Strong momentum and improved profitability

Order intake grew 24 percent in 2024 driven 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. As our portfolio broadens and increases in complexity to accommodate the need for future fuel flexibility and digital solutions, Alfa Laval continues to increase its content onboard vessels.

The efforts made in recent years to build a stronger operational foundation, such as targeted organizational adjustments, portfolio management, manufacturing automation and footprint initiatives, has allowed us to scale profitably as delivery of the record high order book ramps up. During the year, a significant part of the Heat & Gas systems organization was relocated from Europe to China in order to improve the cost structure and get closer to shipyard customers. 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.

Accelerating the energy transition

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. These regulations drive energy efficiency, better operational practice using digital tools and a demand for clean energy like green methanol and green ammonia.

The Marine Division is enabling this transition in a number of dimensions. Foremost, we have accelerated our own investments to reach net zero in Scope 1 and Scope 2 by 2027, three years earlier than previously planned. This will support our customers’ Scope 3-upstream emissions targets.

The development of the energy saving portfolio has good traction.The first full-scale Oceanbird wing, our wind propulsion collaboration with Wallenius, has been deployed for testing on land during 2024. The next generation of OceanGlide, our air lubrication solution, is expected to be available in early 2025 with improved fuel reduction capabilities offering customers an attractive economic payback. Demand is expected to develop positively for these solutions as the industry recognizes that any future fuel will be more expensive than the current ones and implementing energy efficiency measures makes sound economic sense.

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.

A stronger digital customer journey

A significant reduction in the cost of data transfer from ship to shore and crew demands to remain connected have finally created conditions that are supportive of transmitting high frequency (HF) data from ship to shore. In order to improve onboard operational practice using this HF data, we have released the first-generation Alfa Laval Marine Customer Platform for two more products, ballast water and scrubbers. It is built on the same philosophy as the very successful Framo customer portal which today has 2,400 active ships on the platform. These portals are geared towards managing the health and service of the physical assets on board ships and have been built on an open architecture to allow other suppliers to be connected to our platform and conversely allow our data to be carried on other platforms. New products will be added to the digital platform over time.

Our suite of digital services that drive operational transparency and operational efficiency continued to grow, and with good traction for a number of new offerings. 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.The s-Bunker suite has been adopted by 500+ vessels and scaling in accordance with expectations within two years after its launch. The suite of extreme weather management digital solutions for the Brazilian market is also developing well.

In parallel to the above growth initiatives, we continue to invest in our software code base in StormGeo and the data infrastructure of our physical asset base to ensure that we have the needed foundation to continue scaling in a cost-efficient manner.