Slide 1: Midyear Results 2018
Midyear Results 2018 Greg Poux-Guillaume, CEO | Jill Lee, CFO | July 25, 2018
Slide 2: Safe Harbor Statement and IFRS 15
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: Midyear Results 2018 | July 25, 2018
3 Midyear Results 2018 | July 25, 2018
Slide 4: Sulzer and the Wild Boars
Sulzer and the Wild Boars “How they did it was a mix of trial and error, improvisation, skill, massive water pumps, miles of guide rope and strategically placed air tanks along the two-mile-long escape route, much of it submerged.” The New York Times 4 Midyear Results 2018 | July 25, 2018
Slide 5: Business Review, Financial Review, Outlook
Business Review Financial Review Outlook Midyear Results 2018 | July 25, 2018
Slide 6: Highlights H1 18
Highlights H1 18 Order intake up 11.6% (+6.5% organically), driven by O&G (+19%) and acquisitions (JWC and Transcodent) “Cover” of Sales up 10.5% (+5.4% organically) online report on higher orders and acquisitions OpEBITA margin (opROSA) in H1 2018 8.5% up from 7.4% in H1 2017 Confirmation o
Slide 7: Pumps Equipment: Strong growth, return to profitability
Pumps Equipment Strong growth, return to profitability Key figures Order intake by market In CHF millions H1 18 H1 17 YOY adj.1 org.2 Order intake 720 582 23.7% 21.3% 12.1% Sales 603 515 17.2% 14.4% 5.7% opEBITA 6 –13 – – – opROSA 1.0% –2.5% H1 18 Highlights Orders: O&G up 45% with upstream more
Slide 8: Rotating Equipment Services
Rotating Equipment Services Growing despite power downturn, margins holding up Key figures Order intake by product line In CHF millions H1 18 H1 17 YOY adj.1 org.2 Order intake 572 537 6.5% 6.5% 3.1% Sales 505 474 6.4% 6.5% 2.5% opEBITA 61 61 0.6% 1.6% -2.8% opROSA 12.1% 12.8% H1 18 Highlights Pum
Slide 9: Chemtech
Chemtech 2017 volume and profitability rebound confirmed, shrink TFS Key figures Order intake by market In CHF millions H1 18 H1 17 YOY adj.1 org.2 Order intake 280 266 5.5% 5.0% 5.0% Sales 264 231 13.9% 13.3% 13.1% opEBITA 20 11 73.5% 71.1% 71.2% opROSA 7.5% 4.9% H1 18 Highlights Separation Techn
Slide 10: Applicator Systems
Applicator Systems Continuing to grow, one-off customer product plan impact in Beauty Key figures Order intake by market In CHF millions H1 18 H1 17 YOY adj.1 org.2 Order intake 230 210 9.3% 6.3% 1.3% Sales 229 209 9.8% 6.8% 2.4% opEBITA 49 45 7.5% 6.7% 2.6% opROSA 21.2% 21.6% H1 18 Highlights Den
Slide 11: SFP: FY target already achieved in H1, increased by 10m
SFP FY target already achieved in H1, increased by 10m (in CHF millions) ~230 ~220 ~10 CHF 210m P&L impact ~10 H2 E achieved to-date Cost savings CHF 25m incremental (excl. direct savings delivered in H1 18 procurement) 25 H1 A 185 Implemenation costs within ~1.2x savings envelope –239 –22 H1
Slide 12: 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 13: Business Review, Financial Review, Outlook
Business Review Financial Review Outlook Midyear Results 2018 | July 25, 2018
Slide 14: Overview: Growing volumes and profitability
Overview Growing volumes and profitability Key figures Comment Sales increased on higher In CHF millions H1 18 H1 17 YOY adj.1 org.2 order intake and higher Order intake 1’801 1’595 13.0% 11.6% 6.5% opening backlog Order intake gross margin 33.8% 34.2% opROSA increased on higher Order backlog (J
Slide 15: Quarterly order development
Quarterly order development Q2 orders up 5.3%1 YOY and 0.8% organically (in CHF millions ) Quarterly order intake Comment 900 901 837 Acquisitions contributed a total of 790 771 739 758 CHF 38m 732 685 JWC CHF 26m 642 Rotec CHF 7m Transcodent CHF 5m FX impact was a positive 2.4% or CHF 20m
Slide 16: OpEBITA / opROSA
OpEBITA / opROSA SFP savings over-compensate for headwinds (in CHF millions ) SFP cost Headwinds savings Acquisitions opROSA –0.9pp +1.6pp +0.3pp 7.4% 8.2% 8.5% 136 126 11 8.4% 27 -22 106 25 -7 -2 Margin decline PE Energy, RES TS Volume increase across all divisions H1 17 Volume Margin Mix Other SFP
Slide 17: opEBITA to EBIT
opEBITA to EBIT EBIT impacted by SFP costs of CHF 22m (in CHF millions ) 136 SFP costs of 22m 8.5% -34 -6 -1 -17 78 4.9% PE -4.2 RES -1.0 APS -0.3 Others -0.4 SFP related -15 opEBITA Amortization Restructuring Impairment Other non- EBIT H1 18 of assets operational H1 18 items 17 Midyear Results 2018
Slide 18: EBIT to net income
EBIT to net income Effective tax rate 23.2% in H1 18 versus 24.7% in H1 2017 (in CHF millions ) 78 -5 1 -17 57 55 -2 Effective tax rate 23.2% EBIT Financial result Income from Taxes Reported Minorites Reported H1 18 associates net income net income H1 18 shareholders H1 18 Core net income 101 Core n
Slide 19: Free Cash Flow
Free Cash Flow Volume-driven inventory build-up (in CHF millions ) 57 Capex –44.2 Depreciation 35.7 Amortization 34.1 Impairments 0.7 -87 -3 -16 27 -13 -30 -17 19 Net income Inventories Accounts Accounts Net advance Net of D&A Others FCF FCF H1 18 receivable payable payments and Capex H1 18 H1 17 19
Slide 20: Balance Sheet
Balance Sheet Optimizing financing mix through issuance of new bonds in July (in CHF millions ) Dec 2017 June 2018 489 359 Balance sheet June 2018: Total net debt of: CHF 522m FCF of CHF –30m Ordinary dividend payment of CHF 43m -225 Acquisition payments of CHF 209m -522 Changes after balanc
Slide 21: Business Review, Financial Review, Outlook
Business Review Financial Review Outlook Midyear Results 2018 | July 25, 2018
Slide 22: Market Outlook
Market Outlook Solid growth in APS markets GI Positive trends of general industries markets in the other divisions 29% Solid growth in Municipal Water Water Engineered Water projects remain lumpy 12% Continuing price pressure in gas turbine service Power Fewer projects for power plants
Slide 23: Updated financial guidance 2018
Updated financial guidance 2018 as of July 25 Order Intake1 up 7% – 10% (previously: up 5% – 7%) Sales1 up 6% – 8% (previously: up 4% – 6%) Operational ROSA2 % around 9.5% (unchanged) 1. Adjusted for currency effects 2. Operational EBITA divided by sales 23 Midyear Results 2018 | July 25, 2018
Slide 24: Summary
Summary O&G market recovery on track, visible in strong order intake All Sulzer markets healthy except Power Sales volumes improving, lagging order intake by 9 to 12 months opEBITA margin up 110bp on higher volumes, SFP savings and acquisitions Expected full year SPF savings delivered in H
Slide 25: Reconciliations and supplementary slides
Reconciliations and supplementary slides 25 Midyear Results 2018 | July 25, 2018
Slide 26: Order intake split H1 2018
Order intake split H1 2018 Order intake by division Order intake by region Order intake by type (excl APS) H1 18 H1 18 H1 18 38% Pumps Equipment 44% Europe, Middle East, Africa 49% Equipment 32% Rotating Equipment Services 34% Americas 51% Aftermarket 16% Chemtech 22% Asia-Pacific 14% Applicator Sys
Slide 27: OpEBITA to EBIT bridge for divisions H1 18
OpEBITA to EBIT bridge for divisions H1 181 In CHF millions PE RES CT APS Other Total opEBITA 6.3 61.3 19.8 48.5 -0.2 135.7 as % of sales 1.0% 12.1% 7.5% 21.2% – 8.5% Amortization -17.4 -3.7 -2.7 -9.8 -0.5 -34.1 Impairments -0.4 – – -0.3 – -0.7 Restructuring -4.2 -1.0 – -0.3 -0.4 -5.9 Other non-oper
Slide 28: 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 29: Sulzer shareholder structure and governance
Sulzer shareholder structure and governance Large minority shareholder, independent Board 48.8% Tiwel (Renova) Shareholder 15.2% Treasury shares structure 51.2% future free float 36.0% Free float Board of Directors Renova representative 29 Midyear Results 2018 | July 25, 2018