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Alfa Laval: The 140-Year Separation Masters Behind the Energy Transition
I. Introduction: The Invisible Backbone of Industrial Civilization
Picture this: A massive container ship glides through the Strait of Malacca, its engines purring on fuel treated by centrifugal separators that trace their lineage to a Swedish dairy farm. In a pharmaceutical plant in New Jersey, heat exchangers cool the bioreactors producing life-saving vaccines. In the North Sea, ballast water treatment systems prevent microscopic hitchhikers from devastating ecosystems half a world away.
The common thread? Alfa Laval—a leading global provider of first-rate products in the areas of heat transfer, separation and fluid handling.
Founded 140 years ago, Alfa Laval has customers in 100 countries, employs more than 22,300 people, and achieved annual sales of SEK 66.9 billion (5.8 BEUR) in 2024. But these numbers only hint at the company's true significance. The company is helping billions of people get the energy, food, and clean water they need, while simultaneously decarbonizing the marine fleet that is the backbone of global trade.
The hook for this story is deceptively simple: How did a cream separator company from 1880s Sweden become mission-critical for global decarbonization?
The answer involves a 140-year journey through some of the most consequential technological and regulatory shifts in industrial history—from the mechanization of dairy farming to the digitalization of shipping, from the rise of private equity transformation to the urgency of climate action. Alfa Laval has doubled in size over the last eight years. Yet most investors have never heard of it.
This is the story of a company built on what might be called "boring-but-essential" technology—heat exchangers, separators, pumps, valves. These products aren't sexy. They don't generate viral social media moments or spawn consumer brands. But they're mission-critical for everything from brewing beer to refining petroleum to powering the global shipping fleet.
The company is divided into three divisions: the Energy Division, the Food & Water Division and the Marine Division. Each represents a different tributary flowing from the same technological spring—centrifugal separation technology that Gustaf de Laval patented in 1878.
The thesis of this deep dive: Alfa Laval represents a case study in how a single technology platform can spawn multiple billion-dollar businesses across industries, how regulatory tailwinds can transform compliance costs into growth opportunities, and how Swedish engineering DNA—long-term thinking, quality focus, sustainability orientation—can compound value over more than a century.
II. Gustaf de Laval: The Prolific Inventor (1845–1913)
To understand Alfa Laval, one must first understand its founder—a man whose brilliance was matched only by his inability to manage money, whose patents changed the world but whose companies often failed, and whose memorial carries perhaps the most fitting inscription ever carved for an inventor: "The Man of High Speed."
Karl Gustaf Patrik de Laval was a Swedish engineer and inventor who made important contributions to the design of steam turbines and centrifugal separation machinery for dairy. Gustaf de Laval was born at Orsa in Dalarna in the Swedish de Laval Huguenot family (immigrated 1622).
The de Laval family's journey from France to Sweden in the early 17th century—fleeing religious persecution as Huguenots—planted the seeds for what would become one of Sweden's most important industrial dynasties. His father, Jacques de Laval, was an officer and land surveyor.
Gustaf's interest in technology and engineering was born early, and he was already building his first steam engines at age ten. In 1866, he completed his studies at Teknologiska Institutet (today the KTH Royal Institute of Technology).
But the path from education to invention was not smooth. The recession of the mid-1860s meant that Gustaf was unable to find work corresponding to his ambitions. He applied to Uppsala University, studied chemistry and earned his doctorate in 1872.
He was then employed by the Swedish mining company, Stora Kopparberg. From there he returned to Uppsala University and completed his doctorate in 1872.
What defined de Laval was not just his technical brilliance but his obsessive focus on speed. His separators spun at rates that seemed impossible for the materials of the era. Gustaf's steam turbine, with the—for that time—astounding rotation speed of 30,000-40,000 revolutions per minute, quickly became a best-seller.
The de Laval nozzle, perhaps his most lasting contribution to engineering beyond separation technology, emerged from this obsession. The nozzle, now known as a de Laval nozzle, is used in modern rocket engine nozzles. Every rocket that has ever left Earth's atmosphere owes something to this Swedish inventor's work on steam turbines.
At one time, de Laval had 100 engineers working to develop his devices and inventions. This was an industrial research laboratory decades before the concept became common—a 19th-century Bell Labs for mechanical engineering.
Yet for all his technical genius, de Laval struggled with the business side of invention. Gustaf didn't live in the now. It didn't matter to him if his debts mounted. New ideas and new inventions were the only things that were important.
He established 37 companies and secured 92 patents, but his inability to adhere to conventional business practices alienated partners; for instance, Oscar Lamm, co-founder of AB Separator in 1883, eventually withdrew due to de Laval's unpredictable focus on novel ideas over operational stability. Similarly, the 1893 founding of AB de Lavals Ă…ngturbin for steam turbine production encountered resistance from investors wary of his experimental tendencies.
The Lactator—a mobile milking machine—exemplifies de Laval's pattern of brilliant concept, poor execution. One failed invention was the Lactator, a mobile milking machine. The machine was too expensive and complicated and the farmers complained that their animals became sick after having been milked with the Lactator. The AB de Lavals Laktator company survived for two years. In 1897, the company was dissolved and the employees dismissed.
Despite his 92 patents and 37 companies, Gustaf de Laval died in extreme poverty when he succumbed to cancer in 1913. Gustaf was not quite as good at handling his finances, however, and died in extreme poverty.
The contrast between his technological legacy and his personal financial fate illuminates a fundamental truth about innovation: the inventor and the operator are rarely the same person. De Laval's genius was in conceiving and prototyping; the company that bears his name succeeded precisely because it evolved beyond his direct control.
According to the advertising, 98 percent of the world's creameries were by then using de Laval separators. Gustaf de Laval became one of Sweden's most prolific inventors with 92 patents to his name. By the time he died in 1913 he had formed 37 companies.
The lesson for investors: technological vision creates value, but sustainable business models require a different skill set—one that Alfa Laval would develop only after de Laval himself stepped back from operations.
III. The Founding Story & Core Technology (1878–1901)
The problem seems almost trivially simple today: how do you efficiently separate cream from milk?
Prior to this, dairy producers manually skimmed cream from milk, which was laborious and time-consuming. Capable of handling up to 130 litres per hour, de Laval's centrifugal separator made this process easier and more efficient.
Before de Laval's invention, the fat globules from fresh milk floated to the surface to form a layer of cream, which was then skimmed off by hand. But the process was inefficient and often led to the milk turning sour.
The breakthrough came when de Laval read about German experiments with centrifugal separation. The improvement and industrialization of this ancient method began when a young Swedish engineer by the name of Gustaf de Laval read an article that had been published in a German trade journal in 1877.
The milk-cream separator was based on a simple principle—a rapidly rotating container creates centrifugal force. Rapid rotation causes heavier substances to be pressed out toward the walls of the container while lighter substances are collected in the middle. In this way, liquids with different densities can be separated from each other.
In 1878, Gustaf and his business partner Oskar Lamm patented the invention. Gustaf was awarded the Wallmark Prize from the Royal Swedish Academy of Sciences for his invention. The milk separator won first prize in a number of international exhibitions and in 1883, Gustaf and Oskar Lamm founded the company AB Separator (now Alfa-Laval).
Oscar Lamm was the business mind that de Laval lacked. De Laval patented his invention in 1878 and simultaneously collaborated with Oscar Lamm, who owned an engineering firm, to establish a company for making and marketing the continuous-operation cream separators. The company proved so successful that it had to change status in 1883 to a limited company, now named AB Separator, with Lamm as chairman of the board and managing director.
The international ambitions were immediate. Alfa Laval was founded as AB Separator by Swedish inventor Gustaf de Laval and engineer Oscar Lamm in Stockholm in 1883. The De Laval Cream Separator Co., an American subsidiary, was founded the same year.
This was not a provincial Swedish operation content to serve Scandinavian dairies—it was a global industrial enterprise from day one, at a time when such ambition was rare.
The critical breakthrough in separation efficiency came in 1890. In 1890, AB Separator introduced the first continuous separator with disc stacks featuring conical metal discs called Alfa Discs, which increased the separation capacity.
The Alfa Disc—a series of conical metal plates stacked inside the separator bowl—dramatically increased the surface area available for separation. This wasn't just an incremental improvement; it was a step-change in capability that would define the company's identity for the next century. The "Alfa" in Alfa Laval traces directly to this innovation.
Clemens von Bechtolsheim, a German inventor, subsequently improved upon De Laval's separator design by adding alfa-plates that divided the milk into thin layers, a process that increased the efficiency of the mechanism. This innovation was so successful that the company's name was eventually changed to Alfa Laval AB in the 20th century.
AB Separator was a privately held company until 1901, when it was listed on the Stockholm Stock Exchange.
By the time of its IPO, AB Separator had established itself as the global leader in centrifugal separation technology. Success had been achieved, and the milk separator was used in the majority of Swedish farms during the end of the 19th century and the beginning of the 20th century.
IV. Building the Technology Platforms (1901–1963)
The decades following the 1901 IPO transformed AB Separator from a dairy equipment company into a diversified industrial technology platform. The key insight driving this evolution: centrifugal separation could do far more than separate cream from milk.
The company's first major pivot came with oil purification. Industrial machinery and marine engines required clean lubricating oil and fuel—and centrifugal separation proved equally effective at removing water, sediment, and contaminants from petroleum products.
Alfa Laval's separation business dates back to its roots as a cream separator in 1883. Its separators are now used in the food processing and chemical industries, on ships and oil rigs, in wastewater treatment plants, and in businesses that purify industrial fluids.
The international expansion accelerated. The company continued to expand internationally in the early 1900s, opening subsidiaries in Denmark, South Africa, Finland, Australia, New Zealand, Poland, Yugoslavia and Ireland by 1936.
In 1925, an ABS subsidiary was formed in Helsinki, and in 1926 British De Laval Chadburn Company changed its name to Alfa-Laval Company, a wholly owned ABS company. In the same year, subsidiaries were formed in Sydney, Australia, and Palmerston North, New Zealand. Between 1927 and 1929, subsidiaries were formed in Oslo, Warsaw, Danzig, and Zagreb, Yugoslavia.
The company also consolidated its position through acquisitions of Swedish competitors. In 1928, in cooperation with its Swedish competitor AB Pump-Separator, ABS bought the rival company AB Baltic. Only a few months later, ABS acquired its last major Swedish competitor, AB Pump-Separator itself. Both acquisitions, AB Baltic and AB Pump-Separator, had been more energetic than ABS in seeking ways to take advantage of the upswing in trade at the beginning of World War I and had expanded their capacity and grown faster than ABS.
The second major technology platform—heat transfer—emerged in the 1930s. In 1938, AB Separator began manufacturing its first heat exchanger. The plate heat exchanger, with its compact design and superior heat transfer efficiency, would eventually become as important to Alfa Laval as separation technology.
The development and production of heat exchangers moved to Lund, which later became the company's headquarters. This geographic shift from Stockholm to Lund would prove significant—Lund, with its university and engineering culture, provided the talent pipeline that Alfa Laval would need for continued innovation.
In 1963, AB Separator changed its name to Alfa-Laval AB, combining the name of the company's founder with a reference to the Alfa Disc technology in its separators.
The name change was more than cosmetic. It signaled the company's evolution from a single-product business (cream separators) to a diversified technology platform. By 1963, the company operated across multiple end markets—dairy, food processing, brewing, pharmaceuticals, chemicals, marine, and industrial machinery—all built on the twin pillars of separation and heat transfer technology.
This period established the template that Alfa Laval follows to this day: master core technologies, then systematically apply them across every industry where those technologies can add value.
V. Global Industrial Champion & The Tetra Pak Era (1963–2000)
The decades following the name change saw Alfa-Laval (hyphenated until 1993) expand into a true global industrial conglomerate. The company grew both organically and through acquisitions, building positions in markets as diverse as biotechnology and petroleum refining.
Sharples Separator Co. is acquired. in 1988, strengthening the company's position in the American market and adding complementary separation technologies.
But the most consequential event of this era came in 1991. In 1991, the company returned to private ownership after it was acquired by the Swedish packaging group Tetra Pak. It was then renamed Alfa Laval AB and made into an independent industrial group within the newly formed Tetra Laval Group.
The strategic logic was compelling: both Tetra Pak and Alfa Laval served the food processing industry. Tetra Pak dominated packaging; Alfa Laval provided the processing equipment. Together, they could offer integrated solutions from raw material to packaged product.
The activities of today's Alfa Laval represent approximately 40% of its activities at the time of our acquisition in 1991, but the overall sales volume of the current activities now equals that of the total group when we acquired it. The bulk of the remaining businesses has either been integrated into Tetra Pak, been formed into independent units within Tetra Laval or has been divested.
This statistic reveals how dramatically Tetra Laval reshaped Alfa Laval during its ownership. The conglomerate was disaggregated, with non-core businesses spun off or sold. What remained was a more focused, higher-margin operation built around core separation and heat transfer capabilities.
In 1991, Alfa Laval Agri, a company producing dairy and farming machinery was split from Alfa Laval when it was bought by the Tetra Pak Group. When Alfa Laval was sold, Alfa Laval Agri remained a part of the Tetra Pak group and was renamed DeLaval, after the company's founder.
The separation of DeLaval (dairy farming equipment) from Alfa Laval (industrial processing equipment) was perhaps the most significant structural change. The dairy equipment business—closest to the company's origins—went in one direction, while industrial separation and heat transfer went in another.
The hyphen is removed from the Alfa Laval corporate name. in 1993, a small detail but one that signaled the company's evolution into a more streamlined, modern enterprise.
VI. The Private Equity Transformation & Re-IPO (2000–2010)
KEY INFLECTION POINT #1: The Industri Kapital Turnaround
The story of Alfa Laval's private equity transformation is a case study in how disciplined ownership can unlock value in asset-rich, strategically unfocused industrial companies.
Tetra Laval sold a majority stake of Alfa Laval to the Swedish private equity group Industri Kapital (now known as IK Investment Partners) in 2000, who purchased the company with the intention of listing it publicly within a five-year period. Alfa Laval returned to the Stockholm Stock Exchange in 2002.
The acquisition of Alfa Laval is the largest ever Scandinavian management buy-out transaction, and one of the largest in Europe.
"We view Alfa Laval as a very attractive investment" said Björn Savén, Chief Executive of Industri Kapital. "Alfa Laval has a strong position as the leader in its main markets. The group has a long history of technological innovations and a global market presence. We also look forward to working together with Tetra Laval in further developing Alfa Laval."
Industri Kapital's intention is to further develop Alfa Laval as a global leader in equipment for Separation, Heat Transfer and Fluid Handling, with a view to listing the shares publicly within a five year period.
Finally, Industri Kapital 2000 Ltd. agreed to acquire a controlling interest Alfa Laval in 2000 in one of the largest Scandinavian management buyout campaigns in history. Under Industri Kapital, Alfa Laval focused on strengthening its Separation, Heat Transfer, and Fluid Handling business units.
The private equity playbook was clear: strip away non-core businesses, invest in core technologies, improve operational efficiency, and position the company for a return to public markets.
After operating as a private company for over ten years, Alfa Laval re-listed on the Stockholm Stock Exchange on May 17, 2002. Industri Kapital CEO Björn Savén commented on the move in an April 2002 efinancialnews.com article, stating, "We have been very pleased with Alfa Laval's performance during our ownership. Already at the time of our investment we saw a listing of the company as a logical continuation of the company's future development." Alfa Laval CEO Sigge Haraldsson agreed, adding, "For us the IPO means that our financial position will be strengthened, allowing for additional growth and expansion."
In August 2000 the IK 2000 Fund acquired Alfa Laval from the Tetra Laval Group, subsequently completing a partial exit in May 2002 through an IPO on the Stockholm Exchange. IK retained a 26.9% stake in the company, which was gradually reduced...
The ownership structure following the IPO tells the story of patient capital meeting public markets. Following the IPO, and after full exercise of the over-allotment option, the new shareholders own 55.7 percent of the company, the Industri Kapital 2000 Fund 26.9 percent, Tetra Laval 15.9 percent and management 1.5 percent.
IK retained a 26.9% stake in the company, which was gradually reduced until March 2005, when the remaining 8.5% stake was sold.
The post-IPO strategy included strategic acquisitions to strengthen the newly focused platform. The main strategy is to create profitable growth, both organically and through acquisitions, which in 2002 include two Danish companies; Danish Separation Systems A/S (DSS), a specialists in membrane filtration for the pharmaceutical and food industries, and the Toftejorg Group, the world's leading supplier of advanced tank cleaning systems.
As of 2019, Tetra Laval has retained a 29.1% minority stake in the company. Manufacturing at Alfa Laval is carried out in several countries including Sweden, India, China, the UK, and USA.
The anchor shareholder model—with Tetra Laval (now through Winder Holding AG) maintaining a nearly 30% stake—provides stability while allowing public market discipline. The only shareholder holding more than 10 percent of the shares is Winder Holding AG, Switzerland (formerly Tetra Laval International SA, Switzerland), who owns 29.5 (29.5) percent.
Since Alfa Laval was relisted on the Stockholm Stock Exchange on 17 May 2002, the share, including reinvested dividend, has returned 2,591 percent. Over the listing period, this equates to an average annual effective return of 17.38 percent. This can be compared to a 11.48 percent annual return for the Stockholm Stock Exchange during the same period.
VII. Marine Environmental Regulations: The First Regulatory Tailwind (2004–2020)
KEY INFLECTION POINT #2: IMO Regulations Create Massive Demand
The maritime industry is perhaps the most consequential arena where environmental regulation has transformed Alfa Laval's business. The company's prescient investments in marine environmental solutions have created a compliance-as-growth business model that continues to pay dividends.
Environmental regulations protect our marine ecosystems, but they also affect marine businesses. While it's necessary to comply, it's equally important to minimize the onboard impact of the solutions. Alfa Laval is committed to keeping you compliant while safeguarding your business interests. Our compliance solutions combine peace of mind with the flexibility and economy so vital to your operations.
The company developed a comprehensive framework for marine environmental solutions under the "Pure Thinking" brand. Grouped under the conceptual name "Pure thinking", the products will provide security as existing legislation is tightened, as well as compliance with new laws such as those that will regulate ballast water treatment. While most of the solutions can be retrofitted, incorporating them at the newbuilding stage will contribute to gaining DNV's Clean Design class notation for the vessel under construction.
Alfa Laval's "pure thinking" product range comprises: the PureSOx exhaust gas cleaning system; the PureDry separator for recovering re-usable fuel from waste oil (waste fuel recovery); the PureBilge oily water separator for bilge water treatment; PureBallast for ballast water
Ballast Water Treatment: PureBallast
Ballast water—the water ships take on for stability when sailing without cargo—carries microscopic organisms from one ecosystem to another, causing ecological devastation when released. The IMO's Ballast Water Management Convention created a massive compliance opportunity.
PureBallast, which was the first commercially available ballast water treatment solution, is a chemical-free technology sold and serviced by Alfa Laval.
The move follows years of service in ballast water treatment, comprising a number of key milestones for Alfa Laval PureBallast 3. Besides cementing itself as the leading ballast water treatment solution, the system became a forerunner with U.S. Coast Guard type approval and was first to be certified according to the IMO revised G8 guidelines.
Alfa Laval PureBallast 3 is an automated inline ballast water management system for biological disinfection of ballast water. Operating without chemicals, it combines initial filtration with UV treatment to remove organisms in accordance with stipulated limits.
SOx Scrubbers: PureSOx
Cleaning exhaust gas with SOx scrubbers is a strategy for meeting fuel sulphur limits without resorting to low-sulphur fuels. A strict fuel sulphur limit of 0.1% already exists for those sailing in SOx Emission Control Areas (ECAs), but as of 2020 all vessels will need to comply with a 0.5% global fuel sulphur cap. PureSOx is the SOx scrubber system at the forefront. At sea since 2009, it has the record others aspire to, with every scrubber ever sold in operation and in compliance. The long PureSOx reference list includes a broad range of vessel types and many returning customers, convinced by smooth installations, proven results and first-rate global service.
PureSOx builds on over 50 years of work with marine scrubbers, as well as Alfa Laval core technologies like centrifugal separation, which is used for reliable water cleaning in closed-loop mode. Our experienced project management and global resources ensure smooth scrubber installation projects, while connectivity with PureSOx Connect simplifies your compliance reporting and ongoing optimization.
Over 100 years of marine industry experience—including over 50 years of marine scrubber experience. Proven removal of SOx (>98%) and particulate matter through exhaust gas cleaning. Hundreds of marine scrubbers in proven SOx compliance worldwide. Since the first PureSOx scrubber system went to sea in 2009, Alfa Laval has kept vessels in fuel sulphur compliance and SOx scrubbers working at their best.
The Business Model Innovation
What makes Alfa Laval's marine environmental business particularly compelling is how it transforms regulatory compliance into recurring revenue. Each system sold creates an installed base requiring parts, service, and optimization. The compliance deadline creates urgency; the technical complexity creates switching costs.
Water collected in a vessel's bilge water tanks must be cleaned before it can be sent overboard. Its oil content must be reduced to just 15 ppm—or even less in some parts of the world. This can be difficult on today's vessels, where detergents and other chemicals on board often lead to stable oil emulsions. PureBilge is an efficient oily water treatment system, built for continuous use in real life conditions. By means of high-speed centrifugal separation, it can reduce oil-in-water content to less than 5 ppm—even on rough seas or in the presence of difficult emulsions.
VIII. Strategic Acquisitions: Building Ecosystem Power (2014–2023)
KEY INFLECTION POINT #3: Acquisition-Led Platform Expansion
The years 2014-2023 saw Alfa Laval execute a series of strategic acquisitions that expanded its capabilities and deepened its competitive moat—particularly in the Marine division.
Framo (2014): Marine Pumping Systems
In 2014, Alfa Laval acquired marine pump manufacturer Framo AS. It was Alfa Laval's largest acquisition to that point, in order to further expand the company's offering of marine equipment.
The Framo acquisition added deep-well cargo pumping systems for tankers—a mission-critical technology with high switching costs and strong aftermarket revenue. This strengthened Alfa Laval's position in the tanker segment, creating a more complete offering for shipyards and ship owners.
StormGeo (2021): Digital Services
In 2021, Alfa Laval acquired StormGeo, a weather analysis software provider for NOK 3.63 billion ($440 million). The use of StormGeo's digital products is increasing the decarbonisation of the industry; since 2018, their use has saved carriers 2.1 million tonnes of fuel, reducing carbon dioxide emissions by 6.2 million tonnes.
Alfa Laval—a world leader in heat transfer, centrifugal separation and fluid handling—has signed an agreement to acquire StormGeo—a global leader in weather intelligence and advanced data science solutions. The acquisition is part of Alfa Laval's strategy to support the marine industry's efforts to decarbonize and make operations more efficient. It will also enhance Alfa Laval's knowledge within digital services.
"The acquisition of StormGeo will be a strong addition to our toolbox of solutions that help our customers address the decarbonization challenge in the industry. Furthermore, StormGeo fits excellently to our digital acceleration ambition, and we will use their digital and customer experience to level up our offerings and to get deeper experience in the digital space," says Tom Erixon, President and CEO of Alfa Laval.
BunkerMetric (2022): Bunker Optimization
Also part of the strategy to expand digital services for offshore vessels was the acquisition in 2022 of Danish company BunkerMetric, a developer of advanced decision support tools for offshore bunker vessels. The use of tools from both solutions will help optimise and improve the efficiency of maritime carriers. BunkerMetric's procurement optimisation tool will be part of the subscription of StormGeo's existing offering.
In a statement sent to Bunkerspot today (4 August), Alfa Laval said that the acquisition will 'enhance the StormGeo offering in route advisory and voyage optimisation services for the shipping industry'. Soeren Andersen, CEO of StormGeo, commented: 'The acquisition of BunkerMetric will further strengthen the StormGeo suite of software products and services. BunkerMetric's advanced procurement optimisation tool is a welcomed addition to our route advisory services, giving shipping customers timely data for choosing the best bunkering options.'
Desmet (2022): Biofuels & Edible Oils
In 2022, Alfa Laval acquired Desmet, part of the Desmet Ballestra, a world leader in engineering and supplying processing plants and technologies for edible oils and biofuel sectors. This acquisition is to support Alfa Laval's transformation towards renewable fuels.
The acquisition of Desmet was finalized on August 1, 2022 and will strengthen Alfa Laval's position in the renewable energy arena and complement its offering within edible oils.
Marine Performance Systems (2023): Hull Friction Reduction
In 2021, Alfa Laval acquired a minority stake of 16.5 percent in the Netherland-based company Marine Performance Systems (MPS) with an option to acquire the remaining part later. Now Alfa Laval has executed that option and completed the acquisition to own 100 percent of MPS. The closing date for the acquisition was March 21, 2023. MPS' innovative technology significantly reduces the friction from vessels when sailing, resulting in fuel savings. Friction between the hull and the water when sailing is the most significant driver of a vessel's fuel consumption, and the cost of fuel represents up to 60 percent of a vessel's operating costs.
Other Strategic Investments
During 2022 Alfa Laval acquired shares for an additional SEK 13 million in the Swedish company Liquid Wind, which gave a 5.2 percent ownership in the company. The company develops electro-fuel facilities to produce renewable clean fuels. During 2023 Alfa Laval made a capital contribution of SEK 62 (40) million into AlfaWall Oceanbird, which is a joint venture together with Wallenius to supply innovative wind propulsion solutions for cargo vessels and other ship types.
IX. The Tom Erixon Era: "Leading the Transition" (2016–Present)
KEY INFLECTION POINT #4: CEO-Led Strategic Transformation
Tom Erixon has been President and CEO of Alfa Laval since 2016, and with his initial five-year plan largely complete, he is ready to start on the company's next phase. "When I joined, it was a well-run company, but it needed some housekeeping—and especially a stronger product focus," he begins. "The plan was to strengthen our market position back to organic growth, and invest in our core technologies. And last year, we felt we pretty much came to the end of that journey."
"We've increased our R&D spending significantly. We trained our global sales force as product specialists, and we had a response in the market in terms of strengthening market share across the board."
Erixon brought a distinctive background to the CEO role—Boston Consulting Group partner, then industrial leadership positions at Sandvik and OVAKO before joining Alfa Laval. His consulting DNA shows in the strategic clarity he brought to the company.
The 2023 Capital Markets Day articulated a bold strategic direction. During the Capital Markets Day, Tom Erixon, President and CEO of Alfa Laval, elaborated on the growth strategy based for each of Alfa Laval's three divisions. The focus for the Energy Division was on the energy transition and it was announced that Alfa Laval is creating a new business unit—BU Electrolyzer and Fuel Cell Technologies—to accelerate the pace of clean energy solutions. For the Food & Water Division, focus was on the improvement journey of the project business, and for the Marine Division the emphasis was on the profitability improvement journey and growth path moving forward.
The "Transition Leader" Strategy
"The growing demand emerging from the global energy transition will continue to drive our growth towards 2030. Based on current market trends, we expect to reach 100 BSEK no later than 2030," says Tom Erixon, CEO and President, Alfa Laval.
The 100 billion SEK revenue target by 2030—from a 2024 base of SEK 66.9 billion—implies compound annual growth of roughly 7% over the next five years. For a 140-year-old industrial company, this is ambitious but achievable given the secular tailwinds.
"We have seen strong growth across our three divisions and during the past years taken action to expand production capacity in all major geographies. The growing demand emerging from the global energy transition will continue to drive our growth towards 2030. Based on current market trends, we expect to reach 100 BSEK no later than 2030," says Tom Erixon, CEO and President, Alfa Laval.
Accelerated Sustainability Commitments
As part of the investments, Alfa Laval announces plans to effectively reach its scope 1 and 2 net zero targets by 2027, three years ahead of the originally announced target year.
"As part of the priorities made over recent years, significant investments have been made in implementing robust and ambitious plans to address every aspect possible related to achieving net zero targets for scope 1 and 2. The main part of the plans is to increase energy efficiency and replace fossil fuels with renewable energy in processes across divisions and the company's locations around the world. "In recent years we have proven that the actions and plans we set in motion to reach our scope 1 and 2 net zero targets in our operations enable us to deliver on our targets faster than expected."
X. The Energy Transition Opportunity (2020–Today)
KEY INFLECTION POINT #5: Sustainability as Growth Engine
The energy transition represents perhaps the largest secular growth opportunity Alfa Laval has encountered since the mechanization of dairy farming 140 years ago. The company's heat transfer and separation technologies sit at the nexus of almost every pathway to decarbonization.
Hydrogen & Clean Energy
While renewable energy sources like solar and wind are the fastest growing energy providers today, a significant portion of future energy demands cannot be directly electrified. This necessitates the use of clean molecules such as hydrogen. Hydrogen, generated through electrolysis, is at the forefront of this transition.
Swedish sustainable solutions provider Alfa Laval is establishing a new business unit, 'Business Unit Electrolyzer and Fuel Cell Technologies,' intending to capture business opportunities in the hydrogen sector. It will be established by January 1, 2024, and will be part of the Energy Division. Alfa Laval said that over the past three years, the company has been present in the hydrogen market, pioneering products and solutions in the areas of electrolyzers and fuel cells, and recognizing the potential, it has decided to establish a new business unit and develop new products and solutions in hydrogen applications in collaboration with industry leaders.
The company has also announced that it will build an Innovation Center dedicated to heat exchangers, fuel cells and electrolyzer components to further drive innovation, R&D and testing in these areas, both from a capability and pace perspective.
"The creation of a dedicated business unit confirms our commitment to drive the necessary actions in the evolving energy landscape. Hydrogen plays a pivotal role in the energy transition and our ambition is to speed up this transformation through innovation and the industrialization of electrolyzer and fuel cell components."
Marine Division: Alternative Fuels
Order intake grew 24 percent in 2024 driven by a strong demand for new vessels, an increased share of tankers in the ship contracting mix, a good development in services and a growing demand for sustainability related solutions around energy efficiency and clean energy.
In relation to the adoption of clean energy, we continue to deploy and develop the next generation multi-fuel solutions that future proof our customers' assets. During 2024, we delivered our first ammonia supply systems, our first LNG fuel pumps and have now expanded our installed base and backlog to over one hundred alternative fuel supply systems. From a market adoption perspective, we saw a resurgence of LNG as a fuel due to its availability and cost dynamics compared to zero-carbon i.e. green fuels, which have a challenge related to both cost and availability in the near term.
Alfa Laval announces a milestone in maritime decarbonization with an order for the world's first marine boiler system designed for the safe incineration of ammonia emissions. Confirmed for a fleet of four ammonia dual-fuel vessels, this innovation is part of a joint development project with industry frontrunners and is set for delivery in 2027-2028.
EU Emissions Trading System Impact
From a regulatory standpoint, the EU is leading the energy transition and has included shipping as a part of the EU Emissions Trading System (ETS) regime from January 2024, where-in carbon emissions from ships trading with and within Europe will be progressively taxed on the CO2 they emit going forward. In addition, the Fuel-EU programme will kick-in from January 2025, which mandates a minimum zero-carbon fuel mix threshold in the bunkers of a vessel or a fuel penalty equivalent to the price of the alternative fuel not implemented.
We now have more than 3,500 ships using the EU-MRV and EU-ETS compliance reporting tools. The StormGeo Fuel-EU management tool was released during the year as the regulation goes into effect in January 2025. The s-Bunker suite, which enables customers to not just optimize a vessel's route around bunkering fuel but also buy and trade bunkers on this same digital platform as one seamless solution, has become even more relevant in a multi-fuel world where the bunkering decision gets increasingly complex.
XI. Business Model Deep Dive: The Three Divisions Today
Energy Division
The Energy Division serves end markets including oil & gas drilling and production, renewable fuel processing, oil refineries, petrochemicals, HVAC applications, district heating and cooling, power generation, and pulp & paper. Alfa Laval's Energy division has a long track record working with end-markets in oil & gas drilling and production, oil & gas and renewable fuel processing & transportation, oil refineries, and the petrochemicals industry. Other areas include HVAC applications, district heating and district cooling, power generation, engine cooling, pulp, paper, municipal and industrial waste treatment and recycling, bio-based material, mining and minerals. Product areas include heat exchanger and industrial scale centrifugal separation technologies.
The division consists of five Business Units: Brazed & Fusion Bonded Heat Exchangers, Electrolyzer & Fuel Cell Technologies, Energy Separation, Gasketed Plate Heat Exchangers, and Welded Heat Exchangers.
Food & Water Division
Alfa Laval's Food & Water division works with end-markets in food manufacturing, dairy, pharmaceuticals, ethanol, starch, sugar, municipal wastewater and industrial wastewater treatment, proteins, biotech, vegetable oils, and breweries. Product areas include high speed separators, food systems, food heat transfer, decanters, and hygienic fluid handling technologies.
Marine Division
Alfa Laval's Marine division works with end-markets in shipbuilding, offshore oil and gas, and diesel & gas-engine power. The division also develops technology to help marine customers comply with environmental regulations. Product areas include marine separation and heat transfer equipment, boilers and gas systems, and pumping systems.
Furthermore, we have invested in the manufacturing capabilities of our cryogenic heat exchangers in Asia and the pumping systems business in Norway in order to be able to meet the higher demand going forward. These initiatives, together with a strong growth in service, an improved production load in the pumping systems business and good profitability in the growing multi-fuel portfolio helped improve the profitability of the division to 18.4 percent for the year.
Financial Performance Summary (2024)
Order intake increased by 7 percent to SEK 74,592 (70,742) million. Net sales increased by 6 percent to SEK 66,954 (63,598) million. Adjusted EBITA: SEK 11,089 (10,221) million. Adjusted EBITA margin: 16.6 (16.1) percent.
Result after financial items: SEK 9,996 (8,650) million. Net income: SEK 7,432 (6,381) million. Earnings per share: SEK 17.88 (15.31). Cash flow from operating activities: SEK 12,159 (9,169) million. Return on capital employed: 23.2 (21.0). Net debt to EBITDA, times: 0.43 (0.85).
Q4 2024 Performance: Order intake was SEK 18.5 (16.9) billion, an organic increase of 8 percent. Net sales was SEK 18.3 (17.8) billion, an organic increase of 2 percent. Adjusted EBITA increased by 3 percent to SEK 2.9 (2.8) billion, corresponding to a margin of 16.0 (15.9) percent. Strong cash flow from operating activities of SEK 4.0 (3.9) billion. Earnings per share of SEK 4.96 (3.77).
The Board of Directors will propose a dividend of SEK 8.50 (7.50) per share to the Annual General Meeting.
XII. Playbook: Business & Investing Lessons
The Technology Platform Model
Alfa Laval's 140-year history demonstrates the power of building enduring technology platforms rather than chasing individual product cycles. Centrifugal separation technology—invented to separate cream from milk—now serves petrochemical refineries, pharmaceutical plants, breweries, and marine vessels.
The key insight: deep technological expertise in a fundamental process can spawn multiple billion-dollar businesses across industries. Heat transfer and fluid handling extend this platform further.
Regulatory Tailwinds as Competitive Advantage
The company's marine environmental business exemplifies how proactive investment in compliance technology can transform regulatory costs into growth opportunities. By being first-to-market with solutions for IMO ballast water and sulphur cap requirements, Alfa Laval captured share and built switching costs.
The "Boring But Essential" Advantage
Heat exchangers and separators aren't consumer-facing products. They don't generate viral marketing moments. But they're mission-critical for nearly every industrial process on Earth. This "boring but essential" positioning creates durable competitive advantages:
- High switching costs (equipment integrated into customer processes)
- Strong aftermarket revenue (service, parts, optimization)
- Limited attention from disruptive competitors chasing sexier markets
Swedish Engineering DNA
Long-term thinking, quality focus, and sustainability orientation characterize Sweden's industrial companies. The anchor shareholder model—with Tetra Laval maintaining a ~29% stake—provides stability while allowing public market discipline.
The Services Flywheel
Every piece of equipment sold creates an installed base requiring ongoing service, parts, and optimization. Last year more than 10,000 remote service hours were invoiced. Digital connectivity increasingly enables remote diagnostics and predictive maintenance, deepening customer relationships.
Competitive Position: Porter's Five Forces Analysis
Threat of New Entrants: LOW Alfa Laval's 140 years of accumulated expertise, installed base of equipment, global service network, and customer relationships create formidable barriers. The company holds more than 2,000 patents and operates 42 major production facilities—22 located in Europe, 10 in Asia, 8 in the US, and 2 in Latin America. Additionally, it maintains over 100 service centers worldwide.
Bargaining Power of Suppliers: MODERATE The company's scale provides negotiating leverage, though specialty materials (stainless steel, titanium) can create some supplier power.
Bargaining Power of Customers: MODERATE TO LOW Switching costs are high once equipment is installed. Mission-critical applications limit price sensitivity.
Threat of Substitutes: LOW Heat transfer and separation are fundamental physical processes. Alternative technologies exist for specific applications but don't threaten Alfa Laval's core markets.
Competitive Rivalry: MODERATE The plate & frame heat exchanger market is highly competitive, with the five major players collectively holding 40-45% of the total market share. Alfa Laval, Danfoss, Kelvion, SPX FLOW, and Xylem maintain strong shares of the plate & frame heat exchanger market, partly due to their global scope, wide variety of products, and emphasis on innovation and sustainability. Overall, Alfa Laval's comprehensive product portfolio and firm commitment to research & development, supported by its considerable investments in improving product performance and sustainability, are major contributors to its continued strength in the overall heat exchanger market. Additionally, the only heat exchanger manufacturer with global manufacturing and service capabilities, it has a broad applicability range across a variety of industries, from marine and pharmaceuticals to energy.
Hamilton Helmer's 7 Powers Analysis
Scale Economies: Alfa Laval's global manufacturing footprint and installed base create unit cost advantages unavailable to smaller competitors.
Network Economies: Limited direct network effects, though the installed base creates information advantages for product development.
Counter-Positioning: The company's investments in hydrogen/fuel cell technology represent a bet that traditional energy competitors cannot easily follow.
Switching Costs: HIGH. Equipment integration, training, and service relationships create significant friction.
Branding: Strong in professional/industrial contexts, though not consumer-facing.
Cornered Resource: Deep expertise in separation and heat transfer applications accumulated over 140 years.
Process Power: Manufacturing excellence and application engineering capabilities refined over decades.
Key Performance Indicators to Monitor
For investors tracking Alfa Laval's ongoing performance, three metrics deserve particular attention:
1. Order Intake Growth (Organic) Order intake is the leading indicator of future revenue. Alfa Laval reports this metric quarterly. For 2024, order intake achieved 5% growth with organic order intake growth of 7%. This metric signals demand trends across the three divisions and provides visibility into the 12-18 month revenue outlook.
2. Adjusted EBITA Margin This margin captures operational efficiency and pricing power. For 2024, the adjusted EBITA margin was 16.6 (16.1) percent—representing margin expansion despite inflationary pressures. Tracking this across divisions reveals where the company is gaining or losing pricing power.
3. Service Revenue Growth Service revenue (parts, maintenance, digital services) represents the recurring revenue base built on the installed equipment base. As the installed base grows—particularly in marine environmental solutions—service revenue should compound. The metric also indicates customer stickiness and switching costs.
Risk Factors & Material Considerations
Cyclicality: Alfa Laval's end markets—particularly marine and energy—are cyclical. Ship ordering follows freight rates; energy investments follow commodity prices. The company partially mitigates this through diversification and service revenue, but investors should expect earnings volatility.
Regulatory Dependence: Much of the marine division's growth has been driven by environmental regulations. Changes in regulatory enforcement, timing, or scope could impact demand. Conversely, stricter regulations could accelerate demand.
Hydrogen/Energy Transition Execution: The company is making significant bets on hydrogen and alternative fuels. These markets remain nascent, and the path to commercialization is uncertain.
Currency Exposure: With global operations and reporting in Swedish kronor, significant currency translation effects are possible.
Key Customer Concentration: Tetra Pak within the Tetra Laval Group is Alfa Laval's single largest customer with 6.7 (5.4) percent of net sales.
The Century-and-a-Half View
The world faces some big challenges. There's rising demand for energy, clean water, sustainable food and decarbonized marine transportation. Meeting these challenges will require significant change—and Alfa Laval is uniquely positioned to help. Our corporate journey began more than 140 years ago.
From Gustaf de Laval's cream separator to ammonia fuel supply systems, from manual skimming to AI-powered fleet optimization, the company has demonstrated remarkable adaptability while maintaining focus on core technological capabilities.
In 2024, Alfa Laval's share has seen good price growth and has outperformed the index. The share price was recorded at SEK 464.60 (404.40) at the close of the last trading day of the year, representing an increase of SEK 59.20 since the start of the year. This is equivalent to growth of 14.68 per cent, which is comparable with OMX Stockholm Industrials, the industry index for industrial shares in which Alfa Laval is included, which was up 7.24 per cent in 2024. The Stockholm Stock Exchange as a whole (OMXSPI) increased by 5.73 per cent. Therefore, Alfa Laval outperformed both the industry and the stock market with twice the price growth.
At the end of the year, Alfa Laval's market capitalization amounted to SEK 191.2 billion (166.74).
The story of Alfa Laval is ultimately about the durability of fundamental technologies. Centrifugal separation works the same way it did in 1878—rapid rotation creates force that separates substances of different densities. Heat transfer follows the same thermodynamic principles that Alfa Laval's engineers applied in 1938.
What changes is application. What endures is expertise.
We know that we cannot change the world alone. But as the transition leader we can help show the way forward. We dare to stick our neck out by saying the pace of the transition is too slow and that the world is behind schedule in terms of addressing the climate crisis.
Gustaf de Laval died in poverty despite 92 patents and 37 companies. The company that bears his name, built on his core invention but operated by generations of more disciplined managers, has created wealth for shareholders over more than a century. Perhaps his memorial inscription captures the essence of both the man and the company he founded: "The Man of High Speed."
In a world demanding faster transitions—to cleaner energy, to sustainable food production, to decarbonized shipping—high speed is exactly what's needed.
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