Slide 1: Annual Results 2018
Annual Results 2018 Greg Poux-Guillaume, CEO | Jill Lee, CFO | February 14, 2019
Slide 2: Safe Harbor Statement under the US Private Securities Litigation Reform Act 1995
THE SAFE HARBOR STATEMENT UNDER THE US PRIVATE SECURITIES LITIGATION REFORM ACT 1995 This presentation may contain forward-looking statements, including but not limited to, projections of financial developments, market activities or future performance of products and solutions, containing risks and
Slide 3: Business Review, Financial Review, Outlook
Business Review Financial Review Outlook Annual Results 2018 | February 14, 2019
Slide 4: 2018 a very successful year despite challenges
2018 a very successful year despite challenges Strong year on all operational metrics US sanctions resolved within 3 business days and with no long-term impact. Free float rebuilt to 51% Sulzer dewatering pumps helped save “Wild Boars” football team in Thailand 5 million shares and CHF 860m
Slide 5: Financial highlights
Financial highlights Delivered at or above guidance Orders +12.5% (+8.4% organically) Sales +11.9% (+7.8% organically) opEBITA margin at 9.5% (+110bp) “Cover” of Cumulative SFP savings of CHF 230m online report Financing mix optimized with 2 dual tranche bond issuances in July and October
Slide 6: Pumps Equipment
Pumps Equipment Strong growth and margin improvement Key figures Order intake by market In CHF millions 2018 2017 YOY adj.1 org.2 Order intake 1’372 1’180 16.3% 16.5% 8.6% Sales 1’300 1’120 16.1% 15.5% 7.5% opEBITA 40 –3.7 n.m. n.m. n.m. opROSA 3.1% –0.3% 2018 Highlights Strong order intake backed
Slide 7: Rotating Equipment Services
Rotating Equipment Services Strong Pumps Services more than offset decline in Turbo Services Key figures Order intake by product line In CHF millions 2018 2017 YOY adj.1 org.2 Order intake 1’110 1’048 5.9% 7.6% 5.8% Sales 1’087 1’030 5.6% 7.2% 5.2% opEBITA 149 144 3.4% 4.9% 3.0% opROSA 13.7% 13.9% 2
Slide 8: Chemtech
Chemtech Very strong growth and margin improvement Key figures Order intake by market In CHF millions 2018 2017 YOY adj.1 org.2 Order intake 600 502 19.7% 20.5% 20.5% Sales 563 478 17.9% 18.6% 18.6% opEBITA 49 25 94.8% 94.6% 94.7% opROSA 8.7% 5.2% 2018 Highlights Very strong order growth in Separa
Slide 9: Applicator Systems
Applicator Systems Growth in orders, sales and margin despite Beauty gap Key figures Order intake by market In CHF millions 2018 2017 YOY adj.1 org.2 Order intake 450 426 5.4% 4.2% 0.3% Sales 454 422 7.7% 6.3% 2.4% opEBITA 96 87 10.2% 9.5% 5.7% opROSA 21.1% 20.5% 2018 Highlights Orders up organica
Slide 10: Main non-operational one-offs
Main non-operational one-offs Neutral net effect (in CHF millions) ESB costs and claims up to 36 Chemtech booked a CHF 30.1m charge for its discontinued “Extended Scope Business” (ESB) within TFS, upon main contract handover to client Charge is due to two contracts in the Middle East with signif
Slide 11: SFP
SFP One year early and CHF 40m above initial target (in CHF millions) Additional savings ~240 230 ~10 Cost savings (excl. direct 45 procurement) 2019 185 –239 Implementation –45 67% Indirect Procurement costs 11% PE operational excellence 5% SG&A –284 ~ –10 17% Other ~ –294 2015-17A 2018A 2019E 1. G
Slide 12: League Table
League Table Continuing to move up 2014 profitability comparison Expected 2018 profitability1 Company A Company C Company B Company A Company D Company K Company C Sulzer 9.5% ~410bps Company F Company D Company E Company B Sulzer 9.4% ~730bps Company F Company I Company E Company G Company G Compan
Slide 13: Sulzer senior leadership
Sulzer senior leadership Renewed, stable and experienced Greg Poux-Guillaume Jill Lee Armand Sohet CEO CFO CHRO Frédéric Lalanne Daniel Bischofberger Torsten Wintergerste Amaury de Menthiere Division President Division President Division President Division President Pumps Equipment Rotating Equipmen
Slide 14: Sulzer governance
Sulzer governance Board dominated by independents Peter Löscher Matthias Bichsel Dr. Lukas Braunschweiler Mikhail Lifshitz Chairman of the Board Vice Chairman of the Board Member of the Strategy Member of the Strategy Chairman of the Strategy Member of the Strategy Committee Committee Committee Comm
Slide 15: Market Review, Financial Review, Outlook
Market Review Financial Review Outlook Annual Results 2018 | February 14, 2019
Slide 16: Overview
Overview Back to profitable growth Key figures Commentary Orders: acquisition impact In CHF millions 2018 2017 YOY adj.1 org.2 129m; FX impact –19.5m Order intake 3’532 3’156 11.9% 12.5% 8.4% Order intake gross margin Order intake gross margin 33.3% 34.4% down on mix effect (higher Order backlog
Slide 17: Quarterly order development
Quarterly order development Q4 orders up 15.1%1 YOY and 12.2% organically2 (in CHF millions ) Quarterly order intake Commentary +12.2% org Q4 organic order intake driven by 900 901 874 856 RES (+23%), Chemtech (+18%) and PE 837 790 (+8%), whereas APS was slightly 758 771 negative (–3%) Growth dr
Slide 18: OpEBITA / opROSA
OpEBITA / opROSA Volume and cost savings more than offset margin and mix headwinds (in CHF millions ) Neutral +0.8pp 322 -43 301 22 8.4% 8.3% 74 -15 9.5% -15 8.5% 45 9.2% 255 8.4% Impact of challenging Higher share of 2017 pricing new equipment vs environment services opEBITA Volume Margin Mix Other
Slide 19: opEBITA to EBIT
opEBITA to EBIT EBIT impacted by SFP costs of CHF 45m (in CHF millions ) Operational EBITA to EBIT 322 9.5% -69 -13 -4 -52 184 5.4% SFP related -29 PE -9 Acquisitions -9 RES -3 Sanctions -7 CT +1 Discontinue ESB -30 APS -2 Affordable housing +29 opEBITA Amortization Restructuring Impairment Other no
Slide 20: EBIT to net income
EBIT to net income Normalized tax rate 23.1% (30bps improvement) (in CHF millions ) 184 -19 1 -49 116 -3 113 was -11m in 2017 Effective tax rate 29.8% Normalized tax rate 23.1% EBIT Financial result Income from Taxes Reported Minorites Reported 2018 associates net income net income 2018 shareholders
Slide 21: Free Cash Flow
Free Cash Flow NWC flat despite order growth (in CHF millions ) 9 174 Net working capital unchanged 49 127 116 20 -66 106 Capex –96.2 Depreciation 71.7 Amortization 69.0 -60 Impairments 4.4 Net income Inventories Accounts Accounts Net advance Net of D&A Others FCF FCF 2018 receivable payable payment
Slide 22: Balance Sheet
Balance Sheet Solid balance sheet supports profitable growth (in CHF millions ) 1095 Balance sheet December 2018: 185 Total net debt of: CHF 239m 489 FCF of CHF 174m (CHF 127m in 2017) 910 Ordinary dividend payment of CHF 43m (dividend to Renova held back, CHF 76m Payable) Acquisition paymen
Slide 23: Dividend
Dividend Unchanged ordinary dividend of CHF 3.50 proposed Dividend (CHF) 20 18.10 15 Ordinary dividend per share Special dividend per share 10 14.60 5 3.50 3.50 3.50 3.50 3.00 3.00 3.20 3.20 3.50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Proposal to AGM Dividend 2.1% 3.0% 2.2% 2.2% 3.3% 3.7% 3.
Slide 24: Market Review, Financial Review, Outlook
Market Review Financial Review Outlook Annual Results 2018 | February 14, 2019
Slide 25: Market Outlook 2019
Market Outlook 2019 APS markets growing at GDP+ GI Positive trends for Industry in pumps & service 29% Solid growth in Municipal Water Water Engineered Water projects lumpy 12% Continuing price pressure in gas turbine service Power Fossil power plant market has adjusted at low level Nu
Slide 26: Financial guidance 2019
Financial guidance 2019 as of February 14, 2019 Order Intake1 up 2% – 5% Sales1 up 3% – 5% Operational ROSA2 % around 10% 1. Adjusted for currency effects 2. Operational EBITA divided by sales 26 Annual Results 2018 | February 14, 2019
Slide 27: Summary
Summary Successful year with results at or above guidance. Guidance for orders increased twice and for sales once despite sanctions Increased SFP commitment achieved one year ahead of schedule Additional CHF 10m in savings to come in 2019 All markets expected to grow in 2019 except Power Vol
Slide 28: Q&A
Q&A SULZER
Slide 29: Order intake split 2018
Order intake split 2018 Order intake by division Order intake by region Order intake by type (excl APS) 2018 2018 2018 39% Pumps Equipment 43% Europe, Middle East, Africa 49% Equipment 31% Rotating Equipment Services 37% Americas 51% Aftermarket 17% Chemtech 20% Asia-Pacific 13% Applicator Systems 2
Slide 30: OpEBITA to EBIT bridge for divisions 2018
OpEBITA to EBIT bridge for divisions 2018 In CHF millions PE RES CT APS Other Total opEBITA 39.7 148.8 48.8 95.7 -10.9 322.2 as % of sales 3.1% 13.7% 8.7% 21.1% – 9.5% Amortization -35.5 -7.4 -5.2 -19.6 -1.3 -69.0 Impairments -0.7 – – -3.7 – -4.4 Restructuring -8.8 -3.4 +1.1 -1.6 -0.4 -13.1 Other no
Slide 31: 9 acquisitions in 3 years for sales of CHF ~450m
9 acquisitions in 3 years for sales of CHF ~450m Small to mid size add-ons at reasonable multiples EBITDA EV EV/ Consolidated Sales1 Division margin paid EBITDA from (in CHF million) 10 positive ~4 — Nov 6, 2018 RES mid single low single positive — Sept 1, 2018 APS digit digit 81 >20% 212 ~10x3 Jan
Slide 32: Sanctions timeline recap
Sanctions timeline recap Free from all sanctions, no restrictions for shareholders Timeline 12 April AM: 6 April PM: 8 April PM: 28 May Transfer of shares Renova put under Applied with OFAC Renova reduces completed sanctions by OFAC for sanctions relief Board representation (Renova <50%) Free from U
Slide 33: Currency exposure order intake 2018
Currency exposure order intake 2018 28% USD 19% EUR 9% CNY 2018 8% GBP 8% CHF 10% BRL, INR, RUB 18% Other 33 Annual Results 2018 | February 14, 2019