Sulzer Ag · SIX:SUN

Sulzer — Debt Investor Presentation (June 2016)

20 slides from Sulzer's debt investor presentation, Jun 3, 2016

  1. Slide 1: Bond Investor Presentation

    Bond Investor Presentation Thomas Dittrich | CFO | June 3, 2016 Bond Investor Presentation 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 development

  2. Slide 2: Sulzer is an attractive investment with strong fundamentals

    Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 3 Bond Investor Presentation Sulzer is an attractive investment with strong fundamentals STRONG BUSINESS FUNDAMENTALS  Focusing on leading positions in long-term attractive markets  Equipment and services for

  3. Slide 3: A Leading Equipment and Service Provider

    A Leading Equipment and Service Provider Sulzer creates reliable and sustainable solutions for its markets oil and gas, power, water, and the general industry Engineering and application expertise in: Pumps Equipment Rotating Equipment Services Chemtech Pump technology and solutions Service solution

  4. Slide 4: Performance-critical applications throughout oil and gas value chain

    Performance-critical applications throughout oil and gas value chain Offshore production, FPSO, FLNG Equipment Services Pipelines  Water injection  Rotating Equipment Services  Seawater lift equipment  Oil transport  Oil and gas pipeline  Firewater systems services and boosting services  Crud

  5. Slide 5: Serving the water cycle with mostly standard applications in wastewater

    Serving the water cycle with mostly standard applications in wastewater Solutions for water  Submersible pumps  Mixers and agitators Municipal water Domestic and distribution commercial  Aeration systems wastewater collection  Compressors  Vertical pumps  High pressure pumps  Control and moni

  6. Slide 6: O&G market challenging

    Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 11 Bond Investor Presentation O&G market challenging Oil and Gas Order intake (–13%1) 2015 vs 2014 50% Upstream Midstream Downstream ~16% ~4% ~30%  Activity strongly impacted  Midstream construction  High ref

  7. Slide 7: O&G CAPEX expectations reduced significantly since early 15

    O&G CAPEX expectations1 reduced significantly since early 2015 900 800 –20% –30% –30% 700 –6% 600 Capex USD bn –35% 500 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E Cumulated capex global 300 listed companies (USD bn, Jan 2015) Cumulated capex global 300 listed co

  8. Slide 8: Other Sulzer segments proved resilient

    Other Sulzer segments proved resilient Power Water General Industry 16% 13% 21% Order intake 2015 vs 2014  Good activity levels in Asia  Solid municipal water market  Overall positive environment driven by China and India in US and China particularly in Pulp and Paper  US driven by gas, EMEA  E

  9. Slide 9: Sulzer Full Potential (SFP) program guides our transformation journey

    Sulzer Full Potential (SFP) program guides our transformation journey SFP key pillars SFP – key characteristics STRATEGY OPERATING OPERATIONAL  Initiated in late 2014. Sets out to complete MODEL EXCELLENCE Sulzer’s transformation into a market-oriented, globally operating and Portfolio Organization

  10. Slide 10: SFP targets cost savings of approx. CHF 200m by 2018

    SFP targets cost savings of approx. CHF 200m by 20181 with implementation costs of 1.0–1.2x Steady state 2018 going forward (in CHF millions) ~200 ~160–200 Previous range given CHF 120–180m Targeted cost ~60-80 savings ~100–120 ~60-80 36 2015 2016 2017 2018 Expected implementation ~40–60 costs 79.5

  11. Slide 11: FY2015 impacted by headwinds in O&G

    FY2015 impacted by headwinds in O&G Key figures Commentary In CHF millions 2015 20141 YOY YOY adj.2  Q4 orders down 22% YOY2 Order intake 2'895.8 3'160.8 -8.4% -3.7%  Order intake gross margin Order intake gross margin 33.8% 33.5% 0.3pp 0.4pp slightly up on mix effects Order backlog (Dec 31) 1'510

  12. Slide 12: Sulzer Full Potential partially offset headwinds

    Sulzer Full Potential partially offset headwinds Operational EBITA (in CHF millions ) SFP cost savings Headwinds ~2pp ~1.2pp1 303 -22 36 254 -38 -22 -28 25 Impact of Translational headwinds in Higher share of impact: 13.1m O&G in PE and aftermarket in Mainly under- transactional lower volumes Pumps

  13. Slide 13: Sulzer has one of the strongest balance sheets compared to peers

    Sulzer has one of the strongest balance sheet compared to peers (after special dividend) Net liquidity Net debt / EBITDA (in CHF millions) versus industry peers1,2 1000 2.0x 1.4x 774 1.2x 1.2x 1.3x 800 696 1.0x 0.7x 0.6x 600 0.2x 0.1x – 400 2011 2012 2013 2014 2015 (0.2x) 200 (1.0x) 761 0 2011 2012

  14. Slide 14: Market assessment for 2016 and financial guidance

    Market assessment for 2016: O&G continues to be weak, flat to slight growth in other segments Oil & Gas Power Water General Industries 50% 16% 13% 21% 2016 market assessment  Further capex and  Conventional and  Growth driven by  Positive outlook for opex reductions nuclear growth municipal pulp

  15. Slide 15: Summary for credit investors

    Summary for credit investors  Significant market headwinds in 2015 expected to continue in 2016 – rebound will lead to over-proportional margin expansion  Unleashing Sulzer’s Full Potential  SFP accelerated and cost savings target increased from CHF 120–180m to CHF ~200m from 2018 onwards  Addit

  16. Slide 16: Swiss franc recovered, but not fully against Euro

    Swiss franc recovered, but not fully against Euro CHF/EUR Sulzer FX exposure CHF/USD 31 Bond Investor Presentation EBIT impacted by SFP costs of CHF 80m and legal case of CHF9m Operational EBITA to EBIT (in CHF millions ) 254 SFP costs of 80m -42 -41 -13 121 -28 -9 PE 24 RES 10 CT 7 opEBITA Amortiza

  17. Slide 17: Core net income and dividend development

    Core net income In CHF millions 2015 2014 Net income reported 75.0 278.1 Metco divestiture – -435.7 Impairment on tangible and intangible assets 13.0 340.4 Amortization 42.3 43.3 Restructuring expenses 41.2 11.2 Other non-operational items 36.7 -23.0 Tax impact -33.2 -8.9 Core net income 175.0 205.4

  18. Slide 18: SFP cost savings by lever

    SFP cost savings by lever Cost savings by lever 2 (in CHF millions) ~200m X See details on following slides 2017 3 2 2016 1 Cost savings 2015 of CHF 36m (vs. 18m expected) PE CT 2018 steady Procurement operational G&A Service Go-to-market operational state excellence excellence  Comprehensive progr

  19. Slide 19: Strengthen operational capabilities to compete efficiently

    2 Strengthen operational capabilities to compete efficiently in the years to come Objectives Achievements  Adjust global footprint  Reorganization of PE to market demand and division into three develop global market-oriented business production strategy units  Leverage best cost  Introduction of

  20. Slide 20: Notes

    Notes 39 Bond Investor Presentation This document may contain forward-looking statements, including, but not limited to, projections of financial developments and future performance of materials and products, containing risks and uncertainties. These statements are subject to change based on known a

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