Sulzer Ag · SIX:SUN
Sulzer — Investor Day (June 2021)
76 slides from Sulzer's investor day presentation, Jun 15, 2021
Slide 1: Capital Markets Day June 15, 2021
Capital Markets Day │ June 15, 2021
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements, including but not limited to, projections of financial developments, market activities, future performance of products and solutions or planned transactions, containing risks and uncertainties. These forward- looking statements are su
Slide 3: Agenda
Agenda Overview Greg Poux-Guillaume ESG Armand Sohet Pumps Equipment Frédéric Lalanne Rotating Equipment Services Daniel Bischofberger Chemtech Torsten Wintergerste Financials and Targets Jill Lee Takeaways Greg Poux-Guillaume G. Poux-Guillaume - CMD Introduction 3
Slide 4: Overview
Overview Greg Poux-Guillaume - CEO
Slide 5: Sulzer (pro-forma post spin-off)
Sulzer (pro-forma post spin-off) Pure play flow control company with attractive technology portfolio in growth markets driven by sustainability 1’298m 1’131m 621m 4.3% 13.9% 9.6% Pumps Equipment Rotating Equipment Services Chemtech Standard to highly Parts, service and Separation technology for engi
Slide 6: Global and agile
Global and agile We combine reach with responsiveness 180 100 13’000 Production and service countries with employees locations Sulzer presence 50% 3bn 9% Aftermarket Sales (CHF) opEBITA 2021E 2021E G. Poux-Guillaume - Overview 6
Slide 7: Sulzer senior leadership
Sulzer senior leadership Stable and experienced Greg Poux-Guillaume Jill Lee Armand Sohet CEO CFO CHRO & Chief Sustainability Officer Frédéric Lalanne Daniel Bischofberger Torsten Wintergerste Division President Division President Division President Pumps Equipment Rotating Equipment Services Chemte
Slide 8: Sulzer strategic priorities
Sulzer strategic priorities 1 Grow Water and Industry in Pumps 2 Leverage unique service proposition and digital / additive offering to win in Service APS 3 Defend Chemical leadership while boosting Biopolymers and Recycling in Chemtech 4 ESG focus as a key to strong, sustainable financial performan
Slide 9: Sustainability at Sulzer
Sustainability at Sulzer Armand Sohet – Chief Sustainabilty Officer & CHRO
Slide 10: Sustainability at Sulzer: Minimize, Enable, Engage
Sustainability at Sulzer Minimize – Enable - Engage Minimize Enable Engage our carbon a low carbon our employees and footprint society communities We operate in a We contribute to a We make life better sustainable way circular economy for those around us
Slide 11: Minimize our carbon footprint
Minimize our carbon footprint An ambitious target: “30 by 30, neutral by 50” Electricity Direct emissions from • The Greenhouse Gas Protocol primary sources (GHG Protocol) was selected as Gases Indirect emissions from the relevant standard for Fuels and Oils secondary energy calculating emissions an
Slide 12: Minimize our carbon footprint
Minimize our carbon footprint A clear path towards reducing our GHG emissions • Electricity has been identified to be Sulzer’s main source of carbon emissions, 65% in 2020 (54% scope1 + 11% scope 3) • 95% of our UK sites have already switched to renewable electricity sources. • In 2020, our greenhou
Slide 13: Enable a low carbon society
Enable a low carbon society Unique expertise to address environmental challenges Recycling technology: Recycling AI solutions Efficient equipments • «WornAgain» for textile with H&M (textile, plastic, CO, etc.) Converting Product life extension • «Steelanol» for CO with ArcelorMital (plastic to etha
Slide 14: Enable a low carbon society
Enable a low carbon society We bring unique solutions to the planet’s sustainability challenge Groundbreaking textile recycling technology In partnership with H&M and Worn Again, we are developing pioneering technology that enables the recycling of old textiles back into virgin-like raw material, wi
Slide 15: Engage our Employees and Communities
Engage our Employees and Communities A comprehensive approach to increase engagement Build on our engagement level: Increase Improve inclusion Engagement in the workplace • 86% of Sulzer Employees feel engaged. +4 points above Manufacturing benchmark Listen Include Increase inclusion: • Gender diver
Slide 16: Sulzer Employee Opinion Survey 2021
Sulzer Employee Opinion Survey 2021 Positive performance compared to Manufacturing Norm • Voice Of Sulzer 2021: Third edition. 88% participation rate • Compared to the Manufacturing industry, 10 out of 10 categories are above the norm • The Manufacturing norm is an external benchmark of 2,350,000 em
Slide 17: How MSCI rates us vs. Industry peers
How MSCI rates us vs. Industry peers Building on our double AA rating Peers 4.9 Sulzer 5.6 Minimize Enable Engage our carbon a low carbon footprint our employees society and communities We operate We contribute We make life in a to a better for sustainable way circular economy those around us
Slide 18: Pumps Equipment
Pumps Equipment Frédéric Lalanne – Division President
Slide 19: Pumps Equipment (PE)
Pumps Equipment (PE) Full range provider, from standard to engineered, with leading positions 40% 30% 30% Water Industry Energy Standard and configured pumps Configured pumps Engineered pumps, made to spec Sold direct or through distributors Sold direct, key is process expertise Sold direct or throu
Slide 20: Market Trends
Market Trends Steady growth in Water and Industry, Energy rebound starting in 2022 Active Markets Market Growth Market Outlook 2021 2022 2023 Wastewater Water & Wastewater: maintenance and replacement robust. Project spending increasing as Covid restrictions ease. Investment stimulus expected in man
Slide 21: Water Solutions
Water Solutions Critical equipment supplier throughout the water ecosystem Product Portfolio ▪ Submersible pumps ▪ Compressors and aeration diffusers ▪ Sewage grinders ▪ Submersible mixers and agitators ▪ Progressing cavity pumps ▪ Axially-split pumps ▪ Grinders & Screens ▪ Scrapers ▪ Separators ▪ D
Slide 22: Water Overview
Water Overview Targeting 5-7% growth through technology and global leverage Orders by segment Market growth drivers Wastewater 78% Growing population + urbanisation Push towards sustainability, scarce natural resources Rapidly changing legislation and aging infrastructure Clean Water 3% Desalination
Slide 23: Water Products
Water Products Driving growth beyond pumps Sedimentation and Filtration (Nordic) Solids Reduction and Removal (JWC) Magnetic Bearing Turbo Compressors ▪ Nordic Water acquisition (2021): leading provider ▪ JWC (acquisition 2018): leader in solids reduction ▪ The HST™ turbo compressors used in of scre
Slide 24: Water Success Stories
Water Success Stories Transforming one of biggest European Flood Defense Desalination Wastewater Treatment Plants ▪ Wastewater treatment plant turned from a major ▪ Sulzer primary pump supplier for a major flood ▪ The Shuqaiq 3 desalination plant in Saudi Arabia energy consumer into a net producer,
Slide 25: Water Market Dynamics
Water Market Dynamics Opportunities in fragmented market % of market segment Water market segments Source: Sulzer estimates based on publicly available market sources F. Lalanne - PE Business June 15, 2021 25
Slide 26: Industry Solutions
Industry Solutions Pumps, mixers and compressors for process-critical applications Pulp & Paper Industry Food & Biofuels Fertilizers ▪ Pulp & paper ▪ Sugar & starch ▪ Phosphate ▪ Board ▪ Edible oil ▪ Potash ▪ Tissue ▪ Amino acids ▪ Compounds ▪ Wood-based products for textiles ▪ Animal feed and for p
Slide 27: Industry Overview
Industry Overview Targeting 4-5% growth building on PPI and fertilizer leadership Orders by segment Market growth drivers Split based on orders (H1 2021) Fertilizer Push towards sustainability, development of bio textiles and bio packaging 11% Growing population and fertilizer demand Pulp & Paper Me
Slide 28: Pulp & Paper industry transformation
Pulp & Paper industry transformation Sulzer ideally positioned to enable the fiber-based economy Reduce carbon emissions and clean water usage ▪ Textiles based on wood fiber and recycled raw materials ▪ Packaging processes and molded structures to replace plastics ▪ Cellulose-based hygiene materials
Slide 29: Industry Success Stories
Industry Success Stories Pumps and mixers for bioproduct mill Same performance, 25% less energy Strong position in fertilizer ▪ Metsä Fibre is a leading producer of wood-based ▪ A pulp & paper customer installed SALOMIX ▪ The pumped liquid in fluorine salts production is bioproducts agitators in its
Slide 30: Industry Market Dynamics
Industry Market Dynamics Strong in PPI and biofuels, opportunities in Fertilizers & Metals % of market segment Sulzer Industry market segments Source: Sulzer estimates based on publicly available market sources. 1) Mineral based Fertilizers, 2) Non-ferrous Metals F. Lalanne - PE Business June 15, 20
Slide 31: Energy Solutions
Energy Solutions Technology leader in energy pumping applications Offshore production, FPSO, FLNG Onshore production Pipelines ▪ Water injection ▪ Water injection and transfer ▪ Oil transport and boosting ▪ Seawater lift ▪ Auxiliary pump ▪ Firewater systems ▪ Produced water treatment ▪ Crude treatme
Slide 32: Energy Overview
Energy Overview Strong position and diversified, opportunities in Energy transition Orders by segment Market growth drivers Split based on orders (H1 2021) Downstream 40% Recovery of energy consumption National Oil Companies continue to invest Accelerated development of low CO2 and renewable technol
Slide 33: Energy Success Stories
Energy Success Stories CO2 storage and Enhanced Oil Recovery Ultra-deep water FPSO Emissions-free power ▪ Sulzer pumps are used by Qatargas to pump ▪ Sulzer designed and supplied four 9 MW high ▪ An industrial-scale gas-powered energy plant is supercritical CO2 into oil wells to improve recovery pre
Slide 34: Energy Market Dynamics
Energy Market Dynamics Strong NOC focus in O&G, overall #2 in Energy % of market segment Flowserve Energy market segments Source: Sulzer estimates based on publicly available market sources Note: NOC = National Oil Companies (e.g. Aramco, Petrobras, etc.) F. Lalanne - PE Business June 15, 2021 34
Slide 35: Financials
Financials Order intake by Market In CHF millions 20163 20173 20182 2019 2020 Industry Order intake 1’067 1’180 1’372 1’459 1’298 30% Water Q1 2021 40% % growth FX adj 1 9.6% 16.5% 8.3% (4.1%) CHF 302m Sales 1’155 1’120 1’284 1’477 1’296 Energy 30% Order intake by Region % growth FX adj 1 (4.2) 14.1
Slide 36: Outlook
Outlook Shift towards Water and Industry pushes profitability to 7-8% 2020 Outlook 2021* Mid-term Target Order intake 1,298 1% Sales 1,296 8 - 10% 3 - 4% opEBITA% 4.3% > 5% 7 - 8% * FX adjusted including already announced acquisitions. 2020 orders and sales in m CHF. • Water up mid-single digit + No
Slide 37: Rotating Equipment Services
June 15, 2021 Rotating Equipment Services Daniel Bischofberger – Division President
Slide 38: Rotating Equipment Services (RES)
Rotating Equipment Services (RES) Unique breadth of OEM and ISP service offering 54% 29% 17% Pump Services Turbo Services Electro-Mechanical Services Fast, integrated solutions to service, OEM-like solutions for parts, Fast-response, technology-driven upgrade, and repair Sulzer and non- maintenance,
Slide 39: Unique Selling Proposition
Unique Selling Proposition Highly diversified, technical and resilient service business What makes RES unique RES advantage CHF 20+B service market Broad product & Predictive Broad addressable market services offering 60% sales on 3rd Party equip. Maintenance Geographies, segments, products, servi
Slide 40: Growth Drivers
Growth Drivers Mining the installed base and supporting the energy transition Increase Market share on own and 3rd party pumps Life extension & decarbonization of customer assets Share of service spend, extend reach & penetration Retrofits, decentralized power & electrification Strong in Americas, E
Slide 41: Growth Driver Installed Base
Growth Driver Installed Base Drive growth from own and 3rd party pumps Sulzer position in pumps aftermarket Engineered Centrifugal Pumps Installed Base Increase our penetration using: • Existing and new footprint (MEA, APAC) • Potential on low energy pumps • Customers of Turbo & Electromechanical 50
Slide 42: Growth Driver Energy Transition
Growth Driver Energy Transition Global retrofit leader for high energy pumps Pump 20-year lifecycle cost Retrofits are more sustainable • Lowers energy consumption • Lowers operating costs • Reduces material waste • Improves system performance Retrofits are less disruptive • Shortens lead time vs. n
Slide 43: Growth Driver Energy Transition
Growth Driver Energy Transition Enabling the decarbonization of the energy value-chain Distributed power & storage drive new growth Growing demand for retrofits & upgrades in our field of expertise • Pumps, steam turbines & compressors Combined Gas turbine cycle power power • Gas turbine combustor u
Slide 44: Success Stories
Success Stories Improving the output of a chemical plant Repairing a steam turbine in the mountains Upgrade wheel motor for metal mining Lifting production and improving reliability Only 45 days downtime thanks to mobile Increasing uptime through exchanges & through a pump retrofit services in a mou
Slide 45: Advanced Data Analytics
Advanced Data Analytics AI “Digital Twin” BLUE BOX enables new business models Three pillars of service model reinvention 1. Digital Eco-system 2. BlueBoxTM 3. Additive Manufacturing Next level customer engagement • Identify retrofit opportunities and bad actor pumps • Optimize pump availability and
Slide 46: Additive Manufacturing
Additive Manufacturing Reinventing how we do business Castings within 2 weeks for pumps Hybrid parts (4 days) For spare parts and retrofits ➔ faster & more flexible • No tooling → significant lead time reduction • Worldwide manufacturing network • Enables the “sell availability” model Faster & bette
Slide 47: Additive Manufacturing
Additive Manufacturing D. Bischofberger - RES Business June 15, 2021 47
Slide 48: Financials
Financials Growth and margin stability through the cycle Order intake by Product line In CHF millions 20163 20173 20182 2019 2020 Order intake 986 1,048 1,110 1,193 1,131 Turbo 29% Pump % growth FX adj 1 5.3% 7.6% 10.7% 2.5% 54% 2020 CHF 1,131m Sales 1,003 1,030 1,064 1,167 1,078 Electro- Mechanical
Slide 49: Outlook
Outlook Resume growth, push profitability towards 15% 2020 Outlook 2021* Mid-term Target Order intake 1,131 2 - 3% Sales 1,078 4 - 5% 3 - 5% opEBITA% 13.9% 14% 15% * FX adjusted including already announced acquisitions. 2020 orders and sales in m CHF. • 2020 best-ever order intake in RES. RES grew 2
Slide 50: Chemtech
Chemtech Torsten Wintergerste – Division President
Slide 51: Chemtech (CT)
Chemtech (CT) We develop chemical processing and separation technologies that enable our customers to operate world-class plants producing high value products Our business Our customers Our customers’ products We develop and sell, around our core We sell to: Our customers produce: expertise in separ
Slide 52: At the Core of the Chemical Process
At the Core of the Chemical Process Separation and purification key to all chemical processes Chemical process Feed (fossil, bio, Products (chemicals, recycled) pharmaceuticals, fuels,...) Reaction Separation & purification Polymerization Sulzer Chemtech main focus The separation and purification de
Slide 53: Why Separation & Purification matter
Why Separation & Purification matter Separation and purification key to all chemical processes Separation: distillation By far the most used separation technology in the chemical industry Since 1940, > 100 000 columns with Sulzer equipment, in > 500 different applications • Purifications of monomers
Slide 54: Practical Applications
Practical Applications Our technology Diapers (Superabsorbents) is everywhere We are one of the reasons your babies are happy! Acrylic acid is used as an absorbent in diapers and other personal care products. These products require a purity as high as 99.9% for the acrylic acid. Crystallization is o
Slide 55: Unique Selling Proposition
Unique Selling Proposition We lead the market because … We offer unique solutions We invest in the future We are global and we scale We know our customers’ processes inside 3-4% of its revenues in R&D We are where it matters, with main factories and out, they call us at the concept stage in China, I
Slide 56: Commercial & Technical Offering
Commercial & Technical Offering Application know-how based sales & growing licensing What we do How we are positioned 21% 19% 60% Components Sulzer KG Others Technologies Products Services 11% Separation/Purification Tower internals Supervision Services 15% 74% Others Polymerization Skids/System Mai
Slide 57: Components
Components Optimized internals for unrivalled process performance Structured packing Distillation trays Random packing Gas/liquid separators ▪ MellapakPlus™ structured ▪ High performance trays ▪ NeXRing™ random ▪ Inline separators packing ▪ Conventional trays packing ▪ Shell VersiSwirl™ ▪ Mellapak™
Slide 58: Chemtech success stories
Chemtech success stories Our columns are in the largest and most advanced chemical plants Sadara Chemical Complex Hengli PTA columns Wanhua MDI Saudi Arabia China China CT unlocked the potential of Sadara’s CT supports Hengli to become one of the With CT technology, Wanhua became the columns and min
Slide 59: Market Dynamics
Market Dynamics > 60% of CT in fast growing Chemicals and Renewables Industries Market position Outlook Focus Growth Areas Chemical Market Size 2019 4.6% 3.2% 1.1% • Market leader • Specialty chemicals 4.6% Chemicals • Global footprint • Mono-/ polymers production 54% • Growing market Market growing
Slide 60: The Future needs a Past
The Future needs a Past Our shift to renewable technologies started long ago T. Wintergerste - CT Business SULZER CONFIDENTIAL June 15, 2021 60
Slide 61: Renewables: Industry Transformation
Renewables: Industry Transformation Supported by unique Sulzer technologies, driven by sustainability Add Picture Bio-Based Polymer Recycling Carbon Reduction biopolymers, biofuels, biochemicals plastics, textiles carbon capture/recycling, plant optimization ▪ Public concerns on plastic waste ▪ Cons
Slide 62: Renewables: a leader for PLA biopolymer
Renewables: a leader for PLA biopolymer Sustainable and circular, the bio-based alternative to plastics Advantages of PLA (Poly Lactic Acid) Position of Sulzer in PLA ▪ PLA is a sugar-based biopolymer ▪ Sulzer is the leader in distillation, crystallization and ▪ Generated from crops or plant-based b
Slide 63: Renewables: PLA success stories
Renewables: PLA success stories 80% of PLA plant capacity runs on Sulzer technology Total Corbion 75 kta PLA Plant NatureWorks’ Lactide Upgrading B&F 30 kta integrated PLA plant Thailand USA China CT proprietary technologies for monomer CT delivered its proprietary lactide Chemtech supported B&F PLA
Slide 64: Renewables: PEF Bioplastic
Renewables: PEF Bioplastic Superior mechanical, barrier and thermal properties vs. PET Advantages of PEF Position of CT in PEF ▪ PEF is a fructose-based polymer ▪ Sulzer proprietary technology at pilot-plant stage ▪ Exceptional properties go beyond PLA - and PET ▪ Build demonstration plants using ou
Slide 65: Renewables: Recycling
Renewables: Recycling Our technology powers the most promising recycling applications Mixed plastics recycling Food grade polystyrene Closed loop for mixed textiles PE, PP PS Polymers/ for recycled Purification of styrene monomer Natural fibers mixed plastics CT developed key separation technology f
Slide 66: Financials
Financials China & Chemicals fuel profitable growth, Renewables accelerating Order intake by Segment In CHF millions 20163 20173 20182 2019 2020 Service Order intake 472 502 600 670 621 14% Water 3% % growth FX adj 1 5.8% 20.5% 12.8% (1.1%) Gas & 2020 Chemicals Refining CHF 621m 54% Sales 446 478 56
Slide 67: Outlook
Outlook Chemicals & Renewables drive growth and profitability to 11-12% 2020 Outlook 2021* Mid-term Target Order intake 621 5 - 7% Sales 593 7 - 9% 5 - 7% opEBITA% 9.6% ~10% 11 - 12% * FX adjusted including already announced acquisitions. 2020 orders and sales in m CHF. • Resilience demonstrated dur
Slide 68: Financials and Targets
Financials and Targets Jill Lee – CFO
Slide 69: Orders
Orders Growth driven by superior innovation combined with cost discipline Order growth (in CHF million) High portion of aftermarket business3 Other new equipment FX adj 7.2% 13.8% 10.0% -1.1% 38% organic 2.0% 9.7% 7.9% -2.5% Aftermarket 50% up 2-3%2 3’322 3’082 3’0491 Water new 2’729 equipment 2’525
Slide 70: Sales
Sales Growth path barely disrupted by pandemic Sales growth (in CHF million) Order backlog (in CHF million) 0.0% 11.4% 16.0% -3.5% FX adj 1’804m at 2019 FX rates organic -5.3% 7.2% 13.6% -4.3% (negative FX impact of 127m) up 6-8%2 3’308 2’911 2’9681 2’605 2’625 1’722 1’732 1’677 CT 1’527 1’381 RES P
Slide 71: Operational Profit (opEBITA)
Operational Profit (opEBITA) Upwards trajectory through the cycle, expected to reach 9% in 2021 opEBITA (in % of Sales and in CHF million) Cost Savings underway: Energy-focused program announced in April 2020 targets savings of 70m, respectively: 6.7% 6.4% 7.8% 8.6% 8.5% ~9% • 12m achieved in 2020 •
Slide 72: Net debt
Net debt Expected 0.6x deleveraging post transaction Net debt / EBITDA reported1 0.1x 0.8x 0.7x 0.8x 1.3x 0.6-0.8x adjusted2 0.1x 0.8x 1.3x 1.4x 2.1x 1.4-1.6x Net debt (in CHF million) 415 • 2019 347 IFRS 16 requiring leases in net debt 120 Deleveraging 110 of ~0.6x calculation from 2019 onwards, ad
Slide 73: Mid-term targets
Mid-term targets Achievable organically, small-to-medium sized acquisitions on top Rotating Pumps Equipment Chemtech Equipment Services Sales 3-4% 3-5% 5-7% 4-5% growth1 Operational 7-8% 15% 11-12% 10-11% Profitability2 1 average sales growth p.a., FX adjusted 2 opEBITA margin as a percentage of sal
Slide 74: Takeaways
Takeaways Greg Poux-Guillaume - CEO
Slide 75: Sulzer strategy
Sulzer strategy We have a clear path to value creation, based on strong positions 1 Grow Water and Industry in Pumps 2 Leverage unique service proposition and digital / additive offering to win in Service APS 3 Defend Chemical leadership while boosting Biopolymers and Recycling in Chemtech 4 ESG foc
Slide 76: Why Sulzer
Why Sulzer ▪ We have a clear strategy, based on innovative products and strong positions in growing markets ▪ We combine a highly resilient portfolio (50+% aftermarket) and attractive exposure to macro trends (Water, Bio-based) ▪ We are a recognized ESG leader with limited exposure to new oil invest