Alfa Laval Said to Split Out Businesses in Bid to Spur Growth

  • Heat exchanger units will be transferred to ‘greenhouse’
  • Measures are part of strategic review started in April

Sweden’s Alfa Laval AB plans to separate out businesses making three types of products as part of a broader review by Tom Erixon in his first year as head of the world’s largest maker of heat exchangers, according to a person with knowledge of the situation.

Commercial and industrial air heat exchangers made in Vantaa, Finland and in Alonte, Italy, will be placed in a project dubbed “greenhouse” in a bid to improve their performance, said the person, who asked not to be identified because the information hasn’t been made public. Commercial tubular heat exchangers made at factories in the U.S. and in Alonte will also be included, as will heat exchanger systems.

Tom Erixon

Photographer: Jenny Leyman/Alfa Laval AB

Spokesman Peter Torstensson declined to comment on the plan.

The decision is part of Erixon’s efforts to revive growth at the Lund, Sweden-based company after it was damped by weak shipbuilding and oil and gas markets. The CEO started a strategic review in April, a month after taking the helm, and has warned that cutbacks lie ahead due to faltering demand. Founded in 1883, Alfa Laval’s technology is installed at manufacturing sites ranging from food factories to refineries. Heat exchangers are used in everything from refrigerators to airplanes to control temperatures and help engines work more efficiently.

Erixon could unveil details of the plan at a capital markets day scheduled for Nov. 22. In August, he called the company’s business portfolio “flexible.” Shares were down 0.5 percent at 133.4 kronor as of 10:27 a.m. local time, having earlier declined as much as 1.3 percent after a profit warning from U.S. rival SPX Flow Inc.

The units to be split out and run as stand-alone businesses will be overseen by Alfa Laval’s corporate development team, said the person. They will be kept separate from the three industry-focused divisions Alfa Laval announced in August as its new organizational structure and remain that way until their performance has improved and future prospects determined.

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