Slide 1: Midyear 2016 results presentation
Midyear 2016 results presentation Greg Poux-Guillaume, CEO | Thomas Dittrich, CFO | July 26, 2016
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: Executive Team
Executive Team CEO Note: D. Bischofberger from September 1 T. Wintergerste ad interim Greg Poux-Guillaume CHRO CFO CCMO Armand Sohet Thomas Dittrich Frédéric Lalanne Rotating Equipment Pumps Equipment Chemtech Services César Montenegro Daniel Bischofberger Torsten Wintergerste Midyear 2016 results p
Slide 4: Agenda
Agenda Market Review Sulzer Full Potential Financial Review Outlook Midyear 2016 results presentation 4 | July 26, 2016 |
Slide 5: Oil and gas market downturn continues
Oil and gas market downturn continues Oil and Gas No rebound expected before H2 2017 at best Project delays, re-bidding and pricing pressure ~46% Upstream Midstream Downstream ~10% ~7% ~29% Customers squeezing costs Down significantly vs. Pockets of activity at steady previous years levels
Slide 6: All other market segments up or flat
All other market segments up or flat Power Water General Industry ~17% ~13% ~24% Overcapacity in fossil Municipal water stable Pulp & Paper solid in and slowdown in China in continental Europe, Europe and Americas, China and US overcapacity in China US still driven by gas, some nuclear activ
Slide 7: Agenda
Agenda Market Review Sulzer Full Potential Financial Review Outlook Midyear 2016 results presentation 7 | July 26, 2016 |
Slide 8: Sulzer Full Potential continues to pick up speed
Sulzer Full Potential continues to pick up speed Cost savings by lever (in CHF millions) ~200m 2017 2016 H1 16: 36m FY 15: 36m Indirect Pumps Rotating Eqt. 2018 steady SG&A Chemtech Procurement Equipment Service state Highlights H1 2016 Global procurement organization fully operational Advanced
Slide 9: SFP well on track to deliver cost savings of ~CHF 200m by 2018
SFP well on track to deliver cost savings of ~ CHF 200m by 20181 (in CHF millions) ~200 ~160-200 CHF 72m achieved to date (P&L impact) Cost savings (excl. direct ~100-120 75% of CHF 200m procurement) secured through actions H2 E already launched All restructuring to be 36 36 H1 A launched in 2
Slide 10: Agenda
Agenda Market Review Sulzer Full Potential Financial Review Outlook Midyear 2016 results presentation 10 | July 26, 2016 |
Slide 11: Stable sales and opEBITA despite oil & gas headwinds
Stable sales and opEBITA despite oil & gas headwinds Key figures Commentary In CHF millions H1 2016 H1 2015 YOY YOY adj.1 Q2 orders down 5% YOY1, but Order intake 1,423 1,584 -10.1% -9.1% up 8% QOQ Order intake gross margin 34.6% 32.9% Order intake gross margin up Order backlog (Dec 31) 1,548 1,
Slide 12: Orders up quarter-on-quarter
Orders up quarter-on-quarter Order intake Quarterly order intake development Commentary (in CHF millions) +8% Q2 on Q1 Drivers of Q2 order intake: 828 859 PE down 7% YOY1 on significant 801 784 decline in O&G, but up 755 739 sequentially (also in O&G) 719 685 685 RES down 5% YOY1, despite 627
Slide 13: Sales on last year's level despite difficult market
Sales on last year’s level despite difficult market Sales By region In CHF millions H1 2016 H1 2015 YOY YOY adj.1 Total Sulzer 1,381 1,393 -0.9% -0.1% 18% Total Divisions 1,385 1,400 -1.0% -0.3% 43% Pumps Equipment 746 727 2.6% 3.3% Rotating Equipment Services 325 334 -2.8% -1.4% Chemtech 315 339 -7
Slide 14: SFP savings fully offsetting headwinds
SFP savings fully offsetting headwinds Operational EBITA (in CHF millions ) SFP cost savings Headwinds ~2.6pp ~2.6pp1 98 99 -1 36 -11 -24 -1 Significant Mainly under- price pressure absorption in O&G H1 15 Volume Margin Mix Other SFP H1 16 costs opROSA% 7.1% 7.1% unchanged 1 Calculated based on H1 2
Slide 15: OpEBITA stable across divisions
OpEBITA stable across divisions Operational EBITA In CHF millions H1 2016 H1 2015 YOY YOY adj.1 Total Sulzer 98.7 98.3 0.4% 0.8% opROSA % 7.1% 7.1% Divisions 96.0 93.3 2.9% 3.4% opROSA % 6.5% 6.3% PE margin stable on Pumps Equipment 31.7 31.7 0.0% 2.5% stable volumes and opROSA % 4.3% 4.4% SFP impac
Slide 16: EBIT reflects SFP costs and one-time change in Swiss pension plan
EBIT reflects SFP costs and one-time change in Swiss pension plan Operational EBITA to EBIT (in CHF millions ) 99 SFP costs of 31m 82 -21 -17 -6 -8 35 PE 4.3 RES 1.2 CT 10.1 Other 0.9 opEBITA Amortization Restructuring Impairment Other non- Changes in EBIT H1 16 of assets operational Swiss pension H
Slide 17: Core net income stable, tax rate slightly down in H1
Core net income stable, tax rate slightly down in H1 15 EBIT to Net income shareholders (in CHF millions ) 82 Core net income 63m (H1’15: 66m) -14 0 51 50 -17 0 Income tax rate: 25% EBIT Financial result Income from Taxes Reported Minorites Reported H1 16 associates net income net income H1 16 share
Slide 18: FCF down on lower customer advance payments and net working capital timing
FCF down on lower customer advance payments and net working capital timing Free Cash Flow (in CHF millions ) 62 51 -6 -6 Depreciation 35 -19 -34 Amortization Fewer large 27 projects 4 -17 -27 Net income Inventories Accounts Accounts Net advance D&A Capex Others FCF H1 16 receivable payable payments
Slide 19: Net cash after special and regular dividends – one of the strongest balance sheets
Net cash after special and regular dividends – one of the strongest balance sheets in our industry Balance Sheet (in CHF millions ) 2015 H1 2016 1217 1'200 Balance sheet June 2016: 696 Total net cash of: CHF 60m 800 571 FCF of CHF 4m 400 Special dividend payment of CHF 498m 60 Regular divide
Slide 20: Agenda
Agenda Market Review Sulzer Full Potential Financial Review Outlook Midyear 2016 results presentation 20 | July 26, 2016 |
Slide 21: Financial guidance 2016
Financial guidance 20161 At higher end of previously Order Intake2 communicated range of “down 5–10%” Sales2 down 5–10% Operational ROSA3 % around 8% 1 As of July 26, 2016 2 Adjusted for currency effects 3 Operational EBITA divided by sales Midyear 2016 results presentation 21 | July 26, 2016 |
Slide 22: Doubling the size of SMS, Sulzer's most profitable business
Doubling the size of SMS, Sulzer’s most profitable business By acquiring Geka, we create a leader in innovative B2B mixing and applicator solutions Geka brings an additional vertical market segment to Sulzer Mixpac System (SMS) Geka adds critical mass to SMS Significant cost synergies through
Slide 23: Summary
Summary Order intake rebound despite continued challenging market conditions in O&G Q2 8% above Q1, second sequential quarter of growing orders H1 16 down 9.1% YOY1 but up 9.8% vs. H2 15 O&G orders up in Q2 versus Q1 Sales and opEBITA stable despite headwinds opROSA unchanged at 7.1% wit
Slide 24: Key reporting dates and contact
Key reporting dates and contact Financial Calendar October 20, 2015 9M 2016 order intake Your investor relations contact: Christoph Ladner Head of Investor Relations Sulzer Management Ltd Neuwiesenstrasse 15 Phone: +41 52 262 20 22 8401 Winterthur Mobile: +41 79 326 69 70 Switzerland E-mail: christo
Slide 25: Reconciliations and supplementary slides
Reconciliations and supplementary slides Midyear 2016 results presentation 25 | July 26, 2016 |
Slide 26: Exports from the UK are 6% of total Group sales
Exports from the UK are 6% of total Group sales, Imports into the UK are negligible (0.2%) In H1 2016 Exports from the UK ~6% of total sales Sales within UK ~5% of total sales Imports into the UK ~0.2% of total sales Midyear 2016 results presentation 26 | July 26, 2016 |
Slide 27: Headwinds in O&G continued to negatively impact order intake
Headwinds in O&G continued to negatively impact order intake Order intake by region In CHF millions H1 2016 H1 2015 YOY YOY adj.1 Total Sulzer 1,423 1,584 -10.1% -9.1% Total Divisions 1,428 1,590 -10.2% -9.1% 21% Pumps Equipment 731 835 -12.5% -11.5% 44% Rotating Equipment Services 344 364 -5.4% -3.
Slide 28: Operational EBITA to EBIT bridges for divisions
Operational EBITA to EBIT bridges for divisions In CHF millions PE RES CT Divisions Others Total opEBITA H1 2016 31.7 30.3 34.0 96.0 2.7 98.7 Amortization -9.0 -3.2 -8.3 -20.5 -0.9 -21.4 Restructuring costs -4.3 -1.2 -10.1 -15.6 -0.9 -16.5 Impairments on tangible and – -0.2 -5.4 -5.6 – -5.6 intagibl
Slide 29: Core net income
Core net income In CHF millions H1 2016 H1 2015 Net income reported 50.5 27.8 Impairment on tangible and intangible assets 5.6 0.0 Amortization 21.4 20.5 Restructuring expenses 16.5 7.9 Other non-operational items -26.5 22.3 Tax impact -4.2 -12.6 Core net income 63.3 65.9 Midyear 2016 results presen
Slide 30: Foreign exchange exposure
Foreign exchange exposure Sulzer FX exposure H1 2016 Others 23% USD 31% CHF 9% BRL 3% GBP CNY 11% 6% EUR 17% Midyear 2016 results presentation 30 | July 26, 2016 |
Slide 31: Forward-looking statements disclaimer
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 and unknown risks and various other f