 -3,525
Derivative assets/liabilities -5,000
-4,999
Foreign exchange forward -6,000 -5,452
contracts: EUR USD 14 0 -7,000
3 6 9 12 15 18 24 36 >36
EUR SEK 131 -244
Months
EUR AUD -1 1
EUR CAD 0 4
EUR CNY -40 -9 Maturity analysis for metal derivatives
EUR DKK -1 –
SEK millions
EUR JPY -2 -4
150
EUR SGD 0 1
EUR INR -3 -7 120
USD CAD -2 0
USD DKK 14 -39 90
USD GBP 1 1
60
USD SEK 3 –
USD JPY -1 – 30
USD KRW -3 0
0
USD INR – -4
3 6 9 12 15 18 24 36 >36
CAD SEK 0 1
DKK NOK – -2 Months

DKK SEK 4 -3
NOK EUR -25 10
Maturity analysis for electricity futures
NOK USD 62 -178
CNY SEK 1 3 SEK millions

CNY USD 0 -1 1.0

AUD USD 0 –
0.8
JPY NOK 21 -1
KRW EUR – -2 0.6
Other Other -5 -1
Subtotal 168 -474 0.4

Currency options 9 -39

0.2
Metal forward contacts -277 319
Electricity futures 2 61 0.0
Total, corresponding to a net derivative 3 6 9 12 15 18 24 36 >36
asset (+) or liability (-) -98 -133 Months

For currency options and electricity futures hedge accounting has not been Positive cashflows Negative cashflows
applied. For foreign exchange forward contracts and metal forward contracts
hedge accounting has been applied when the conditions for hedge account-
ing have been fulfilled.
The fair value adjustment of derivatives is made through other comprehensive
income if hedge accounting can be applied and the derivatives are effective.
In all other cases the fair value adjustment is made above net income. The
corresponding entries are made on derivative assets and liabilities and not
on the underlying financial instruments in the statement on financial position.

156 Notes
1
2
Note 16. Current and deferred taxes Alfa Laval has provisions for uncertain tax positions and they are booked as a
part of current tax liabilities when for instance a local tax audit or a taxation
3
decision indicate an increased tax burden and the company makes the
Tax on this year’s net income and other taxes judgement that the tax authority wholly or partially can gain success in the 4
Consolidated future litigation.
Temporary differences exist when there is a difference between the book 5
SEK millions 2023 2022
value and the tax base of assets and liabilities. The Group’s temporary differ-
Major components of the Group's tax cost: 6
ences have resulted in a deferred tax asset or a deferred tax liability relating
Current tax cost -2,119 -1,579 to the following assets and liabilities: 7
Adjustment for current taxes on prior periods -63 120
Deferred tax costs/income on changes in 8
Deferred tax assets and liabilities
temporary differences -50 -138 9
Consolidated
Deferred tax costs/income on changes in tax
rates or new taxes -4 1 2023 2022 10
Previously unrecognised tax assets related to SEK millions Assets Liabilities Assets Liabilities
11
tax losses and tax credits 4 20 Relating to:
Previously unrecognised deferred tax assets Intangible non-current assets 1 1,257 9 1,362 12
related to tax losses, tax credits and temporary Tangible non-current assets 95 155 121 188 13
differences 4 1
Right-of-use assets 22 141 – –
Deferred tax cost from the write down or reversal
Inventory 211 121 212 56 14
of a previous write down of a deferred tax asset 8 1
Other current assets 3 9 4 11 15
Dividend distribution tax 0 0
Financial assets 1 9 43 11
Other taxes -49 -36 16
Short term liabilities 1,348 50 1,520 83
Total tax cost -2,269 -1,610
Lessee liability 140 – – – 17
Other taxes are mainly referring to wealth tax. Tax losses and tax credits * 93 – 130 –
18
Other 17 841 21 747
Tax on this year’s other comprehensive income Subtotal 1,931 2,583 2,060 2,458 19
Consolidated Possible to net -211 -211 -165 -165
20
SEK millions 2023 2022 Total deferred taxes 1,720 2,372 1,895 2,293
21
Major components of the Group's tax cost * The Group has reported a deferred tax asset on unused tax losses and tax grants of SEK 534
Deferred tax on: (665) million. These unused tax losses and tax grants are essentially not restricted in time. 22
Cash flow hedges -9 69
In the Group there are temporary differences and unused tax losses and tax 23
Market valuation of external shares 1 -28
credits of SEK 761 (999) million that have not resulted in corresponding deferred 24
Translation difference -23 142
tax assets, since these are not likely to be used within foreseeable time. The
Revaluations of defined benefit obligations 23 -81
temporary differences are mainly relating to pensions, where the date of pay- 25
Total tax cost -8 102 ment is so far into the future that considering discounting and uncertainty
concerning future profit levels no asset is deemed to exist. The unused tax 26
The difference between the tax costs of the group and the tax cost based
losses and tax grants are essentially not restricted in time, but the tax losses 27
upon applicable tax rates can be explained as follows:
that can be utilised per year can be restricted to a certain proportion of the
taxable result. 28
Tax cost reconciliation The nominal tax rate has changed in the following countries between
2022 and 2023 or will change during 2024. 29
Consolidated
SEK millions 2023 2022 30
Result after financial items 8,650 6,179
Tax rates by country
31
Tax according to applicable tax rates -2,053 -1,454 Consolidated
Tax effect of: Percent 2024 2023 2022 32
Non-deductible costs -530 -352 Argentina 35.0 35.0 30.0 33
Non-taxable income 98 183 Lithuania 15.0 15.0 20.0
34
Differences between reported official depreciation UK 25.0 25.0 19.0
and depreciation according to tax rules 11 6 South Africa 27.0 27.0 28.0 35
Differences between reported other official Czech Republic 21.0 19.0 19.0
appropriations and other appropriations 36
Turkey 25.0 25.0 23.0
according to tax rules 256 -55 37
Austria 23.0 24.0 25.0
Tax losses and tax credits 61 -22
Adjustment for current tax on prior periods -63 120 The tax rates for 2023 and 2022 have been used to calculate the actual tax 38
Adjustment deferred tax 0 0 each year, while the tax rates for 2024 and 2023 have been used to calculate
39
Dividend distribution tax 0 0 the deferred tax for 2023 and 2022 respectively.
Other -49 -36
The Group’s normal effective tax rate is approximately 26 (26) percent 40
based on taxable result, and it is calculated as a weighted average based on
Total tax costs -2,269 -1,610
each subsidiary’s part of the result before tax. One-time items can however
increase or decrease the tax rate for an individual year.
Notes

Notes 157
Tax cost per country/district
Consolidated
2023 2022
Earnings before Earnings before
tax and received Tax percentage tax and received Tax percentage
SEK millions (unless otherwise stated) dividends Tax cost (%) dividends Tax cost (%)
Top ten countries/districts
China 1,840 -499 27.1% 1,584 -388 24.5%
Sweden 1,468 -442 30.1% 1,517 -363 23.9%
Norway 1,210 -258 21.3% 746 -78 10.5%
USA 781 -175 22.3% 692 -155 22.4%
India 585 -154 26.3% 388 -101 26.1%
Denmark 704 -152 21.7% 432 -88 20.4%
Brazil 430 -122 28.5% 339 -107 31.5%
Italy 205 -65 31.6% -104 11 10.9%
Hong Kong 238 -63 26.5% 90 -38 42.3%
Belgium 148 -54 36.4% 1,198 -13 1.1%
Total top ten countries/districts 7,609 -1,984 26.1% 6,882 -1,320 19.2%

Other countries/districts
With a positive result 1,314 -314 23.9% 1,648 -363 22.0%
With losses -188 -32 -17.2% -75 2 2.1%

Total all countries/districts 8,735 -2,330 26.7% 8,455 -1,681 19.9%

Consolidation entries
Elimination of appropriations 104 -17 16.3% -479 97 20.3%
Amortisation of step-up values -965 216 22.4% -943 211 22.4%
Central provisions and consolidation adjustments 776 -138 17.8% -854 -237 -27.8%
Total 8,650 -2,269 26.2% 6,179 -1,610 26.1%

The above table presents the earnings before tax and received dividends, the Observe that individual companies in the top ten countries/districts and in
tax cost and the tax percentage per country for the top ten countries/districts the group with a positive result can report losses. The group with losses can
separately and the others grouped under profit generating and loss-making contain individual companies with profits. Also observe that the presented
respectively and the consolidation entries in order to arrive at the total. The local result is without correction for any non-deductible costs and non-taxable
results include appropriations. The reason why the result is before received revenues outside received tax free dividends.
dividends is that these mostly are non-taxable. The top ten countries/districts Companies with losses in countries/districts without tax pooling might
are defined as the ten countries/districts with the highest tax cost in 2023. have unused tax losses that have not resulted in a corresponding deferred tax
The comparison figures 2022 are for these ten countries/districts, although asset, since these are not likely to be used. The lack of such a deferred tax in-
they might not have been among the ten countries/districts with highest tax come in these cases has an impact on the tax percentage in the concerned
cost also in 2022. countries/districts.

Note 17. Goodwill and step-up values – acquisition of businesses

The allocation of step-up values to tangible and intangible assets and the residual goodwill in effect means that all acquisitions are valued at market. In order
to separate out this valuation effect Alfa Laval focuses on EBITA, where any amortisation of step-up values is excluded. The development of these step-up values
and any goodwill is shown in the table below.

Movement schedule
Consolidated
Adjustment of last Planned
Opening year’s purchase depreciation/ Translation Closing balance
SEK millions balance 2023 Acquisitions price allocation amortisation difference 2023
Buildings 160 – – -38 3 125
Land and land improvements -54 – – – 12 -42
Patents and unpatented know-how 2,528 268 – -399 -207 2,190
Trademarks 1,972 9 – -527 -36 1,418
Other 2 – – -1 0 1
Subtotal step-up values 4,608 277 – -965 -228 3,692

Goodwill 26,258 52 -42 – -1,199 25,069

Total 30,866 329 -42 -965 -1,427 28,761

During 2023 the Group has not recorded any impairment losses related to goodwill and step-up values.
There is no deferred tax liability calculated on the goodwill. The deferred tax liability on the other step-up values is SEK 861 (983) million.
For assets sold, net gains or losses are recognised on the cost basis including any related step-up value.
The next table shows each acquisition separately. Any later adjustments to the allocations are referred to the original year of the acquisition. The figures for
the allocations are based on the prevailing rates at the time the transactions took place and any change in exchange rates until December 31, 2023 is shown
as a translation difference. The corresponding presentation by asset type is found in Notes 18 and 19.

158 Notes
1
2
Acquisition of businesses since 2000
Consolidated 3
Patents and 4
SEK millions Land and land unpatented Total step-up
Year Businesses Buildings improvements Inventory know-how Trademarks Other values Goodwill Total 5
2000 Alfa Laval Holding 1,058 -228 340 1,280 461 1,112 4,023 3,683 7,706
6
2002 Danish Separation Systems – – – – – – – 118 118
2003 Toftejorg 1 – – – – – 1 35 36 7
2005 Packinox – – 6 99 183 – 288 253 541
8
2006 Tranter 17 – 6 180 265 – 468 530 998
2007 AGC Engineering – – – – 12 – 12 20 32 9
Helpman 9 8 – 36 – – 53 4 57
Public offer Alfa Laval (India) – – – – – – – 441 441
10
DSO Fluid Handling – – – – 39 – 39 42 81 11
Fincoil – – – 233 – – 233 241 474
2008 Høyer Promix A/S – – – – – – – 16 16 12
Nitrile India Pvt Ltd – – – – – – – 6 6 13
Standard Refrigeration – – 5 166 – – 171 152 323
Pressko AG – – 1 – – – 1 69 70 14
Hutchison Hayes Separation – – 1 95 49 – 145 46 191
15
P&D's Plattvärmeväxlarservice – – – – – – – 10 10
Ageratec – – – – – – – 44 44 16
2009 Two providers of parts & service – – – – 291 – 291 210 501
17
Onnuri Industrial Machinery – – – 40 39 – 79 48 127
HES Heat Exchanger Systems – – – 83 – – 83 59 142 18
Public offer Alfa Laval (India) – – – – – – – 311 311
19
Termatrans – – – – 7 – 7 6 13
Tranter acquisitions in Latin America – – – – 20 – 20 16 36 20
ISO Mix – – – 22 – – 22 – 22
LHE – – – 298 297 – 595 344 939 21
2010 Champ Products – – – 15 14 – 29 2 31 22
A leading U.S. service provider – – – – 134 – 134 82 216
G.S Anderson – – – 35 – – 35 23 58 23
Astepo – – – 24 15 – 39 8 47 24
Si Fang Stainless Steel Products – – – 27 16 – 43 42 85
Definox – – – 4 5 – 9 2 11 25
Olmi – – 37 58 32 – 127 – 127
26
2011 Service company in the U.S. – – – – 150 – 150 126 276
Aalborg Industries 248 – – 430 860 – 1,538 3,630 5,168 27
2012 Vortex Systems – – – 148 – – 148 225 373
28
Ashbrook Simon-Hartley – – – 86 – – 86 55 141
Gamajet Cleaning Systems – – – 47 – – 47 37 84 29
Air Cooled Exchangers (ACE) – – – 585 – – 585 346 931
2013 Niagara Blower Company – – – 202 – – 202 203 405
30
2014 Frank Mohn AS – – 38 1,160 3,793 – 4,991 9,831 14,822 31
CorHex Corp – – – 15 – – 15 – 15
2015 Aftermarket company (separation) – – – – 32 – 32 24 56 32
K-Bar Parts LLC – – – – 16 – 16 – 16 33
2019 Airec – – – 60 – – 60 22 82
2020 WCR Benelux – – – – 10 – 10 3 13 34
Sandymount – – – 41 – – 41 15 56 35
2021 StormGeo – – – 1,397 – – 1,397 2,245 3,642
LiftUP – – – 106 – – 106 109 215 36
2022 Desmet – – – 681 1,330 – 2,011 2,079 4,090 37
Scanjet – – – 130 – – 130 108 238
Bunker Metric – – – 9 – 2 11 8 19 38
2023 MPS – – – 211 – – 211 0 211
39
Header–coil – – – 11 – – 11 7 18
European service provider – – – 46 9 – 55 45 100 40
Accumulated during the period
Realised -542 122 -435 – – -123 -978 -50 -1,028
Write down -6 -9 – -89 -5 – -109 -941 -1,050
Planned depreciation/amortisation -671 – – -6,156 -6,612 -994 -14,433 -612 -15,045
Translation difference 11 65 1 375 -44 4 412 691 1,103
Closing balance 125 -42 – 2,190 1,418 1 3 ,692 25,069 28,761

The acquisition of the Alfa Laval Holding AB group in connection with the acquisition by Industri Kapital of the Alfa Laval Group from Tetra Laval on August 24,
2000 is shown on the first row.
Notes

“Other” relates to step-up values from 2000 for “Machinery” of SEK 548 million and “Equipment” of SEK 452 million that have been fully depreciated or realised,
for “Research and development” of SEK 54 million and “Capital gain (Industrial Flow)” of SEK 42 million that have been fully realised and for “Construction in
process” of SEK 16 million that has been transferred to “Machinery”.

Notes 159
Acquisition of businesses and SEK -5 million respectively. At the end of December 2023, the number of
During 2023 employees was 21.
On March 2, 2023, Alfa Laval acquired an additional 38.7 percent of On July 31, 2023 Alfa Laval acquired 100 percent of a European service
StormGeo’s subsidiary Climatempo in Brazil from the minority owners. Alfa provider. The company will operate under its own name as an independent
Laval’s ownership thereby increased from 51 percent to 89.7 percent. The channel. The purchase price is SEK 199 million, out of which all has been paid
purchase price is SEK 118 million, out of which all has been paid in cash. The in cash. At the acquisition cash of SEK 40 million has been taken over. The
transaction is reported as a change within the equity. costs directly linked to the acquisition (fees to lawyers, due diligence and as-
In 2021, Alfa Laval acquired a minority stake of 16.5 percent in the sisting counsel) come in addition to this and have amounted to SEK 4 million,
Netherland-based company Marine Performance Systems (MPS) with an which is reported as other operating costs. The impact on the cash flow is
option to acquire the remaining part later. Now Alfa Laval has executed that thus SEK -163 million. Out of the difference between the purchase price paid
option and completed the acquisition to own 100 percent of MPS. The clos- and the net assets acquired SEK 46 million has been allocated to patents
ing date for the acquisition was March 21, 2023. MPS’ innovative technology and un-patented know-how and SEK 9 million to the trademark, while the
significantly reduces the friction from vessels when sailing, resulting in fuel residual SEK 45 million has been allocated to goodwill. The goodwill is relat-
savings. Friction between the hull and the water when sailing is the most sig- ing to estimated synergies in procurement, logistics and corporate overheads
nificant driver of a vessel’s fuel consumption, and the cost of fuel represents and the company’s ability to over time recreate its intangible assets. The
up to 60 percent of a vessel’s operating costs. Fuel consumption has a direct value of the goodwill is still preliminary. The step-up values for patents and
impact on greenhouse gas emissions, as reducing 1 ton of fossil fuel con- un-patented know-how and the trademark are amortised over 10 years.
sumption equals the reduction of approximately 3 tonnes of CO2 emissions. From the date of the acquisition the company has added SEK 31 million in or-
Marine Performance Systems’ air lubrication technology generates micro ders received, SEK 31 million in invoicing and SEK 5 million in adjusted EBITA
bubbles under a ship’s hull, reducing friction between the vessel and the wa- to Alfa Laval. If the company had been acquired at January 1, 2023 the cor-
ter by 50-70 percent and enabling substantial fuel cost savings and improve- responding figures would have been SEK 87 million, SEK 87 million and SEK
ment in overall ship efficiency, during normal service speed. The technology 21 million respectively. At the end of December 2023, the number of employ-
was first tested on a sea-going vessel in 2020 and the fuel savings have ees was 55.
been confirmed by the shipowner based on several months of operation. The On July 31, 2023 Alfa Laval acquired 51 percent of the Danish company
patented solution can be installed on vessels of any size or fuel type at point Header-coil Company A/S that develops and manufactures heat exchang-
of building or retrofitted on already operating vessels. Since the acquisition ers and steam generation system equipment components based on its
Alfa Laval has launched the Alfa Laval OceanGlide product that creates an header-coil design for the concentrated solar power (CSP) industry, thermal
even layer of micro air bubbles across the vessel’s flat bottom area, which re- energy storage etc. The purchase price is SEK 47 million, out of which all has
duces drag by up to 75 percent. Since Alfa Laval OceanGlide needs few been paid in cash. At the acquisition cash of SEK 0 million has been taken
compressors and no large hull penetrations it can be easily installed. The pur- over. The costs directly linked to the acquisition (fees to lawyers, due dili-
chase price is SEK 141 million, out of which SEK 24 million has been paid in gence and assisting counsel) come in addition to this and have amounted to
cash and SEK 117 million is retained for a period of 3 years. The retained part SEK 2 million, which is reported as other operating costs. The impact on the
of the purchase price is contingent on that certain profitability and liquidity cash flow is thus SEK -49 million. Out of the difference between the purchase
goals are fulfilled. The outcome can be as low as SEK 0 million, but the prob- price paid and the net assets acquired SEK 11 million has been allocated to
able outcome is SEK 117 million, which is also the fair value since the contin- patents and un-patented know-how, while the residual SEK 7 million has
gent consideration is to be paid in cash. The costs directly linked to the ac- been allocated to goodwill. The goodwill is relating to estimated synergies in
quisition (fees to lawyers, due diligence and assisting counsel) come in procurement, logistics and corporate overheads and the company’s ability to
addition to this and have amounted to SEK 0 million, which is reported as over time recreate its intangible assets. The value of the goodwill is still pre-
other operating costs. The impact on the cash flow is thus SEK -24 million. liminary. The step-up value for patents and un-patented know-how is amor-
Out of the difference between the purchase price paid and the net assets ac- tised over 10 years. From the date of the acquisition the company has added
quired SEK 211 million has been allocated to patents and un-patented SEK 1 million in orders received, SEK 1 million in invoicing and SEK -7 million in
know-how, while the residual SEK 0 million has been allocated to goodwill. adjusted EBITA to Alfa Laval. If the company had been acquired at January 1,
The goodwill is relating to estimated synergies in procurement, logistics and 2023 the corresponding figures would have been SEK 3 million, SEK 3 mil-
corporate overheads and the company’s ability to over time recreate its in- lion and SEK -15 million respectively. At the end of December 2023, the num-
tangible assets. The value of the goodwill is still preliminary. The step-up ber of employees was 4.
value for patents and un-patented know-how is amortised over 10 years. The acquisitions during 2023 are summarized in the following table. The
From the date of the acquisition the company has added SEK 15 million in or- larger acquisitions of MPS and the European service provider are shown sep-
ders received, SEK 43 million in invoicing and SEK -27 million in adjusted arately, whereas the acquisitions of the other companies are shown on a sin-
EBITA to Alfa Laval. If the company had been acquired at January 1, 2023 gle line as other minor acquisitions. All acquired assets and liabilities were re-
the corresponding figures would have been SEK 100 million, SEK 86 million ported according to IFRS at the time of the acquisitions.

160 Notes
1
2
Acquisitions 2023
MPS European service provider Total 3
Adjustment to Adjustment to 4
SEK millions Book value fair value Fair value Book value fair value Fair value Fair value
Property, plant and equipment 1 – 1 44 – 44 45 5
Patents and unpatented know-how 1) 0 211 211 – 46 46 257 6
Trademarks 1) – – – 18 9 27 27
Inventory 4 – 4 14 – 14 18 7
Accounts receivable 1 – 1 – – – 1 8
Other receivables 37 – 37 15 – 15 52
9
Liquid assets – – – 40 – 40 40
Accounts payable -11 – -11 – – – -11 10
Advance payments -14 – -14 – – – -14 11
Other liabilities -7 – -7 -17 – -17 -24
12
Deferred tax – -55 -55 – -15 -15 -70
Acquired net assets 11 156 167 114 40 154 321 13
Goodwill 2) 0 45 45 14
Equity attributable to owners of parent 26 – 26
Purchase price -141 -199 -340 15
Costs directly linked to the acquisitions 3) 0 -4 -4 16
Retained part of purchase price 4) 117 – 117
17
Liquid assets in the acquired businesses 0 40 40
Other minor acquisitions current year -167 18
Payment of amounts retained in prior years 17 19
Effect on the Group's liquid assets -24 -163 -337
20
1)
he step up values for patents and un-patented know-how as well as trademarks are amortised over 10 years. The purchase price allocation is still preliminary so the allocated step up values
T
may be subject to change. 21
2)
The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the companies’ ability to over time recreate its intangible assets. The purchase price allocation
is still preliminary so the value of the goodwill may be subject to change. 22
3)
Refers to fees to lawyers, due diligence and assisting counsel. Has been expensed as other operating costs.
4)
Contingent on certain warranties in the contract not being triggered or that certain profitability goals are fulfilled. The probable outcome has been calculated.
23
24
During 2022 reduce the water usage and energy consumption connected with tank cleaning. 25
On September 13, 2022 Alfa Laval announced that it had acquired BunkerMetric, Adding Scanjet to Alfa Laval’s portfolio will support customer efficiency at every
a Scandinavian software company that develops advanced decision support stage of cargo handling. Scanjet has global presence with factories in Sweden, 26
tools for marine bunker vessels. The acquisition was part of Alfa Laval’s strategy Poland and Indonesia. The purchase price was SEK 314 million, out of which 27
to expand its digital marine service offering and will be part of the recently SEK 268 was paid in cash and SEK 46 million is retained for a period of 12 to
acquired StormGeo, a global leader in weather intelligence software and 18 months. At the acquisition cash of SEK 40 million was taken over. The costs 28
decision support services. BunkerMetric, headquartered in Denmark, supports directly linked to the acquisition (fees to lawyers, due diligence and assisting
ship operators in finding the best bunker procurement plan and improving counsel) came in addition to this and amounted to SEK 9 million, which was 29
voyage margins by using sophisticated algorithms. The optimization tools, reported as other operating costs. The impact on the cash flow was thus 30
together with StormGeo’s advanced route services, will enable ship owners to SEK -237 million. Out of the difference between the purchase price paid and
streamline operations to help them improve their bottom line. BunkerMetric’s the net assets acquired SEK 130 million was allocated to patents and un- 31
procurement optimization tool will become a subscription service within patented know-how, while the residual SEK 108 million was allocated to
StormGeo’s existing offering. The purchase price was SEK 13 million, out of goodwill. The goodwill was relating to estimated synergies in procurement, 32
which all was paid in cash. At the acquisition cash of SEK 1 million was taken logistics and corporate overheads and the company’s ability to over time 33
over. The costs directly linked to the acquisition (fees to lawyers, due diligence recreate its intangible assets. The value of the goodwill has been finalised in
and assisting counsel) came in addition to this and amounted to SEK 1 million, 2023. The step-up value for patents and un-patented know-how is amortised 34
which was reported as other operating costs. The impact on the cash flow over 10 years. From the date of the acquisition the company added SEK 121
was thus SEK -13 million. Out of the difference between the purchase price million in orders received, SEK 94 million in invoicing and SEK 17 million in 35
paid and the net assets acquired SEK 9 million was allocated to patents and adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 36
un-patented know-how and SEK 2 million to other intangible assets (non- 2022 the corresponding figures would have been SEK 346 million, SEK 281
competition clause), while the residual SEK 8 million was allocated to good- million and SEK 41 million respectively. At the end of December 2022, the 37
will. The goodwill was relating to estimated synergies in procurement, logistics number of employees was 153.
and corporate overheads and the company’s ability to over time recreate its On August 2, 2022 Alfa Laval announced that it had closed the acquisition 38
intangible assets. The value of the goodwill has been finalised in 2023. The of Desmet, part of the Desmet Ballestra Group, a world leader in engineering 39
step-up value for patents and un-patented know-how is amortised over 10 years and supplying processing plants and technologies for edible oils and biofuel
while the step-up value of the non-competition clause is amortised over 2 years. sectors. The acquisition will strengthen Alfa Laval’s position in the renewable 40
From the date of the acquisition the company added SEK 1 million in orders energy arena and complement its offering within edible oils. Headquartered
received, SEK 1 million in invoicing and SEK 0 million in adjusted EBITA to Alfa in Brussels, Belgium, Desmet employs around 1,000 people in Europe, India,
Laval. If the company had been acquired at January 1, 2022 the corresponding Southeast Asia, North America and Latin America. The acquired business
figures would have been SEK 3 million, SEK 3 million and SEK 0 million respec- was a part of the Desmet Ballestra Group and had a turnover of approximately
tively. At the end of December 2022, the number of employees was 1. EUR 300 million in 2021. The operational units and brands of Rosedowns
On August 31, 2022 Alfa Laval announced that it had closed the acquisition and Stolz were included in the transaction. The Desmet Ballestra Group was
of Scanjet, a leading global supplier of tank cleaning equipment and solutions owned by Financière DSBG and ultimately controlled by Kartesia and Farallon.
for marine, offshore and industrial applications. The acquisition will extend The acquisition will operate as a stand-alone entity within the Food & Water
Alfa Laval’s broad tanker offering, creating a more comprehensive product Division of Alfa Laval. It strengthens Alfa Laval’s position in the markets for
portfolio for cargo tanks. Scanjet’s intelligent tank management solutions will edible oils, biofuels, and plant- and animal-based proteins for food and feed.
Notes

be a valuable complement to Alfa Laval’s sustainable marine offering as they The acquisition will have a positive impact on earnings per share and be

Notes 161
marginally decretive to Alfa Laval’s EBITA margin. “The acquisition will be an the company’s ability to over time recreate its intangible assets. In 2023 the
excellent fit for our offering of specialized processing equipment designed to purchase price has been reduced by SEK 42 million, which has reduced the
increase both yield and quality of customers’ end products,” says Tom Erixon, goodwill correspondingly. The value of the goodwill has been finalised in 2023.
President and CEO of Alfa Laval. “It will add know-how and expertise to ac- The step-up value for patents and un-patented know-how and the step-up
celerate future innovations within food, feed and biofuels – and strengthen value for the trademark Desmet are both amortised over 10 years. From the
our ability to support the transformation towards renewable fuels.” The pur- date of the acquisition the company added SEK 1,374 million in orders received,
chase price was SEK 3,632 million, out of which all was paid in cash. At the SEK 2,474 million in invoicing and SEK 314 million in adjusted EBITA to
acquisition cash of SEK 238 million was taken over. The costs directly linked Alfa Laval. If the company had been acquired at January 1, 2022 the corre-
to the acquisition (fees to lawyers, due diligence and assisting counsel) sponding figures would have been SEK 4,288 million, SEK 4,861 million and
came in addition to this and amounted to SEK 37 million, which was reported SEK 444 million respectively. At the end of December 2022, the number of
as other operating costs. The impact on the cash flow was thus SEK -3,431 employees was 1,071.
million. Out of the difference between the purchase price paid and the net The acquisitions during 2022 are summarized in the following table. The
assets acquired SEK 681 million was allocated to patents and un-patented larger acquisitions of Desmet and Scanjet are shown separately, whereas the
know-how and SEK 1,330 to the trademark Desmet, while the residual acquisition of BunkerMetric is shown on a single line as other minor acquisitions.
SEK 2,201 million was allocated to goodwill. The goodwill was relating to All acquired assets and liabilities were reported according to IFRS at the time
estimated synergies in procurement, logistics and corporate overheads and of the acquisitions.

Acquisitions 2022
Desmet Scanjet Total
Adjustment to Adjustment to
SEK millions Book value fair value Fair value Book value fair value Fair value Fair value
Property, plant and equipment 113 – 113 28 – 28 141
Right-of-use assets 93 – 93 – – – 93
Patents and unpatented know-how 1) 22 681 703 – 130 130 833
Trademarks 1) – 1,330 1,330 – – – 1,330
Capitalised development costs – – – 5 – 5 5
Other non-current assets 34 – 34 6 – 6 40
Inventory 212 – 212 85 – 85 297
Accounts receivable 1,032 – 1,032 31 – 31 1,063
Other receivables 810 – 810 6 – 6 816
Liquid assets 238 – 238 40 – 40 278
Provisions for pensions and similar commitments -27 – -27 – – – -27
Other provisions -17 – -17 -1 – -1 -18
Equity attributable to non-controlling interests 0 – 0 – – – 0
Loans -47 – -47 -47 – -47 -94
Lease liability -101 – -101 – – – -101
Accounts payable -534 – -534 -21 – -21 -555
Advance payments -469 – -469 -7 – -7 -476
Other liabilities -1,392 – -1,392 -20 – -20 -1,412
Tax liabilities -10 – -10 – – – -10
Deferred tax -19 -438 -457 -2 -27 -29 -486
Acquired net assets -62 1,573 1,511 103 103 206 1,717
Goodwill 2) 2,121 108 2,229
Purchase price -3,632 -314 -3,946
Costs directly linked to the acquisitions 3) -37 -9 -46
Retained part of purchase price 4) – 46 46
Liquid assets in the acquired businesses 238 40 278
Other minor acquisitions current year -13
Payment of amounts retained in prior years -4
Effect on the Group's liquid assets -3,431 -237 -3,685
1)
he step up values for patents and un-patented know-how as well as trademarks are amortised over 10 years. The purchase price allocation was still preliminary so the allocated step up
T
values may be subject to change.
2)
The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the companies’ ability to over time recreate its intangible assets. The purchase price
allocation was still preliminary so the value of the goodwill may be subject to change.
3)
Refers to fees to lawyers, due diligence and assisting counsel. Was expensed as other operating costs.
4)
Contingent on certain warranties in the contract not being triggered or that certain profitability goals are fulfilled. The probable outcome was calculated.

Impairment testing The recoverable amount of the cash-generating units is based on their value
An impairment test has been performed at the end of 2023 indicating that in use, which is established by calculating the net present value of future
there is not any need to write down the goodwill. cash flows. The net present value is based on the projected EBITDA figures
Three of Alfa Laval’s operating segments, the three business divisions for the next five years, less projected investments and changes in operating
“Energy”, “Food & Water” and ”Marine” have been identified as the cash- capital during the same period and thereafter the perceived expected aver-
generating units within Alfa Laval. Technically a recently acquired business age industry growth rate.
activity could be followed independently during an initial period, but acquired
businesses are normally integrated into the divisions at a fast rate. This This projection is based on the following components:
means that the independent traceability is lost fairly soon and then any inde- – The projection for 2024 is based on the Group’s normal 12 month revolving
pendent measurement and testing becomes impracticable. ”Forecast” reporting. This is based on a very large number of rather detailed

162 Notes
1

assumptions throughout the organisation concerning the business cycle, 2

Trademarks
volume growth, market initiatives, product mix, currency rates, cost devel-
Consolidated 3
opment, cost structure, R&D etc.
– The projection for the years 2025 till 2028 is based on Management’s general SEK millions 2023 2022 4
assumptions concerning the business cycle, volume growth, market initia- Accumulated acquisition values
5
tives, product mix, currency rates, cost development, cost structure, R&D etc. Opening balance 8,780 6,889
– The projection for the years 2029 and onwards is based on the perceived Purchases – 6 6
expected average industry growth rate of 2.25 (2.25) percent. Acquisition of businesses 17 –
Step-up values 9 1,330 7
The assumptions used for the projections reflect past experiences or infor- Translation difference -384 555 8
mation from external sources. Closing balance 8,422 8,780
The used discount rate is the pre-tax weighted average cost of capital 9
(WACC) of 9.97 (9.86) percent. Accumulated amortisation 10
There exists no reasonably possible change in a key assumption in the im- Opening balance -6,802 -5,927
pairment test that would cause the carrying amount to exceed the recoverable Acquisition of businesses -2 – 11
amount. The reason is that the recoverable amounts with a very good margin
Amortisation of step-up values -527 -451 12
exceed the carrying amounts. Due to this a sensitivity analysis is not presented.
Amortisation for the year -2 0
Alfa Laval does not have any intangible assets with indefinite useful lives
Translation difference 349 -424 13
other than goodwill.
Closing balance -6,984 -6,802
14
Goodwill has been allocated to the following cash-generating units:
Closing balance, net book value 1,438 1,978 15
Goodwill
Consolidated 16
Licenses, renting rights and similar rights
SEK millions 2023 2022 17
Energy 3,347 3,431 Consolidated
18
Food & Water 4,885 5,017 SEK millions 2023 2022
Marine 16,837 17,810 Accumulated acquisition values 19
Total 25,069 26,258 Opening balance 145 212
Purchases 5 2
20
Sales/disposals -34 -17 21
Reclassifications 121 -63
Note 18. Intangible non-current assets Step-up values – 2 22
Translation difference -16 9 23
Patents and unpatented know-how Closing balance 221 145
24
Consolidated
Accumulated amortisation 25
SEK millions 2023 2022
Opening balance -127 -180
Accumulated acquisition values Sales/disposals 33 17 26
Opening balance 8,903 7,433 Reclassifications -11 54
27
Purchases 10 4 Amortisation of step-up values -1 0
Acquisition of businesses 107 177 Amortisation for the year -13 -9 28
Sales/disposals -3 -3 Translation difference 11 -9
29
Reclassifications 0 1 Closing balance -108 -127
30
Step-up values 268 820
Closing balance, net book value 113 18
Translation difference -381 471 31
Closing balance 8,904 8,903
32
Internally generated intangible assets
Accumulated amortisation Consolidated 33
Opening balance -6,270 -5,384 SEK millions 2023 2022 34
Acquisition of businesses -22 -155 Accumulated acquisition values
Opening balance 1,000 633 35
Sales/disposals 3 0
Acquisition of businesses – 86 36
Reclassifications 1 -4
Expenses 214 197
Amortisation of step-up value -399 -459 37
Sales/disposals -8 -11
Amortisation for the year -20 -9
Reclassifications -2 56 38
Translation difference 179 -259 Translation difference -43 39
Closing balance -6,528 -6,270 Closing balance 1,161 1,000 39
40
Closing balance, net book value 2,376 2,633 Accumulated amortisation
Opening balance -470 -235
Acquisition of businesses – -81
Sales/disposals 8 4
Reclassifications 2 -46
Amortisation for the year -98 -94
Translation difference 23 -18
Closing balance -535 -470

Closing balance, net book value 626 530

Notes

Internally generated intangible assets are referring to capitalised IT costs and

capitalised development cost related to R&D.

Notes 163
Goodwill Machinery and other technical installations
Consolidated Consolidated
SEK millions 2023 2022 SEK millions 2023 2022
Accumulated acquisition values Accumulated acquisition values
Opening balance 27,975 24,320 Opening balance 8,262 8,112
Goodwill in connection with acquisition of Purchases 577 260
businesses 52 2,237 Acquisition of businesses 96 105
Reduction of purchase price -42 – Sales/disposal -388 -746
Translation difference -1,251 1,418 Reclassifications 318 133
Closing balance 26,734 27,975 Translation difference -234 398
Closing balance 8,631 8,262
Accumulated amortisation
Opening balance -1,717 -1,840 Accumulated depreciation
Translation difference 52 123 Opening balance -5,839 -5,742
Closing balance -1,665 -1,717 Acquisition of businesses -75 -90
Sales/disposals 319 696
Closing balance, net book value 25,069 26,258 Reclassifications -31 -29
Depreciation for the year -444 -424
Write down – -12
Translation difference 173 -238
Note 19. Property, plant and equipment Closing balance -5,897 -5,839

Real estate Closing balance, net book value 2,734 2,423

Consolidated
SEK millions 2023 2022
Accumulated acquisition values Equipment, tools and installations
Opening balance 7,145 6,247 Consolidated
Purchases 209 250 SEK millions 2023 2022
Acquisition of businesses 29 130 Accumulated acquisition values
Sales/disposal -32 -166 Opening balance 3,408 3,263
Reclassifications -124 365 Purchases 280 219
Reclassification to assets for sale -65 -265 Acquisition of businesses 9 184
Translation difference -212 584 Sales/disposal -50 -367
Closing balance 6,950 7,145 Reclassifications 78 105
Translation difference -99 4
Accumulated depreciation Closing balance 3,626 3,408
Opening balance -3,534 -3,187
Acquisition of businesses -10 -49 Accumulated depreciation
Sales/disposals 31 166 Opening balance -2,350 -2,417
Reclassifications -1 -3 Acquisition of businesses -7 -136
Reclassification to assets for sale 49 165 Sales/disposals 61 386
Depreciation of step-up value -38 -33 Reclassifications -2 24
Depreciation for the year -222 -216 Depreciation for the year -257 -227
Translation difference 114 -377 Translation difference 79 20
Closing balance -3,611 -3,534 Closing balance -2,476 -2,350

Closing balance, net book value 3,339 3,611 Closing balance, net book value 1,150 1,058

Non-current assets held for sale

Within Alfa Laval these assets are normally relating to real estate.
The property in Singapore, the property in Alonte in Italy, the properties in
Camberley and Cwmbran in the UK and four smaller properties in India are
for sale and are expected to be sold within the next year. These have there-
fore been classified as current assets held for sale with SEK 59 (100) million.
The fair value of the properties for sale exceeds the book value by approxi-
mately SEK 373 (246) million.

164 Notes
1
2
Construction in progress and advances to suppliers concerning Right-of-use asset equipment, tools and installations
property, plant and equipment Consolidated 3
Consolidated SEK millions 2023 2022 4
SEK millions 2023 2022 Accumulated acquisition values
Opening balance 369 314 5
Accumulated acquisition values
Opening balance 1,089 475 New or adjusted leases 113 72 6
Acquisition of businesses – 7
Purchases 1,145 915
Sales/disposal -56 -49 7
New advances 507 173
Reclassifications -7 3
Reclassifications -414 -481 Translation difference -7 22 8
Translation difference -237 7 Closing balance 412 369 9
Closing balance 2,090 1,089
Accumulated depreciation 10
Closing balance, net book value 2,090 1,089 Opening balance -211 -172
Acquisition of businesses – 0
11
Sales/disposals 52 42 12
Reclassifications 6 0
Right-of-use asset real estate 13
Depreciation for the year -71 -68
Consolidated Translation difference 5 -13
14
SEK millions 2023 2022 Closing balance -219 -211
Accumulated acquisition values 15
Opening balance 3,533 2,931 Closing balance, net book value 193 158
16
New or adjusted leases 410 422
Acquisition of businesses – 167 17
Sales/disposal -190 -192
Note 20. Other non-current assets
18
Reclassifications 6 -30
Translation difference -134 235 Shares in subsidiaries, joint ventures and other companies 19
Closing balance 3,625 3,533 Consolidated Parent company 20
SEK millions 2023 2022 2023 2022
21
Accumulated depreciation Shares in subsidiaries – – 4,669 4,669
Opening balance -1,192 -773 Shares in joint ventures 262 205 – – 22
Acquisition of businesses – -79 Shares in other companies 280 270 – –
Total 542 475 4,669 4,669
23
Sales/disposals 154 182
Reclassifications 18 -66 24
Alfa Laval does not hold any shares in unconsolidated structured entities.
Depreciation for the year -417 -384
The consolidated financial statements include the parent company Alfa 25
Translation difference 49 -72 Laval AB (publ) and the subsidiaries in which it has a decisive influence,
Closing balance -1,388 -1,192 which in all cases refer to companies where the parent company directly or 26
indirectly had an ownership of more than 50 percent during the period. 27
Closing balance, net book value 2,237 2,341 These are consolidated according to the purchase method and are referred
to as subsidiaries. Most of the subsidiaries are owned to 100 percent and 28
only 11 (11) companies have non-controlling interests, see Note 12. The sub-
sidiaries are displayed in the table on pages 166–168. Since all consolidated 29
Right-of-use asset machinery companies are owned to more than 50 percent there is no risk that judge- 30
Consolidated ments if a decisive influence exists or not at ownerships below 50 percent
SEK millions 2023 2022 means that companies from time to time are included or not included in the 31
Accumulated acquisition values consolidation.
Alfa Laval also has interests in 5 (5) small joint ventures, out of which one 32
Opening balance 74 65
New or adjusted leases 23 19 has a fully owned subsidiary, that are consolidated according to the equity 33
Sales/disposal -20 -20 method since no decisive influence exists. These are displayed in a separate
Reclassifications -10 -1 table on page 169. The risks associated with joint ventures are basically business 34
oriented and are not materially different than the risks linked to subsidiaries,
Translation difference -5 11 35
with one exception. The exception relates to the risk of disagreeing with the
Closing balance 62 74
other joint venture partner concerning for instance larger investments, financing 36
Accumulated depreciation and future direction for market penetration and product development, which
Opening balance -44 -41
could result in a sub-optimal development of the operations. Since Alfa Laval’s 37
joint ventures are of marginal significance for the Group as a total this risk is
Sales/disposals 23 18 38
judged to be small.
Reclassifications 0 3
Depreciation for the year -16 -18 39
Translation difference 1 -6
40
Closing balance -36 -44

Closing balance, net book value 26 30

Notes

Notes 165
The share of capital in the below tables is in all cases the same as the share of voting rights.
The below specification of shares contains some simplifications, for instance in connection with ownership in multiple layers or when the ownership is split
on several owners or at cross-holdings. This is in order not to unnecessarily burden the presentation. A complete specification of shares can be ordered by contacting
Alfa Laval’s head office in Lund.

Specification of shares in subsidiaries

Share of Book
Registration Number of capital value
Company name number Domicile shares % SEK millions
Alfa Laval Holding AB 556587-8062 Lund, Sweden 8,191,000 100 4,461
Alfa Laval NV Maarssen, Netherlands 887,753 100 –
Alfa Laval Inc. Newmarket, Canada 1,000,000 67 –
Alfa Laval S.A. DE C.V. Tlalnepantla, Mexico 45,057,057 100 –
Alfa Laval S.A. San Isidro, Argentina 1,223,967 95 –
Alfa Laval Ltda Sao Paulo, Brazil 21,129,066 100 –
Framo do Brasil Ltda Rio de Janeiro, Brazil 14,850 4.67 –
Alfa Laval SpA Santiago, Chile 2,735 100 –
Alfa Laval S.A. Bogota, Colombia 11,563 95 –
Alfa Laval S.A. Lima, Peru 4,346,832 100 –
Alfa Laval Venezolana S.A. Caracas, Venezuela 10,000 100 –
Alfa Laval Taiwan Ltd Taipei, Taiwan 1,499,994 100 –
Alfa Laval (China) Ltd Hong Kong, China 79,999 100 –
Alfa Laval (Jiangyin) Manufacturing Co Ltd Jiang Yin, China 100 –
Alfa Laval Flow Equipment (Kunshan) Co Ltd Jiangsu, China 30 –
Alfa Laval Flow Equipment (Kunshan) Co Ltd Jiangsu, China 70 –
Alfa Laval (Shanghai) Technologies Co Ltd Shanghai, China 100 –
Wuxi MCD Gasket Co Ltd Jiang Yin, China 100 –
Tranter Heat Exchangers (Beijing) Co Ltd Beijing, China 100 –
Liyang Sifang Stainless Steel Products Co., Ltd Liyang City, China 65 –
Alfa Laval (Taicang) Technologies Co Ltd Taicang City, China 100 –
Alfa Laval Iran Ltd Teheran, Iran 32,983 100 –
Framo Korea Ltd Busan, South Korea 20,000 100 –
Alfa Laval Philippines Inc. Makati, Philippines 72,000 100 –
Alfa Laval Singapore Pte Ltd Singapore 5,000,000 100 –
Alfa Laval (Thailand) Ltd Bangkok, Thailand 1,199,999 100 –
Alfa Laval Technologies Equipment and Service Solutions LLC Abu Dhabi, United Arab Emirates 100 100 –
Alfa Laval Middle East Ltd Nicosia, Cyprus 40,000 100 –
Alfa Laval Arabia for Maintenance Company LLC Jubali, Saudi Arabia 5,000 100 –
Alfa Laval Service Operations Qatar LLC Doha, Qatar 9,800 49 –
Alfa Laval Benelux NV/SA Brussels, Belgium 98,284 100 –
N.V. Desmet Belgium S.A. Savatem, Belgium 146,540 100 –
Desmet Mexico Technologies S.A. de C.V. Mexico City, Mexico 59,999 99.9 –
Desmet Argentina S.A. Buenos Aires, Argentina 9,276,277 97.8 –
Desmet Brasil Ltda Sao Paulo, Brazil 2,100,217 25 –
Desmet Brasil Ltda Sao Paulo, Brazil 6,159,206 75 –
Desmet Ballestra (Shanghai) Co., Ltd. Shanghai, China 9,144,505 100 –
Desmet India Corporation Private Limited Bangalore, India 259,645 99.9 –
Desmet Engineering Center Private Limited Bangalore, India 9,999 99.9 –
Desmet Malaysia Sdn. Bhd. Shah Alam, Malaysia 1,000,000 100 –
Desmet Singapore Pte. Ltd. Singapore 4,000,000 100 –
Desmet India Corporation Private Limited Bangalore, India 1 0.1 –
Desmet Engineering Center Private Limited Bangalore, India 1 0.1 –
Desmet Stolz France SAS Wailly Beaucamp, France 168,819 100 –
Desmet Stolz Singapore Pte. Ltd. Singapore 2 100 –
Desmet Stolz Vietnam LLC Ho Chi Minh City, Vietnam 4,156,200,000 100 –
Desmet España Empresarial SA Madrid, Spain 12,922,100 100 –
Desmet Mexico Technologies S.A. de C.V. Mexico City, Mexico 1 0.1 –
Desmet Argentina S.A. Buenos Aires, Argentina 207,259 2.2 –
Desmet Rosedowns Ltd Hull, UK 23,408 100 –
Desmet Ballestra Rosedowns India Private Limited Bangalore, India 9,900 99 –
Desmet Rosedowns GmbH Eversen, Germany 54,252 80 –
Desmet Ballestra Rosedowns India Private Limited Bangalore, India 100 1 –
Desmet Rus LLC Moscow, Russia 1 100 –
Alfa Laval EOOD Sofia, Bulgaria 100 100 –
Alfa Laval Slovakia S.R.O. Bratislava, Slovakia 1 –
Alfa Laval Spol S.R.O. Prague, Czech Republic 20 –
Alfa Laval Nordic OY Espoo, Finland 20,000 100 –
Alfa Laval Benelux BV Maarssen, Netherlands 20,000 100 –
Alfa Laval Rotterdam BV Rotterdam, Netherlands 10,000 100 –
PHE Holding AB 556306-2404 Lund, Sweden 2,500 100 –
Tranter Heat Exchangers Canada Inc. Edmonton, Canada 100 100 –
Tranter Indùstria e Comércio de Equipamentos Ltda Sao Paulo, Brazil 2,018,370 100 –
Tranter India Pvt Ltd Pune, India 3,009,999 100 –
Alfa Laval India Pvt Ltd Pune, India 1 0 –
Alfa Laval Korea Ltd Seoul, South Korea 36,400 10 –
Alfa Laval Korea Holding Company Ltd Chungnam, South Korea 13,318,600 100 –
Alfa Laval Korea Ltd Seoul, South Korea 327,600 90 –
Alfa Laval Corhex Ltd Daejeon, South Korea 50,000 100 –

166 Notes
1
2
Specification of shares in subsidiaries, continued
3
Share of Book
Registration Number of capital value 4
Company name number Domicile shares % SEK millions
5
LHE Co. Ltd Gim Hae, South Korea 4,104,000 90 –
LHE Co. Ltd Gim Hae, South Korea 456,000 10 – 6
Tranter International AB 556559–1764 Vänersborg, Sweden 100,000 100 –
Multbran AB 556662–3988 Lund, Sweden 2,723 100 – 7
Alfa Laval India Pvt Ltd Pune, India 1 0 –
Breezewind AB 556773–6532 Lund, Sweden 1,000 100 – 8
Alfa Laval India Pvt Ltd Pune, India 1 0 –
9
Alfa Laval Corporate AB 556007–7785 Lund, Sweden 13,920,000 100 –
Alfa Laval S.A. San Isidro, Argentina 64,419 5 – 10
Alfa Laval S.A. Bogota, Colombia 609 5 –
Definox (Beijing) Stainless Steel Equipment Ltd Beijing, China 100 – 11
Alfa Laval India Pvt Ltd Pune, India 17,832,712 100 –
Tranter India Pvt Ltd Pune, India 1 0 – 12
PT Alfa Laval Indonesia Jakarta, Indonesia 16,250 100 –
13
Alfa Laval Malaysia Sdn Bhd Shah Alam, Malaysia 10,000 100 –
Alfa Laval d.o.o. Trzin, Slovenia 100 – 14
Alfa Laval Kolding A/S Kolding, Denmark 40 100 –
Alfa Laval Nordic A/S Rödovre, Denmark 1 100 – 15
Alfa Laval Copenhagen A/S Söborg, Denmark 1 100 –
Alfa Laval Nakskov A/S Nakskov, Denmark 242,713 100 – 16
Alfa Laval Aalborg A/S Aalborg, Denmark 2,560,972 100 –
Alfa Laval Aalborg Indústria e Comércio Ltda Petrópolis, Brazil 5,969,401 99.5 –
17
Alfa Laval Qingdao Ltd Jiaozhou City, China 100 – 18
Alfa Laval Aalborg Oy Rauma, Finland 3,000 100 –
Alfa Laval Nijmegen BV Nijmegen, Netherlands 182 100 – 19
Alfa Laval Aalborg Header–coil Company A/S Aalborg, Denmark 510,000 51 –
Alfa Laval Olmi SpA Suisio, Italy 500,000 100 – 20
Alfa Laval Italy Srl Milan, Italy 33.3 –
Alfa Laval Nordic AS Oslo, Norway 100 100 –
21
Framo AS Nesttun, Norway 95,347,695 100 – 22
Framo do Brasil Ltda Rio de Janeiro, Brazil 303,002 95.33 –
Framo Shanghai Ltd Shanghai, China 100 – 23
Framo Singapore PTE Ltd Singapore 1,000,000 100 –
Framo Nederland BV Spijkenisse, Netherlands 500 100 – 24
Framo Nippon KK Tokyo, Japan 600 100 –
Framo Fusa AS Fusa, Norway 86,236 100 – 25
Framo Holsnøy AS Frekhaug, Norway 25,000 100 –
26
LiftUP AS Eikelandsosen, Norway 106 100 –
Framo Flatøy AS Frekhaug, Norway 45,330 100 – 27
Framo Services AS Nesttun, Norway 10,000 100 –
PHE Holding AS Nesttun, Norway 45,000 100 – 28
StormGeo AS Bergen, Norway 125,960 100 –
StormGeo Ltd Aberdeenshire, UK 1,000 100 – 29
StormGeo Japan KK Tokyo, Japan 500 100 –
30
StormGeo Pte Ltd Singapore 100,000 100 –
StormGeo Inc Seoul, South Korea 40,000 100 – 31
StormGeo PH Inc Makati City, Philippines 2,000 100 –
StormGeo Ltd Hong Kong, China 100 100 – 32
StormGeo Denmark A/S Söborg, Denmark 400,000 100 –
StormGeo FZ LLC Dubai, United Arab Emirates 50 100 – 33
StormGeo AB 556761–9472 Stockholm, Sweden 10,000 100 –
StormGeo GmbH Hamburg, Germany 25,000 100 –
34
StormGeo Brasil AS Bergen, Norway 30,000 100 – 35
StormGeo do Brasil Servicos Meteorologicos Ltda Rio de Janeiro, Brazil 150,000 100 –
ClimaTempo Participacoes SA Sao Paulo, Brazil 1,733,181 89.66 – 36
Agência Brasileira de Meteorologia Ltda Sao Paulo, Brazil 859,999 100 –
Climanet Serviços de Internet Ltda Sao Paulo, Brazil 45,000 100 – 37
Somar Meteorologia Ltda Sao Paulo, Brazil 790,000 100 –
Southern Marine Weather Services Ltda Sao Paulo, Brazil 1,400,000 100 – 38
UAB StormGeo Vilnius, Lithuania 2,500 100 –
39
Alfa Laval Nordic AB 556243-2061 Tumba, Sweden 1,000 100 –
Scanjet Holding AB 556705-2286 Sjöbo, Sweden 1,300 100 – 40
Scanjet Asia Pacific Pte Ltd Singapore 200,000 100 –
PT Scanjet Production Batam, Indonesia 417,400 100 –
Scanjet Service EOOD Varna, Bulgaria 200 100 –
Maas Marine & Industrial Equipment BV Rotterdam, Netherlands 40 100 –
Scanjet Ariston AS Porsgrunn, Norway 780,000 100 –
Scanjet Production sp z oo Lobesz, Poland 100 100 –
Scanjet Marine & Systems AB 556291-2427 Sjöbo, Sweden 2,000 100 –
PSM Systems Ltd Haywards Heath, UK 146,000 100 –
PSM Instrumentation Ltd Haywards Heath, UK 600 100 –
Alfa Laval Treasury International (publ) AB 556432-2484 Lund, Sweden 50,000 100 –
Alfa Laval India Pvt Ltd Pune, India 1 0 –
Notes

Alfa Laval Europe AB 556128-7847 Lund, Sweden 500 100 –

Alfa Laval Technologies AB 556016-8642 Lund, Sweden 100 100 –
Alfa Laval India Pvt Ltd Pune, India 1 0 –

Notes 167
Specification of shares in subsidiaries, continued
Share of Book
Registration Number of capital value
Company name number Domicile shares % SEK millions
Alfa Laval International Engineering AB 556039-8934 Lund, Sweden 4,500 100 –
BeamTeam AB 559401-3517 Lund, Sweden 100,000 100 –
AO Alfa Laval Potok Koroljov, Russia 31,092,939 100 –
Alfa Laval Makine Sanayii ve Ticaret Ltd Sti Istanbul, Turkey 27,001,755 99 –
Alfa Laval SIA Riga, Latvia 125 100 –
Alfa Laval Australia Pty Ltd Homebush, Australia 2,088,076 100 –
Alfa Laval New Zeeland Pty Ltd Hamilton, New Zeeland 1,000 100 –
Alfa Laval Holding BV Maarssen, Netherlands 60,035,631 100 –
Alfa Laval (Pty) Ltd Isando, South Africa 2,000 100 –
Alfa Laval SA (Pty) Ltd Isando, South Africa 100 100 –
Alfa Laval Slovakia S.R.O. Bratislava, Slovakia 99 –
Alfa Laval Spol S.R.O. Prague, Czech Republic 80 –
Alfa Laval Holding SAS Saint–Priest, France 2,000,000 100 –
Alfa Laval France & North West Africa SAS Saint–Priest, France 606,700 100 –
Alfa Laval Moatti SAS Elancourt, France 24,000 100 –
Alfa Laval Spiral SAS Nevers, France 79,999 100 –
MCD SAS Guny, France 71,300 100 –
Alfa Laval Vicarb SAS Grenoble, France 200,000 100 –
Canada Inc. Newmarket, Canada 480,000 100 –
Alfa Laval Inc. Newmarket, Canada 481,600 33 –
SCI du Companil Grenoble, France 32,165 100 –
Alfa Laval Packinox SAS Courbevoie, France 348,115 100 –
Ziepack SA Courbevoie, France 37,701 51 –
Tranter SAS Nanterre, France 100 –
Definox SAS Clisson, France 10,000 100 –
Alfa Laval Holding GmbH Glinde, Germany 1 100 –
Alfa Laval Mid Europe GmbH Wiener Neudorf, Austria 1 100 –
Tranter Warmetauscher GmbH Guntramsdorf, Austria 100 –
Alfa Laval Mid Europe GmbH Glinde, Germany 1 100 –
Tranter GmbH Artern, Germany 1 100 –
Alfa Laval Heat Exchanger Service GmbH Frechen, Germany 1 100 –
Alfa Laval Mid Europe AG Dietlikon, Switzerland 647 100 –
Alfa Laval Single Member SA Koropi, Greece 807,000 100 –
Alfa Laval Kft Budapest, Hungary 1 100 –
Alfa Laval SpA Monza, Italy 1,992,276 99 –
Alfa Laval Italy Srl Milan, Italy 66.7 –
WCR Benelux BV Veenendahl, the Netherlands 180 100 –
Alfa Laval Polska Sp.z.o.o. Warsaw, Poland 7,600 100 –
Alfa Laval Kraków Sp.z.o.o. Krakow, Poland 80,080 100 –
Alfa Laval (Portugal) Ltd Linda-A-Velha, Portugal 1 –
Alfa Laval SRL Bucharest, Romania 38,566 100 –
Alfa Laval Iberia SA Madrid, Spain 99,999 99.999 –
Alfa Laval (Portugal) Ltd Linda-A-Velha, Portugal 1 99 –
Alfa Laval Holdings Ltd Camberley, UK 14,053,262 100 –
Alfa Laval Ltd Camberley, UK 11,700,000 100 –
Tranter Ltd Doncaster, UK 10,000 100 –
Alfa Laval Eastbourne Ltd Eastbourne, UK 10,000 100 –
Alfa Laval Makine Sanayii ve Ticaret Ltd Sti Istanbul, Turkey 1 1 –
Alfa Laval USA Inc. Richmond, Virginia, USA 1,000 100 –
Alfa Laval US Holding Inc. Richmond, Virginia, USA 180 100 –
Alfa Laval Inc. Richmond, Virginia, USA 44,000 100 –
Framo Houston Inc. La Porte, Texas, USA 5,000 100 –
Desmet USA Inc Marietta, Georgia, USA 500 100 –
Alfa Laval US Treasury Inc. Richmond, Virginia, USA 1,000 100 –
AGC Heat Transfer Inc. Bristow, Virginia, USA 1,000 100 –
Tranter Inc. Wichita Falls, Texas, USA 1,000 100 –
MCD Gaskets Inc. Richmond, Virginia, USA 1,000 100 –
Definox Inc. New Berlin, Wisconsin, USA 1,000 100 –
StormGeo Holding Inc. Houston, Texas, USA 100 100 –
StormGeo Inc Houston, Texas, USA 1,000 100 –
StormGeo Corp. Inc Sunnyvale, California, USA 542,554 100 –
Alfa Laval IC Disc Inc. Richmond, Virginia, USA 1,000 100 –
Alfa Laval Ltda Sao Paulo, Brazil 2 0 –
Tranter Indùstria e Comércio de Equipamentos Ltda Sao Paulo, Brazil 1 0 –
Alfa Laval Benelux NV/SA Brussels, Belgium 2 0 –
Alfa Laval SpA Monza, Italy 20,124 1 –
Alfa Laval Iberia SA Madrid, Spain 1 0.001 –
Alfa Laval Ukraine Kiev, Ukraine 100 –
Alfa Laval India Pvt Ltd Pune, India 1 0 –
Alfa Laval Vietnam LLC Ho Chi Minh City, Vietnam 100 –
Alfa Laval KK Tokyo, Japan 1,200,000 100 208
Total 4,669

168 Notes
1
2
Specification of shares in joint ventures
Number of Share of Book value 3
Company name Registration number Domicile shares capital % SEK millions
4
Alfa Laval Holding AB
Alfdex AB 556647-7278 Landskrona, Sweden 1,000 50 116 5
Alfdex Kunshan Co Ltd Kunshan, China 100 20 6
Alfa Laval Corporate AB
AlfaWall AB 556723-6715 Botkyrka, Sweden 500 50 13
7
AlfaWall Oceanbird AB 559333-0003 Botkyrka, Sweden 500 50 89 8
PHE Holding AS
9
Stadion Laks AS Norheimsund, Norway 17,630 50 24
Alfa Laval Ltd 10
Rolls Laval Heat Exchangers Ltd Wolverhampton, UK 5,000 50 0 11
Total 262
12

Specification of shares in other companies

Company name Domicile Number of shares Share of capital % Book value SEK thousands
14
Alfa Laval US Holding Inc. 15
Malta Inc USA 19,575,713 19.15 226,683
Alfa Laval Inc. 16
AMI Global LLC USA 20 34,951
17
Alfa Laval Aalborg Indústria e Comércio Ltda
Tractebel Brazil 1,268 88 18
Elektrobras Brazil 7,107 119
Alfa Laval Philippines Inc. 19
Philippine Long Distance Telephone Philippines 820 0
20
Alfa Laval Nordic OY
As Oy Koivulantie 7A Finland 1 343 21
Helsinki Halli Finland 4 155
Framo Nederland BV 22
Triangle (Air) Freight Forwarders BV Netherlands 12 33 99
Framo Flatøy AS
23
Glöde AS Norway 8,960 5.4 27 24
Alfa Laval Technologies AB
Smedhälsan Ekonomisk Förening Sweden 61 25
Alfa Laval Corporate AB
European Development Capital 26
Corporation (EDCC) NV Curacao 36,129 0
27
Multiprogress Hungary 100 3 0
Kurose Chemical Equipment Ltd Japan 180,000 11 0 28
Liquid Wind AB Sweden 555,245 5.2 17,713
Poljopriveda former Yugoslavia 0 29
Tecnica Argo-Industrial S.A. Mexico 490 49 0
30
Adela Investment Co S.A. (preference) Luxembourg 1,911 0 0
Adela Investment Co S.A. Luxembourg 1,911 0 0 31
Mas Dairies Ltd Pakistan 125,000 5 0
Total 280,239 32
33
None of these other companies with a share of capital of 20 percent or more are accounted for as associates since they are dormant or have very limited activities
and Alfa Laval does not have a significant influence according to IAS 28 item 6. 34
35
36
37
38
39
40
Notes

Notes 169
Note 21. Inventories
Type of inventory
Consolidated
SEK millions 2023 2022
Raw materials and consumables 4,862 4,833
Work in progress 3,871 3,679
Finished goods & goods for resale, new sales 3,560 3,577
Finished goods & goods for resale, spare parts 1,975 2,112
Advance payments to suppliers 682 574
Total 14,950 14,775
A considerable part of the inventory for spare parts is carried at net realisable value.

Obsolescence related to inventories amounts to and has changed as follows:

Obsolescence
Consolidated
SEK millions January 1 Translation difference Acquired Write down Reversal of previous write down December 31
År:
2022 1,330 101 27 664 -413 1,709
2023 1,709 -51 - 312 -209 1,761
The Group’s inventories have been accounted for after deduction for inter-company gains in inventory due to internal sales within the Group. The inter-company
profit reserve at the end of 2023 amounts to SEK 731 (761) million.

Note 22. Accounts receivable

Accounts receivable with a maturity exceeding one year of SEK 125 (78) million have not been accounted for as non-current assets as they are not intended for
permanent use.
Accounts receivable are reported net of provisions for bad debts. The provision for bad debts amounts to and has changed as follows:

Bad Debts
Consolidated
New provisions and Unused
Translation increase of existing Amounts amounts Change due to
SEK millions January 1 difference Acquired provisions used reversed discounting December 31
Year:
2022 316 35 64 198 -36 -82 0 495
2023 495 -15 – 161 -101 -70 0 470
The amount of accounts receivable being overdue is an indication of the risk the company runs for ending up in bad debts. The percentage is in relation to the
total amount of accounts receivable.

Accounts receivable – overdue

Consolidated
SEK millions 2023 % 2022 %
Overdue:
Maximum 30 days 1,017 9.9 949 9.7
More than 30 days but maximum 90 days 736 7.2 580 6.0
More than 90 days 745 7.2 671 6.9
Total 2,498 24.3 2,200 22.6

Provision for lifetime expected credit losses

Consolidated
Relating to Provision
Accounts and notes For credit risks that have
receivables / increased significantly Related to objective
Other receivables Recorded at inception since initial recognition evidence of impairment Total
SEK millions 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Accounts and notes receivable
Undue 8,541 8,388 5 7 17 9 45 57 67 73
Overdue 1-30 days 1,017 949 – 2 1 13 6 – 7 15
Overdue 31-60 days 565 433 – – 8 7 5 4 13 11
Overdue 61-90 days 171 147 – – 3 5 20 4 23 9
Overdue 91-365 days 521 418 – – 88 109 33 26 121 135
Overdue >365 days 224 253 – – 127 117 63 76 190 193
Total 11,039 10,588 5 9 244 260 172 167 421 436

Other receivables
Contract assets 2,621 2,613 15 15 22 24 8 8 45 47
Financial lessor receivable 0 1 1 2 – – 3 10 4 12
Total 2,621 2,614 16 17 22 24 11 18 49 59

170 Notes
1
2
Note 23. Other short-term receivables
3
Split on type and maturity 4
Consolidated
5
SEK millions 2023 2022
Notes receivable 336 435 6
Financial lessor receivable 0 1 7
Revenue recognition ahead of progress invoicing 2,576 2,566
Other receivables 2,460 2,336
8
Total 5,372 5,338 9
Of which, not due within one year:
10
Notes receivable 0 0
Other receivables 13 32 11
Total 13 32 12
Other receivables relate to a wide range of other receivables, including balanced invoicing relating to satisfied performance obligations that have not yet been 13
invoiced (where the revenue recognition is ahead of the progress invoicing), VAT receivables, receivables on governments for export incitements, receivables on
personnel, rent receivables etc. 14
15
16
Note 24. Prepaid expenses and accrued income
17
Split on type 18
Consolidated 19
SEK millions 2023 2022
20
Prepaid expenses 544 450
Accrued income 34 45 21
Total 578 495
22
23

Note 25. Other current deposits 24

25
Split on type and maturity
26
Consolidated
27
SEK millions 2023 2022
Deposits with banks 586 187 28
Bonds and other securities 136 117 29
Other deposits 6 7
Total 728 311
30
Of which, not due within one year: 31
Deposits with banks 32 41
32
Other deposits 0 0
Total 32 41 33
34
35
Note 26. Cash and cash equivalents
36
The item cash and cash equivalents in the statement on financial position and in the cash flow statement is relating to cash and bank deposits.
37

Note 27. Defined benefit obligations 38

39
The Group has defined benefit commitments to employees and former employees and their survivors. The benefits are referring to old age pension, survivor’s
pension, disability pension, health care and severance pay. 40
The defined benefit plans are in place in Austria, Belgium, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Netherlands, Norway, Philippines,
South Africa, Sweden, Switzerland, Taiwan, the United Kingdom and the United States. Most plans have been closed for new participants and replaced by
defined contribution plans for new employees.

Risks
The cost for defined benefit obligations is impacted by several factors that are outside the control of the company, such as the discount rate, the return on plan
assets, future salary increases, the development of the average length of life and the claim rates under medical plans. The size of and the development of these
costs are therefore difficult to predict. According to the IAS 19 all of these remeasurements are reported in other comprehensive income.
The following table presents how the net defined benefit liability is arrived at out of the present values of the different defined benefit plans, less the fair value
of the plan assets.
Notes

Notes 171
Net defined benefit liability
Consolidated
SEK millions 2023 2022
Present value of defined benefit obligation, unfunded -926 -1,042
Present value of defined benefit obligation, funded -4,357 -4,390
Present value of defined benefit obligation at year end -5,283 -5,432
Fair value of plan assets 4,438 4,486
Net defined benefit liability -845 -946
Less disallowed assets due to asset ceiling -6 -45
(-) liability/(+) asset at December 31 -851 -991

The net plan cost for the defined benefit plans describes the different cost elements of the plans. The net plan cost is reported in the consolidated comprehensive
income statement on the lines where personnel costs are reported. The interest cost/income is not part of the financial net, but instead just a way to categorize
the components of the net plan cost. All remeasurements are reported in other comprehensive income and will never be reclassified to net income.

Total plan cost

Consolidated
SEK millions 2023 2022
Net plan cost
Current service cost -46 -25
Net interest cost/income -31 -31
Past service cost/income from plan amendments and curtailments and gains and losses on settlements 109 15
Net plan (-) cost/(+) income 32 -41
Remeasurements
Actuarial losses/gains arising from changes in demographic assumptions 46 14
Actuarial losses/gains arising from changes in financial assumptions -159 1 705
Actuarial losses/gains arising from changes in experience 41 -77
Return on plan assets less interest on plan assets -48 -1 269
Change in disallowed assets due to asset ceiling -6 -45
Other comprehensive income (OCI) -126 328
Total plan cost -94 287

The following table presents how the present value of the defined benefit liability has changed during the year and lists the different components of the change.
Present value of defined benefit liability
Consolidated
SEK millions 2023 2022
Present value of defined benefit liability at January 1 -5,432 -6,762
Acquired businesses – -154
Translation difference 79 -297
Current service cost -46 -25
Interest cost -183 -124
Employee contributions -1 -4
Actuarial losses/gains arising from changes in demographic assumptions 46 14
Actuarial losses/gains arising from changes in financial assumptions -159 1,705
Actuarial losses/gains arising from changes in experience 41 -77
Past service cost/income from plan amendments and curtailments and gains and losses on settlements 109 15
Benefit payments 263 263
Settlement payments 0 14
(-) liability at December 31 -5,283 -5,432

The liability has the following duration and maturity:

Duration and maturity
Consolidated
2023 2022
Weighted average duration of the defined benefit obligation (years) 6 7
Maturity analysis of benefit payments (non-discounted amounts) SEK millions
maturity ≤ 1 year 272 263
maturity > 1 ≤ 5 years 1,120 1,015
maturity > 5 ≤ 10 years 1,592 1,574
maturity > 10 ≤ 20 years 3,029 3,057
maturity > 20 years 3,748 3,933

172 Notes
1

The following table presents how the fair value of the plan assets has developed during the year and lists the components of the change. 2
Fair value of plan assets 3
Consolidated 4
SEK millions 2023 2022
5
Fair value of plan assets at January 1 4,486 4,925
Acquired businesses – 118 6
Translation difference -81 177 7
Employer contributions 130 652
Employee contributions 1 4
8
Interest on plan assets 152 93 9
Return on plan assets less interest on plan assets -48 -1,269
10
Benefit payments -202 -202
Settlement payments 0 -12 11
Other 0 0 12
(+) asset at December 31 4,438 4,486
13
The plan assets are split on the following types of assets: 14
Split of plan assets
15
Consolidated
16
SEK millions 2023 2022
Cash and cash equivalents 379 612 17
Equity instruments 788 782 18
Debt instruments 2,174 1,976
Real estate 95 111
19
Investment funds 1,002 1,005 20
Fair value at December 31 4,438 4,486
21
The plan assets are in all essentials valued at quoted market prices in active markets. 22
The table below presents how the net defined benefit liability has changed and the factors affecting the change. 23
Net defined benefit liability/asset 24
Consolidated
25
SEK millions 2023 2022
Defined benefit liability/asset at January 1 -991 -1,837
26
Acquired businesses – -36 27
Translation difference 43 -120
28
Net plan cost 32 -41
Employer contributions 130 652 29
Remeasurements (other comprehensive income) -126 328 30
Benefit payments, unfunded plans 61 61
31
Settlement payments, unfunded plans 0 2
Other 0 0 32
(-) liability/(+) asset at December 31 -851 -991 33

The gross plan assets and gross defined benefit liabilities of each plan are to be reported as a net amount. The following table shows how the net asset and the
34
net liability are calculated. 35
Gross defined benefit liability/asset
36
Consolidated
37
SEK millions 2023 2022
Assets 38
Fair value of plan assets 4,438 4,486
39
Less disallowed assets due to asset ceiling -6 -45
4,432 4,441 40
Netting -4,193 -4,240
Assets in statement on financial position 239 201
Liabilities
Present value of defined benefit obligation at year end -5,283 -5,432
Netting 4,193 4,240
Provision in statement on financial position -1,090 -1,192
Notes

Notes 173
The weighted averages for the more significant actuarial assumptions that have been used at the year-end are:
Actuarial assumptions
Consolidated
2023 2022
Discount rate (%) 3.88 3.95
Expected average retirement age (years) 64 64
Life expectancy for a 45-year-old male (years) 81 81
Life expectancy for a 45-year-old female (years) 85 85
Claim rates under medical plans (%) 5 5
Expected rate of salary/wage increase (%) 3 3
Change in health care costs (%) 5 5
Index for future compensation increases (%) 2 2

Future contributions
Consolidated
SEK millions 2024
Expected employer contributions to the plan for the next calendar year -206
Expected employer contributions for the next calendar year to multi-employer plans reported as defined contribution plans -104

The following table presents how the defined benefit pension schemes are distributed on different countries.

Regional split
Consolidated
United United
SEK millions, unless otherwise stated States Kingdom Netherlands Germany Norway Italy Belgium Other Total
Net defined benefit liability
Present value of the defined benefit obligation, unfunded -454 – – -159 -9 -14 – -290 -926
Present value of the defined benefit obligation, funded – -2,562 -553 – -757 – -187 -298 -4,357
Present value of the defined benefit obligation at year end -454 -2,562 -553 -159 -766 -14 -187 -588 -5,283
Fair value of plan assets – 2,619 554 – 817 – 187 261 4,438
Net defined benefit liability -454 57 1 -159 51 -14 0 -327 -845
Less disallowed assets due to asset ceiling – -5 -1 – – – – – -6
(-) liability/(+) asset -454 52 0 -159 51 -14 0 -327 -851
Net plan cost 19 -4 0 -6 -4 -1 -10 38 32
Remeasurements (OCI) -29 -57 0 -2 -31 – 2 -9 -126
Sensitivity analysis*
Discount rate decreased by 1% point -39 -356 -93 -14 -93 – -3 -171 -769
Life expectancy increased by 1 year -12 -110 -18 -9 -7 – 0 -9 -165
Expected average retirement age decreased by 1 year -7 – – 0 0 – 0 2 -5
Claim rates under medical plans increased by 1 % point 0 – – – – – – – 0
Expected rate of salary increases increased by 1% point – -21 – – -6 – -8 -114 -149
Medical costs increased by 1% point -1 – – – – – – 0 -1
Index for future compensation increases increased by 1%
point – -48 -30 -13 -90 – – -2 -183
Cost for actuarial services -2 -4 0 0 0 0 0 -1 -7
Number of participants in the plans at December 31
Current employees (active members) 1,067 32 10 5 48 – 141 3,211 4,514
Current employees (only vested value for closed plans) – – 24 4 – 96 – 7 131
Former employees that are not yet pensioners – 302 310 2 – – 161 – 775
Pensioners 678 680 117 198 412 – – 65 2 150
Total 1,745 1,014 461 209 460 96 302 3,283 7,570
Remaining service period
Average remaining service period for active members (years) 10 13 11 3 3 – 18 12 12

* How much would the present value of the defined benefit obligation at December 31 increase if the (all other things being equal):

174 Notes
1
2
Note 28. Other provisions
3
Movement schedule 4
Consolidated
5
Translation New provisions and increase Unused amounts
SEK millions January 1 difference Acquired of existing provisions Amounts used reversed December 31 6
2022
7
Claims & warranty 1,262 66 62 598 -757 -113 1,118
Deferred costs 170 11 – 119 -105 -13 182 8
Restructuring 143 6 – 597 -97 -23 626 9
Onerous contracts 70 5 – 90 -58 -11 96
10
Environmental 50 – – – – – 50
Litigations 184 3 – 59 -38 0 208 11
Other 344 40 – 197 -196 -51 334 12
Total 2,223 131 62 1,660 -1,251 -211 2,614
13
Of which:
current 1,811 2,164 14
non-current 412 450
15
2023
Claims & warranty 1,118 -31 4 541 -445 -106 1,081 16
Deferred costs 182 0 – 219 -169 -12 220 17
Restructuring 626 -51 – 59 -371 -49 214
18
Onerous contracts 96 -2 – 2 -79 -1 16
Environmental 50 – – – – – 50 19
Litigations 208 -3 – 117 -138 -13 171 20
Other 334 -15 – 187 -120 -44 342
21
Total 2,614 -102 4 1,125 -1,322 -225 2,094
Of which: 22
current 2,164 1,757
23
non-current 450 337
24
Unused amounts reversed refer to, among other items, changed classifications and reversals of provisions made in prior years that have not been used. 25
Each type of provision entails everything from a few up to a large number of different items. It is therefore not practicable or particularly meaningful to specify
the provisions item by item. As indicated above a clear majority of the provisions will result in disbursements within the next year. 26
Claims & warranty refers to claims from customers according to the conditions in issued warranties. The claims concern technical problems with the delivered
goods or that promised performance has not been achieved. 27
Deferred costs are partly costs that are known but not yet debited at the time of invoicing, partly costs that are unknown but expected at the time of invoicing. 28
The provision for deferred costs is charged to costs of goods sold in order to get a correct phasing of the gross margin.
Provisions for restructuring are usually relating to closure of plants or closure or move of production lines, businesses, functions etc. or reduction of the number 29
of employees in connection with a downturn in the business climate. The provisions for restructuring are affecting approximately 6 (500) employees.
The provision for onerous contracts is relating to orders where a negative gross margin is expected. Provisions are made as soon as a final loss on the order can 30
be expected. This can in exceptional cases happen already at the time when the order is taken. Normally this provision is relating to larger and complex orders 31
where the final margin is more uncertain.
The provision for litigations refers to ongoing or expected legal disputes. The provision covers expected legal costs and expected amounts for damages or 32
settlements.
Other refers to miscellaneous provisions that do not fall within any of the above categories. 33
34
35
36
37
38
39
40
Notes

Notes 175
Note 29. Borrowings and net debt Loans with floating interest rate
Bilateral term loans with other lenders
Alfa Laval has two loans of EUR 100 million from Svensk Exportkredit that
Net debt mature in 2027 and 2028 that accrue interest at a floating interest rate
Consolidated based on EURIBOR plus a margin.
The loan of EUR 100 million from Svenska Handelsbanken with maturity
SEK millions 2023 2022
in June 2024, was repaid already on December 22, 2023.
Credit institutions 145 829 The average interest rate for the loans with floating interest rate was 4.62
Swedish Export Credit 2,207 2,227 (2.21) percent at the end of 2023. The Group has chosen not to hedge the
Handelsbanken - 1,114 loans to fixed interest rate.
Commercial papers - 892
Loans with fixed rate
Corporate bonds 10,921 10,000
Loan from credit institutions
Borrowings* 13,273 15,062 Alfa Laval has a revolving credit facility of EUR 700 million corresponding to
Cash and cash equivalents and current deposits -5,863 -4,663 SEK 7,736 million on December 31, 2023 with a banking syndicate. The facility
Net debt excluding lease liabilities*** 7,410 10,399 has a maturity of five years from April 2023 and it includes a possibility to in-
Lease liabilities** 2,601 2,671 crease by EUR 200 million. When utilised, the interest is fixed based on the
base rate for the currency of the individual loan plus a mark-up that depends
Net debt including lease liabilities*** 10,011 13,070
on Alfa Laval’s credit rating. At December 31, 2023 the facility was not utilised.
* Equals the sum of the non-current and current liabilities to credit institutions etc in the
At year end the commitment fee on the un-utilised facility was 14.0 (14.0)
statement of consolidated financial position, which is also displayed in the below table basis points.
“Maturity of loans by currency”.
** Equals the sum of the non-current and current lease liabilities in the statement of con- Corporate bonds
solidated financial position. Alfa Laval has a Euro Medium Term Note (EMTN) programme of EUR 2,000
*** Alternative performance measure. million. Under the programme, Alfa Laval has four tranches of corporate bonds
listed on the Irish stock exchange. Three of them of EUR 300 million each that
The changes in the loans during the year are explained by the following table: matures in June 2024, in February 2026 and in February 2029 respectively,
Loans whereas the fourth of SEK 1,000 million was raised in May 2023 and matures
in November 2025.
Consolidated
At the end of 2023 the loans were accruing interest in the range of 0.250 %
SEK millions January 1 Cash flows Exchange rate effects December 31 - 4.235 % (0.250 % - 1.375 %). The average interest rate at the end of 2023
Year: was 1.14 (0.83) percent.
2022 8,244 5,971 847 15,062
Commercial papers
2023 15,062 -1,696 -93 13,273
The company’s commercial paper programme is SEK 4,000 million with a
duration of 1-12 months. It was not utilised at December 31, 2023. When
The loans are distributed among currencies as follows: commercial papers are issued, the interest rate is fixed at inception based on
current interest level.
Maturity of loans by currency The average interest rate for the commercial papers is - (2.17) percent.
Consolidated
Transaction costs
Current Non-current Total
The transaction costs in connection with raising the loans or issuing the bonds
SEK millions 2023 2022 2023 2022 2023 2022 have been capitalised and are being amortised over the maturity of the loans.
Currency: At the end of the year the capitalised amount was SEK 21 (31) million. The
BRL 17 22 – – 17 22 current year’s cost for the fee amortisation is SEK -10 (-14) million.
CAD 1 1 – – 1 1
Average interest duration
DKK 6 – – – 6 –
The average interest duration for all loans including derivatives is 25.7 (29.1)
EUR 3,371 159 8,830 13,362 12,201 13,521 months at the end of 2023.
GBP 20 5 – – 20 5
INR 8 2 – – 8 2 Financial covenants
The corporate bonds, the commercial papers and the loans from Svensk
NOK – 3 – – – 3
Exportkredit and the banking syndicate are not linked to any financial covenants
PLN 21 116 – – 21 116 that must be fulfilled throughout the life of the loans.
SEK – 1,392 999 – 999 1,392
Total 3,444 1,700 9,829 13,362 13,273 15,062
Of which, not due within five years: 3,315 4,461 3,315 4,461

The maturity structure of the loans is presented in the bar chart in the section
“Liquidity risk and refinancing risk” under Financial risks.

Maturity analysis for loans

SEK millions

0
-103 -28 -92 -103 -28

-1,000
-1,099 -1,246 -1,190

-2,000

-3,000
-3 352 -3,361
-3,504
-4,000
3 6 9 12 15 18 24 36 48 60 72
Months

Negative cashflows

176 Notes
1
2
Note 30. Other current liabilities
3
Split by type 4
Consolidated
5
SEK millions 2023 2022
6
VAT liabilities, employee withholding taxes 231 222
Progress invoicing ahead of revenue recognition 2,455 2,076 7
Other non-interest bearing liabilities 3,410 2,971 8
Total 6,096 5,269
9
10
Note 31. Accrued costs and prepaid income 11
12
Split by type and maturity
Consolidated 13
SEK millions 2023 2022 14
Accruals for social security 342 382
15
Reserve for severance pay 51 264
Accrued interest expenses 118 91 16
Other accrued expenses 2,041 2,016 17
Prepaid income 84 17
Total 2,636 2,770
18
Of which, not due within one year: 19
Accruals for social security 4 66
20
Reserve for severance pay 11 195
Other accrued expenses 137 146 21
Total 152 407 22
23
Note 32. Pledged assets and contingent liabilities 24
25
Split by type
26
Consolidated
SEK millions 2023 2022 27
Pledged assets 28
Other pledges and similar commitments 9 9
Total 9 9
29
Contingent liabilities 30
Discounted bills 10 15
31
Performance guarantees 2,030 1,606
Other contingent liabilities 1,142 1,407 32
Total 3,182 3,028 33
34
As of December 31, 2023, the Group had sold receivables with recourse totalling SEK 10 (15) million. These are disclosed as discounted bills above.
Other contingent liabilities are among other items referring to bid guarantees, payment guarantees to suppliers and retention money guarantees. 35
36
37
38
39
40
Notes

Notes 177
Note 33. Transactions with related party Note 34. Interests in joint ventures
Tetra Pak within the Tetra Laval Group is Alfa Laval’s single largest customer Alfa Laval owns 50 percent in five different joint ventures: Rolls Laval Heat
with 5.4 (4.0) percent of net sales. In June 1999, Tetra Pak entered into a Exchangers Ltd with Rolls Royce as partner, Alfdex AB with Concentric as
purchasing agreement with Alfa Laval that governs the distribution, research partner, Stadion Laks AS with Lingalaks AS partner and AlfaWall AB and
and development, market and sales information, use of trademarks and intel- AlfaWall Oceanbird AB with Wallenius as partner. Alfdex AB has a fully
lectual property. The following areas shall be agreed upon from time to time owned subsidiary Alfdex Kunshan Co Ltd. None of these joint ventures are of
between representatives of the parties: products that are subject to the material importance and for that reason no disclosures are made of each in-
agreement, prices and discounts of such products, geographical markets dividual joint venture. Instead, disclosures in aggregate are made on the car-
and product areas where Tetra Pak is Alfa Laval’s preferred distributor, the rying amount of Alfa Laval’s interests in these individually immaterial joint
right of Tetra Pak to affix its trademarks to Alfa Laval products, sales goals for ventures. See the below tables.
Tetra Pak in defined geographical markets, products and technologies that Since joint ventures as from 2014 are consolidated according to the equity
are the focus of joint research and development and the ownership rights of method in IFRS 11 ”Joint arrangements”, the amounts in the following two ta-
the research and development result and use of market and sales information. bles are no longer part of Alfa Laval’s statements over consolidated compre-
The agreement aims at the applications within liquid food where Tetra Pak hensive income and consolidated financial position.
has a natural market presence through the deliveries of packaging equipment
and packaging material.
Assets/liabilities
The agreement has a 12-month period of notice. The prices Tetra Pak receives
are not lower than the prices Alfa Laval would obtain when selling to a com- Joint ventures
parable third party. The prices are fixed on a calendar year basis. SEK millions 2023 2022
The Board of Directors of Alfa Laval AB (publ) has two members, Finn Rausing Current assets 380 331
and Jörn Rausing, that are also members of the Tetra Laval Group Board.
Non-current assets 136 115
At year-end, Alfa Laval has the following balance items against companies
within the Tetra Laval group (Tetra Pak and DeLaval). Current liabilities 168 148
Non-current liabilities 16 17
Receivables on/payables to related parties Contingent liabilities – –

Consolidated
SEK millions 2023 2022 Revenues/expenses
Receivables:
Joint ventures
Accounts receivable 153 162
SEK millions 2023 2022
Net sales 386 326
Liabilities:
Cost of goods sold -242 -204
Accounts payable 47 –
Other operating income 87 95
Alfa Laval has had the following transactions with companies within the Other operating costs -165 -156
Tetra Laval group (Tetra Pak and DeLaval). Financial net 1 1
Result before tax 67 62
Revenues/expenses from related parties Taxes -14 -13
Consolidated Net income 53 49
SEK millions 2023 2022 Other comprehensive income -1 -1
Net sales 3,431 2,072 Comprehensive income 52 48

Instead, the application of the equity method means that the net income in
the joint ventures is booked into one line in the operating income. The counter
entry is an increase or decrease of the value of shares in joint ventures.
Received dividends reduce the value of the shares in joint ventures.

Interests in joint ventures

Consolidated
SEK millions 2023 2022
Opening balance 205 165
Acquisition/capital contribution 64 40
Comprehensive income 52 48
Received dividends -59 -48
Shares in joint ventures 262 205

The effect on comprehensive income is the same as the net income.

178 Notes
1
2
Note 35. Leasing
3
Leasing disclosures 4
Consolidated
5
SEK millions 2023 2022
Lessee 6
Financial position 7
Right-of-use assets 2,456 2,529
8
Lease liabilities 2,601 2,671
9
New or adjusted leases 546 513 10

Income statement
11
Depreciation -504 -470 12
Interest cost on lease liabilities -94 -87
13

Expenses 14
Expense for not capitalised short-term leases 80 78 15
Expense for not capitalised leases of low-value assets not included in above line 4 5
16
Expense for not capitalised leases of low-value assets according to Alfa Laval's higher materiality thresholds not included in above lines 12 14
Expense for variable lease payments not included in lease liabilities 9 5 17
18
Cash flow
Total cash outflow for all leases, including leases that are not capitalised, excluding non-lease components 831 678
19
20
Lessor
21
Financial position
Financial lessor receivable 0 1 22
23
Income statement
24
Finance income 3 5
Income from subleasing 1 0 25
Income from variable lease payments not included in financial lessor receivable – – 26
Lease income from operating leases 19 16
– out of which variable lease payments not dependent on an index or a rate – – 27
28
The leasing periods are between 1 and 25 years. The latter figure relates to a very limited number of properties. Normally the maximum leasing period is 10
years for buildings and 3-5 years for all other assets. 29
The weighted average incremental borrowing rate used to discount the value of the lease liabilities during 2023 is 4.30 (3.77) percent.
30
Maturity analysis of lease liabilities and receivables 31
Consolidated 32
Finance lease payments received Operating lease payments received
Lease payments by the lessee by the lessor by the lessor 33
SEK millions 2023 2022 2023 2022 2023 2022 34
Maturity in year:
35
2023 N/A 569 N/A 1 N/A 0
2024 642 512 – – – 0 36
2025 545 441 – – – – 37
2026 446 353 – – – –
38
2027 350 269 – – – –
2028 262 N/A – N/A – N/A 39
Later 886 1,038 – – – –
40
Total 3,131 3,182 – 1 – 0
Unearned finance income – –
Discounted unguaranteed residual value – 1
Notes

Notes 179
Note 36. Revenue recognition from contracts with customer
Revenue recognition from contracts with customers
Consolidated
SEK millions 2023 2022
Income statement
Net sales from:
Contracts with customers 63,355 51,963
Leasing 243 172
Total net sales 63,598 52,135

Net sales from contracts with customers with a contract duration of:
≤ 1 year 50,403 44,720
> 1 year 12,952 7,243
63,355 51,963
Performance obligations towards customers satisfied:
at a point in time 52,535 43,399
over time 10,820 8,564
63,355 51,963

Additional information:
Net sales:
included in contract liability at January 1 6,336 3,905
from performance obligations satisfied or partially satisfied in previous periods 930 471

Amortisation of capitalised costs to obtain or fulfil contracts with external customers – –

Impairment losses – –

Assets
Accounts and notes receivables, contracts with external customers 10,610 10,126
Accounts and notes receivables, external, other 8 26
Contract assets 2,576 2,566
Capitalised costs to obtain a contract with a customer – 8
Capitalised costs to fulfil a contract with a customer – –

Liabilities
Contract liabilities 10,430 8,710

Net sales per Business Division, per geography and per product is shown in Note 1, 2 and 3. Since contracts with customers account for 99.6 (99.7) percent of
net sales and leasing only 0.4 (0.3) percent the figures are shown for total net sales in these notes and not separately for contracts with customers.
A contract asset is Alfa Laval’s right to consideration in exchange for goods or services that Alfa Laval has transferred to a customer when that right is
conditioned on something other than the passage of time (for example, Alfa Laval’s future performance). It could be balanced invoicing relating to satisfied
performance obligations that have not yet been invoiced (where the revenue recognition is ahead of the progress invoicing) and inventory linked to revenue
recognised over time (like work in progress).
A contract liability is Alfa Laval’s obligation to transfer goods or services to a customer for which Alfa Laval has received consideration (or the amount is due)
from the customer. It could be advance payments and balanced invoicing relating to unsatisfied performance obligations that have been invoiced (where the
progress invoicing is ahead of the revenue recognition).

180 Notes
1
2
Note 37. Remuneration policy for executive officers
3
The executive officers, i.e. the CEO and other members of Group Management The decision-making process to determine, review and implement the policy 4
reporting to the CEO, fall within the provisions of this policy. The policy must The Board of Directors has established a Committee within the Board (the
be adopted by the annual general meeting once every four years or when Remuneration Committee), with the tasks of preparing, within the Board of 5
changed. The policy is forward-looking, i.e. applicable to remuneration agreed, Directors, the policy for remuneration for executive officers. The Board of Directors
6
and amendments to remuneration already agreed, after adoption of the policy shall propose a revised policy at least every fourth year and submit it to the
by the annual general meeting. This policy does not apply to any remuneration general meeting. The policy shall be in force until a new policy is adopted by 7
decided or approved by the general meeting. The below policy was adopted the general meeting.
by the annual general meeting 2023. Unless otherwise stated herein, the Board of Directors shall resolve on 8
A prerequisite for the successful implementation of the company’s business matters regarding remuneration and employment provisions for all other ex-
9
strategy and safeguarding of its long-term interests, including its sustainability, ecutive officers. The Board of Directors may delegate decision-making to the
is that the company is able to recruit and retain qualified personnel, consequently Remuneration Committee. The Committee shall continuously report to the 10
it is necessary that the company offers market competitive remuneration. Board of Directors. The CEO and the other executive officers shall not be
For information regarding Alfa Laval’s business strategy, please visit present when their respective remuneration terms are decided. 11
https://www.alfalaval.com/investors/in-brief/#xaa Additionally, the general meeting may – irrespective of this policy– resolve
12
This policy enables the company to offer the executive officers a competitive on, among other things, share-related or share price-related remuneration.
total remuneration. The remuneration shall be on market terms and may consist 13
of the following components: fixed base salary, variable cash remuneration
(including STI and LTIP), pension benefits and other benefits. The components, 14
their purpose and link to the company’s business strategy are described below.
15
16
Fixed Base Salary 17
Purpose and link to strategy Supports the attraction and retention of the best talents. Ensures competitiveness while controlling fixed costs to maximise efficiency. 18
Operational Details – Normally reviewed annually and increases will usually be effective from 1 January or following a change in responsibilities. 19
– The Remuneration Committee will consider, among other things, the following parameters when reviewing fixed base salary:
20
– Economic and salary conditions and trends.
– The individual’s performance and responsibilities. 21
– Base salaries and total remuneration at other companies that operate in the same markets, typically benchmarked 22
against similar roles.
23
24
Variable Cash Remuneration
25
A portion of the total remuneration for the executive officers is linked to business performance so that total remuneration will increase or decrease in line with performance, thus
26
promoting the company’s business strategy and long-term interests.
27
28
Annual Short-Term Incentive (STI)
29
Purpose and link to strategy To incentivise and create focus on the delivery of annual financial and strategic criteria.
30
Operational Details – The performance criteria, weighting and targets are to be determined annually. Targets shall be set by reference to the
company’s operating plan and historical and projected performance. 31
– The outcome of criteria for awarding STI is to be measured over a period of one year and depend on the degree of fulfilment of
32
predetermined targets.
– The Board of Directors shall have the possibility, under applicable law or contractual provisions, subject to the restrictions that 33
may apply under law or contract, to reclaim in whole or in part STI paid on incorrect grounds (so-called claw-back).
34
Opportunity Levels The maximum opportunity for STI can amount up to 50 percent of fixed base salary. For the CEO the maximum opportunity can
amount up to 60 percent of fixed base salary. The Remuneration Committee shall have the possibility to review the opportunity 35
levels in order to ensure market competitiveness.
36
Performance criteria The STI plan awards shall be based on mainly financial criteria. The criteria shall be designed so as to contribute to the
37
company’s business strategy and long-term interests.
38
39
40
Notes

Notes 181
Long-Term Incentive Plan (LTIP)

Purpose and link to strategy Give extra focus on the long-term value creation for the shareholders.

Operational Details – An annual grant of the LTIP, with a three-year performance period, can be decided by the Board of Directors each year.
– Payment to the participants of the program is made after year three, provided, that they are still employed at the date of payment.
– The Board of Directors shall have the possibility, under applicable law or contractual provisions, subject to the restrictions that
may apply under law or contract, to reclaim in whole or in part LTIP paid on incorrect grounds (so-called claw-back).
– In the event of a restructuring of the Company or any other extraordinary event which the Remuneration Committee considers will
affect the value of an award, the method of calculating the proportion of the maximum value of the award which will be paid to a
Participant on vesting may be adjusted in such manner as the Remuneration Committee shall determine to be fair and reasonable.

Opportunity Levels For executive officers the maximum opportunity for LTIP can amount up to 40 percent of fixed base salary for each three-year
performance period. For the CEO the maximum opportunity can amount up to 50 percent of fixed base salary for each three-
year performance period.

Performance Criteria The performance criteria of the LTIP are to be related to financial targets over a business cycle, including but not necessarily limited to,
Operating margin (adjusted EBITA margin) and Net invoicing growth. Maximum outcome is awarded when the externally com-
municated long-term financial targets are clearly exceeded.

For retention or recruitment purposes or extraordinary performance beyond the individual’s ordinary tasks the Remuneration Committee based on proposal of CEO, may
decide on a specific cash remuneration. Such remuneration may not exceed an annual amount corresponding to 40 percent of fixed annual cash salary and may not be paid
more than once each year per individual.

Pension Benefits

Purpose and link to strategy Provide competitive and cost-effective pension benefits.

Operational Details – Pension benefits shall be defined contribution (premium defined) unless the individual concerned is subject to defined benefit
pension under mandatory collective agreement provisions.
– Variable cash remuneration shall not qualify for pension benefits unless the executive officer is part of mandatory collective
agreed provisions where this is stipulated.
– Early retirement may be offered selectively and only after a special decision by the Remuneration Committee, with a defined
contribution early retirement scheme.
– For executive officers governed by rules other than Swedish, pension benefits may be duly adjusted for compliance with mandatory
rules or established local practice, taking into account, to the extent possible, the overall purpose of this policy.

Opportunity Levels The pension premiums for defined contribution pension shall amount to not more than 50 percent of the pensionable salary
(for the CEO fixed annual base salary).

Other Benefits

Purpose and link to strategy Provide competitive and cost-effective benefits.

Operational Details – Other benefits may include but is not limited to life insurance, disability insurance and medical insurance/cover and a company
car or car allowance.
– For executive officers governed by rules other than Swedish, benefits may be duly adjusted for compliance with mandatory
rules or established local practice, taking into account, to the extent possible, the overall purpose of this policy.
– Executive officers who are international assignees (for example expatriates) to or from Sweden may receive additional remuneration
and other benefits to the extent reasonable in light of the special circumstances associated with the international assignment
arrangement, taking into account, to the extent possible, the overall purpose of this policy.

Opportunity Levels Other benefits may amount to not more than 5 percent of the fixed annual cash salary and shall be set at a level which the
Remuneration Committee considers to:
– provide the relevant level of benefit depending on role and the individual circumstances,
– be in line with comparable roles in companies with similar size and complexity in the local market, and
– be appropriate compared to the benefits offered to the wider workforce in the local market.

Termination of employment

Details – If notice of termination of employment is made by the company:

– The notice period may not exceed twelve months.
– Fixed cash salary during the period of notice and severance pay may together not exceed an amount equivalent to the fixed
cash salary for two years.
– When termination is made by the executive officer the period of notice may not to exceed six months without any right to severance pay.
– Appropriate so-called good leaver/bad leaver principles are to be applied for STI and LTIP.
– Repatriation – If the executive officer is an international assignee the company may reimburse reasonable cost for the repatriation
of good leavers, taking into account, to the extent possible, the overall purpose of this policy.
For executive officers governed by rules other than Swedish, payments in connection with termination may be duly adjusted for compliance
with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of this policy.

182 Notes
1

Salary and employment conditions for employees Derogation from the policy 2
In the preparation of the Board of Directors’ proposal for this remuneration policy, The Board of Directors may temporarily resolve to derogate from the policy, in
3
salary and employment conditions for employees of the company have been whole or in part, if in a specific case there is special cause for the derogation and
taken into account by including information on the employees’ total income, the a derogation is necessary to serve the company’s long-term interests, including 4
components of the remuneration and increase and growth rate over time. The its sustainability, or to ensure the company’s financial viability. As set out above,
development of the difference between the remuneration to executive officers and the Remuneration Committee’s tasks include preparing the Board of Directors’ 5
remuneration to other employees will be disclosed in the remuneration report. resolutions in remuneration-related matters. This includes any resolutions to
6
derogate from the policy.
7

Note 38. Government grants 8

In 2023 Alfa Laval has received SEK 93 (9) million in government grants, out of which, SEK 72 (6) as employment or company support, SEK 12 (3) million as 9
energy support and SEK 9 (0) million as investment support. Most of it relates to China and to some part Italy.
10
11
Note 39. Events after the closing date 12
The statements on financial position and the comprehensive income statements will be adopted at the Annual General Meeting of shareholders on April 25, 2024. 13
14
Note 40. Proposed disposition of earnings 15
16
The unrestricted equity in Alfa Laval AB (publ) is SEK:
Profit brought forward 4,027,466,708 17
Repaid dividend 27,156 18
Net income 2023 5,265,821,931
19
9,293,315,795
20
The Board of Directors propose a dividend of SEK 7.50 (6.00) per share corresponding to SEK 3,099,947,363 (2,479,957,890) and that the remaining income
of SEK 6,193,368,432 (4,027,466,708) be carried forward. 21
The Board of Directors are of the opinion that the proposed dividend is in line with the requirements that the type and size of operations, the associated risks, 22
the capital needs, liquidity and financial position put on the company.
23
True and fair view
The undersigned certify that the annual report for the Group and the Parent company has been prepared in accordance with International Financial Reporting 24
Standards (IFRS), as adopted for use in the European Union, and generally accepted accounting principles respectively, and gives a true and fair view of the fi- 25
nancial positions and results of the Group and the Parent company, and that the Board of Directors’ report gives a fair review of the development of the opera-
tions, financial positions and results of the Group and the Parent company and describes substantial risks and uncertainties that the Group companies face. 26
27

Lund, March 17, 2024 28

29
Dennis Jönsson Lilian Fossum Biner Nadine Crauwels
30
Chairman Director Director
31
Henrik Lange Bror García Lantz Ray Mauritsson 32
Director Employee representative Director
33

Anna Müller Henrik Nielsen Johan Ranhög
34
Director Employee representative Employee representative 35
36
Finn Rausing Jörn Rausing Ulf Wiinberg
37
Director Director Director
38
Tom Erixon 39
President and CEO 40

Our Auditors’ Report concerning this Annual Report has been issued on March 25, 2024.

Andreas Troberg Karoline Tedevall
Authorised Public Accountant Authorised Public Accountant
Notes

Notes 183
Auditor’s report
To the general meeting of the shareholders of Alfa Laval AB (publ), corporate identity number 556587-8054

Report on the annual accounts and consolidated accounts

Opinions
We have audited the annual accounts and consolidated accounts of Alfa Laval Our opinions in this report on the annual accounts and consolidated accounts
AB (publ) for the year 2023. The annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted
of the company are included on pages 101–183 and 188–190 in this document. to the parent company’s audit committee in accordance with the Audit
In our opinion, the annual accounts have been prepared in accordance Regulation (537/2014) Article 11.
with the Annual Accounts Act and present fairly, in all material respects, the
financial position of the parent company as of 31 December 2023 and its fi- Basis for Opinions
nancial performance and cash flow for the year then ended in accordance We conducted our audit in accordance with International Standards on Auditing
with the Annual Accounts Act. The consolidated accounts have been prepared (ISA) and generally accepted auditing standards in Sweden. Our responsibilities
in accordance with the Annual Accounts Act and present fairly, in all material under those standards are further described in the Auditor’s Responsibilities
respects, the financial position of the group as of 31 December 2023 and their section. We are independent of the parent company and the group in accor-
financial performance and cash flow for the year then ended in accordance dance with professional ethics for accountants in Sweden and have otherwise
with International Financial Reporting Standards (IFRS), as adopted by the fulfilled our ethical responsibilities in accordance with these requirements.
EU, and the Annual Accounts Act. The statutory administration report is con- This includes that, based on the best of our knowledge and belief, no prohibited
sistent with the other parts of the annual accounts and consolidated accounts. services referred to in the Audit Regulation (537/2014) Article 5.1 have been
We therefore recommend that the general meeting of shareholders provided to the audited company or, where applicable, its parent company or
adopts the consolidated financial position and parent company income and its controlled companies within the EU.
financial position for the parent company and the group. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.

Key Audit Matters

Key audit matters of the audit are those matters that, in our professional We have fulfilled the responsibilities described in the Auditor’s responsibilities
judgment, were of most significance in our audit of the annual accounts and for the audit of the financial statements section of our report, including in re-
consolidated accounts of the current period. These matters were addressed lation to these matters. Accordingly, our audit included the performance of
in the context of our audit of, and in forming our opinion thereon, the annual procedures designed to respond to our assessment of the risks of material
accounts and consolidated accounts as a whole, but we do not provide a misstatement of the financial statements. The results of our audit procedures,
separate opinion on these matters. For each matter below, our description of including the procedures performed to address the matters below, provide
how our audit addressed the matter is provided in that context. the basis for our audit opinion on the accompanying financial statements.

Goodwill

Description How our audit addressed this key audit matter

Book value of goodwill amounts to 25 069 MSEK per 31 December 2023 During our audit we have evaluated and tested the company’s process for
which corresponds to 31% of the group’s total assets. The company evaluates the impairment test, for example by evaluating historic growth and current
whether the book value of goodwill exceeds its recoverable amount on an forecasts. We have also benchmarked with peer companies in order to
annual basis or upon indications of declining value. The recoverable amount evaluate the reasonableness of the valuation and, through support of our
is determined for each cash-generating unit through means of a calculation valuation specialists, evaluated the chosen discount rate and assumptions
of net present value of future cash flows. Future cash flows are based on on long-term growth. We have also evaluated the company’s model and
management’s business plans and forecasts and includes various assump- method for executing the impairment test and made sensitivity analyses.
tions such as development in earnings, growth, investment needs and In our audit we have also examined whether the disclosures in the
discount rates. If a decision is made to wind-up or dispose a business a annual report are appropriate and in accordance with the assumptions
separate impairment test is performed and a write down is recorded if applied by group management.
the recoverable amount is lower than the recorded value for the business.
Changes to the assumptions could have a major impact on the calculation
of the recoverable amount and the assumptions applied by the company
are thus important to the assessment as to whether an impairment is
present. We have thus determined valuation of goodwill to represent a
key audit matter for the group.
A description of goodwill and the impairment tests is included in note 17.

Other provisions

Description How our audit addressed this key audit matter

Book value of other provisions in the group amounts 2 094 MSEK per 31 We have obtained the group’s documentation of the provisions. We have
December 2023. The provisions amongst other relates to provision for evaluated the provisions recorded and discussed the assumptions and
expected expenses for warranties, litigation, restructuring and deferred risk assessments made by the company for each major provision in order to
costs, as expressed in note 28 Other provisions. establish that the provisions are in compliance with applicable accounting
The provisions include assumptions about future outcome, primarily as it standards. We have also followed up the provisions with legal assessments,
relates to amount, timing and magnitude of the final settlement. Provisions documented decisions and historic outcome.
for this type of expenses are uncertain and are based on various assumptions In our audit we have also examined whether the disclosures in the annual
made by the company. Changes to the assumptions upon which the pro- report are appropriate.
visions are based could have a major impact on the reported earnings.

184 Auditor’s report

Other Information than the annual accounts and consolidated accounts – Identify and assess the risks of material misstatement of the annual accounts
This document also contains other information than the annual accounts and and consolidated accounts, whether due to fraud or error, design and perform
consolidated accounts and is found on 1–100. The remuneration report for audit procedures responsive to those risks, and obtain audit evidence that
the financial year 2023 also constitutes other information. The Board of is sufficient and appropriate to provide a basis for our opinions. The risk of
Directors and the Managing Director are responsible for this other information. not detecting a material misstatement resulting from fraud is higher than
Our opinion on the annual accounts and consolidated accounts does not for one resulting from error, as fraud may involve collusion, forgery, intentional
cover this other information and we do not express any form of assurance omissions, misrepresentations, or the override of internal control.
conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, – Obtain an understanding of the company’s internal control relevant to our
our responsibility is to read the information identified above and consider audit in order to design audit procedures that are appropriate in the cir-
whether the information is materially inconsistent with the annual accounts cumstances, but not for the purpose of expressing an opinion on the effec-
and consolidated accounts. In this procedure we also take into account our tiveness of the company’s internal control.
knowledge otherwise obtained in the audit and assess whether the information – Evaluate the appropriateness of accounting policies used and the reason-
otherwise appears to be materially misstated. ableness of accounting estimates and related disclosures made by the
If we, based on the work performed concerning this information, conclude Board of Directors and the Managing Director.
that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard. – Conclude on the appropriateness of the Board of Directors’ and the Managing
Director’s use of the going concern basis of accounting in preparing the annual
Responsibilities of the Board of Directors and the Managing Director accounts and consolidated accounts. We also draw a conclusion, based on
The Board of Directors and the Managing Director are responsible for the the audit evidence obtained, as to whether any material uncertainty exists
preparation of the annual accounts and consolidated accounts and that they related to events or conditions that may cast significant doubt on the com-
give a fair presentation in accordance with the Annual Accounts Act and, pany’s and the group’s ability to continue as a going concern. If we conclude
concerning the consolidated accounts, in accordance with IFRS as adopted that a material uncertainty exists, we are required to draw attention in our
by the EU. The Board of Directors and the Managing Director are also re- auditor’s report to the related disclosures in the annual accounts and con-
sponsible for such internal control as they determine is necessary to enable solidated accounts or, if such disclosures are inadequate, to modify our opinion
the preparation of annual accounts and consolidated accounts that are free about the annual accounts and consolidated accounts. Our conclusions are
from material misstatement, whether due to fraud or error. based on the audit evidence obtained up to the date of our auditor’s report.
In preparing the annual accounts and consolidated accounts, The Board of However, future events or conditions may cause a company and a group to
Directors and the Managing Director are responsible for the assessment of the cease to continue as a going concern.
company’s and the group’s ability to continue as a going concern. They disclose,
– Evaluate the overall presentation, structure and content of the annual accounts
as applicable, matters related to going concern and using the going concern
and consolidated accounts, including the disclosures, and whether the annual
basis of accounting. The going concern basis of accounting is however not
accounts and consolidated accounts represent the underlying transactions
applied if the Board of Directors and the Managing Director intends to liquidate
and events in a manner that achieves fair presentation.
the company, to cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of Director’s – Obtain sufficient and appropriate audit evidence regarding the financial in-
responsibilities and tasks in general, among other things oversee the company’s formation of the entities or business activities within the group to express an
financial reporting process. opinion on the consolidated accounts. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible
Auditor’s responsibility for our opinions.
Our objectives are to obtain reasonable assurance about whether the annual
accounts and consolidated accounts as a whole are free from material mis- We must inform the Board of Directors of, among other matters, the planned
statement, whether due to fraud or error, and to issue an auditor’s report that scope and timing of the audit. We must also inform of significant audit findings
includes our opinions. Reasonable assurance is a high level of assurance but during our audit, including any significant deficiencies in internal control that
is not a guarantee that an audit conducted in accordance with ISAs and we identified.
generally accepted auditing standards in Sweden will always detect a mate- We must also provide the Board of Directors with a statement that we
rial misstatement when it exists. Misstatements can arise from fraud or error have complied with relevant ethical requirements regarding independence,
and are considered material if, individually or in the aggregate, they could and to communicate with them all relationships and other matters that may
reasonably be expected to influence the economic decisions of users taken reasonably be thought to bear on our independence, and where applicable,
on the basis of these annual accounts and consolidated accounts. actions taken to eliminate threats or related safeguards applied.
As part of an audit in accordance with ISAs, we exercise professional From the matters communicated with the Board of Directors, we determine
judgment and maintain professional skepticism throughout the audit. We also: those matters that were of most significance in the audit of the annual accounts
and consolidated accounts, including the most important assessed risks for
material misstatement, and are therefore the key audit matters. We describe
these matters in the auditor’s report unless law or regulation precludes disclosure
about the matter.

Auditor’s report 185

Report on other legal and regulatory requirements
Report on the audit of the administration and the proposed appropriations of the company’s profit or loss

Opinions Auditor’s responsibility

In addition to our audit of the annual accounts and consolidated accounts, Our objective concerning the audit of the administration, and thereby our
we have also audited the administration of the Board of Directors and the opinion about discharge from liability, is to obtain audit evidence to assess
Managing Director of Alfa Laval AB (publ) for the year 2023 and the proposed with a reasonable degree of assurance whether any member of the Board of
appropriations of the company’s profit or loss. Directors or the Managing Director in any material respect:
We recommend to the general meeting of shareholders that the profit be
appropriated in accordance with the proposal in the statutory administration – has undertaken any action or been guilty of any omission which can give
report and that the members of the Board of Directors and the Managing rise to liability to the company, or
Director be discharged from liability for the financial year.
– in any other way has acted in contravention of the Companies Act, the
Basis for opinions Annual Accounts Act or the Articles of Association.
We conducted the audit in accordance with generally accepted auditing
standards in Sweden. Our responsibilities under those standards are further Our objective concerning the audit of the proposed appropriations of the
described in the Auditor’s Responsibilities section. We are independent of the company’s profit or loss, and thereby our opinion about this, is to assess with
parent company and the group in accordance with professional ethics for reasonable degree of assurance whether the proposal is in accordance with
accountants in Sweden and have otherwise fulfilled our ethical responsibilities the Companies Act.
in accordance with these requirements. Reasonable assurance is a high level of assurance, but is not a guarantee
We believe that the audit evidence we have obtained is sufficient and that an audit conducted in accordance with generally accepted auditing
appropriate to provide a basis for our opinions. standards in Sweden will always detect actions or omissions that can give
rise to liability to the company, or that the proposed appropriations of the
Responsibilities of the Board of Directors and the Managing Director company’s profit or loss are not in accordance with the Companies Act.
The Board of Directors is responsible for the proposal for appropriations of As part of an audit in accordance with generally accepted auditing standards
the company’s profit or loss. At the proposal of a dividend, this includes an in Sweden, we exercise professional judgment and maintain professional
assessment of whether the dividend is justifiable considering the requirements skepticism throughout the audit. The examination of the administration and
which the company’s and the group’s type of operations, size and risks place the proposed appropriations of the company’s profit or loss is based primarily
on the size of the parent company’s and the group’s equity, consolidation on the audit of the accounts. Additional audit procedures performed are based
requirements, liquidity and position in general. on our professional judgment with starting point in risk and materiality. This
The Board of Directors is responsible for the company’s organization and means that we focus the examination on such actions, areas and relationships
the administration of the company’s affairs. This includes among other things that are material for the operations and where deviations and violations
continuous assessment of the company’s and the group’s financial situation would have particular importance for the company’s situation. We examine and
and ensuring that the company’s organization is designed so that the accounting, test decisions undertaken, support for decisions, actions taken and other cir-
management of assets and the company’s financial affairs otherwise are cumstances that are relevant to our opinion concerning discharge from liability.
controlled in a reassuring manner. The Managing Director shall manage the As a basis for our opinion on the Board of Directors’ proposed appropriations
ongoing administration according to the Board of Directors’ guidelines and of the company’s profit or loss we examined the Board of Directors’ reasoned
instructions and among other matters take measures that are necessary to statement and a selection of supporting evidence in order to be able to assess
fulfill the company’s accounting in accordance with law and handle the whether the proposal is in accordance with the Companies Act.
management of assets in a reassuring manner.

186 Auditor’s report

The auditor’s examination of the ESEF report

Opinion Reasonable assurance is a high level of assurance, but it is not a guarantee

In addition to our audit of the annual accounts and consolidated accounts, that an engagement carried out according to RevR 18 and generally accepted
we have also examined that the Board of Directors and the Managing auditing standards in Sweden will always detect a material misstatement when
Director have prepared the annual accounts and consolidated accounts in a it exists. Misstatements can arise from fraud or error and are considered material
format that enables uniform electronic reporting (the Esef report) pursuant if, individually or in aggregate, they could reasonably be expected to influence
to Chapter 16, Section 4(a) of the Swedish Securities Market Act the economic decisions of users taken on the basis of the Esef report.
(2007:528) for Alfa Laval AB (publ) for the financial year 2023. The audit firm applies ISQM 1 Quality Management for Firms that Perform
Our examination and our opinion relate only to the statutory requirements. Audits or Reviews of Financial Statements, or other Assurance or Related
In our opinion, the ESEF report has been prepared in a format that, in all Services Engagements which requires the firm to design, implement and
material respects, enables uniform electronic reporting. operate a system of quality management, including policies and procedures
regarding compliance with professional ethical requirements, professional
Basis for opinion standards and applicable legal and regulatory requirements.
We have performed the examination in accordance with FAR’s recommendation The examination involves obtaining evidence, through various procedures, that
RevR 18 Examination of the ESEF report. Our responsibility under this recom- the Esef report has been prepared in a format that enables uniform electronic
mendation is described in more detail in the Auditors’ responsibility section. reporting of the annual and consolidated accounts. The procedures selected
We are independent of Alfa Laval AB (publ) in accordance with professional depend on the auditor’s judgment, including the assessment of the risks of
ethics for accountants in Sweden and have otherwise fulfilled our ethical material misstatement in the report, whether due to fraud or error. In carrying
responsibilities in accordance with these requirements. out this risk assessment, and in order to design audit procedures that are ap-
We believe that the evidence we have obtained is sufficient and appropriate propriate in the circumstances, the auditor considers those elements of inter-
to provide a basis for our opinion. nal control that are relevant to the preparation of the Esef report by the Board
of Directors and the Managing Director, but not for the purpose of expressing
Responsibilities of the Board of Directors and the Managing Director an opinion on the effectiveness of those internal controls. The examination
The Board of Directors and the Managing Director are responsible for the also includes an evaluation of the appropriateness and reasonableness of
preparation of the Esef report in accordance with Chapter 16, Section 4(a) of assumptions made by the Board of Directors and the Managing Director.
the Swedish Securities Market Act (2007:528), and for such internal control that The procedures mainly include a validation of the Esef report, which is
the Board of Directors and the Managing Director determine is necessary to prepared in a valid XHTML format and a reconciliation of the Esef report with
prepare the Esef report without material misstatements, whether due to the audited annual accounts and consolidated accounts.
fraud or error. Furthermore, the procedures also include an assessment of whether financial
performance, financial position, changes in equity and cash flow as well as
Auditor’s responsibility notes in Esef report has if it has been tagged with iXBRL in accordance with
Our responsibility is to obtain reasonable assurance whether the Esef report the requirements of the EUSF Regulation.
is in all material respects prepared in a format that meets the requirements of
Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528),
based on the procedures performed.
RevR 18 requires us to plan and execute procedures to achieve reasonable
assurance that the Esef report is prepared in a format that meets these
requirements.

Andreas Troberg, Ernst & Young AB, Box 7850, 103 99 Stockholm, was appointed auditor of Alfa Laval AB by the general meeting of the
shareholders on the 25th of April 2023 and has been the company’s auditor since the 25th of April 2023.

Karoline Tedevall, Ernst & Young AB, Box 7850, 103 99 Stockholm, was appointed auditor of Alfa Laval AB by the general meeting of the
shareholders on the 25th of April 2023 and has been the company’s auditor since the 23rd of April 2018.

Lund March 25, 2024

Ernst & Young AB

Andreas Troberg Karoline Tedevall

Authorized Public Accountant Authorized Public Accountant

Auditor’s report 187

Ten-year overview

Ten-year overview
Consolidated
SEK millions, unless otherwise stated 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Profit and loss
Net sales 63,598 52,135 40,911 41,468 46,517 40,666 35,314 35,634 39,746 35,067
Comparison distortion items – -767 -192 -796 189 151 – -1,500 – -320
Operating income 9,256 6,519 6,126 5,580 7,198 5,831 4,589 2,989 5,717 4,667
Financial net -606 -340 16 -603 23 65 -218 336 -273 -550
Result after financial items 8,650 6,179 6,142 4,977 7,221 5,896 4,371 3,325 5,444 4,117
Taxes -2,269 -1,610 -1,341 -1,397 -1,713 -1,359 -1,383 -1,013 -1,583 -1,149
Net income for the year 6,381 4,569 4,801 3,580 5,508 4,537 2,988 2,312 3,861 2,968

Financial position
Goodwill 25,069 26,258 22,480 19,080 21,112 20,537 19,775 20,436 19,498 20,408
Other intangible assets 4,553 5,159 3,441 2,204 3,134 3,873 4,692 5,946 6,556 7,898
Property, plant and equipment 11,769 10,710 9,075 8,321 8,943 5,732 4,851 4,940 4,773 5,004
Other non-current assets 2,668 2,666 3,216 3,633 2,081 1,958 1,654 2,100 1,804 2,092
Inventories 14,950 14,775 10,525 9,223 10,077 9,253 8,424 7,831 7,405 7,883
Current receivables 17,416 17,018 11,977 10,631 12,582 11,807 8,808 8,431 8,964 9,791
Current deposits 728 311 291 2,618 873 617 1,208 1,075 1,021 697
Cash and cash equivalents 5,135 4,352 3,356 5,150 5,594 4,295 3,137 2,619 1,876 2,013
TOTAL ASSETS 82,288 81,249 64,361 60,860 64,396 58,072 52,549 53,378 51,897 55,786

Equity 37,378 35,704 32,344 29,071 27,747 23,599 20,500 20,276 18,423 17,202
Provisions for pensions etc. 1,090 1,192 1,907 2,494 2,321 2,118 2,297 2,425 1,931 2,221
Provisions for taxes 2,372 2,293 1,838 1,553 1,662 1,945 2,100 2,722 2,925 3,074
Other non-current liabilities 1,863 2,139 1,928 2,259 2,571 802 677 636 521 660
Non-current loans 9,829 13,362 3,059 8,043 10,600 8,540 11,092 12,169 12,484 16,454
Current liabilities 29,756 26,559 23,285 17,440 19,495 21,068 15,883 15,150 15,613 16,175
TOTAL EQUITY & LIABILITIES 82,288 81,249 64,361 60,860 64,396 58,072 52,549 53,378 51,897 55,786

Changes in accounting standards

A reader of the ten-year overview should observe that accounting standards have
changed repeatedly over this period of time. The major changes are the following.
During 2019 IFRS 16 ”Leases” was implemented, which meant that right-of use assets
and lease liabilities increased by SEK 2,766 million as per January 1, 2019 in connection
with the initial application.

188
Alternative performance measures
and definitions
Ten-year overview Alternative performance measures hensive income statement and the amortisation of Order backlog at year-end
An alternative performance measure is a financial step-up values is exhibited in the Income analysis table Incoming orders that not yet have been invoiced,
Consolidated measure of historical financial performance, financial on page 120, while the corresponding tax is SEK 208 translated at the current closing rate. The order backlog
position or cash flows, other than a financial measure (159) million. This key figure is fully comparable over at the end of the year is equal to the sum of the order
SEK millions, unless otherwise stated 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 time independent of the amortisation of step-up backlog at the beginning of the year plus the orders
defined or specified in the financial reporting framework.
Key ratios values that from time to time burden the Group. received during the year less the net sales for the year.
In the annual report, the following alternative performance
Orders received 70,742 58,645 45,718 39,833 44,119 45,005 36,628 32,060 37,098 36,660 It gives an indication of how the net sales can be ex-
measures have been used (all of these alternative
Measures to show how the Group is pected to develop in the future.
Order backlog at year end 45,325 37,020 22,954 18,969 21,551 23,168 18,289 16,870 20,578 22,293 performance measures relate to actual historical figures
EBITA 10,221 7,462 6,922 6,435 8,178 6,869 5,610 4,680 6,811 5,571 and never to expected performance in future periods): funded and manages its capital
World-leading in three key technologies – Return on capital employed (%) is defined as EBITA Profit margin %
EBITDA 11,780 8,911 8,113 7,569 9,251 7,495 6,239 5,323 7,478 6,136 in relation to average capital employed, calculated on 12 Result after financial items in relation to net sales,
Measures to achieve full comparability expressed in percent.
EBITA-margin % 16.1% 14.3% 16.9% 15.5% 17.6% 16.9% 15.9% 13.1% 17.1% 15.9% months’ revolving basis and expressed in percent. Capital
over time
EBITDA-margin % 18.5% 17.1% 19.8% 18.3% 19.9% 18.4% 17.7% 14.9% 18.8% 17.5% employed is defined as total assets less liquid funds,
Heat transfer Separation Fluid handling All of these concern the comparison distorting impact Capital turnover rate, times
other long-term securities, accrued interest income,
Compact heat exchangers that recycle Separators, decanter centrifuges, filters, Pumps, valves, tank cleaning equipment Adjusted EBITA 10,221 8,229 7,114 7,231 7,989 6,718 5,610 5,553 6,811 5,891 from above all amortisation of step-up values both over Net sales in relation to average capital employed, ex-
operating liabilities and other non-interest-bearing
Adjusted EBITDA 11,780 9,678 8,305 8,365 9,062 7,344 6,239 6,196 7,478 6,456 time and compared to external companies. For the same pressed as a multiple of capital employed. Shown ex-
heat, optimize customers’ energy con- strainers and membranes that separate and installation material for industries with liabilities, including tax and deferred tax, but excluding
reasons adjustments are also made for comparison cluding and including goodwill, step-up values and
sumption, cut costs and reduce negative liquids from other liquids and solid particles stringent hygiene requirements as well as Adjusted EBITA-margin % 16.1% 15.8% 17.4% 17.4% 17.2% 16.5% 15.9% 15.6% 17.1% 16.8% distortion items. How they are calculated is exhibited in the
accrued interest costs. The measure shows how well
the capital that is used in the operations is managed. the corresponding deferred tax liability.
environmental impact. from liquids or gases. pumping systems specifically for the marine Adjusted EBITDA-margin % 18.5% 18.6% 20.3% 20.2% 19.5% 18.1% 17.7% 17.4% 18.8% 18.4% Income analysis table on page 120, except for the last one.
industry and the offshore market. Profit margin % 13.6% 11.9% 15.0% 12.0% 15.5% 14.5% 12.4% 9.3% 13.7% 11.7% – Net debt is defined as interest-bearing liabilities and
– EBITA or Earnings Before Interests, Taxes and Amor- Capital employed
lease liabilities less cash and cash equivalents and
tisation is defined as operating income before amor- Average total assets less liquid funds, other long-term
current deposits. The calculation of net debt is exhib-
tisation of step-up values. This measure of result is fully securities, accrued interest income, operating liabilities
Excl. goodwill and step-up values: ited in the Net debt table in Note 29. The measure
comparable over time independent of the financing and other non-interest-bearing liabilities, including tax
Capital turnover rate, times 3.4 3.5 3.8 3.9 4.4 7.4 5.7 8.6 10.6 7.9 shows the net financial indebtedness.
costs and the amortisation of step-up values that and deferred tax, but excluding accrued interest costs.

70,742 63,598 16.1% 21,321

Analysts tracking Alfa Laval

ABG Sundal Collier: Danske Bank HSBC Pareto Securities

ALPHAVALUE Deutsche Bank JP Morgan RBC Capital Markets

Bank of America Merrill Lynch DNB Kepler Cheuvreux SEB

Barclays Capital Exane BNP Paribas Morgan Stanley UBS

Carnegie Goldman Sachs International Morningstar

Gustav Österberg Daniela Costa Matthew Donen

Enabling change
[email protected] [email protected] [email protected]

Annual Report – Sustainability Report – Corporate Governance Report – 2023

Tel: +46 8 5886 85 13 Tel: +44 20 7774 8354 Tel: +31 20 797 00 12

Citi Investment Research Handelsbanken Nordea

Klas Bergelind Gustav Schwerin Henrik Gripenvik
[email protected] [email protected] [email protected]
Tel: +44 207 986 4018 Tel: +46 8 701 13 81 Tel: +46 10 156 1231

This is Alfa Laval

Alfa Laval is active in the areas of Energy, Marine, and
Annual General Meeting 2024 instructions in the notice. Shareholders may Meeting program Food & Water, offering its expertise, products, and service
The Annual General Meeting of Alfa Laval AB exercise their voting rights at the Annual General 4:00 p.m. Start of Meeting to a wide range of industries in some 100 countries. The
(publ) will be held on Thursday, April 25, 2024, Meeting 2023 by voting in advance. A shareholder company is committed to optimizing processes, creating
at 4.00 p.m. at Stadshallen, Stortorget 9, in Lund. whose shares are held in the name of a nominee Dividend responsible growth, and driving progress – always going
Notice of the Annual General Meeting will be must, in addition to providing notification of The Board of Directors and the President propose
the extra mile to support customers in achieving their
inserted as an announcement in the Swedish participation, register its shares in its own name that a dividend of SEK 7.50 per share be distributed
business goals and sustainability targets.
Official Gazette and on the company’s website so that the shareholder is recorded in the share to shareholders. The proposed record date for
not more than six and not less than four weeks register relating to the circumstances on April 17, the dividend is Monday, April 29, 2024. If the
Alfa Laval’s innovative technologies are dedicated to
prior to the Meeting. An announcement that 2024. Please see the notice for more information. Annual General Meeting approves the proposal,
purifying, refining, and reusing materials, promoting more Alfa Laval contributes to progress towards the UN Sustainable Development
notification has been issued will be placed in the dividend is expected to be distributed by
Dagens Nyheter. As a service to existing share- Notification of participation shall be made to: Euroclear Sweden AB on Friday, May 3, 2024. responsible use of natural resources. They contribute to Goals for 2030. We continuously improve our own sustainability performance
holders, information about the Annual General – Alfa Laval AB, Group Staff Legal, The record date and dividend payment date may improved energy efficiency and heat recovery, better
Meeting can also be sent to them by mail. The Box 73, SE-221 00 Lund, Sweden be postponed due to the technical procedures water treatment, and reduced emissions. Thereby, Alfa and enable change by supporting customers to reach their environmental targets.
following information concerning the Meeting – E-mail: [email protected] required for the execution of the payment. Laval is not only accelerating success for its customers,
does not constitute legal notice. – Website: www.alfalaval.com but also for people and the planet. Making the world
– Tel: +46 46 36 74 00 or +46 46 36 65 00. better, every day. It’s all about Advancing better™.
Notification of participation Alfa Laval’s products and solutions enable our customers to improve the efficiency
A shareholder who wishes to attend the Annual Shareholders must state their name, personal How to contact Alfa Laval of their production processes by, for example, improving energy efficiency, reusing
General Meeting must be recorded as share- identity number and telephone number on the Up-to-date Alfa Laval contact details for all countries are water or reducing waste. Moreover, Alfa Laval supports the transition to a more
holder in the register of shareholders prepared by notice of participation. If participation is by always available on our website at www.alfalaval.com 2023 Annual & Sustainability Report sustainable future in the energy, food and marine industries.
Euroclear Sweden AB relating the circumstances proxy, a power of attorney or authorization must
on April 17, 2024, and notify participation – no later be submitted to the company prior to the Meeting.
than April 19, 2024 – in accordance with the

100018199EN 2403
Financial information
Alfa Laval uses a number of channels to provide regarding the company’s operations. In addition, Financial information for fiscal year 2024
information about the company’s operations representatives of Group management meet Alfa Laval will publish quarterly reports on
and financial development. The website – with analysts, investors and journalists on an the following dates in 2024:
www.alfalaval.com/investors – is updated ongoing basis to ensure that they have correct First quarter report: April 25, 2024
continuously with annual reports, quarterly and current information. Pursuant to the com- Second quarter report: July 23, 2024
reports, press releases and presentations. pany’s agreement with Nasdaq Stockholm, Third quarter report: October 24, 2024
Annual reports are also sent to those share- information that could have an effect on the Year-end report: Februari 5, 2025
holders who have notified the company that share price and that is not yet publicly known is
they wish to receive a copy. Conference calls never disclosed in conjunction with these types Shareholder information
with analysts, investors and the media are of meetings or contacts. Alfa Laval employs a Johan Lundin
arranged by Alfa Laval in conjunction with the so-called silent period of three weeks prior to the Head of Investor Relations
publication of the company’s quarterly reports. publication of a quarterly report. The President Tel: +46 46 36 74 82
A capital markets day is organized each year, and Chief Financial Officer do not meet or speak e-mail: [email protected]
during which representatives from the financial to representatives from the financial market
market are offered more in-depth information during this period.

Analysts tracking Alfa Laval

ABG Sundal Collier: Danske Bank HSBC Pareto Securities

ALPHAVALUE Deutsche Bank JP Morgan RBC Capital Markets

Bank of America Merrill Lynch DNB Kepler Cheuvreux SEB

Barclays Capital Exane BNP Paribas Morgan Stanley UBS

Carnegie Goldman Sachs International Morningstar

Gustav Österberg Daniela Costa Matthew Donen

Enabling change
[email protected] [email protected] [email protected]

Annual Report – Sustainability Report – Corporate Governance Report – 2023

Tel: +46 8 5886 85 13 Tel: +44 20 7774 8354 Tel: +31 20 797 00 12

Citi Investment Research Handelsbanken Nordea

Klas Bergelind Gustav Schwerin Henrik Gripenvik
[email protected] [email protected] [email protected]
Tel: +44 207 986 4018 Tel: +46 8 701 13 81 Tel: +46 10 156 1231

This is Alfa Laval

100018199EN 2403

Common questions

Alfa Laval's stakeholder engagement is integral to its sustainability strategy, involving both formal and informal dialogues across various stakeholders, including customers, investors, suppliers, and local communities. These engagements focus on sustainability-related topics such as climate change risks, resource efficiency, and the circular economy. Feedback from these dialogues informs the company's strategies, as illustrated by its commitment to emission reduction and resource management targets, which have been positively influenced by stakeholder input .

Alfa Laval prioritizes understanding the true needs of its customers to deliver outstanding experiences and retain technological leadership. This involves seamless solutions and relentless innovation, enhancing customer experience by making them feel they have the best overall experience from the initial contact. Additionally, Alfa Laval focuses on sustainability, meeting high expectations by offering energy-saving products and solutions, such as their advanced heat exchangers and water management technologies, which help reduce environmental impacts in industrial processes .

Alfa Laval's digital solutions have a positive impact on both environmental and financial savings for process customers. Alfa Laval enables customers to enhance energy efficiency, reuse water, and reduce waste in their production processes . Specifically, its digital tools, such as the Life-cycle Assessment Solution, help analyze and validate the environmental impact throughout the supply chain, thus offering insights for cost reduction and regulatory compliance . Additionally, Alfa Laval's products, like heat exchangers and mechanical vapor recompression technology, significantly cut energy consumption and carbon emissions, as exemplified by the Chelsea Sugar case, where energy use was reduced by 76%, leading to an 11% cut in CO2 emissions . These technologies not only lower operational costs for users by optimizing energy efficiency but also contribute to reducing the overall environmental footprint, which aligns with Alfa Laval's sustainability targets .

Alfa Laval's financial performance metrics, including an 24% growth in Adjusted EBITA to SEK 10,221 million and a 21% increase in order intake to SEK 70,742 million in 2023, demonstrate effective growth strategies. These results reflect a focus on expanding product offerings and enhancing market presence through innovative solutions and increased sales. Additionally, strategic priorities, such as customer collaboration and strengthening the aftermarket offering, support this growth trajectory .

Alfa Laval's innovation in heat exchanger technology significantly contributes to the hydrogen economy by enhancing energy efficiency and supporting the transition to clean energy solutions such as hydrogen. Their compact plate heat exchangers are designed for efficiency, playing an essential role in energy transfer processes crucial for hydrogen production, such as in electrolyzers and fuel cells . Specifically, the AlfaNova GL50 heat exchanger, developed for fuel cell systems, increases efficiency and minimizes energy losses in hydrogen systems . Organizationally, Alfa Laval supports this innovation through strategic investments in research and development, accounting for about 3% of sales, and focuses on advancing technologies relevant to new energy landscapes such as hydrogen . Additionally, Alfa Laval has taken steps to enhance production capabilities and restructure operations to better meet the growing demand for energy-efficient applications, which is critical for supporting a hydrogen economy .

Alfa Laval has successfully reduced operational emissions (Scope 1 and 2) by 52% since 2020, putting them on track to meet their 2030 target of a 95% reduction. However, managing Scope 3 emissions remains challenging due to growing business volumes leading to increased carbon emissions. An error in the calculation of downstream emissions further complicates this task, necessitating improvements in emission tracking and management across the company's value chain .

The key drivers of Alfa Laval's growth include the increasing demand for sustainable solutions to address climate change, energy efficiency, and the need for clean water due to global trends in food, transportation, and energy . Alfa Laval's focus on technologies that reduce water and energy consumption and enhance recycling supports these growth drivers . The company aligns with broader global trends by contributing to sustainable energy practices, such as renewable fuel production and low-carbon hydrogen, which are vital for meeting climate targets . Additionally, the rise in global trade and urbanization increases demands for efficient value chains and resource-efficient supply chains, aligning with Alfa Laval's marine and food industry solutions to reduce environmental impact . Overall, Alfa Laval’s strategies focus on sustainability and resource efficiency, matching the global emphasis on environmental sustainability and efficient production processes .

Alfa Laval's strategic focus on the Marine Division is integral to its goals of sustainability and innovation. By developing pioneering solutions that reduce the need for fossil fuels and enhance energy efficiency, Alfa Laval supports the shift towards carbon-neutral shipping and more sustainable fuel types . This aligns with the broader sustainability strategy of achieving net-zero emissions and improving circularity in operations . Furthermore, partnerships for sustainable innovation are central to this focus. Alfa Laval collaborates with suppliers and supports start-ups through the Alfa Laval Innovation House, aimed at solving energy efficiency issues and promoting new sustainable business ideas . This strategic emphasis not only contributes to environmental sustainability but also enhances Alfa Laval’s ability to meet the evolving demands of the marine industry and reinforce its market position .

Alfa Laval addresses global water scarcity through initiatives that focus on water reuse and recycling. At its São Paulo site, all operational water is reused, eliminating the need for public water supply, thanks to a series of water-capture and recycling initiatives, including a system that recirculates water used in hydrotesting and cleaning processes . Additionally, Alfa Laval has set targets, such as 100% water recirculation at sites in water-stressed areas by 2030, demonstrating its commitment to reducing water consumption and enhancing water efficiency . The company’s technologies contribute to efficient wastewater treatment and reduce water consumption in various industrial processes . Products like the CultureOne separator significantly cut water use by optimizing processes in the biopharma industry, exemplifying the integration of water-saving technologies into product designs .

Alfa Laval supports data centers in managing excess heat by using its advanced heat exchangers to efficiently cool servers and transform excess heat into valuable resources such as district heating or agricultural heating solutions, like in greenhouses and fish farms . This is significant for creating net-zero industries as it taps into the energy-saving potential of data center waste heat recovery, which could save up to 3,000 TWh of energy globally by 2030, equivalent to heating 300 million European homes . This approach not only enhances energy efficiency but also reduces carbon emissions, thereby supporting the transition to sustainable and net-zero industrial practices .

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