SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2004
Alfa Laval Special Finance AB
(Commission File No. 333-13690)
(Translation of Registrants' Names Into English)
Rudeboksvagen 1,
Lund,
Sweden
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
---
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): -----.
[Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): -----.
[Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.]
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934:
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_____.
Enclosure: - Interim report April 1 - June 30, 2004 of Alfa Laval Special
Finance AB.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this Current Report to be signed on their
behalf by the undersigned, thereunto duly authorized.
Alfa Laval Special Finance AB
Date: August 16, 2004 By: /s/ Thomas Thuresson
--------------------
Thomas Thuresson
Chief Financial Officer
[ALFA LAVAL LOGO]
Alfa Laval Special Finance AB
Interim report April 1 - June 30, 2004
"The second quarter 2004 was another strong quarter for Alfa Laval.
The order intake increased by more than 20 percent, excluding exchange rate
variations, compared to the same period 2003. All customer segments and
geographical areas showed an increase.
Net sales increased by more than 15 percent, excluding exchange rate variations,
compared to the same period 2003.
The EBITA margin has been affected by a lower gross margin in the quarter. This
is mainly due to a combination of FX variations, larger portion of capital
sales, competitive pricing on certain larger projects and an increased
assertiveness by our sales force. We have taken measures with the aim to raise
the gross margin to the previous higher level.
We believe that we have improved our competitive position and increased our
market shares. We maintain our positive outlook for the year with an even more
positive view on the order intake."
Sigge Haraldsson, President and CEO, Alfa Laval Special Finance
Summary of the second quarter 2004:
- Order intake increased to SEK 4,174 (3,554) million, meaning an
increase by 20.4 percent excluding exchange rate variations.
- Net sales increased to SEK 3,798 (3,402) million, meaning an increase
by 15.4 percent excluding exchange rate variations.
- Adjusted EBITA increased to SEK 419 (414) million, including adverse
foreign exchange effects of SEK 75 million.
- Adjusted EBITA-margin was 11.0 percent (12.2).
- Result after financial items increased to SEK 257 (213) million.
- Cash flow from operating activities was SEK 363 (267) million.
Summary of the first six months 2004:
- Order intake, excluding exchange rate variations, increased by 21.4
percent to SEK 8,103 (6,932) million.
- Net sales, excluding exchange rate variations, increased by 13.8
percent to SEK 6,982 (6,397) million.
- Adjusted EBITA increased to SEK 805 (735) million, including adverse
foreign exchange effects of SEK 143 million.
- Adjusted EBITA-margin was 11.5 percent (11.5).
- Result after financial items increased to SEK 469 (354) million.
- Result after tax was SEK 263 (231) million.
- Earnings per share were SEK 32 (28).
- Cash flow from operating activities was SEK 686 (483) million.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 2(15)
Outlook 2004
The continued recovery in the market that Alfa Laval predicted in the Year End
Report in February 2004 has been fulfilled during the first six months. Based on
the outcome for the first half of 2004 we believe in a very strong increase in
orders received during the full year 2004.
We assess that the EBITA-margin, excluding currency effects, will be improved.
Earlier published outlook (April 27, 2004):
Markets recovered during the second half of 2003 within most of the customer
segments in which Alfa Laval is active. It is our opinion that the recovery will
continue during 2004. Assuming that the recovery will not be affected by
unforeseen events in the world, we believe in a strong increase in orders
received during 2004.
We assess that the EBITA-margin, excluding currency effects, will be improved.
The interim report has been issued on August 16, 2004 by the Board of Directors.
The interim report has not been subject to review by the company's auditors.
- ---------------------------------------------------------------------------------------------------------
SEK millions, unless Apr 1 - Apr 1 - Jan 1 - Jan 1 -
otherwise stated June 30 June 30 June 30 June 30
2004 2003 2004 2003 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------
Order intake 4,174 3,554 8,103 6,932 14,145 14,675 15,894
- ---------------------------------------------------------------------------------------------------------
Net sales 3,798 3,402 6,982 6,397 13,909 14,595 15,830
- ---------------------------------------------------------------------------------------------------------
Adjusted EBITDA 1) 483 486 937 882 1,925 2,091 2,141
- ---------------------------------------------------------------------------------------------------------
Adjusted EBITA 2) 419 414 805 735 1,632 1,760 1,740
- ---------------------------------------------------------------------------------------------------------
Adjusted EBITA - margin 2) 11.0% 12.2% 11.5% 11.5% 11.7% 12.1% 11.0%
- ---------------------------------------------------------------------------------------------------------
Result after financial items 257 213 469 354 817 460 373
- ---------------------------------------------------------------------------------------------------------
Return on capital employed 3) 23.6% 21.2% 22.2% 20.3% 18.5%
- ---------------------------------------------------------------------------------------------------------
Return on equity capital 3) 14.9% 15.4% 14.6% 4.7% 10.1%
- ---------------------------------------------------------------------------------------------------------
Solidity 31.8% 28.8% 30.0% 28.6% 20.6%
- ---------------------------------------------------------------------------------------------------------
Debt ratio, times 0.56 0.74 0.55 0.79 1.57
- ---------------------------------------------------------------------------------------------------------
Cash flow from operations 363 267 686 483 1,489 2,047 1,976
- ---------------------------------------------------------------------------------------------------------
Investments 72 61 116 90 259 277 275
- ---------------------------------------------------------------------------------------------------------
No. of employees (units) 4) 9,357 9,150 9,358 9,125 9,259
- ---------------------------------------------------------------------------------------------------------
1) Adjusted EBITDA - "Earnings before interests, taxes, depreciation,
amortisation of goodwill and step up values and comparison distortion
items."
2) Adjusted EBITA - "Earnings before interests, taxes, amortisation of
goodwill and step up values and comparison distortion items.
3) Calculated on a 12 months' revolving basis. The new issue of shares in June
2002 has changed the basis for the calculation of return on equity capital,
which has affected the comparison figure.
4) Number of employees at the end of the period.
- --------------------------------------------------------------------------------------------------------------
Alfa Laval Special Finance AB Visiting address: For more information, please contact:
PO Box 73 Rudeboksvagen 1 Mikael Sjoblom, Investor Relations Manager
SE-221 00 Lund Phone: + 46 46 36 65 00 Phone: +46 46 36 74 82,
Sweden Website: www.alfalaval.com Mobile: +46 709 78 74 82,
Corporate registration E-mail: mikael.sjoblom@alfalaval.com
number: 556587-8062
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 3(15)
Management's discussion and analysis
Orders received
Orders received amounted to SEK 4,174.3 (3,554.1) million for the second
quarter. Excluding exchange rate variations, the order intake for the Group was
20.4 percent higher than the second quarter last year.
Orders received amounted to SEK 8,103.3 (6,931.8) million for the first six
months. Excluding exchange rate variations, the order intake for the Group was
21.4 percent higher than the same period last year.
Orders received from the after market "Parts & Service" has continued to develop
positively and increased by 2.4 percent compared to the corresponding period
last year excluding exchange rate variations. Its relative share of the Group's
total orders received decreased to 24.1 (27.4) percent due to the large increase
in capital sales.
Order backlog
The order backlog at June 30, 2004 was 5,221.5 (4,380.1) million. Excluding
exchange rate variations, the order backlog was 24.1 percent higher than the
order backlog at June 30, 2003 and 26.7 percent higher than the order backlog at
the end of 2003.
Net sales
Net sales amounted to SEK 3,798.3 (3,402.0) million for the second quarter.
Excluding exchange rate variations, the invoicing was 15.4 percent higher than
the second quarter last year.
Net sales of the Alfa Laval Special Finance Group amounted to SEK 6,982.2
(6,396.7) million for the first six months. Excluding exchange rate variations,
the invoicing was 13.8 percent higher than the period January to June last year.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 4(15)
Comments on the Income Statement
As a basis for comments on the various main items of the income statement,
please find below a comparison between April - June and January - June for 2004
and 2003 and January - December for 2003 and 2002:
Income statement analysis
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 June 30 June 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- ----------------------------------------------------------------------------------------------------------
Net sales 3,798.3 3,402.0 6,982.2 6,396.7 13,909.3 14,594.9
Adjusted gross profit 1,357.9 1,334.5 2,601.1 2,531.9 5,235.8 5,651.7
- - in % of net sales 35.8 39.2 37.3 39.6 37.6 38.7
Expenses * -875.3 -848.3 -1,664.3 -1,649.7 -3,310.6 -3,560.7
- - in % of net sales 23.0 24.9 23.8 25.8 23.8 24.4
Adjusted EBITDA 482.6 486.2 936.8 882.2 1,925.2 2,091.0
- - in % of net sales 12.7 14.3 13.4 13.8 13.8 14.3
Depreciation -63.6 -72.2 -132.1 -146.9 -293.1 -331.3
Adjusted EBITA 419.0 414.0 804.7 735.3 1,632.1 1,759.7
- - in % of net sales 11.0 12.2 11.5 11.5 11.7 12.1
Amortisation of goodwill ** -121.1 -121.8 -244.9 -245.5 -494.1 -506.7
Comparison distortion items - - -13.5 3.6 5.6 -29.2
--------------------------------------------------------------------------
EBIT 297.9 292.2 546.3 493.4 1,143.6 1,223.8
- ----------------------------------------------------------------------------------------------------------
* Excluding comparison distortion items
** Including amortisation of step-up values
The first six months generated a gross profit of SEK 2,451.9 (2,379.2) million.
Excluding the amortisation of SEK 149.2 (152.7) million on step up values, the
adjusted gross profit is SEK 2,601.1 (2,531.9) million. This corresponds to 37.3
(39.6) percent of net sales.
Sales and administration expenses amounted to SEK 1,538.3 (1,548.0) million.
Excluding exchange rate variations and the acquisition of bioKinetics, sales and
administration expenses were at the same level as the corresponding period last
year.
The costs for research and development has amounted to SEK 198.0 (188.0)
million, corresponding to 2.8 (2.9) percent of net sales.
Adjusted EBITDA amounted to SEK 936.8 (882.2) million for the first six months.
The adjusted EBITA amounted to SEK 804.7 (735.3) million. The adjusted EBITA
margin was 11.5 (11.5) percent.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 5(15)
The result has been affected by comparison distortion items of SEK -13.5 (3.6)
million. These are reported gross as a part of other operating income and other
operating costs, see summary on page 12. The divestment of the Tri-Lad
operations in Canada has generated a loss of SEK -15.0 million and the sale of a
minor property in Brazil has resulted in a realised gain of SEK 1.5 million. On
February 26, 2003 the property in Newmarket, Canada was sold for SEK 20.0
million, with a realised gain of SEK 3.6 million.
Divisional reporting
Equipment division
The Equipment division consists of six customer segments: Comfort &
Refrigeration, Fluids & Utility Equipment, Marine & Diesel, OEM (Original
Equipment Manufacturers), Sanitary Equipment and the aftermarket segment Parts &
Service.
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1- Jan 1-
June 30 June 30 June 30 June 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 2,435.0 2,049.6 4,528.8 4,014.5 8,069.9 8,092.6
Order backlog * 2,069.9 1,663.1 1,598.9 1,564.5
Net sales 2,117.4 1,940.4 3,981.2 3,769.9 7,841.8 8,129.6
Operating income 264.9 231.9 515.6 475.6 1,010.9 1,098.8
- -------------------------------------------------------------------------------------------------------
* At the end of the period.
Orders received and net sales (all comments are after adjustment for exchange
rate fluctuations)
Orders received increased by 16.7 percent and net sales increased by 9.7 percent
during the first six months 2004 compared to the corresponding period last year.
Almost without exception orders received have developed well in all the various
applications and channels served by the Equipment division. The most significant
growth is found within the "Marine & Diesel" and "OEM" segments. Parts & Service
has continued to grow also in the first six months of 2004.
Operating income (all comments are after adjustment for exchange rate
fluctuations)
The increase in operating income during the first six months 2004 compared to
the corresponding period 2003 is mainly due to higher gross margin, partly
offset by a negative translation impact from exchange rates.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 6(15)
Process Technology division
The Process Technology division consists of five customer segments: Energy &
Environment, Food Technology, Life Science, Process Industry and the aftermarket
segment Parts & Service.
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1- Jan 1-
June 30 June 30 June 30 June 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 1,724.2 1,483.1 3,529.3 2,879.0 5,990.6 6,488.1
Order backlog * 3,095.4 2,703.6 2,398.0 2,752.6
Net sales 1,677.4 1,441.1 2,991.4 2,584.6 5,993.6 6,377.1
Operating income 110.1 95.4 177.2 128.9 351.5 537.5
- -------------------------------------------------------------------------------------------------------
* At the end of the period.
Orders received and net sales (all comments are after adjustment for exchange
rate fluctuations)
Orders received increased by 27.9 percent and net sales increased by 21.2
percent during the first six months 2004 compared to the corresponding period
last year. Excluding the acquisition of bioKinetics, the corresponding figures
are 24.3 percent and 15.2 percent.
All segments in the Process Technology division have reported a substantial
increase in orders received compared to the first six months 2003. The increase
affects almost all the applications the division is working within. The growth
has been largest within the "Energy & Environment" and "Process Industry"
segments. Parts & Service shows a continued positive development.
Operating income (all comments are after adjustment for exchange rate
fluctuations)
The increase in operating income during the first six months 2004 compared to
the corresponding period 2003 is foremost due to higher gross margin, partly
offset by a negative translation impact from exchange rates.
Operations division and Other
Operations are responsible for procurement, production and logistics. Other is
referring to corporate overhead and non-core businesses.
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1- Jan 1-
June 30 June 30 June 30 June 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 15.1 21.4 45.2 38.3 84.8 94.1
Order backlog * 56.2 13.4 24.2 23.0
Net sales 3.5 20.5 9.6 42.2 73.9 88.2
Operating income -77.1 -35.1 -133.0 -114.7 -224.4 -383.3
- -------------------------------------------------------------------------------------------------------
* At the end of the period.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 7(15)
Reporting by geographical markets
The Group's secondary segments are geographical markets. All comments are after
considering exchange rate variations.
Orders received
Orders received increased in all regions during the first six months 2004
compared to the corresponding period last year. The increase was largest in
Asia, the Nordic countries, Western Europe and North America.
Presentation of geographical markets
- -------------------------------------------------------------------------------------------------------------------
Order received
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 Dec 31 Dec 31
2004 2003 2003 2002
SEK SEK SEK SEK
Consolidated in millions % in millions % in millions % in millions %
- -------------------------------------------------------------------------------------------------------------------
Customers in
Sweden 470.6 5.8% 443.3 6.4% 887.3 6.3% 842.2 5.7%
Other EU 3,101.2 38.3% 2,582.7 37.3% 5,143.3 36.4% 5,374.3 36.6%
Other Europe 638.5 7.9% 613.4 8.8% 1,234.5 8.7% 1,167.8 8.0%
USA 1,126.7 13.9% 1,078.1 15.6% 2,095.3 14.8% 2,478.6 16.9%
Other North America 180.2 2.2% 141.6 2.0% 326.7 2.3% 331.2 2.3%
Latin America 271.5 3.4% 245.9 3.5% 560.8 4.0% 667.6 4.5%
Africa 74.3 0.9% 55.0 0.8% 177.7 1.2% 132.7 0.9%
Asia 2,093.4 25.8% 1,646.8 23.8% 3,463.2 24.5% 3,342.6 22.8%
Oceania 146.9 1.8% 125.0 1.8% 256.5 1.8% 337.8 2.3%
------------------------------------------------------------------------------------------
Total 8,103.3 100.0% 6,931.8 100.0% 14,145.3 100.0% 14,674.8 100.0%
- ------------------------------------------------------------------------------------------------------------------
Net sales
The invoicing increased in all regions except Africa during the first six months
2004 compared to the corresponding period last year. The most substantial
increases are found in Central and Eastern Europe, North America and Asia.
Presentation of geographical markets
- -------------------------------------------------------------------------------------------------------------------
Net sales
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 Dec 31 Dec 31
2004 2003 2003 2002
SEK SEK SEK SEK
Consolidated in millions % in millions % in millions % in millions %
- -------------------------------------------------------------------------------------------------------------------
Customers in
Sweden 431.6 6.2% 414.5 6.5% 893.2 6.4% 835.1 5.7%
Other EU 2,659.9 38.2% 2,467.0 38.6% 5,186.4 37.3% 5,343.4 36.7%
Other Europe 574.9 8.2% 466.0 7.3% 1,118.7 8.0% 1,116.2 7.6%
USA 1,098.0 15.7% 983.3 15.4% 2,159.0 15.5% 2,638.7 18.1%
Other North America 133.5 1.9% 160.8 2.5% 315.0 2.3% 423.5 2.9%
Latin America 254.1 3.6% 256.2 4.0% 553.6 4.0% 626.7 4.3%
Africa 74.4 1.1% 65.7 1.0% 182.7 1.3% 69.6 0.5%
Asia 1,602.4 22.9% 1,460.3 22.8% 3,242.6 23.3% 3,287.9 22.5%
Oceania 153.4 2.2% 122.9 1.9% 258.1 1.9% 253.8 1.7%
--------------------------------------------------------------------------------------------
Total 6,982.2 100.0% 6,396.7 100.0% 13,909.3 100.0% 14,594.9 100.0%
- -------------------------------------------------------------------------------------------------------------------
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 8(15)
The values for the "Other EU" and "Other Europe" regions have been adjusted for
all periods in order to reflect the extension of the European Union on May 1,
2004 with 10 new membership countries: Cyprus, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia.
Consolidated financial result and net income
The financial net has amounted to SEK -92.5 (-144.6) million, excluding realised
and unrealised exchange rate losses and gains. The main elements of costs were
interest on debt to the banking syndicate of SEK -22.7 (-75.9) million, interest
on the bond loan of SEK -65.0 (-69.5) million and a net of dividends and other
interest income and interest costs of SEK -4.8 (-0.8) million. The decrease in
interests to the banking syndicate between 2004 and 2003 is mainly due the
cancellation of the previous interest rate swaps that were requested by the
first banking syndicate.
The net of realised and unrealised exchange rate differences amounts to SEK 15.6
(5.6) million.
The result after financial items increased to SEK 469.4 (354.4) million.
Income taxes were SEK -183.8 (-104.3) million. The difference between the first
six months of 2004 and 2003 is primarily due to utilisation of loss carry
forwards during 2003.
The parent company's result after financial items was SEK 508.2 (5.1) million,
out of which net interests were SEK 8.4 (5.3) million, dividend from subsidiary
SEK 500.0 (-) million and other administration costs the remaining SEK -0.2
(-0.2) million.
Asbestos-related lawsuits in the United States
Alfa Laval's subsidiary in the US, Alfa Laval Inc, was as of June 30, 2004 named
as co-defendant in a total of 143 asbestos-related lawsuits with a total of
approximately 21,200 plaintiffs. The lawsuits filed in Mississippi account for
approximately 99 percent of all plaintiffs.
Alfa Laval strongly believes the claims against the company are without merit
and intends to vigorously contest each lawsuit.
After thorough investigations Alfa Laval continues to believe that potential
claims in connection with asbestos related lawsuits against Alfa Laval Inc will
be covered by insurance policies. Furthermore, primary insurance policies issued
in favour of Alfa Laval Inc. provide for coverage of its defence costs.
During the second quarter 2004 Alfa Laval Inc has been named as co-defendant in
an additional 22 lawsuits with a total of approximately 1,300 plaintiffs. During
the second quarter 10 lawsuits involving approximately 60 plaintiffs have been
resolved. This gives a grand total of 88 lawsuits that have been resolved. Alfa
Laval has furthermore been dismissed from the proceedings in respect of
approximately 20 plaintiffs in ongoing multiple plaintiffs lawsuits.
Based on current information and Alfa Laval's understanding of these lawsuits,
Alfa Laval continues to believe that these lawsuits will not have a material
adverse effect on the company's financial condition or results of operation.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 9(15)
Cash flow
Cash flow from operating and investing activities was SEK 644.9 (430.3) million
during the first six months, out of which divestments generated cash of SEK 36.5
(26.0) million.
Working capital increased by SEK 128.0 (253.0) million during the first six
months.
Investments in property, plant and equipment amounted to SEK 116.2 (89.6)
million during the first six months. Depreciations, excluding allocated step up
values, amounted to SEK 132.1 (146.9) million during the period.
Cash and bank
The Group's cash and bank amounted to SEK 524.2 (485.0) million. The item cash
and bank in the balance sheet and in the cash flow statement is mainly relating
to bank deposits. Cash and bank includes a bank deposit in the publicly listed
subsidiary Alfa Laval (India) Ltd of SEK 21.3 (36.3) million. The company is not
a wholly owned subsidiary of the Alfa Laval Special Finance Group. It is owned
to 64.1 percent.
Borrowings and net debt
Debt table
- ---------------------------------------------------------------------------------------------------------
Consolidated
June 30 June 30 December 31 December 31
SEK millions 2004 2003 2003 2002
- ---------------------------------------------------------------------------------------------------------
Credit institutions 2,281.0 2,797.2 2,530.7 3,360.2
Bond loan 1,072.2 1,102.0 1,064.8 1,127.6
Capitalised financial leases 10.0 19.0 13.6 24.7
Interest-bearing pension liabilities 5.2 6.1 5.2 6.1
--------------------------------------------------------------------
Total debt 3,368.4 3,924.3 3,614.3 4,518.7
Cash, bank and current deposits 751.3 790.0 1,213.2 1,020.2
--------------------------------------------------------------------
Net debt 2,617.1 3,134.3 2,401.1 3,498.5
- ---------------------------------------------------------------------------------------------------------
On April 15, 2004 Alfa Laval has signed a new senior credit facility with a
banking syndicate. The former facility was transferred to a multi currency
revolving credit facility. The new facility is USD 325 million and EUR 150
million, corresponding to SEK 3,818.6 million. At June 30, 2004, SEK 2,118.4
million were utilised of the facility. The new facility provides increased
flexibility, improved terms and extended security of funding. The maturity of
this facility is five years.
During the first six months Alfa Laval has re-purchased bonds at the prevailing
market rate for a face value of SEK - (27.3) million. The difference between the
higher market value and the face value was SEK - (5.0) million, which has been
reported as an interest cost. The bond loan accrues interest at 12.125 percent,
which is considerably more than the Group's current cost for other external
financing.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 10(15)
Ownership and legal structure
Alfa Laval Special Finance AB is the parent company of the Alfa Laval Special
Finance Group. Alfa Laval Special Finance AB's parent company Alfa Laval AB
(publ) is listed on the Stockholm Stock Exchange. Alfa Laval AB (publ) had 9,426
(5,631) shareholders on June 30, 2004. The two largest owners are Tetra Laval
and Industri Kapital, where 17.7 (17.7) percent are owned by Tetra Laval B.V.,
the Netherlands and 8.5 (26.9) percent are owned by the partnerships that are
controlled by Industri Kapital 2000 Ltd, United Kingdom. At the beginning of May
2004 Industri Kapital decreased the holding in Alfa Laval from 17.9 percent to
8.5 percent.
Acquisitions and disposals
Alfa Laval made public in December 2003 that the company had decided to initiate
new negotiations with the former owner of bioKinetics Inc. This decision was
based on the fact that Alfa Laval suspected irregularities in the accounting of
certain customer projects in the acquired US company. The parties were
originally unable to resolve the matter, leading Alfa Laval to file a lawsuit
against the former owner Kinetics Group Inc and certain individuals. On July 2,
2004 Alfa Laval announced that a settlement agreement had been reached between
the parties. The terms of the agreement are confidential.
On December 5, 2003 an asset purchase agreement was signed between the
subsidiary Tri-Lad Inc in Canada and local management of the company whereby all
non-financial assets were sold to local management. The closing date was January
30, 2004. Tri-Lad Inc is selling equipment to the oil & gas industry and was a
non-core activity within Alfa Laval. It has been up for sale since several
years. The Tri-Lad property was sold effective on May 12, 2004. The divestment
of the Tri-Lad operations has generated a loss of SEK -15.0 million.
Accounting principles
The same accounting principles and accounting estimates have been applied in the
second quarter interim report 2004 as for the annual report for 2003, except
that comparison distortion items now are reported included in each line in the
income statement and specified in a note.
Date for the next financial report
The interim report for the third quarter 2004 will be published on October 21,
2004.
Events after the balance sheet date
On July 2, 2004, Alfa Laval announced that a settlement agreement had been
reached in the dispute with the former owner of bioKinetics, see the section on
acquisitions above.
On July 7, 2004, the property in Madrid was divested for SEK 265,1 million with
an estimated realised gain in connection with the sale of approximately SEK 70
million.
Alfa Laval will arrange a Capital Market Day in Copenhagen on September 7, 2004.
As already announced, Alfa Laval's CEO and President Sigge Haraldsson will
retire during the autumn. He will leave his duties on October 1 and the new CEO
and President Lars Renstrom will take up his duties as of this date.
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 11(15)
CONSOLIDATED CASH-FLOW STATEMENTS
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2003 2002
- ------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities
Operating income 546.3 493.4 1,143.6 1,223.8
Adjustment for depreciation 377.0 392.4 787.2 838.0
Adjustment for other non-cash items 9.5 1.0 22.1 35.0
---------------------------------------------------------
932.8 886.8 1,952.9 2,096.8
Taxes paid -118.4 -151.1 -268.6 -396.2
Cash flow from operations before
changes in working capital 814.4 735.7 1,684.3 1,700.6
Changes in working capital:
(Increase)/decrease of current receivables -94.8 181.6 -25.7 340.0
(Increase)/decrease of inventories -468.8 -374.1 -17.2 140.4
Increase/(decrease) of liabilities 435.6 -60.5 -152.9 -134.2
---------------------------------------------------------
-128.0 -253.0 -195.8 346.2
---------------------------------------------------------
Cash flow from operating activities 686.4 482.7 1,488.5 2,046.8
=========================================================
Cash flow from investing activities
Investments in fixed assets -116.2 -89.6 -258.5 -276.7
Divestment of fixed assets 26.5 26.0 40.1 120.7
Additional purchase price -8.2 - - -367.5
Acquisition of businesses - -45.0 -289.5 -135.7
Reduction of purchase price 61.2 - - 81.6
Divestment of businesses 10.0 - - -
Provisions -14.8 56.2 50.5 29.8
---------------------------------------------------------
Cash flow from investing activities -41.5 -52.4 -457.4 -547.8
=========================================================
Cash flow from financing activities
Financial net, paid -70.4 -149.1 -237.1 -590.1
New issue of shares - - - 819.0
Paid group contribution -613.4 -53.4 -53.4 -
(Increase)/decrease of other financial assets 452.6 103.2 -256.9 -84.2
Capitalised financing costs, acquisition loans -6.8 - - -39.7
Increase/(decrease) of liabilities to credit
institutions -458.0 -411.8 -454.8 -1,548.2
---------------------------------------------------------
Cash flow from financing activities -696.0 -511.1 -1,002.2 -1,443.2
=========================================================
Net increase (decrease) in cash and bank -51.1 -80.8 28.9 55.7
Cash and bank at the beginning of the year 554.6 605.9 605.9 666.4
Translation difference in cash and bank 20.7 -40.1 -80.2 -116.2
Cash and bank at the end of the period 524.2 485.0 554.6 605.9
---------------------------------------------------------
Cash flow per share (SEK) -6.24 -9.86 3.50 10.70
Average number of shares* 8,191,000 8,191,000 8,191,000 5,229,137
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 12(15)
CONSOLIDATED INCOME STATEMENT
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 June 30 June 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2004 2003 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
Net sales 3,798.3 3,402.0 6,982.2 6,396.7 13,909.3 14,594.9
Cost of goods sold -2,514.9 -2,143.1 -4,530.3 -4,017.5 -8,976.3 -9,262.2
------------------------------------------------------------------------------------
Gross profit 1,283.4 1,258.9 2,451.9 2,379.2 4,933.0 5,332.7
- -----------------------------------------------------------------------------------------------------------------------------
Sales costs -575.3 -561.8 -1,113.0 -1,099.0 -2,245.8 -2,115.1
Administration costs -242.3 -223.3 -425.3 -449.0 -865.8 -1,026.8
Research and development costs -105.6 -92.3 -198.0 -188.0 -368.1 -355.2
Other operating income * 55.1 75.9 127.4 135.1 248.0 282.7
Other operating costs * -70.8 -119.0 -201.0 -192.1 -366.4 -706.8
Amortisation of goodwill -46.6 -46.2 -95.7 -92.8 -191.3 -187.7
-----------------------------------------------------------------------------------
Operating income 297.9 292.2 546.3 493.4 1,143.6 1,223.8
- ----------------------------------------------------------------------------------------------------------------------------
Dividends 0.8 1.1 1.4 6.2 6.9 7.8
Interest income 20.3 39.4 94.7 113.8 267.5 322.7
Interest expense * -62.0 -119.4 -173.0 -259.0 -601.3 -1,094.2
----------------------------------------------------------------------------------
Result after financial items 257.0 213.3 469.4 354.4 816.7 460.1
- ---------------------------------------------------------------------------------------------------------------------------
Minority share in subsidiaries' income -8.6 -9.1 -22.3 -18.8 -41.6 -33.7
Taxes -96.4 -50.3 -183.8 -104.3 -134.5 -218.2
----------------------------------------------------------------------------------
Net income for the year 152.0 153.9 263.3 231.3 640.6 208.2
- ---------------------------------------------------------------------------------------------------------------------------
Earnings per share (SEK) 18.56 18.79 32.15 28.24 78.21 39.82
Average number of shares ** 8,191,000 8,191,000 8,191,000 8,191,000 8,191,000 5,229,137
* The line has been affected by comparison distortion items, see separate
specification below.
** The average number of shares has been changed through split and new issue
of shares.
Comparison distortion items
Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 June 30 June 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2004 2003 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
Operational
Other operating income 55.1 75.9 125.9 131.5 242.4 268.7
Comparison distortion income - - 1.5 3.6 5.6 14.0
--------------------------------------------------------------------------------------
Total other operating income 55.1 75.9 127.4 135.1 248.0 282.7
Other operating costs -70.8 -119.0 -186.0 -192.1 -366.4 -663.6
Comparison distortion costs - - -15.0 - - -43.2
--------------------------------------------------------------------------------------
Total other operating costs -70.8 -119.0 -201.0 -192.1 -366.4 -706.8
Financial
Interest expense -62.0 -119.4 -173.0 -259.0 -601.3 -803.5
Comparison distortion costs - - - - - -290.7
--------------------------------------------------------------------------------------
Total interest expense -62.0 -119.4 -173.0 -259.0 -601.3 -1,094.2
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 13(15)
In order to illustrate the quarterly development, the income statement analysis
is shown also for the last ten quarters:
Income statement analysis
2004 2003 2002
SEK millions Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
- --------------------------------------------------------------------------------------------------------------------------------
Net sales 3,798.3 3,183.9 4,086.3 3,426.3 3,402.0 2,994.7 4,175.1 3,503.7 3,654.2 3,261.9
Adjusted gross profit 1,357.9 1,243.2 1,385.0 1,318.9 1,334.5 1,197.4 1,539.1 1,394.7 1,426.4 1,291.5
- - in % of net sales 35.8 39.0 33.9 38.5 39.2 40.0 36.9 39.8 39.0 39.6
Expenses * -875.3 -789.0 -843.5 -817.4 -848.3 -801.4 -920.5 -902.6 -896.7 -840.9
- - in % of net sales 23.0 24.8 20.6 23.9 24.9 26.8 22.1 25.8 24.6 25.8
Adjusted EBITDA 482.6 454.2 541.5 501.5 486.2 396.0 618.6 492.1 529.7 450.6
- - in % of net sales 12.7 14.3 13.3 14.6 14.3 13.2 14.8 14.0 14.5 13.8
Depreciation -63.6 -68.5 -75.5 -70.7 -72.2 -74.7 -81.8 -78.6 -83.1 -87.8
Adjusted EBITA 419.0 385.7 466.0 430.8 414.0 321.3 536.8 413.5 446.6 362.8
- - in % of net sales 11.0 12.1 11.4 12.6 12.2 10.7 12.8 11.8 12.2 11.1
Amortisation of goodwill ** -121.1 -123.8 -124.5 -124.1 -121.8 -123.7 -125.9 -128.7 -125.7 -126.4
Comparison distortion items 0.0 -13.5 2.0 0.0 0.0 3.6 -0.7 15.9 0.5 -44.9
-----------------------------------------------------------------------------------------------
EBIT 297.9 248.4 343.5 306.7 292.2 201.2 410.2 300.7 321.4 191.5
- --------------------------------------------------------------------------------------------------------------------------------
* Excluding comparison distortion items
** Including amortisation of step-up values
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 14(15)
CONSOLIDATED BALANCE SHEET
June 30 June 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2003 2002
- ----------------------------------------------------------------------------------------------------------
ASSETS
Non-current assets:
Intangible assets 4,045.8 4,382.7 4,200.0 4,703.3
Property, plant and equipment 2,705.2 2,899.5 2,756.5 3,082.7
Financial assets 724.2 677.5 666.2 751.9
Current assets
Inventories 2,727.3 2,637.9 2,217.8 2,279.0
Accounts receivable 2,816.2 2,469.8 2,463.3 2,504.0
Other receivables 945.6 1,001.6 1,167.6 1,085.5
Other current deposits 227.1 305.0 658.6 414.3
Cash and bank 524.2 485.0 554.6 605.9
TOTAL ASSETS 14,715.6 14,859.0 14,684.6 15,426.6
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 4,682.5 4,645.7 4,402.5 4,413.0
Minority interest 123.8 107.8 104.2 108.2
Provisions for:
Pensions and similar commitments 786.1 744.6 754.8 720.6
Deferred taxes 822.0 969.1 817.0 990.3
Other 853.8 923.4 891.2 989.3
--------------------------------------------------------
2,461.9 2,637.1 2,463.0 2,700.2
Non-current liabilities:
Liabilities to credit institutions 2,153.0 2,660.0 2,427.0 3,105.8
Bond loan 1,072.2 1,102.0 1,064.8 1,127.6
--------------------------------------------------------
3,225.2 3,762.0 3,491.8 4,233.4
Current liabilities:
Liabilities to credit institutions 128.0 137.2 103.7 254.4
Accounts payable 1,419.1 1,122.6 1,199.4 1,173.2
Advances from customers 602.4 632.7 512.1 571.3
Other liabilities 2,072.7 1,813.9 2,407.9 1,972.9
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 14,715.6 14,859.0 14,684.6 15,426.6
- ---------------------------------------------------------------------------------------------------------
Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004
Page 15(15)
CHANGES IN CONSOLIDATED EQUITY
Amounts in SEK millions
- ----------------------------------------------------------------------------------------------------
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 Dec 31 Dec 31
2004 2003 2003 2002
- ----------------------------------------------------------------------------------------------------
At the beginning of the period 4,402.5 4,413.0 4,413.0 3,628.9
New issue of shares - - - 819.0
Group contribution - - -613.4 -53.4
Translation difference 16.7 1.4 -37.7 -189.7
Net income for the period 263.3 231.3 640.6 208.2
-----------------------------------------------------------------
At the end of the period 4,682.5 4,645.7 4,402.5 4,413.0
- ----------------------------------------------------------------------------------------------------
The share capital of SEK 819,100,000 is divided into 8,191,000 shares at par
value SEK 100.