Sulzer Ag · SIX:SUN
Sulzer — FY2005 Earnings Presentation
36 slides from Sulzer's earnings presentation, Feb 28, 2006
Slide 1: Solid Results – The Foundation of Success
Annual Results Presentation 2005 Solid Results – The Foundation of Success February 28, 2006 Annual Results 2005 | 28/02/2006 | page 1
Slide 2: Agenda
Agenda Review Ulf Berg Financial Results Bruno Allmendinger Outlook and Targets Ulf Berg Corporate Governance Ulf Berg Annual Results 2005 | 28/02/2006 | page 2
Slide 3: Sulzer Today
Sulzer Today Approximately 9,600 employees Sales of approximately CHF 2.5 billion Four core divisions, clearly-defined main markets One central research and development unit to support the divisions Sulzer Sulzer Sulzer Sulzer Turbo in %1 Pumps Metco Chemtech Services Oil and gas Upstream (p
Slide 4: Markets
Markets Sulzer's activities in the areas: Oil and gas Turbines and power generation Automotive Sulzer Pumps Sulzer Turbo Services Sulzer Metco Sulzer Chemtech Annual Results 2005 | 28/02/2006 | page 4
Slide 5: 2005 At a Glance
2005 At a Glance in millions CHF 2005 2004 Strong growth continued Order intake 2 635.1 2 197.6 Profit rise carried by the three largest Sales 2 498.2 2 067.0 divisions; overcompensation of closing cost of Sulzer Hexis EBITA Sulzer 166.8 135.6 Restructuring at Sulzer Turbo EBITA core divisions
Slide 6: Management Principles
Management Principles External Growth Organic Growth Operational Excellence Annual Results 2005 | 28/02/2006 | page 6
Slide 7: Operational Excellence 2005: Sulzer Core Divisions – Solid Performance
Operational Excellence 2005 Sulzer Core Divisions – Solid Performance Operating Income (EBITA) Operating Net Cash Flow1) Core divisions in millions CHF in millions CHF Other 200 Core divisions 200 14 Sulzer Hexis 155 160 160 160 24 131 67 120 21 120 185 80 80 59 128 97 107 40 40 0 0 –15 –16 –16 –32
Slide 8: Operational Excellence 2005: Sulzer Builds on Solid Foundations
Operational Excellence 2005 Sulzer Builds on Solid Foundations Return on Sales (ROS) Return on Capital (ROCE) Core divisions Core divisions 18% 8% 7.5% 16.4% 6.3% 6% 12.0% 5.2% 12% 4.7% 8.2% 4% 7.3% 6% 2% 0% 0% 2002 2003 2004 2005 2002 2003 2004 2005 Sulzer Pumps and Sulzer Chemtech Core divisio
Slide 9: Sulzer’s Perception of its Markets
Sulzer’s Perception of its Markets Market condition 10 Very good Good 5 Oil and gas 1) Stable CPI 0 Pulp and paper Power generation Aero Automotive Bad -5 02 H1 02 H2 03 H1 03 H2 04 H1 04 H2 05 H1 05 H2 1) Chemical processing industries Annual Results 2005 | 28/02/2006 | page 9
Slide 10: Markets in a Good Condition
Markets in a Good Condition Growth from Improved Products and Market Coverage Order intake CAGR1) Organic Growth Organic Growth Nominal Growth 2005 2004 2002–2005 Sulzer Pumps 13.5% 12.4% 13.1% Sulzer Metco 9.0% 16.0% 10.9% Sulzer Chemtech 20.5% 13.9% 11.5% Sulzer Turbo Services 7.5% 19.6% 8.0% Core
Slide 11: Selective Acquisitions
Selective Acquisitions 2005 Annual Sales in millions CHF Sulzer Chemtech Cana-Tex, USA ~30 Extending the portfolio to offer world-wide maintenance services for separation columns 2004 Sulzer Pumps Johnston, Paco and Crown pump ranges, ~120 USA, China Reinforcing position in power generation and
Slide 12: Acquisition and Integration
Acquisition and Integration Building up processes and competences Cana-Tex (USA) Integration going well Business better than planned Johnston, Paco and Crown pump ranges (USA, China) All service centers merged, three sites sold Manufacturing converted to lean production Business better tha
Slide 13: Sulzer Pumps
Sulzer Pumps Market leader in pump technology and hydraulics No. 1: Pulp and Paper No. 2: Oil and Gas No. 4: Power Generation Annual Results 2005 | 28/02/2006 | page 13
Slide 14: Sulzer Pumps
Sulzer Pumps Strong growth and good profitability in millions CHF 2005 2004 Good performance on all levels Order intake 1 367.5 1 073.0 Operational excellence, ROCE >25% High growth rates > market Good acquisition integration Order backlog as of 31.12. 667.2 508.2 The 8% ROS target set for
Slide 15: Sulzer Metco
Sulzer Metco Leader in surface technology No. 1: Coating equipment No. 1: Coating materials No. 3: Coating services Annual Results 2005 | 28/02/2006 | page 15
Slide 16: Sulzer Metco
Sulzer Metco Remarkable performance improvement in millions CHF 2005 2004 Focus on operational excellence since late 2004 has paid off Order intake 589.2 534.2 Increased return on sales (ROS) Better delivery processes Order backlog as of 31.12. 75.6 66.1 2004 acquisitions sucessfully integra
Slide 17: Sulzer Chemtech
Sulzer Chemtech Components and services for separation technology and static mixing No. 2: Separation columns No. 1: Static mixers (at high viscosity) Annual Results 2005 | 28/02/2006 | page 17
Slide 18: Sulzer Chemtech
Sulzer Chemtech Success through technological leadership in millions CHF 2005 2004 Excellent operational results High ROS and ROCE Order intake 415.5 346.0 Growth signalizes competence and customer proximity Order backlog as of 31.12. 177.6 147.0 Cana-Tex acquisition performing well Sales 38
Slide 19: Sulzer Turbo Services
Sulzer Turbo Services Globally leading independent service provider No. 1: Industrial gas turbines No. 1: Steam turbines No. 1: Turbo-compressors Annual Results 2005 | 28/02/2006 | page 19
Slide 20: Sulzer Turbo Services
Sulzer Turbo Services Strong and weak performances in millions CHF 2005 2004 USA Fast market recovery / high growth Order intake 244.0 226.1 Very good results Order backlog as of 31.12. 82.7 74.0 The Netherlands Stagnation and earnings weakness Restructuring Sales 241.3 213.0 Midrange
Slide 21: Agenda
Agenda Review Ulf Berg Financial Results Bruno Allmendinger Outlook and Targets Ulf Berg Corporate Governance Ulf Berg Annual Results 2005 | 28/02/2006 | page 21
Slide 22: Operating Income Year-on-Year
Operating Income Year-on-Year in millions CHF 2005 20041) U Sulzer Pumps 98.2 63.2 35.0 Sulzer Metco 36.1 18.6 17.5 Sulzer Chemtech 40.6 30.0 10.6 Sulzer Turbo Services 10.0 16.5 –6.5 Subtotal core divisions 184.9 128.3 56.6 Sulzer Hexis –32.2 –16.5 –15.7 Other 14.1 23.8 –9.7 Total before goodwill a
Slide 23: Other—Once Again Good Contribution
Other—Once Again Good Contribution Operating income CHF 14.1 million (CHF 23.8 million in 2004) Real Estate: Total EBIT over CHF 20 million (CHF 48 million in 2004) (operationally non essential) – Gains from sales slightly below prior year – Income from rentals gradually declining (sales) – Prior
Slide 24: From Operating Income to Net Income
From Operating Income to Net Income in millions CHF 2005 2004 U U% Operating income (EBITA) 166.8 135.6 31.2 +23% Goodwill amortization — –28.0 28.0 Operating income (EBIT) 166.8 107.6 59.2 +55% Financial income 14.2 –1.7 15.9 Income taxes –50.3 –33.8 –16.5 in % income before tax (EBT) 27.8% 31.9% N
Slide 25: Strong Cash Flow Generation
Strong Cash Flow Generation in millions CHF 2005 2004 U Cash flow generation by core divisions Operating income (EBITA) 184.9 128.3 56.6 Depreciation 74.9 69.7 5.2 EBITDA 259.8 198.0 61.8 Change net current assets/provisions –40.0 13.8 –53.8 Capex net1) –60.0 –58.9 –1.1 Net operating cash flow (core
Slide 26: Solid Balance Sheet, High Financing Potential
Solid Balance Sheet, High Financing Potential Net Liquidity Balance Sheet Ratios Cash and marketable securities Liabilities Gearing in % Debt Equity Equity in % of total assets Net liquidity In millions CHF Total assets 600 551 In millions CHF 444 3000 60% 407 385 400 2500 50% 305 200 2000 40% 72 21
Slide 27: Agenda
Agenda Review Ulf Berg Financial Results Bruno Allmendinger Outlook and Targets Ulf Berg Corporate Governance Ulf Berg Annual Results 2005 | 28/02/2006 | page 27
Slide 28: Sulzer’s Perception of its Markets
Sulzer’s Perception of its Markets State of the market 10 Very good Good 5 Oil and gas Stable CPI1) 0 Pulp and paper Power generation Aero Automotive Bad -5 02 H1 02 H2 03 H1 03 H2 04 H1 04 H2 05 H1 05 H2 06 H1 06 H2 07 H1 07 H2 1) Chemical processing industries Annual Results 2005 | 28/02/2006 | pa
Slide 29: New Midrange Targets for Margins and Growth
New Midrange Targets for Margins and Growth Sulzer Sulzer Sulzer Sulzer Core Pumps Metco Chemtech Turbo Services Divisions 30% Return on 20% sales (ROS) 11.0% 10.0% 10.4% 10.0% 9.3% 10% >8% 7.8% 6.2% 7.5% 4.1% 0% 30.6% 30% 25.7% Return on >20% >20% 18.3% capital 20% 15.0% 15.0% 16.4% employed 8.2% 1
Slide 30: Conclusion
Conclusion Market positioning Stronger focus on M&A Best-practice integration Principle: Discipline and return on capital Organic growth Profit before growth Investment in our sales processes Investment in products and innovation Customer satisfaction is the benchmark Building on the f
Slide 31: Agenda
Agenda Review Ulf Berg Financial Results Bruno Allmendinger Outlook and Targets Ulf Berg Corporate Governance Ulf Berg Annual Results 2005 | 28/02/2006 | page 31
Slide 32: Annual General Meeting 2006: Dividend
Annual General Meeting 2006: Dividend CHF 16 Wednesday April 12, 2006, 14 14 10 a.m. in the Eulachhalle, 12 Winterthur 10 9 Proposed dividend: 8 CHF 14.– per share 6 6 (last year: CHF 9.–) 6 4 Dividend yield: approx. 2% 2 0 2002 2003 2004 2005 Annual Results 2005 | 28/02/2006 | page 32
Slide 33: Annual General Meeting 2006: Board of Directors
Annual General Meeting 2006: Board of Directors Proposed for reelection: Daniel Sauter Annual Results 2005 | 28/02/2006 | page 33
Slide 34: Solid Results – The Foundation of Success
Solid Results – The Foundation of Success Annual Results 2005 | 28/02/2006 | page 34
Slide 35: Safe Harbor Statement
THE SAFE HARBOR STATEMENT UNDER THE US PRIVATE SECURITIES LITIGATION REFORM ACT 1995 This presentation contains forward-looking statements, including but not limited to, projections of future performance of materials and products, containing risks and uncertainties. These statements are subject to c
Slide 36: Contact
Contact Sulzer Ltd Zürcher Str. 14 CH-8401 Winterthur, Switzerland Telephone +41 52 262 11 22 Telefax +41 52 262 01 01 www.sulzer.com Corporate Communications and Investor Relations Telephone +41 52 262 72 72 Telefax +41 52 262 00 25 E-Mail communications@sulzer.com Annual Results 2005 | 28/02/2