Process Technology Division overview
Market segment
Process Industry
Performance in 2008
Share of the Division’s order intake
Change in order intake1)
Geographic distribution (order intake)
Operations
Strong demand for efficient solutions for heat transfer
During the year, significant investments in petrochemicals and refineries in Asia and the Middle East continued. High energy prices in the first half of the year combined with an increased focus on environmental solutions contributed to rising demand for compact and efficient products for heat transfer. Alfa Laval’s products and solutions also continued to capture market share as a result of an increased market presence and an expansion in the product range for welded heat exchangers. Accordingly, order intake remained at a high level, although a certain decline was experienced compared with the preceding year.
The markets for steel, aluminum and mining performed well but activity is expected to slow due to the industry entering a calmer pace following the capacity expansion in recent years. Increased demand for thermal evaporation systems was observed in the reuse of caustic soda in the aluminum industry.
The markets for steel, aluminum and mining performed well but activity is expected to slow due to the industry entering a calmer pace following the capacity expansion in recent years. Increased demand for thermal evaporation systems was observed in the reuse of caustic soda in the aluminum industry.
Alfa Laval’s products are used for manufacturing petrochemical products, plastics, polymers, metals, minerals, biofuels, starch, paper and sugar. Alfa Laval has many well-known customers in the process industry including BASF, Bayer, Dow, and Dedini SA Indústrias de Base.
Energy & Environment
Increased demand for electricity boosted power market
Alfa Laval’s strong development in Energy & Environment continued in 2008, particularly in the markets for Oil & Gas and Power. The latter reached record levels, benefiting from upgrades of existing generating capacity and major investments in new capacity, primarily in China, Russia and the Middle East. Increased demand for electricity in a rising number of areas in the world places a demand for continued expansions in the years to come.
The nuclear power market, in which Alfa Laval has a leading position, continued to perform well, primarily in Asia where several major orders were secured during the year. Continued investments in expanding generating capacity, a goal of decreasing dependence on oil and gas combined with an ambition to reduce carbon-dioxide emissions, make nuclear power an important alternative in many regions.
A rebound occurred in Oil & Gas, primarily due to a strong trend in the Middle East and the oil-drilling activity in Canada. The expansion of new production capacity for liquid natural gas (LNG) remained at a low level. There is still an underlying need to expand production in the future.
Environment operations continued to grow in nearly all regions. The market is expected to expand in pace with an increased focus on preventing the pollution of the world’s water resources.
In the energy sector, Alfa Laval’s products, modules and systems play a major role in the extraction of oil and gas and in the production of energy in power plants.
In the wastewater treatment segment, Alfa Laval supplies systems that reduce sludge volumes so that they can be managed in a cost- efficient manner.
Customers include Shell, Total, Petrobras, Gazprom, CNPC, GE, City of Chicago and Shanghai Drainage.
Food Technology
Strong development for vegetable oils, weakening within brewery
The market for vegetable oils continued to grow in 2008, but the pace slackened toward the end of the year. This was due to increasing demand at the beginning of the year, particularly in Asia. Alfa Laval, which already had a strong position, achieved further success partially due to the company’s global presence.
Brewery experienced favorable growth during the first half-year. However, a slowdown was observed in the second half of the year, due to ongoing consolidation in the industry, which contributed to lower investments. The market for fish proteins is expected to continue to grow since new regulations regarding waste management and the extraction of fish oil will require new investments.
In fruit processing, Alfa Laval continued to show positive growth, particularly in India and Brazil. The beneficial trend is expected to continue in pace with the demand for healthy food increasing. Wine markets also performed well, since the industry began adopting and accepting other types of technologies. Alfa Laval’s decanters for example, are progressively replacing traditional pressing technology.
Alfa Laval supplies process solutions for the beverage and food industries. Among other applications, solutions are used in the production of beer, wine, fruit concentrates, milk proteins and milk sugars (casein and lactose), liquid foods, vegetable proteins as well as, meat and fish proteins.
Customers include global groups such as Cargil, ADM, Nestlé, Heineken and Anheuser-Busch.
Life Science
Strong demand for separators and membranes in China
The segment’s order intake in 2008 remained at the same level as in 2007, but a slight redistribution of the operation’s composition was observed. Traditional vaccine production continued to expand, as did the market for industrial fermentation, an area in which Alfa Laval has a broad product offering, and the trend is expected to continue.
The biotech market lost speed during the year, particularly in the US, as several major projects were postponed, partially due to a certain consolidation in the industry.
However, the Chinese market continued to grow. The largest increases were observed in industrial fermentation and traditional pharmaceuticals, with strong demand for both separators and membranes. The country’s biotech business also showed growth, but from a low level compared with the US and Western Europe.
Customers are active in the pharmaceutical, biotechnology, hygiene and health food product industries. Alfa Laval has developed a series of products and solutions that meet the extremely strict safety and hygiene requirements imposed by the industries and supervisory authorities.
Customers include many major pharmaceutical groups such as GlaxoSmithKline, Genentech and Lonza.
Parts & Service
More service centers a base for continued expansion
The segment’s expansion continued in 2008, as a result of the continuous growth in Alfa Laval’s installed base. The trend toward applications in Energy & Environment in North America and Asia was particularly strong.
More new service centers were added during the year to expand Alfa Laval’s global coverage and broaden local presence. In addition, the offering was increased to comprise several types of service agreements for Alfa Laval’s products. Increased investments in the upgrade offering were also implemented to help customers raise the capacity of machines already installed. In 2008, the network of service centers was expanded in Russia, China, Saudi Arabia and the US, among other countries. During the first quarter of 2009, additional units are expected to beestablished in Japan, Australia and Turkey.
Customers are active in all the division’s segments. The aftermarket is a priority area and the overall strategy is to develop and expand spare parts and service operations. It offers customer value, brings customers closer to Alfa Laval and is less sensitive to variations in the business cycle. By creating continual customer contacts, it facilitates new sales. Read more on pages 22-23.
1) ± 3% compared with
immediately preceding year