Slide 1: Annual Results 2017
Annual Results 2017 Greg Poux-Guillaume, CEO | Thomas Dittrich, CFO | February 28, 2018
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, Update on SFP, Financial Review, Outlook
Business Review Update on SFP Financial Review Outlook Annual Results 2017 | February 28, 2018
Slide 4: Highlights
Highlights Delivered on guidance Order intake up 12% (+2% organically) Sales up 5% (–4% organically) “Cover” of opROSA increased to 8.4%, despite online report CHF 10m (= 0.3%) one-time charge for a discontinued business activity in Chemtech SFP over-delivered in 2017 2017 incremental sa
Slide 5: Pumps Equipment
Pumps Equipment Back to organic growth, eroding sales to rebound in 2018 Key figures Order intake by market In CHF millions 2017 20161 YOY adj.2 org.3 Order intake 1’190 1’090 9.1% 8.1% 1.5% Sales 1’123 1’159 -3.1% -4.3% -12.9% opEBITA –3.6 13 n.m. n.m. n.m. opROSA –0.3% 1.1% 2017 Highlights Order
Slide 6: Rotating Equipment Services
Rotating Equipment Services Resilient, outperforming the market Key figures Order intake by product line In CHF millions 2017 20161 YOY adj.2 org.3 Order intake 1’071 1’010 6.1% 4.9% -0.9% Sales 1’035 1’011 2.3% 1.6% -2.1% opEBITA 144 140 3.2% 2.4% -1.8% opROSA 13.9% 13.8% 2017 Highlights Turbo Se
Slide 7: Chemtech
Chemtech Strong recovery, impact of one-time charge Key figures Order intake by market In CHF millions 2017 20161 YOY adj.2 org.3 Order intake 502 472 6.4% 5.9% 5.1% Sales 478 446 7.2% 7.0% 6.2% opEBITA 25 18 38.9% 35.2% 39.7% opROSA 5.2% 4.0% 2017 Highlights Orders up on continued recovery in O&G
Slide 8: Applicator Systems
Applicator Systems Solid growth in all markets, ahead of plan Key figures Order intake by market In CHF millions 2017 20161 YOY adj.1 org.2 Order intake 426 273 56.4% 55.7% 6.0% Sales 424 272 55.7% 54.9% 5.0% opEBITA 87 64 35.4% 34.8% 10.3% opROSA 20.5% 23.6% 2017 Highlights Beauty, Dental and Ind
Slide 9: Update on SFP
Market Review Update on SFP Financial Review Outlook Annual Results 2017 | February 28, 2018
Slide 10: SFP: Ahead of target, ahead of schedule
SFP Ahead of target, ahead of schedule (in CHF millions) 185 61 CHF 185m P&L impact 124 achieved to-date, ahead of previously communicated Cost savings CHF ~160-180m range (excl. direct 88 procurement) CHF 61m incremental 36 savings delivered in 2017, ahead of previously communicated CHF 40-60m
Slide 11: SFP: Program extended, savings target increased to CHF 230m
SFP Program extended, savings target increased to CHF 230m (in CHF millions) Additional savings ~230 ~20 ~210 Cost savings (excl. direct procurement) ~25 2018-2019 185 –239 ~ –25 Implementation 40% Indirect Procurement costs 30% PE operational excellence ~ –265 ~ –20 10% SG&A 20% Other ~ –285 2017A
Slide 12: League Table: Profitability gap stabilized
League Table Profitability gap stabilized 2014 profitability comparison Expected 2017 profitability1 Company A Company C Company B Company A Company D Company K Company C Company E Company F Sulzer 8.4% ~350bps Company E Company B Sulzer 9.4% ~730bps Company D Company I Company F Company G Company J
Slide 13: Financial Review
Market Review Update on SFP Financial Review Outlook Annual Results 2017 | February 28, 2018
Slide 14: Overview: Delivered on guidance despite continuing headwinds
Overview Delivered on guidance despite continuing headwinds Key figures Commentary Sales decreased on lower In CHF millions 2017 2016 YOY adj.1 org.2 opening backlog in 2017 Order intake 3’156 2’798 12.8% 11.8% 2.2% opEBITA margin impacted Order intake gross margin 34.4% 34.0% by CHF 10m one-tim
Slide 15: Quarterly order development
Quarterly order development Q4 orders up 3%1 YOY and down 2% organically (in CHF millions ) Quarterly order intake Commentary 837 790 739 758 771 Q4 YOY: +5% reported; +3% FX 732 685 adjusted; –2% FX and acquisition adj. 642 Drivers of Q4 order intake: Relatively high base in Q4 2016 Slightl
Slide 16: OpEBITA / opROSA
OpEBITA / opROSA SFP savings over-compensate for headwinds (in CHF millions ) SFP cost CT one-off Headwinds savings charge –1.7pp +2.2pp –0.3pp 255 239 235 20 8.4% 8.3% -10 8.5% -42 6 19 61 -38 Mainly under-absorption Impact of lower volumes in PE 2016 Volume Margin Mix Other SFP CT one-off 2017 Acq
Slide 17: opEBITA to EBIT
opEBITA to EBIT EBIT impacted by SFP costs of CHF 63m (in CHF millions ) Operational EBITA to EBIT 255 SFP costs of 63m 8.4% -54 -22 -15 -28 137 4.5% PE -15 RES -4 CT -2 Others -1 SFP related -26 opEBITA Amortization Restructuring Impairment Other non- EBIT 2017 of assets operational 2017 items 17 A
Slide 18: EBIT to net income
EBIT to net income Normalized tax rate 23.4% in 2017 versus 24.3% in 2016 (in CHF millions ) 137 -11 0 -38 87 83 -4 was -19m in 2016 Effective tax rate 30.5% Normalized tax rate 23.4% EBIT Financial result Income from Taxes Reported Minorites Reported 2017 associates net income net income 2017 share
Slide 19: Free Cash Flow
Free Cash Flow Impacted by SFP cash outs and smaller NWC improvement (in CHF millions ) SFP cash out –59 201 Net working capital improvement +23 -42 60 127 10 87 12 -36 36 Capex –81.2 Depreciation 71.7 Amortization 53.8 Impairments 15.4 Net income Inventories Accounts Accounts Net advance Net of D&A
Slide 20: Balance Sheet
Balance Sheet Deploying balance sheet for bolt-on M&A (in CHF millions ) 2016 2017 Balance sheet December 2017: 489 430 Total net debt of: CHF 225m FCF of CHF 127m (CHF 201m in 2016) Ordinary dividend payment of CHF 119m -36 Acquisition payments of CHF 163m -225 -465 Net debt / EBITDA pro-
Slide 21: Dividend
Dividend Unchanged ordinary dividend of CHF 3.50 proposed Dividend (CHF) 20 18.10 15 Ordinary dividend per share Special dividend per share 14.60 10 5 3.00 3.00 3.20 3.20 3.50 3.50 3.50 3.50 0 2010 2011 2012 2013 2014 2015 2016 2017 Proposal to AGM Dividend 2.1% 3.0% 2.2% 2.2% 3.3% 3.7% 3.3% 3.0% yi
Slide 22: Outlook
Market Review Update on SFP Financial Review Outlook Annual Results 2017 | February 28, 2018
Slide 23: Market Outlook
Market Outlook Solid growth in APS markets GI Continuing positive trend in Pulp & Paper 30% Solid growth in Municipal Water Water Engineered Water projects remain lumpy 11% Continuing price pressure in gas turbine service Power Fewer projects for power plants in China Nuclear active bu
Slide 24: Financial guidance 2018
Financial guidance 2018 as of February 28 Order Intake1 up 5% – 7% Sales1 up 4% – 6% Operational ROSA2 % around 9.5% 1. Adjusted for currency effects 2. Operational EBITA divided by sales 24 Annual Results 2017 | February 28, 2018
Slide 25: Summary
Summary 2017 results in-line with guidance Original SFP commitment to be exceeded SFP extended and total savings target increased to CHF 230m Markets back to growth in 2018 except Power Volume rebound and SFP savings stickiness driving 2018 profitability upswing 25 Annual Results 2017 | Fe
Slide 26: Reconciliations and supplementary slides
Reconciliations and supplementary slides 26 Annual Results 2017 | February 28, 2018
Slide 27: Order intake split 2017
Order intake split 2017 Order intake by division Order intake by region Order intake by type (excl APS) 2017 2017 2017 37% Pumps Equipment 45% Europe, Middle East, Africa 45% Equipment 33% Rotating Equipment Services 33% Americas 55% Aftermarket 16% Chemtech 22% Asia-Pacific 14% Applicator Systems 2
Slide 28: OpEBITA to EBIT bridge for divisions 2017
OpEBITA to EBIT bridge for divisions 2017 In CHF millions PE RES CT APS Other Total opEBITA -3.7 144.0 25.0 86.8 3.3 255.4 as % of sales -0.3% 13.9% 5.2% 20.5% – 8.4% Amortization -23.2 -6.8 -5.6 -17.0 -1.2 -53.8 Impairments -10.5 -2.3 -2.6 -0.0 -0.0 -15.4 Restructuring -15.0 -3.8 -1.7 -0.3 -0.9 -21
Slide 29: Acquisitions
Acquisitions Seven transactions since April 2016 Acquired at reasonable multiples Total acquired sales of CHF ~435m 2016 2017 2018 (in CHF millions ) GT VIEC Sales1 20 160 120 35 mid single digit 19 81 EBITDA margin ~16% ~18% break even ~20% — >30% >20% EV paid 22 280 85 28 4 75 212 EV/EBITDA
Slide 30: Currency exposure order intake 2017
Currency exposure order intake 2017 23% USD 21% EUR 10% CNY 2017 8% GBP 8% CHF 10% BRL, INR, RUB 20% Other 1. Adjusted for currency effects 2. Organic: adjusted for currency and acquisition effects 30 Annual Results 2017 | February 28, 2018