Alfa Laval Stock Jumps as Fourth-Quarter Orders Increase

Alfa Laval AB, the world’s largest maker of heat exchangers, rose to a one-year high after sticking to sales-growth targets as the company countered an economic slowdown with gains in equipment orders.

Alfa gained as much as 6.1 percent to 145.8 kronor, the highest intraday price since Feb. 6, 2012, and was trading up 4.8 percent at 10:18 a.m. in Stockholm. That pared the shares’ drop in the past 12 months to 1.4 percent, valuing the manufacturer at 60.4 billion kronor ($9.6 billion).

The 17 countries that share the euro entered a recession in the third quarter, and the U.S. economy shrank in the fourth. Alfa’s new orders rose in western Europe in the fourth quarter from the third and were unchanged in North America, the Lund, Sweden-based manufacturer said today in a statement. New sales contracts at the marine business will rise in the current three months versus the period at the end of 2012, Chief Executive Officer Lars Renstrom said on a conference call.

“We are happy about having had a good quarter in western Europe and the Nordic region, but when you look at the macro situation it is difficult to draw any conclusions from that,” Renstrom told journalists. At the same time, “we have a positive view on the U.S. market.”

Profit Declines

Fourth-quarter net income fell 3.6 percent from a year earlier to 895 million kronor as sales declined 0.4 percent to 8.12 billion kronor. Profit exceeded the 877 million-krona average of 13 analyst estimates compiled by Bloomberg, and revenue beat the 8.09 billion-krona prediction.

New orders rose 7.1 percent from a year earlier to 7.25 billion kronor. The company said first-quarter demand will about match figures for the fourth quarter.

The shipbuilding industry in China, the world’s biggest, has been struggling with an order rate that’s the lowest since 1999, while South Korean producers are shifting focus to the offshore oil-drilling market. Alfa said in November that a decline in shipbuilding contracts had stopped, though the manufacturer wasn’t able pinpoint when they would resume rising.

“It is our assessment we’re still moving about at the bottom but we forecast new sales to increase somewhat in the first quarter sequentially,” Renstrom said today.

Demand in the first quarter at Alfa’s largest division, process technology, will probably remain unchanged with the fourth quarter, Renstrom said. The equipment division is expected to see lower demand.

Waertsilae ‘Cautious’

Waertsilae Oyj, a Helsinki-based manufacturer that supplies engines to the marine industry, said Jan. 25 that the forecast for the shipbuilding market this year is “cautious, although slightly better than in 2012.”

Alfa Laval makes gear for cleaning wastewater and purifying ballast water as well as scrubbers that clean sulfur emissions on ships. It established a separate marine and diesel division last year after adding Aalborg Industries of Denmark in December 2010.

Alfa Laval, which also makes heat-transfer systems and handling technology for industrial gases and liquids, reiterated a target of increasing sales by as much as 4 percent this year through acquisitions. The company has a strategy of posting 8 percent total annual growth over a business cycle.