6-K 1 f6k_081604.txt REPORT OF FOREIGN PRIVATE ISSUER SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of August 2004 Alfa Laval Special Finance AB (Commission File No. 333-13690) (Translation of Registrants' Names Into English) Rudeboksvagen 1, Lund, Sweden (Address of Principal Executive Offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F X Form 40-F --- Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): -----. [Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): -----. [Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.] Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: Yes No X --- --- If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____. Enclosure: - Interim report April 1 - June 30, 2004 of Alfa Laval Special Finance AB. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this Current Report to be signed on their behalf by the undersigned, thereunto duly authorized. Alfa Laval Special Finance AB Date: August 16, 2004 By: /s/ Thomas Thuresson -------------------- Thomas Thuresson Chief Financial Officer [ALFA LAVAL LOGO] Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 "The second quarter 2004 was another strong quarter for Alfa Laval. The order intake increased by more than 20 percent, excluding exchange rate variations, compared to the same period 2003. All customer segments and geographical areas showed an increase. Net sales increased by more than 15 percent, excluding exchange rate variations, compared to the same period 2003. The EBITA margin has been affected by a lower gross margin in the quarter. This is mainly due to a combination of FX variations, larger portion of capital sales, competitive pricing on certain larger projects and an increased assertiveness by our sales force. We have taken measures with the aim to raise the gross margin to the previous higher level. We believe that we have improved our competitive position and increased our market shares. We maintain our positive outlook for the year with an even more positive view on the order intake." Sigge Haraldsson, President and CEO, Alfa Laval Special Finance Summary of the second quarter 2004: - Order intake increased to SEK 4,174 (3,554) million, meaning an increase by 20.4 percent excluding exchange rate variations. - Net sales increased to SEK 3,798 (3,402) million, meaning an increase by 15.4 percent excluding exchange rate variations. - Adjusted EBITA increased to SEK 419 (414) million, including adverse foreign exchange effects of SEK 75 million. - Adjusted EBITA-margin was 11.0 percent (12.2). - Result after financial items increased to SEK 257 (213) million. - Cash flow from operating activities was SEK 363 (267) million. Summary of the first six months 2004: - Order intake, excluding exchange rate variations, increased by 21.4 percent to SEK 8,103 (6,932) million. - Net sales, excluding exchange rate variations, increased by 13.8 percent to SEK 6,982 (6,397) million. - Adjusted EBITA increased to SEK 805 (735) million, including adverse foreign exchange effects of SEK 143 million. - Adjusted EBITA-margin was 11.5 percent (11.5). - Result after financial items increased to SEK 469 (354) million. - Result after tax was SEK 263 (231) million. - Earnings per share were SEK 32 (28). - Cash flow from operating activities was SEK 686 (483) million. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 2(15) Outlook 2004 The continued recovery in the market that Alfa Laval predicted in the Year End Report in February 2004 has been fulfilled during the first six months. Based on the outcome for the first half of 2004 we believe in a very strong increase in orders received during the full year 2004. We assess that the EBITA-margin, excluding currency effects, will be improved. Earlier published outlook (April 27, 2004): Markets recovered during the second half of 2003 within most of the customer segments in which Alfa Laval is active. It is our opinion that the recovery will continue during 2004. Assuming that the recovery will not be affected by unforeseen events in the world, we believe in a strong increase in orders received during 2004. We assess that the EBITA-margin, excluding currency effects, will be improved. The interim report has been issued on August 16, 2004 by the Board of Directors. The interim report has not been subject to review by the company's auditors.

--------------------------------------------------------------------------------------------------------- SEK millions, unless Apr 1 - Apr 1 - Jan 1 - Jan 1 - otherwise stated ~~Mar~~June 3130 ~~Mar~~June 3130 June 30 June 30 2004 2003 2004 2003 2003 2002 2001 --------------------------------------------------------------------------------------------------------- Order intake 34,~~929~~174 3,~~378~~554 8,103 6,932 14,145 14,675 15,894 --------------------------------------------------------------------------------------------------------- Net sales 3,~~184~~798 23,~~995~~402 6,982 6,397 13,909 14,595 15,830 --------------------------------------------------------------------------------------------------------- Adjusted EBITDA 1) ~~454~~483 ~~396~~486 937 882 1,925 2,091 2,141 --------------------------------------------------------------------------------------------------------- Adjusted EBITA 2) ~~386~~419 ~~321~~414 805 735 1,632 1,760 1,740 --------------------------------------------------------------------------------------------------------- Adjusted ~~EBITA2)~~EBITA - margin 2) 11.0% 12.12% 1011.75% 11.5% 11.7% 12.1% 11.0% --------------------------------------------------------------------------------------------------------- Result after financial items ~~212~~257 ~~141~~213 469 354 817 460 373 --------------------------------------------------------------------------------------------------------- Return on capital ~~employed3~~employed 3) 23.16% 2021.12% 22.2% 20.3% 18.5% --------------------------------------------------------------------------------------------------------- Return on equity ~~capital3~~capital 3) 1514.39% 615.34% 14.6% 4.7% 10.1% --------------------------------------------------------------------------------------------------------- Solidity 2931.98% 2928.98% 30.0% 28.6% 20.6% --------------------------------------------------------------------------------------------------------- Debt ratio, times 0.5256 0.74 0.55 0.79 1.57 --------------------------------------------------------------------------------------------------------- Cash flow from operations ~~323~~363 ~~216~~267 686 483 1,489 2,047 1,976 --------------------------------------------------------------------------------------------------------- Investments 4472 2961 116 90 259 277 275 --------------------------------------------------------------------------------------------------------- No. of employees (units) 4) 9,~~333~~357 9,~~186~~150 9,358 9,125 9,259 ---------------------------------------------------------------------------------------------------------

1) Adjusted EBITDA - "Earnings before interests, taxes, depreciation, amortisation of goodwill and step up values and comparison distortion items." 2) Adjusted EBITA - "Earnings before interests, taxes, amortisation of goodwill and step up values and comparison distortion items. 3) Calculated on a 12 months' revolving basis. The new issue of shares in June 2002 has changed the basis for the calculation of return on equity capital, which has affected the comparison figure. 4) Number of employees at the end of the period.

---------------------------------- -------------------------------- -------------------------------------------- Alfa Laval Special Finance AB Visiting address: For more information, please contact: PO Box 73 Rudeboksvagen 1 Mikael Sjoblom, Investor Relations Manager SE-221 00 Lund Phone: + 46 46 36 65 00 Phone: +46 46 36 74 82, Sweden Website: www.alfalaval.com Mobile: +46 709 78 74 82, Corporate registration ~~number:~~ E-mail: mikael.sjoblom@alfalaval.com number: 556587-8062

Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 3(15) Management's discussion and analysis Orders received Orders received amounted to SEK 4,174.3 (3,554.1) million for the second quarter. Excluding exchange rate variations, the order intake for the Group was 20.4 percent higher than the second quarter last year. Orders received amounted to SEK 8,103.3 (6,931.8) million for the first six months. Excluding exchange rate variations, the order intake for the Group was 21.4 percent higher than the same period last year. Orders received from the after market "Parts & Service" has continued to develop positively and increased by 2.4 percent compared to the corresponding period last year excluding exchange rate variations. Its relative share of the Group's total orders received decreased to 24.1 (27.4) percent due to the large increase in capital sales. Order backlog The order backlog at June 30, 2004 was 5,221.5 (4,380.1) million. Excluding exchange rate variations, the order backlog was 24.1 percent higher than the order backlog at June 30, 2003 and 26.7 percent higher than the order backlog at the end of 2003. Net sales Net sales amounted to SEK 3,798.3 (3,402.0) million for the second quarter. Excluding exchange rate variations, the invoicing was 15.4 percent higher than the second quarter last year. Net sales of the Alfa Laval Special Finance Group amounted to SEK 6,982.2 (6,396.7) million for the first six months. Excluding exchange rate variations, the invoicing was 13.8 percent higher than the period January to June last year. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 4(15) Comments on the Income Statement As a basis for comments on the various main items of the income statement, please find below a comparison between April - June and January - June for 2004 and 2003 and January - December for 2003 and 2002: Income statement analysis

Apr 1 - Apr 1 - Jan 1 - Jan 1 - Jan 1 - Jan 1 - ~~Mar~~June 3130 ~~Mar~~June 3130 June 30 June 30 Dec 31 Dec 31 SEK millions 2004 2003 2004 2003 2003 2002 ---------------------------------------------------------------------------------------------------------- Net sales 3,~~183~~798.93 3,402.0 6,982.2 6,~~994~~396.7 13,909.3 14,594.9 Adjusted gross profit 1,~~243~~357.29 1,~~197~~334.45 2,601.1 2,531.9 5,235.8 5,651.7 - in % of net sales 35.8 39.02 4037.03 39.6 37.6 38.7 Expenses * -~~789~~875.03 -~~801~~848.43 -1,664.3 -1,649.7 -3,310.6 -3,560.7 - in % of net sales 23.0 24.9 23.8 2625.8 23.8 24.4 Adjusted EBITDA ~~454~~482.6 486.2 ~~396~~936.08 882.2 1,925.2 2,091.0 - in % of net sales 12.7 14.3 13.24 13.8 13.8 14.3 Depreciation -6863.56 -7472.72 -132.1 -146.9 -293.1 -331.3 Adjusted EBITA ~~385~~419.0 414.0 804.7 ~~321~~735.3 1,632.1 1,759.7 - in % of net sales 11.0 12.12 1011.75 11.5 11.7 12.1 Amortisation of goodwill ** -~~123~~121.1 -121.8 -~~123~~244.79 -245.5 -494.1 -506.7 Comparison distortion items - - -13.5 3.6 5.6 -29.2 -------------------------------------------------------------------------- EBIT ~~248~~297.49 ~~201~~292.2 546.3 493.4 1,143.6 1,223.8 ----------------------------------------------------------------------------------------------------------

* Excluding comparison distortion items ** Including amortisation of step-up values The first six months generated a gross profit of SEK 2,451.9 (2,379.2) million. Excluding the amortisation of SEK 149.2 (152.7) million on step up values, the adjusted gross profit is SEK 2,601.1 (2,531.9) million. This corresponds to 37.3 (39.6) percent of net sales. Sales and administration expenses amounted to SEK 1,538.3 (1,548.0) million. Excluding exchange rate variations and the acquisition of bioKinetics, sales and administration expenses were at the same level as the corresponding period last year. The costs for research and development has amounted to SEK 198.0 (188.0) million, corresponding to 2.8 (2.9) percent of net sales. Adjusted EBITDA amounted to SEK 936.8 (882.2) million for the first six months. The adjusted EBITA amounted to SEK 804.7 (735.3) million. The adjusted EBITA margin was 11.5 (11.5) percent. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 5(15) The result has been affected by comparison distortion items of SEK -13.5 (3.6) million. These are reported gross as a part of other operating income and other operating costs, see summary on page 12. The divestment of the Tri-Lad operations in Canada has generated a loss of SEK -15.0 million and the sale of a minor property in Brazil has resulted in a realised gain of SEK 1.5 million. On February 26, 2003 the property in Newmarket, Canada was sold for SEK 20.0 million, with a realised gain of SEK 3.6 million. Divisional reporting Equipment division The Equipment division consists of six customer segments: Comfort & Refrigeration, Fluids & Utility Equipment, Marine & Diesel, OEM (Original Equipment Manufacturers), Sanitary Equipment and the aftermarket segment Parts & Service.

~~Presentation~~Apr of1 ~~geographical markets~~ -~~---------------------------------------------------------------------------------------------------------------------~~ ~~Net~~Apr ~~sales~~1 - Jan 1 - Jan 1 - Jan 1 - Jan 1 - ~~Mar~~June 3130 ~~Mar~~June 3130 June 30 June 30 Dec 31 Dec 31 ~~2004 2003 2003 2002~~ SEK ~~SEK SEK SEK Consolidated in~~ millions %2004 in2003 ~~millions~~2004 %2003 in2003 ~~millions~~2002 ~~% in millions %~~ -------------------------------------------------------------------------------------------------------~~---------------~~ ~~Customers~~Orders inreceived ~~Sweden 220.~~2 6,435.9%0 ~~198~~2,049.8 6~~.6%~~ ~~893.2 6.~~4~~% 835~~,528.18 ~~5.7% Other EU 1~~4,~~098~~014.5 ~~34.5% 1,072.7 35.~~8~~% 4~~,~~727~~069.~~2 33.~~9% 48,~~953~~092.16 ~~33.9%~~Order ~~Other~~backlog ~~Europe~~* ~~367~~2,069.~~1 11.5% 289.3~~ 9~~.7%~~ 1,~~567~~663.81 111,598.3%9 1,~~497~~564.85 ~~10.3%~~Net ~~USA~~sales ~~500.4 15.7% 492.6 16.4%~~ 2,~~159~~117.~~0 15.5% 2,638.7 18.1% Other North America 57.~~4 1,940.~~8% 82.~~4 ~~2.8% 315.0 2.~~3~~% 423~~,981.5 2~~.9%~~ ~~Latin America 129.0 4.1% 127.2 4.~~3~~% 553~~,769.69 ~~4.0% 626.~~7 4,841.~~3% Africa 34.4 1.1% 22.0 0.7% 182.7 1.3% 69.6 0.5% Asia 688.4 21.6% 659.~~8 ~~22.0% 3~~8,~~252~~129.~~7 23.4% 3,296.~~6 ~~22.6%~~Operating ~~Oceania~~income 88264.59 2231.~~8% 49.~~9 1515.7%6 ~~258~~475.16 1,010.9% ~~253.8~~ 1~~.7% -------------------------------------------------------------------------------------------- Total 3~~,~~183~~098.98 ~~100.0% 2,994.7 100.0% 13,909.3 100.0% 14,594.9 100.0%~~ -------------------------------------------------------------------------------------------------------~~---------------~~

* At the end of the period. Orders received and net sales (all comments are after adjustment for exchange rate fluctuations) Orders received increased by 16.7 percent and net sales increased by 9.7 percent during the first six months 2004 compared to the corresponding period last year. Almost without exception orders received have developed well in all the various applications and channels served by the Equipment division. The most significant growth is found within the "Marine & Diesel" and "OEM" segments. Parts & Service has continued to grow also in the first six months of 2004. Operating income (all comments are after adjustment for exchange rate fluctuations) The increase in operating income during the first six months 2004 compared to the corresponding period 2003 is mainly due to higher gross margin, partly offset by a negative translation impact from exchange rates. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 6(15) Process Technology division The Process Technology division consists of five customer segments: Energy & Environment, Food Technology, Life Science, Process Industry and the aftermarket segment Parts & Service.

~~Debt~~Apr ~~table~~1 - Apr 1 - Jan 1 - Jan 1 - Jan 1- Jan 1-~~-------------------------------------------------------------------------------------------------------~~ ~~Consolidated~~June ~~March~~30 31June ~~March~~30 31June ~~December~~30 June 30 Dec 31 ~~December~~Dec 31 SEK in millions 2004 2003 2004 2003 2003 2002 -------------------------------------------------------------------------------------------------------~~------~~ ~~Credit~~Orders ~~institutions~~received 21,~~708~~724.~~3 3,016.~~2 21,~~530~~483.71 3,~~360~~529.23 ~~Bond loan 1~~2,~~086~~879.50 15,~~123~~990.26 16,~~064~~488.8 1~~,127.6~~ ~~Capitalised~~Order ~~financial~~backlog ~~leases~~* 113,095.~~1 23.~~4 132,703.6 ~~24.7 Interest-bearing pension liabilities 5.~~2 6,398.10 5.2 6,752.16 ~~-----------------------------------------------------------------~~Net ~~Total~~sales ~~debt~~1,677.4 31,~~811~~441.1 42,~~168~~991.94 32,~~614~~584.36 45,~~518~~993.76 ~~Cash~~6,377.1 ~~bank~~Operating ~~and~~income ~~current deposits 1,421~~110.61 ~~847~~95.4 ~~1,213~~177.2 ~~1,020~~128.29 ~~----------------------------------------------------------------- Net debt 2,389~~351.5 ~~3,321~~537.5 ~~2,401.1 3,498.5~~ -------------------------------------------------------------------------------------------------------~~------~~

* At the end of the period. Orders received and net sales (all comments are after adjustment for exchange rate fluctuations) Orders received increased by 27.9 percent and net sales increased by 21.2 percent during the first six months 2004 compared to the corresponding period last year. Excluding the acquisition of bioKinetics, the corresponding figures are 24.3 percent and 15.2 percent. All segments in the Process Technology division have reported a substantial increase in orders received compared to the first six months 2003. The increase affects almost all the applications the division is working within. The growth has been largest within the "Energy & Environment" and "Process Industry" segments. Parts & Service shows a continued positive development. Operating income (all comments are after adjustment for exchange rate fluctuations) The increase in operating income during the first six months 2004 compared to the corresponding period 2003 is foremost due to higher gross margin, partly offset by a negative translation impact from exchange rates. Operations division and Other Operations are responsible for procurement, production and logistics. Other is referring to corporate overhead and non-core businesses.

~~CONSOLIDATED~~Apr ~~CASH~~1 -~~FLOW~~ ~~STATEMENTS~~Apr ~~Jan~~ 1 - Jan 1 - Jan 1 - Jan 1- Jan 1- ~~Mar~~June 3130 ~~Mar~~June 3130 June 30 June 30 Dec 31 Dec 31 ~~Amounts in~~ SEK millions 2004 2003 2004 2003 2003 2002 -------------------------------------------------------------------------------------------------------~~------------------~~ ~~Cash~~Orders ~~flow~~received ~~from operating activities Operating income 248~~15.~~4 201.2~~ 1~~,143.6~~ ~~1,223~~21.~~8 Adjustment for depreciation 192.3 198.~~4 ~~787~~45.2 ~~838~~38.03 ~~Adjustment for other non-cash items 11~~84.8 -394.~~8 22.~~1 ~~35.0~~Order ~~----------------------------------------------------------------~~backlog ~~452.5~~* ~~395~~56.~~8 1,952.9~~ 2~~,096.8~~ ~~Taxes paid -80~~13.64 ~~-84~~24.~~6 -268.6 -396.~~2 ~~Cash flow from operations before working capital 371~~23.~~9 311.2 1,684.3 1,700.6 Changes in working capital: (Increase)/decrease of current receivables 296.3 247.1 -25.7 340.~~0 ~~(Increase)/decrease~~Net ofsales ~~inventories -245.7 -262.5 -17.2 140.4 Increase/(decrease) of liabilities -99.7 -80.~~3 ~~-152~~.9 -134.2 ---------------------------------------------------------------- -49.1 -95.7 -195.8 346.2 ---------------------------------------------------------------- Cash flow from operating activities 322.8 215.5 ~~1,488~~20.5 ~~2,046.8 ================================================================ Cash flow from investing activities Investments in fixed assets -43.~~9 ~~-28~~.~~5 -258.5 -276.7 Divestment of fixed assets 3.~~6 2642.~~0 40.1 120.7 Additional purchase price -8.~~2 ~~- - -367~~73.~~5 Acquisition of businesses - -40.~~9 ~~-289~~88.5 -135.7 Reduction of purchase price - - - 81.6 Divestment of businesses 10.1 - - - Provisions -28.8 -28.9 50.5 29.8 ---------------------------------------------------------------- Cash flow from investing activities -67.2 ~~-72.3~~Operating ~~-457.4~~income -~~547~~77.~~8 ================================================================ Cash flow from financing activities Financial net, paid -45.8 -21.3 -237.~~1 -~~590~~35.1 ~~New issue of shares~~ - ~~- - 819~~133.0 ~~Paid group contribution~~ -114.7 - ~~-53~~224.4 - ~~(Increase)/decrease of other financial assets -250~~383.3 ~~159.0~~ -~~256.9~~ -~~84.2 Capitalised financing costs, acquisition loans~~ - - - -~~39.7 Increase/(decrease) of liabilities to credit institutions~~ -~~59.7~~ -~~346.7~~ -~~454.8~~ -~~1,548.2~~ ---------------------------------------------------------------- ~~Cash flow from financing activities~~ -~~355.8~~ -~~209.0~~ -~~1,002.2~~ -~~1,443.2 ================================================================ Net increase (decrease) in cash and bank~~ -~~100.2~~ -~~65.8 28.9 55.7 Cash and bank at the beginning of the year 554.6 605.9 605.9 666.4 Translation difference in cash and bank 29.9~~ -~~20.1~~ -~~80.2~~ -~~116.2 Cash and bank at the end of the period 484.3 520.0 554.6 605.9~~ --------------------~~-------------------------------------------- Cash flow per share (SEK) -12.2 -8.0 3.5 10.7 Average number of shares* 8,191,000 8,191,000 8,191,000 5,229,137~~

* At the end of the period. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 7(15) Reporting by geographical markets The Group's secondary segments are geographical markets. All comments are after considering exchange rate variations. Orders received Orders received increased in all regions during the first six months 2004 compared to the corresponding period last year. The increase was largest in Asia, the Nordic countries, Western Europe and North America.

~~CONSOLIDATED~~Presentation ~~INCOME~~of ~~STATEMENT~~geographical ~~Jan~~markets 1 - ~~Jan 1~~ - ~~Jan 1~~ - ~~Jan 1~~ - ~~Mar 31 Mar 31 Dec 31 Dec 31 Amounts in SEK millions 2004 2003 2003 2002~~ --------------------------------------------------------------------------------------------------------------- ~~Net~~Order ~~sales~~received ~~3,183.9~~Jan ~~2,994.7~~1 ~~13,909.3~~- ~~14,594.9~~Jan ~~Cost~~1 of- ~~goods~~Jan ~~sold~~1 -~~2,015.4~~ -Jan 1~~,874.4~~ -~~8,976.3~~ ~~-9,262.2~~June 30 June 30 Dec 31 Dec 31 2004 2003 2003 2002 SEK SEK SEK SEK Consolidated in millions % in millions % in millions % in millions % ----------------------------------------------------------- ~~Gross profit 1,168.5 1,120.3 4,933.0 5,332.7~~ --------------------------------------------------------~~---------------------------------------------~~ ~~Sales~~Customers ~~costs~~in ~~-537.7~~Sweden ~~-537~~470.26 ~~-2,245~~5.8% ~~-2,115~~443.13 ~~Administration~~6.4% ~~costs~~887.3 ~~-183~~6.03% ~~-225~~842.72 ~~-865~~5.87% -1Other EU 3,~~026~~101.82 ~~Research~~38.3% ~~and~~2,582.7 ~~development~~37.3% ~~costs~~5,143.3 ~~-92~~36.4% ~~-95~~5,374.73 ~~-368~~36.16% ~~-355~~Other Europe 638.25 ~~Comparison~~7.9% ~~distortion~~613.4 ~~items~~8.8% ~~-13~~1,234.5 38.67% 51,167.68 ~~-29~~8.20% ~~Other~~USA ~~operating~~1,126.7 ~~income~~13.9% 701,078.81 5515.6% ~~242~~2,095.43 ~~268~~14.78% 2,478.6 16.9% Other ~~operating~~North ~~costs~~America ~~-115~~180.2 ~~-73~~2.12% ~~-366~~141.~~4 -663.~~6 ~~Amortisation of goodwill -49~~2.10% ~~-46~~326.67 ~~-191~~2.3% ~~-187~~331.72 ~~-----------------------------------------------------------~~2.3% ~~Operating~~Latin ~~income~~America ~~248~~271.5 3.4% ~~201~~245.29 ~~1,143~~3.65% ~~1,223~~560.8 ~~----------------------------------------------------------------------------------------------------- Dividends~~ 4.0% 667.6 4.5% Africa 74.13 60.9% 755.80 ~~Interest income 74~~0.48% 74177.47 ~~267~~1.52% ~~322~~132.7 ~~Interest~~0.9% ~~expense~~Asia ~~-111~~2,093.04 ~~-139~~25.68% ~~-601~~1,646.8 23.8% 3,463.2 ~~-803~~24.5% ~~Comparison~~3,342.6 ~~distortion~~22.8% ~~items~~Oceania -146.9 -1.8% ~~- -290~~125.70 ~~----------------------------------------------------------- Result after financial items 212~~1.48% ~~141~~256.5 1.8% ~~816~~337.78 ~~460~~2.13% ------------------------------------------------------------------------------------------~~-----------~~ ~~Minority~~Total ~~share in subsidiaries' income -13~~8,103.73 -9100.70% ~~-41.~~6,931.8 ~~-33~~100.70% ~~Taxes -87~~14,145.43 ~~-54~~100.0% ~~-134~~14,674.58 ~~-218~~100.20% ----------------------------------------------------------- ~~Net income for the year 111.3 77.4 640.6 208.2~~ -------------------------------------------------------~~---------------------------------------------- Earnings per share (SEK) 13.59 9.45 78.21 39.83 Average number of shares * 8,191,000 8,191,000 8,191,000 5,229,137~~

Net sales The invoicing increased in all regions except Africa during the first six months 2004 compared to the corresponding period last year. The most substantial increases are found in Central and Eastern Europe, North America and Asia. Presentation of geographical markets

~~Income statement analysis 2004 2003 2002 2001 SEK millions Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4~~ -------------------------------------------------------------------------------------------------------------------~~-------------~~ Net sales ~~3,183.9~~Jan ~~4,086.3~~1 ~~3,426.3~~- ~~3,402.0~~Jan ~~2,994.7 4,175.~~1 ~~3,503.7~~- ~~3,654.2~~Jan ~~3,261.9~~1 ~~4,738.6~~- ~~Adjusted~~Jan ~~gross~~1 ~~profit~~- ~~1,243.2~~June ~~1,385.0~~30 ~~1,318.9~~June ~~1,334.5~~30 ~~1,197.4~~Dec ~~1,539.1~~31 ~~1,394.7~~Dec ~~1,426.4~~31 ~~1,291.5~~2004 ~~1,679.5~~2003 -2003 in2002 %SEK ofSEK ~~net~~SEK ~~sales~~SEK ~~39.0~~Consolidated ~~33.9~~in ~~38.5~~millions ~~39.2~~% ~~40.0~~in ~~36.9~~millions ~~39.8~~% ~~39.0~~in ~~39.6~~millions ~~35.4~~% ~~Expenses~~in ~~-789.0~~millions ~~-843.5~~% -~~817.4~~ -~~848.3~~ -~~801.4~~ -~~920.5~~ -~~902.6~~ -~~896.7~~ -~~840.9~~ -~~1,079.8~~ ----------------------------------------------------------------------------------------------------------- Customers in %Sweden ~~of net sales 24~~431.~~8 20.~~6 236.92% 24414.95 266.85% 22893.12 256.84% 24835.61 255.87% ~~22.8~~Other ~~Adjusted~~EU ~~EBITDA 454.~~2 ~~541~~,659.59 ~~501~~38.~~5 486.~~2% ~~396~~2,467.0 ~~618~~38.6% ~~492~~5,186.14 ~~529~~37.73% ~~450~~5,343.64 ~~599~~36.7 ~~- in~~ % ofOther ~~net~~Europe ~~sales 14~~574.39 138.32% 14466.60 147.3% 131,118.27 ~~14.~~8 14.0% 141,116.52 137.~~8 12.~~6% ~~Depreciation~~USA ~~-68~~1,098.50 ~~-75~~15.57% ~~-70~~983.73 ~~-72~~15.24% ~~-74~~2,159.70 ~~-81~~15.85% ~~-78~~2,638.67 ~~-83~~18.1% ~~-87.8~~Other ~~-103.3~~North ~~Adjusted~~America ~~EBITA 385~~133.75 ~~466~~1.09% ~~430~~160.8 ~~414~~2.5% 315.0 ~~321~~2.3% ~~536~~423.~~8 413.~~5 ~~446~~2.~~6 362.8 496.4 - in~~ 9% ofLatin ~~net~~America ~~sales 12~~254.1 113.6% 256.2 4.0% 12553.6 124.20% 10626.7 124.83% ~~11.8~~Africa 1274.24 111.1% 1065.57 ~~Amortisation~~1.0% of182.7 ~~goodwill~~1.3% * -12369.86 ~~-124~~0.5% ~~-124.1~~Asia ~~-121~~1,602.84 ~~-123~~22.79% ~~-125~~1,460.93 ~~-128~~22.78% ~~-125~~3,242.76 ~~-126~~23.43% ~~-127~~3,287.9 ~~Comparison distortion items -13~~22.5% ~~2.0~~Oceania 0153.04 02.02% 3122.69 -01.~~7 15.~~9% 0258.51 ~~-44~~1.9% 5253.38 1.7% --------------------------------------------------------------------------------------------~~---~~ ~~EBIT~~Total ~~248~~6,982.42 ~~343~~100.50% ~~306~~6,396.7 ~~292~~100.20% ~~201~~13,909.23 ~~410~~100.20% ~~300~~14,594.79 ~~321~~100.40% ~~191.5 373.8~~ -------------------------------------------------------------------------------------------------------------------~~-------------~~

Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 8(15) The values for the "Other EU" and "Other Europe" regions have been adjusted for all periods in order to reflect the extension of the European Union on May 1, 2004 with 10 new membership countries: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia. Consolidated financial result and net income The financial net has amounted to SEK -92.5 (-144.6) million, excluding realised and unrealised exchange rate losses and gains. The main elements of costs were interest on debt to the banking syndicate of SEK -22.7 (-75.9) million, interest on the bond loan of SEK -65.0 (-69.5) million and a net of dividends and other interest income and interest costs of SEK -4.8 (-0.8) million. The decrease in interests to the banking syndicate between 2004 and 2003 is mainly due the cancellation of the previous interest rate swaps that were requested by the first banking syndicate. The net of realised and unrealised exchange rate differences amounts to SEK 15.6 (5.6) million. The result after financial items increased to SEK 469.4 (354.4) million. Income taxes were SEK -183.8 (-104.3) million. The difference between the first six months of 2004 and 2003 is primarily due to utilisation of loss carry forwards during 2003. The parent company's result after financial items was SEK 508.2 (5.1) million, out of which net interests were SEK 8.4 (5.3) million, dividend from subsidiary SEK 500.0 (-) million and other administration costs the remaining SEK -0.2 (-0.2) million. Asbestos-related lawsuits in the United States Alfa Laval's subsidiary in the US, Alfa Laval Inc, was as of June 30, 2004 named as co-defendant in a total of 143 asbestos-related lawsuits with a total of approximately 21,200 plaintiffs. The lawsuits filed in Mississippi account for approximately 99 percent of all plaintiffs. Alfa Laval strongly believes the claims against the company are without merit and intends to vigorously contest each lawsuit. After thorough investigations Alfa Laval continues to believe that potential claims in connection with asbestos related lawsuits against Alfa Laval Inc will be covered by insurance policies. Furthermore, primary insurance policies issued in favour of Alfa Laval Inc. provide for coverage of its defence costs. During the second quarter 2004 Alfa Laval Inc has been named as co-defendant in an additional 22 lawsuits with a total of approximately 1,300 plaintiffs. During the second quarter 10 lawsuits involving approximately 60 plaintiffs have been resolved. This gives a grand total of 88 lawsuits that have been resolved. Alfa Laval has furthermore been dismissed from the proceedings in respect of approximately 20 plaintiffs in ongoing multiple plaintiffs lawsuits. Based on current information and Alfa Laval's understanding of these lawsuits, Alfa Laval continues to believe that these lawsuits will not have a material adverse effect on the company's financial condition or results of operation. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 9(15) Cash flow Cash flow from operating and investing activities was SEK 644.9 (430.3) million during the first six months, out of which divestments generated cash of SEK 36.5 (26.0) million. Working capital increased by SEK 128.0 (253.0) million during the first six months. Investments in property, plant and equipment amounted to SEK 116.2 (89.6) million during the first six months. Depreciations, excluding allocated step up values, amounted to SEK 132.1 (146.9) million during the period. Cash and bank The Group's cash and bank amounted to SEK 524.2 (485.0) million. The item cash and bank in the balance sheet and in the cash flow statement is mainly relating to bank deposits. Cash and bank includes a bank deposit in the publicly listed subsidiary Alfa Laval (India) Ltd of SEK 21.3 (36.3) million. The company is not a wholly owned subsidiary of the Alfa Laval Special Finance Group. It is owned to 64.1 percent. Borrowings and net debt

~~CONSOLIDATED~~Debt ~~BALANCE~~table ~~SHEET Mar 31 Mar 31 Dec 31 Dec 31 Amounts in SEK millions 2004 2003 2003 2002~~ ---------------------------------------------------------------------------------------------------------~~-------~~ ~~ASSETS~~Consolidated ~~Non-current~~June ~~assets:~~30 ~~Intangible~~June ~~assets~~30 ~~4,249.6~~December ~~4,585.3~~31 ~~4,200.0~~December ~~4,703.3~~31 ~~Property,~~SEK ~~plant~~millions ~~and~~2004 ~~equipment~~2003 ~~2,763.3~~2003 ~~2,997.4~~2002 2,756.5 3,082.7 Financial assets 683.5 670.0 666.2 751.9 Current assets Inventories 2,545.2 2,568.6 2,217.8 2,279.0 Accounts receivable 2,591.6 2,442.1 2,463.3 2,504.0 Other receivables 1,090.2 916.3 1,167.6 1,085.5 Other current deposits 937.3 327.4 658.6 414.3 Cash and bank 484.3 520.0 554.6 605.9 TOTAL ASSETS 15,345.0 15,027.1 14,684.6 15,426.6 ---------------------------------------------------------------------------------------------------------~~-------~~ ~~SHAREHOLDERS'~~Credit ~~EQUITY~~institutions ~~AND LIABILITIES Shareholders' equity 4~~2,~~586~~281.50 42,~~486~~797.32 42,~~402~~530.57 43,~~413~~360.02 ~~Minority~~Bond ~~interest~~loan ~~128~~1,072.82 ~~115~~1,102.20 ~~104~~1,064.28 ~~108~~1,127.26 ~~Provisions~~Capitalised ~~for:~~financial ~~Pensions~~leases ~~and similar commitments 786~~10.0 ~~711~~19.50 ~~754~~13.~~8 720.~~6 ~~Deferred taxes 890~~24.27 ~~1,001.9~~Interest-bearing ~~817.0~~pension ~~990.3~~liabilities ~~Other 903~~5.62 ~~950~~6.71 ~~891~~5.2 ~~989~~6.31 -------------------------------------------------------------------- 2Total debt 3,~~579~~368.84 23,~~664~~924.13 23,~~463~~614.03 24,~~700~~518.27 ~~Non-current~~Cash, ~~liabilities:~~bank ~~Liabilities~~and tocurrent ~~credit~~deposits ~~institutions 2,548~~751.23 ~~2,825~~790.~~5 2,427.~~0 ~~3,105.8 Bond loan~~ 1,~~086~~213.52 1,~~123~~020.2 ~~1,064.8 1,127.6~~ -------------------------------------------------------------------- ~~3,634.7~~Net ~~3,948.7~~debt 32,~~491~~617.~~8 4,233.4 Current liabilities: Liabilities to credit institutions 160.~~1 ~~190.7 103.7 254.4 Accounts payable 1~~3,~~240~~134.~~6 1089.1 1,199.4 1,173.2 Advances from customers 582.7 621.9 512.1 571.~~3 ~~Other liabilities~~ 2,~~431~~401.8 1~~,911.10~~ 23,~~407~~498.95 ~~1,972.9 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 15,345.0 15,027.1 14,684.6 15,426.6~~ ---------------------------------------------------------------------------------------------------------~~-------~~

On April 15, 2004 Alfa Laval has signed a new senior credit facility with a banking syndicate. The former facility was transferred to a multi currency revolving credit facility. The new facility is USD 325 million and EUR 150 million, corresponding to SEK 3,818.6 million. At June 30, 2004, SEK 2,118.4 million were utilised of the facility. The new facility provides increased flexibility, improved terms and extended security of funding. The maturity of this facility is five years. During the first six months Alfa Laval has re-purchased bonds at the prevailing market rate for a face value of SEK - (27.3) million. The difference between the higher market value and the face value was SEK - (5.0) million, which has been reported as an interest cost. The bond loan accrues interest at 12.125 percent, which is considerably more than the Group's current cost for other external financing. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 10(15) Ownership and legal structure Alfa Laval Special Finance AB is the parent company of the Alfa Laval Special Finance Group. Alfa Laval Special Finance AB's parent company Alfa Laval AB (publ) is listed on the Stockholm Stock Exchange. Alfa Laval AB (publ) had 9,426 (5,631) shareholders on June 30, 2004. The two largest owners are Tetra Laval and Industri Kapital, where 17.7 (17.7) percent are owned by Tetra Laval B.V., the Netherlands and 8.5 (26.9) percent are owned by the partnerships that are controlled by Industri Kapital 2000 Ltd, United Kingdom. At the beginning of May 2004 Industri Kapital decreased the holding in Alfa Laval from 17.9 percent to 8.5 percent. Acquisitions and disposals Alfa Laval made public in December 2003 that the company had decided to initiate new negotiations with the former owner of bioKinetics Inc. This decision was based on the fact that Alfa Laval suspected irregularities in the accounting of certain customer projects in the acquired US company. The parties were originally unable to resolve the matter, leading Alfa Laval to file a lawsuit against the former owner Kinetics Group Inc and certain individuals. On July 2, 2004 Alfa Laval announced that a settlement agreement had been reached between the parties. The terms of the agreement are confidential. On December 5, 2003 an asset purchase agreement was signed between the subsidiary Tri-Lad Inc in Canada and local management of the company whereby all non-financial assets were sold to local management. The closing date was January 30, 2004. Tri-Lad Inc is selling equipment to the oil & gas industry and was a non-core activity within Alfa Laval. It has been up for sale since several years. The Tri-Lad property was sold effective on May 12, 2004. The divestment of the Tri-Lad operations has generated a loss of SEK -15.0 million. Accounting principles The same accounting principles and accounting estimates have been applied in the second quarter interim report 2004 as for the annual report for 2003, except that comparison distortion items now are reported included in each line in the income statement and specified in a note. Date for the next financial report The interim report for the third quarter 2004 will be published on October 21, 2004. Events after the balance sheet date On July 2, 2004, Alfa Laval announced that a settlement agreement had been reached in the dispute with the former owner of bioKinetics, see the section on acquisitions above. On July 7, 2004, the property in Madrid was divested for SEK 265,1 million with an estimated realised gain in connection with the sale of approximately SEK 70 million. Alfa Laval will arrange a Capital Market Day in Copenhagen on September 7, 2004. As already announced, Alfa Laval's CEO and President Sigge Haraldsson will retire during the autumn. He will leave his duties on October 1 and the new CEO and President Lars Renstrom will take up his duties as of this date. Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 11(15) CONSOLIDATED CASH-FLOW STATEMENTS

~~CHANGES~~Jan IN1 ~~CONSOLIDATED~~- ~~EQUITY~~Jan 1 - Jan 1 - Jan 1 - June 30 June 30 Dec 31 Dec 31 Amounts in SEK millions 2004 2003 2003 2002 ------------------------------------------------------------------------------------------------------------------ Cash flow from operating activities Operating income 546.3 493.4 1,143.6 1,223.8 Adjustment for depreciation 377.0 392.4 787.2 838.0 Adjustment for other non-cash items 9.5 1.0 22.1 35.0 --------------------------------------------------------- ~~Jan~~932.8 886.8 1,952.9 -2,096.8 ~~Mar~~Taxes 31paid ~~Jan~~-118.4 -151.1 -268.6 ~~Mar~~-396.2 31Cash ~~Jan~~flow 1from -operations ~~Dec~~before 31changes ~~Jan~~in working capital 814.4 735.7 1,684.3 -1,700.6 ~~Dec~~Changes 31in ~~2004~~working ~~2003~~capital: ~~2003~~(Increase)/decrease ~~2002~~of current receivables -94.8 181.6 -25.7 340.0 (Increase)/decrease of inventories -468.8 -374.1 -17.2 140.4 Increase/(decrease) of liabilities 435.6 -60.5 -152.9 -134.2 --------------------------------------------------------- -128.0 -253.0 -195.8 346.2 ---------------------------------------------------------- AtCash ~~the~~flow ~~beginning~~from ofoperating ~~the~~activities ~~period 4,402~~686.5 4~~,413~~ 482.07 41,~~413~~488.05 32,~~628~~046.98 ~~New~~========================================================= ~~issue~~Cash offlow ~~shares~~from investing activities Investments in fixed assets -116.2 -89.6 -258.5 ~~819~~-276.7 Divestment of fixed assets 26.5 26.0 ~~Group~~40.1 ~~contribution~~120.7 Additional purchase price -8.2 - -~~613.4~~ -53367.45 ~~Translation~~Acquisition ~~difference~~of ~~72.7~~businesses -4 -45.10 -37289.75 -~~189~~135.7 ~~Net~~Reduction ~~income~~of ~~for~~purchase ~~the~~price ~~period~~61.2 ~~111~~- - 81.36 77Divestment of businesses 10.40 ~~640~~- - - Provisions -14.68 ~~208~~56.2 50.5 29.8 --------------------------------------------------------- Cash flow from investing activities -41.5 -52.4 -457.4 -547.8 ========================================================= Cash flow from financing activities Financial net, paid -70.4 -149.1 -237.1 -590.1 New issue of shares - - - 819.0 Paid group contribution -613.4 -53.4 -53.4 - (Increase)/decrease of other financial assets 452.6 103.2 -256.9 -84.2 Capitalised financing costs, acquisition loans -6.8 - - -39.7 AtIncrease/(decrease) ~~the~~of ~~end~~liabilities ofto ~~the~~credit ~~period~~institutions ~~4,586~~-458.50 ~~4,486~~-411.38 ~~4,402~~-454.58 4-1,~~413~~548.02 --------------------------------------------------------- Cash flow from financing activities -696.0 -511.1 -1,002.2 -1,443.2 ========================================================= Net increase (decrease) in cash and bank -51.1 -80.8 28.9 55.7 Cash and bank at the beginning of the year 554.6 605.9 605.9 666.4 Translation difference in cash and bank 20.7 -40.1 -80.2 -116.2 Cash and bank at the end of the period 524.2 485.0 554.6 605.9 --------------------------------------------------------- Cash flow per share (SEK) -6.24 --9.86 ~~The~~3.50 ~~share~~10.70 ~~capital~~Average number of ~~SEK~~shares* ~~819~~8,~~100~~191,000 is8,191,000 ~~divided into~~ 8,191,000 ~~shares at par value SEK 100.~~5,229,137

Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 12(15) CONSOLIDATED INCOME STATEMENT

* The line has been affected by comparison distortion items, see separate specification below. ** The average number of shares has been changed through split and new issue of shares. Comparison distortion items

Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 13(15) In order to illustrate the quarterly development, the income statement analysis is shown also for the last ten quarters: Income statement analysis

* Excluding comparison distortion items ** Including amortisation of step-up values Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 14(15) CONSOLIDATED BALANCE SHEET

Alfa Laval Special Finance AB Interim report April 1 - June 30, 2004 Page 15(15) CHANGES IN CONSOLIDATED EQUITY

The share capital of SEK 819,100,000 is divided into 8,191,000 shares at par value SEK 100.

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