Slide 1: Midyear 2017 Results Presentation
Midyear 2017 Results Presentation Greg Poux-Guillaume, CEO | Thomas Dittrich, CFO | July 27, 2017
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: Agenda
Agenda 1. Market review 2. Update on Sulzer Full Potential program 3. Financial review 4. Acquisitions 5. Outlook 3 Midyear results 2017 | July 27, 2017
Slide 4: Divisional split shows new structure; Aftermarket 54%
Divisional split shows new structure; Aftermarket 54%1 Order intake H1 17 Order intake H1 17 Order intake H1 17 by division by region by type1 13% 23% 17% 36% 44% 54% 46% 33% 34% Pumps Equipment Europe, Middle East, Africa Equipment Rotating Equipment Services Americas Aftermarket Chemtech Asia-Paci
Slide 5: Rebalancing continues: O&G 43% of order intake in H1
Rebalancing continues: O&G 43% of order intake in H1 Growth in GI driven by APS division (strong organic growth in Dental and Adhesives plus Beauty segment consolidation) GI Positive trend in Pulp and Paper 29% Solid growth in Waste Water Water Engineered Water projects create volatility 11%
Slide 6: Agenda
Agenda 1. Market review 2. Update on Sulzer Full Potential program 3. Financial review 4. Acquisitions 5. Outlook 6 Midyear results 2017 | July 27, 2017
Slide 7: SFP ahead of schedule and on track for CHF 200m
SFP ahead of schedule and on track for CHF 200m (in CHF millions) 200 ~160-180 ~20-40 CHF 150m P&L impact H2 E achieved to date 124 26 H1 A Cost savings All of the CHF 200m (excl. direct savings targeted by procurement) 88 20181 secured through 36 actions already launched Cost vs. benefit rati
Slide 8: All SFP savings categories progressing well
All SFP savings categories progressing well Cost savings by lever (in CHF millions) ~200m 2017 H1 17: 26m 150 FY 16: 88m FY 15: 36m Indirect Pumps Rotating Eqt. SG&A Chemtech Procurement Equipment Services Highlights H1 2017 Procurement achieved considerable savings in direct (not included in SFP)
Slide 9: Agenda
Agenda 1. Market review 2. Update on Sulzer Full Potential program 3. Financial review 4. Acquisitions 5. Outlook 9 Midyear results 2017 | July 27, 2017
Slide 10: Order intake up 2% YOY organically for H1 and Q2
Order intake up 2% YOY organically for H1 and Q2 Key figures Commentary In CHF millions H1 17 H1 16 YOY YOY adj.1 YOY org.2 Q2 Order intake up 2% YOY organically (10% adjusted) Order intake 1,595 1,423 12.0% 12.5% 1.9% Order intake gross margin 34.2% 34.6% Order intake gross margin decreased on
Slide 11: Q2 orders grew by 14% YOY (2% organically)
Q2 17 orders grew1 by 14% YOY (2% organically) Quarterly order intake Commentary on Q2 (in CHF millions ) +14% +10% Strong organic growth in Chemtech (+16%) and 837 Applicator Systems (+11%) 801 784 758 Aquisition impact of Geka, 739 732 Ensival Moret, Rotec, VIEC 685 685 642 (CHF88m in total) 6
Slide 12: Acquisitions more than offset organic sales decline
Acquisitions more than offset organic sales decline Sales Commentary on H1 In CHF millions H1 17 H1 16 YOY YOY adj.1 YOY org.2 Organic sales declined in PE based on lower order opening Total Sulzer 1,429 1,381 3.4% 3.7% -6.7% backlog and timing of projects Total Divisions 1,460 1,417 3.0% 3.3% -6.
Slide 13: OpEBITA increased
OpEBITA increased Operational EBITA Commentary on H1 In CHF millions H1 17 H1 16 YOY YOY adj.1 YOY org.2 PE with lower margins Total Sulzer 106 99 7.5% 7.7% -1.0% on lower volumes and pricing in O&G opROSA % 7.4% 7.1% Divisions 105 96 8.9% 8.9% APS margins diluted by GEKA consolidation opROSA %
Slide 14: SFP savings offset headwinds
SFP savings offset headwinds (in CHF millions ) Operational EBITA Headwinds SFP cost savings –1.5pp +2.0pp 106 99 98 9 22 -24 26 -33 9 Water and Pumps Services Mainly under- compensate lower margins in absorption O&G and Power Lower opening backlog in PE H1 16 Volume Margin Mix Other SFP H1 17 Acqui
Slide 15: EBIT impacted by SFP costs of CHF 24m
EBIT impacted by SFP costs of CHF 24m (in CHF millions ) Operational EBITA to EBIT 106 SFP costs of 24m -25 -6 -13 -6 55 PE -3 RES -1 CT -1 SFP related -13 SFP related -6 Others -1 opEBITA Amortization Restructuring Impairment Other non- EBIT H1 17 of assets operational items H1 17 7.4% % of sales 3
Slide 16: Better financial result and slightly lower tax rate
Better financial result and slightly lower tax rate (in CHF millions ) EBIT to Net income shareholders 55 Effective tax rate 24.8% -5 -0.4 -12 38 37 was -14m in -1 H1 16 EBIT Financial result Share in loss Taxes Reported Minorites Reported H1 17 of associates net income net income H1 17 shareholders
Slide 17: Net liquidity distorted in half year: FCF back-end loaded to H2
Net liquidity distorted in half year: FCF back-end loaded to H2, dividend paid in H1 (in CHF millions ) Balance Sheet Dec 16 June 17 Balance sheet June 2017: Total net debt of CHF 280m 430 328 FCF of CHF –2.5m (vs CHF 3.7m in 2016) Ordinary dividend payment of CHF 119m Acquisition payments o
Slide 18: Agenda
Agenda 1. Market review 2. Update on Sulzer Full Potential program 3. Financial review 4. Acquisitions 5. Outlook 18 Midyear results 2017 | July 27, 2017
Slide 19: Executing on bolt-on acquisitions
Executing on bolt-on acquisitions Six transactions in the last 18 months Acquired at reasonable multiples Total acquired sales of CHF ~370m 2016 2017 (in CHF millions ) GT VIEC Sales1 20 160 120 35 mid single digit 35 EBITDA margin ~16% ~18% break even ~20% — ~27% EV paid 22 280 85 28 4 90 EV/
Slide 20: Agenda
Agenda 1. Market review 2. Update on Sulzer Full Potential program 3. Financial review 4. Acquisitions 5. Outlook 20 Midyear results 2017 | July 27, 2017
Slide 21: Financial guidance 2017 as of July 27
Financial guidance 2017 as of July 27 Order Intake1 new: up 7–10% (previously up 5–8%) Sales1 up 3–5% Operational ROSA2 % around 8.5% 1. Adjusted for currency effects 2. Operational EBITA divided by sales 21 Midyear results 2017 | July 27, 2017
Slide 22: Summary
Summary Order intake grew 2% organically in H1, 12% including acquisitions SFP program well on track to reach CHF 200m from 2018 onwards Achieved additional CHF 26m savings in H1 bringing total to date to CHF150m H1 SFP savings more than offset market headwinds for opEBITA margin of 7.4% S
Slide 23: Reconciliations and supplementary slides
Reconciliations and supplementary slides 23 Midyear results 2017 | July 27, 2017
Slide 24: Order intake by division
Order intake by division Order intake Commentary on H1 In CHF millions H1 17 H1 16 YOY YOY adj.1 YOY org.2 FX impact CHF –6.3m Total Sulzer 1,595 1,423 12.0% 12.5% 1.9% Total acquisition impact Total Divisions 1,616 1,444 11.9% 12.4% 2.0% CHF 150m Pumps Equipment 591 566 4.4% 5.4% -0.5% Rotating
Slide 25: OpEBITA to EBIT bridge for new structure FY2016
OpEBITA to EBIT bridge for new structure FY2016 In CHF millions PE RES CT APS Divisions Others Total opEBITA 2016 13.0 139.5 18.0 64.1 234.6 4.3 238.9 as % of sales 1.1% 13.4% 4.0% 23.6% 7.9% 8.3% Amortization -17.9 -6.3 -6.3 -15.4 -45.9 -1.4 -47.3 Impairments -8.8 -3.8 -5.4 -0.5 -18.5 0.0 -18.5 Res