Sulzer Ag · SIX:SUN
Sulzer — Investor Day (June 2024)
78 slides from Sulzer's investor day presentation, Jun 10, 2024
Slide 1: 2024 Capital Markets Day
2024 Capital Markets Day June 10, 2024
Slide 2: Disclaimer
Disclaimer This Presentation has been prepared and issued by and is the sole responsibility of Sulzer Ltd (Sulzer, and together with its subsidiaries, the Sulzer Group) and is being furnished to each party to whom it is delivered solely for its own information. For the purposes of this notice, this
Slide 3: Welcome and opening remarks
Welcome and opening remarks Suzanne Thoma | Executive Chairwoman 3
Slide 4: What we will discuss today
What we will discuss today ▪ How Sulzer serves large essential markets ▪ How Sulzer creates value where it really counts ▪ How Sulzer grows organically ▪ How Sulzer achieves a step-change in profitability and return on capital ▪ How Sulzer evolves as a resilient, cash-generating company 4
Slide 5: Today's agenda
Today’s agenda 2024 Capital Markets Day 10:00 12:20 Welcome & opening remarks Suzanne Thoma Sulzer Excellence Suzanne Thoma Florian Häuser Markets and strategy Suzanne Thoma Louise Graffner Flow Jan Lüder Alina Halank Gilbert Faul Financials Thomas Zickler Services Tim Schulten Closing remarks Suzan
Slide 6: Today's presenters
Today’s presenters Suzanne Thoma Thomas Zickler Louise Graffner Alina Halank Group Executive Chairwoman CFO CIO Head Corporate Services Jan Lüder Gilbert Faul Florian Häuser Division President Flow Head Water & Industrial Head Strategy & Bus. Development Tim Schulten Ravin Pillay Darayus Pardivala D
Slide 7: Sulzer at a glance
Sulzer at a glance Revenue profile Energy security and Natural resources transition 40% 20% 35% 45% 20% End- Process Aftermarket Type Products and market industries 50% packages 50% 40% Revenue CHF EBITDA Employees Locations Flow Services Chemtech 40% 35% 25% 3.3B 13% 13’000 160 Balanced market expo
Slide 8: Sulzer enjoys consistently strong ESG ratings
Sulzer enjoys consistently strong ESG ratings Agency Rating Historical trend MSCI AA (2023) FTSE Russel 2.8 (2023) Morningstar 4 globes (2024) Sustainalytics 18.7 ESG risk rating (2024) 8
Slide 9: Key messages of today
Key messages of today ▪ Sulzer is an attractive long-term investment ▪ Sulzer serves essential and structurally growing markets ▪ Sulzer makes customers’ crucial processes and infrastructure better ▪ Sulzer builds on engineering excellence, strong technology and application expertise and customer pr
Slide 10: Markets and strategy
Markets and strategy Suzanne Thoma | Executive Chairwoman 10
Slide 11: Key drivers for Sulzer's growing markets
Key drivers for Sulzer’s growing markets Population growth Climate change Ecological footprint Digitalization and and living standards electrification Energy security and transition Natural resources Process industries 11
Slide 12: Sulzer makes crucial processes and infrastructure better
Sulzer makes crucial processes and infrastructure better In all 3 divisions, Sulzer: Flow ▪ Enables demanding transport, storage and treatment of fluids and gases Services ▪ Removes contamination and pollution, separates and purifies substances ▪ Improves critical infrastructure and keeps it running
Slide 13: Energy security and transition
Energy security and transition Current, new and emerging infrastructure Growing addressable market 90B Size CHF 3-5% p.a. Market drivers ▪ Need to increase energy production ▪ Need to reduce environmental impact Sulzer’s contribution ▪ Cleaner, efficient, better performing infrastructure ▪ Life-time
Slide 14: Natural resources
Natural resources Large worldwide investment needs Growing addressable market 100B Size CHF 4-5% p.a. Market drivers ▪ Water consumption, scarcity, quality ▪ Minerals and metals as enablers for electrification, digitalization, artificial intelligence Sulzer’s contribution ▪ Better (waste-) water tre
Slide 15: Process industries
Process industries Driving sustainability and process innovation Growing addressable market 50B Size CHF 3-5% p.a. Market drivers ▪ Growing demand for chemicals ▪ Cleaner chemistry, smaller ecological footprint ▪ Cost efficiency and regulatory compliance Sulzer’s contribution ▪ Clean, energy- & cost
Slide 16: Capex trend indicates long-term growth across end-markets
Capex trend indicates long-term growth across end-markets Global capex development 2010-2035 (real values, in USD trillion) 40 2024 30 Energy, power ▪ Structurally growing markets, including oil and gas 20 Other industries ▪ Near-term somewhat lower growth, Metals, mining but no downcycle 10 Chemica
Slide 17: How Sulzer succeeds in its markets
How Sulzer succeeds in its markets Best solutions powered by application ~350 ~35k years expertise active patent families cumulative across Sulzer Group engineering experience Extensive installed base and high ~160 >700 customer proximity countries with # active Sulzer product installations key acco
Slide 18: Sulzer excellent together in the markets
Sulzer excellent together in the markets Same markets Integrated solutions Capability sharing Opening doors to key accounts, Packages solving customer Joint solution development, e.g. first spare part sets problems, e.g. effluent treatment e.g. carbon capture 18
Slide 19: Sulzer 2028
Sulzer 2028 SULZER
Slide 20: A strong industrial company that truly creates value
A strong industrial company that truly creates value 20
Slide 21: Sulzer 2028
Sulzer 2028 Organic growth above average Sulzer Excellence along in structurally growing markets the value chain High-quality, future-proof business portfolio 21
Slide 22: Sulzer 2028 creates significant value
Sulzer 2028 creates significant value Organic growth > 60 initiatives Strong Sulzer today industrial Excellence along company the value chain > 40 initiatives 22
Slide 23: Key takeaways
Key takeaways On path to strong industrial company ▪ Sulzer serves industries that are essential for economic prosperity and sustainable development ▪ Sulzer is active in structurally growing markets driven by strong tailwinds ▪ Sulzer’s strength is in high-demanding, critical customer applications
Slide 24: Flow
Flow Jan Lüder | Division President Gilbert Faul | Head Water & Industrial 24 24
Slide 25: Flow today
Flow today Profound application know-how and excellent client reputation Revenue profile 50% Energy security Aftermarket Products and 20% and transition 35% 20% packages 80% 30% Natural End- resources Type market 35% Process industries 30% Energy Water Industry Revenue CHF EBITDA Employees Productio
Slide 26: Technology leader in energy security and transition
Technology leader in energy security and transition Energy ▪ Highly sophisticated engineered pumps ▪ Demanding environments ▪ Capital-lean growth in energy transition technologies Market size | CHF #1-#3 multiple 15B 2-5% p.a. applications Strategy ▪ Grow energy transition plays ▪ Harvest mature cor
Slide 27: Integrated treatment solutions along wastewater chain
Integrated treatment solutions along wastewater chain Water ▪ Comprehensive physical transport and treatment portfolio ▪ Municipalities and industries ▪ Strong market position in multiple geographies Market size | CHF Top-5 multiple 100B 5% p.a. applications Strategy ▪ Grow municipal and industrial
Slide 28: Expert for handling complex fluids in process industries
Expert for handling complex fluids in process industries Industry ▪ High value-added pumps and complimentary equipment ▪ Edge in handling of complex fluids ▪ Differentiated process and application expertise Market size | CHF #1 Pulp & paper 20B 2-6% p.a. #2 Biofuels Strategy ▪ Grow green metals proc
Slide 29: Wastewater treatment
Wastewater treatment Integrated solutions along wastewater chain Wastewater collection Wastewater treatment Demand drivers ▪ Regulation drives treatment technology ▪ Engineered full solutions Sludge handling Control and monitoring Sulzer advantage ▪ Integrated physical treatment portfolio ▪ Global d
Slide 30: Customer example: Upgrade to complete system
Customer example: Upgrade to complete system Improving efficiency to secure fresh water supply in Bari (Italy) Outcome 90% Reduction of space 80% Energy savings 32’000 Population equivalent Moving from products to systems builds competitive edge 30
Slide 31: Green metals processing
Green metals processing Complete offering for mining and metals Dewatering Metals processing Demand drivers ▪ “Green mining” in high demand ▪ Best processes need specialized pumps Water treatment Aftermarket & Services Sulzer advantage ▪ Flow-handling solutions along mining chain ▪ Application and e
Slide 32: Customer example: Sulzer enables Lithium expansion in Chile
Customer example: Sulzer enables Lithium expansion in Chile Increased Lithium production, reduced environmental impact Outcome m3/h of high 24’000 chloride brine slurry >5% Performance improvement Fulfillment of 100% governmental requirements Enabling the customer’s growth targets and contribution t
Slide 33: Key takeaways
Key takeaways Flow ▪ Strong technologies, profound application expertise, excellent client reputation ▪ Significant growth opportunities in new energies, wastewater and focus industries ▪ Initiatives build solutions, add advanced technologies and grow market share Flow 2028 › Focus and resilience ›
Slide 34: Services
Services Tim Schulten | Division President Ravin Pillay-Ramsamy | Head Pump Services Darayus Pardivala | Head Turbo Services 34
Slide 35: Services today
Services today Keeping critical rotating equipment running – no matter which brand Revenue profile Process Energy security & Aftermarket 40% 10% industries 15% transition 80% 100% 50% Natural End- resources Type market 5% Electro- Revenue CHF EBITDA Employees Locations Pump Turbo mechanical Services
Slide 36: Servicing one of the world's largest pump asset pools
Servicing one of the world’s largest pump asset pools Pump Services ▪ Services is a technology business ▪ Complete service spectrum irrespective of brand ▪ Best expertise, speed and customer proximity Market size | CHF Top-3 15B 4-5% p.a. globally Strategy ▪ Grow penetration of installed base ▪ Driv
Slide 37: Leading independent provider of turbomachinery services
Leading independent provider of turbomachinery services Turbo Services ▪ Independent provider, complete service spectrum ▪ Gas-, steam-, aero-turbines and compressors ▪ Unmatched sophistication on par with OEM1 Market size | CHF #1 independent turbo 50B 4-5% p.a. services globally Strategy ▪ Sustain
Slide 38: Keeping high-value motors and generators seamlessly running
Keeping high-value motors and generators seamlessly running Electro-mechanical Services ▪ Independent provider, complete service spectrum ▪ High-value motors and generators ▪ Distributor of motor replacements Market size | CHF Top-3 independent 10B 4% p.a. providers globally Strategy ▪ Grow opportun
Slide 39: Pump retrofits
Pump retrofits Extend lifetime, improve performance and sustainability Customer value proposition Demand drivers Performance Energy savings ▪ CO2 emission targets 5-10% more capacity 5-20% less energy ▪ Demanding uptime and reliability needs Sulzer advantage ▪ Dedicated team, 5’000 retrofits complet
Slide 40: Customer example: Pump retrofit for Turkish power plant
Customer example: Pump retrofit for Turkish power plant Sulzer contributes to sustainability, efficiency and reliability objectives Outcome Increase 2.6pt in reliable up-time more 3% production efficiency less CO2 2’200t emissions per year Customer entered into long-term relationship with Sulzer, al
Slide 41: Independent Turbo Services
Independent Turbo Services Capabilities on par with original equipment manufacturers Typical lifecycle spend Demand drivers 1.0 ▪ “100% uptime”-need, safety regulations Initial purchase Total aftermarket spend ▪ Full range of services under one roof 0.8 Major 200+% of equipment spend overhaul 0.6 Su
Slide 42: Customer example: Redesign of a defective turbine
Customer example: Redesign of a defective turbine Turbo Services delivered a quick solution to a petrochemical producer in the US Outcome add. reliable 40-50% power output 100% increase in reliability 300+ days in operation High entry barriers: Complex machinery requirements, specialized expertise a
Slide 43: Key takeaways
Key takeaways Services ▪ Global, leading provider of rotating equipment services irrespective of brand ▪ Attractive growth opportunities in engineered pumps, gas & steam turbines and compressors ▪ Initiatives grow the installed base and footprint, build advanced technologies and capabilities Service
Slide 44: Chemtech
Chemtech Uwe Boltersdorf | Division President Emmanuel Rapendy | Head Polymer & Crystallization 44
Slide 45: Chemtech today
Chemtech today Trusted source of critical chemical process steps, charting the path to green chemicals Revenue profile 35% Aftermarket Products and 40% Energy security Natural 30% packages 70% and transition 5% resources 25% 5% End- Type Process market industries 90% Mass Modular E2E Revenue CHF EBI
Slide 46: A global application leader for separation and purification
A global application leader for separation and purification Mass Transfer Components ▪ Almost all chemical processes need separation ▪ Sulzer superior on yield, energy, costs ▪ Customers willing to pay for highest performance Market size | CHF #1 2-3B 4-5% p.a. globally Strategy ▪ Grow attractive ge
Slide 47: Specialist for high-value applications
Specialist for high-value applications Modular Process Systems ▪ Modularity a game-changer in chemical plant design ▪ Focus on high-value applications ▪ Sophisticated know-how drives profitability Market size | CHF Top-3 in focus 10B 5-6% p.a. applications Strategy ▪ Build market share, separation f
Slide 48: Strong portfolio of licensed technologies in biochemicals
Strong portfolio of licensed technologies in biochemicals E2E Process Technology ▪ Full-scale plant process technologies ▪ Laboratory science becomes industrial reality ▪ Strong intellectual property protection Market size | CHF #1 15B 7-11% p.a. Bioplastics Strategy ▪ Scale up offering for PLA1 and
Slide 49: Carbon capture, utilization and storage
Carbon capture, utilization and storage Best-in-class supplier Demand drivers ▪ Global commitment towards net-zero ▪ Public funding of large and small projects Sulzer advantage ▪ Best-in-class mass transfer equipment ▪ Preferred supplier in energy & chemicals Global yearly CO2 captured 50M tons p.a.
Slide 50: Customer example: Pivotal project puts Sulzer in a strong position
Customer example: Pivotal project puts Sulzer in a strong position One of the largest plants for Carbon Capture Utilization and Storage (CCUS) in the world Outcome +1.5M tons of CO2 captured gas-powered ≙330k cars off the road reduction of 3% country’s emissions Building the largest reference list o
Slide 51: Bioplastics transition
Bioplastics transition Sulzer is the global #1 technology provider for PLA, the most produced biopolymers From sugar Demand drivers ▪ Regulation reduces plastic waste pollution ▪ End-user demand: Sustainable living Sulzer advantage to biodegradable ▪ E2E process chain out of one hand plastics ▪ Full
Slide 52: Customer example: Sulzer enables major bioplastics plant
Customer example: Sulzer enables major bioplastics plant Helping the customer use India’s main crop to make a major contribution to nation’s climate goals Outcome tons of 75’000 bioplastic per year 100% biobased and biodegradable CO2 savings 70% vs. oil-based plastics A blueprint project for future
Slide 53: Key takeaways
Key takeaways Chemtech ▪ Trusted source of critical chemical process steps, charting the path to sustainable chemicals ▪ Ideally positioned for significant growth in CCUS as well as in bio-polymers and -fuels ▪ Initiatives build market share in attractive technologies, applications and geographies C
Slide 54: Sulzer Excellence
Sulzer Excellence Suzanne Thoma | Executive Chairwoman Florian Häuser | Head Strategy & Business Development Louise Graffner | CIO Alina Halank | Head Corporate Services 54
Slide 55: Sulzer Excellence is our way to run the company
Sulzer Excellence is our way to run the company ▪ Increase profitability ▪ Increase competitiveness ▪ Reduce bad complexities ▪ Boost transparency and agility ▪ Drive performance culture 55
Slide 56: Sulzer Excellence creates the capacity for growth
Sulzer Excellence creates the capacity for growth Portfolio mix ▪ High-quality, future-proof business ▪ Production efficiency and quality Operations ▪ Project planning and delivery ▪ Suppliers, conditions, demand management Supply Chain ▪ Product redesign for better cost / performance ▪ Excellent to
Slide 57: Operations excellence
Operations excellence Production efficiency drives profitability ▪ Lean process optimization › Customer satisfaction ▪ Digital process optimization › Sales efficiency and cross-selling ▪ Robotics / automation › Lean workflows and operations ▪ Structural improvements 57
Slide 58: Example: Higher customer satisfaction from lean shopfloor processes
Example: Higher customer satisfaction from lean shopfloor processes Material flow improvements in Kotka plant (Finland) Outcome CHF 100M additional capacity p.a. reduced 93% throughput time testing > x2 capacity small pumps Value stream approach boosts production capacity of existing footprint 58
Slide 59: IT is a critical enabler of Sulzer Excellence
IT is a critical enabler of Sulzer Excellence ▪ Integrated customer experience ▪ Full transparency on trusted data › High-quality customer interaction › Data driven commercial excellence ▪ Efficient operations with automated lean processes › Operational and resource efficiency ▪ Harmonized and integ
Slide 60: Example: How to create customized offers fast, easy and right
Example: How to create customized offers fast, easy and right Integrating >10 applications into one Outcome reduced 80% quotation time reduced 30% engineering time saved 50% engineering cost Seamless integration into supply chain 60
Slide 61: Supply chain excellence: Key source of savings and resilience
Supply chain excellence: Key source of savings and resilience Innovative cross-functional Consolidation of supplier portfolio approaches to product redesign with competitive tendering Advanced negotiation approaches Continuous improvement (should-costing, e-auctioning) embedded in operating model 61
Slide 62: Example: Patternless casting
Example: Patternless casting Required storage space reduced to 0, lead time improved by up to 70% Outcome 2022-23 >10% improved on time delivery reduced 90% cost of poor quality 3D-printed >1’300 patterns used Innovative 3D-printed patterns deliver higher quality and enable flexible supply 62
Slide 63: Key takeaways
Key takeaways Sulzer Excellence ▪ Sulzer Excellence creates the capacity for growth ▪ Portfolio mix as well as initiatives in operations, supply chain and SG&A drive significant profitability improvement ▪ Sulzer Excellence is our way to run the company, develop the culture and future-proof Sulzer 6
Slide 64: Financials
Financials Thomas Zickler | CFO 64
Slide 65: Sulzer 2028 creates significant shareholder value
Sulzer 2028 creates significant shareholder value Organic growth 2028 Ambition Sales growth > 60 initiatives 2023 above market Actual Financials EBITDA Excellence along >17% the value chain ROCE > 40 initiatives >22% 65
Slide 66: Accelerating performance since 2023
Accelerating performance since 2023 Market development and first strategic moves drive positive results Sales | CHF M and YoY growth EBITDA | CHF M and margin ROCE | % 3’282 17.7% 438 14.7% >14% 2’857 2’899 +6%-9% 2’800 13.3% 11.7% 2’699 +13.2% 342 323 9.0% 11.8% CAGR +1.2% 279 11.3% 5.4% 9.9% 243 9
Slide 67: Shareholder return with further upside potential
Shareholder return with further upside potential Total Return Index Total Shareholder Return | (per share) 309% Since 01/19-12/22 01/23 Sulzer Sulzer 69% 83% 184% DJ Stoxx 600 42% 30% 146% Swiss SMI 29% 13% DJ Swiss SMI Mid Stoxx Cap Index Mid Cap Index 100% 600 › Current EV/ EBITDA1 of ~9.5x leavin
Slide 68: Sulzer 2028 creates significant shareholder value
Sulzer 2028 creates significant shareholder value Organic growth 2028 Ambition Sales growth > 60 initiatives 2023 above market Actual Financials EBITDA Excellence along >17% the value chain ROCE > 40 initiatives >22% 68
Slide 69: All divisions deliver growth above market
All divisions deliver growth above market Growth supported by more than 60 initiatives Sales Growth | % CAGR Growth initiatives drive growth above market Flow Services Chemtech Market Excellent together for customer solutions 3%-5% › Grow wastewater and › Grow penetration of › Build CCUS business +1
Slide 70: Portfolio mix and Sulzer Excellence drive profitability
Portfolio mix and Sulzer Excellence drive profitability Multiple drivers of margin expansion EBITDA margin | % Profitability drivers Flow Services Chemtech Group > 17% 11.8% Portfolio mix 30% Operations 25% Supply Chain 20% 2022 Sulzer 2028 SG&A 25% 70
Slide 71: Focus on capital-lean business
Focus on capital-lean business ROCE | % Key ROCE drivers Return Capital Employed > 22% EBITDA-Improvement Capital-efficient growth 14.7% 11.8% >17% Strict NWC management <20% of sales 2022 Sulzer 2028 over business cycle 71
Slide 72: Strong cash generating business
Strong cash generating business Strategy fully financed internally, providing entrepreneurial flexibility Liquidity | CHF M Operating Cash Flow 2’000 -650 ▪ Free cash flow conversion rate 8-9% over the business cycle -650 CAPEX ▪ Predominantly growth investments -100 1’200 Dividend 600 ▪ Sustainable
Slide 73: Disciplined approach to M&A
Disciplined approach to M&A Accelerate the strategy over the mid-term Characteristics ▪ Small to medium sized / bolt-ons in focus ▪ Within or close to existing business Strategic criteria ▪ Attractive end-markets with long-term tailwinds ▪ Strong fit to Sulzer Financial criteria ▪ Cumulative EVA1 po
Slide 74: Robust financial structure
Robust financial structure Strong balance sheet provides security and freedom of action Liquidity | CHF M Net Debt / EBITDA | CHF M 1’206 2.5x 862 864 2.1 2.1 817 609 1.4 1.2 0.8 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Financial debt maturi
Slide 75: Key takeaways
Key takeaways ▪ Sulzer strategy capitalizes on long term favorable market trend ▪ Sulzer 2028 creates significant shareholder value: Organic growth above market, increased profitability and higher margin portfolio ▪ Strategy fully financed internally, providing entrepreneurial flexibility ▪ Sulzer’s
Slide 76: Closing remarks
Closing remarks Suzanne Thoma | Executive Chairwoman • 76
Slide 77: On path to strong industrial company
On path to strong industrial company ▪ Sulzer is an attractive long-term investment ▪ Sulzer serves essential and structurally growing markets ▪ Sulzer makes customers’ crucial processes and infrastructure better ▪ Sulzer builds on engineering excellence, strong technology and application expertise
Slide 78: Q&A
Q&A SULZER