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Alfa Laval 'confident' Despite Softening Scrubber Demand
Sweden's Alfa Laval reported a fall in quarterly
orders on Wednesday on weaker-than-expected demand for ship
exhaust cleaners and pumping systems, sending its shares sharply
lower.
Demand for so-called scrubbers which strip out sulphur from
marine fuel has boosted the engineering group as well as Wartsila
in the past few years as shipowners prepared for stricter sulphur
emissions regulations from next year.
Chief Executive Tom Erixon forecast higher sequential demand for
Alfa's marine unit as well the overall group and said he remained
confident about future prospects.
"Our underlying view on the scrubber market and view on the
technology has not changed," said Erixon. "All indications are
that the market will maybe grow a little bigger over time... than
we had expected."
The company has forecast about 5,000 ships will be retrofitted
with scrubbers by 2023. Its scrubbers order book is filled well
into the first quarter of 2020, Erixon said.
He said uptake of scrubbers was being impacted by shipowners
comparing installing scrubbers with switching to lower sulphur
fuels.
The outlook for scrubbers has also been clouded by a move by
several major ports to ban discharges from open-loop scrubbers.
One producer, Yara Marine, is up for sale.
Alfa Laval's second-quarter order intake fell 20% to 10.0 billion
crowns ($1.07 billion), while adjusted core earnings rose to 1.87
billion Swedish crowns ($199 million) from 1.70 billion a year
earlier, the company said.
Citi analyst Klas Bergelind said order intake was a 12% miss on
expectations and adjusted earnings was a 7-8% miss due to a
bigger impact from a divestment. He said he now expected full
year earnings per share consensus to be cut by 3-5%.
The maker of machinery such as heat exchangers, separators and
ballast water treatment equipment forecast "somewhat higher"
demand in the current quarter.
Alfa shares extended their losses after results and were down
6.2% at 192 crowns at 1242 GMT.
Reporting by Esha Vaish
Jul 17, 2019
