Bond Investor Presentation

Transcription

1 8 th Swiss Bond Congress Zürich September 22, 2016 Christoph Ladner Head Investor Relations Thomas Zickler Head Group Treasury

2 Thomas Zickler, Head Group Treasury Thomas Zickler is Head of Group Treasury at Sulzer Ltd. Prior to joining Sulzer in October 2015, Thomas Zickler was Country Treasurer at ABB Switzerland Ltd and Head of SEC Reporting and USGAAP Accounting Principles at ABB Headquarters. Before ABB he worked 10 years for the Daimler Group in Germany. Thomas Zickler spent his entire working career in finance related functions and studied macroeconomics at the university in Frankfurt, Germany. Christoph Ladner, Head Group Communications & Investor Relations Christoph Ladner has joined Sulzer in June 2014 as Head of Investor Relations and since April this year has taken over also as Head of Group Communications. Prior to Sulzer, Christoph Ladner was for more than a decade a sell-side analyst covering Swiss industrial companies at KeplerCheuvreux and Bank Sarasin. Christoph Ladner holds a master equivalent degree of business science of the university of Fribourg, Switzerland. 2

3 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 uncertainties. These forward-looking statements are subject to change based on known or unknown risks and various other factors, which could cause the actual results or performance to differ materially from the statements made herein. 3

4 Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 4

5 Sulzer is an attractive investment with strong fundamentals STRONG BUSINESS FUNDAMENTALS Focusing on leading positions in long-term attractive markets Equipment and services for performance-critical applications Diversified business portfolio with high aftermarket share Global footprint with a strong presence in emerging markets ATTRACTIVE GROWTH POTENTIAL Self help through Sulzer Full Potential program well under way Strong balance sheet allows for bolt-on small- to medium-sized acquisitions Commitment to efficient capital structure and financial discipline 5

6 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 Pump technology and solutions 52% Share of order intake Order intake (in millions of CHF) Rotating Equipment Services Service solutions for rotating equipment 24% Share of order intake 698 Order intake (in millions of CHF) Chemtech Separation technology and services, mixing and dispensing systems 24% Share of order intake 709 Order intake (in millions of CHF) Employees (FTE) as of Dec 31, Employees (FTE) as of Dec 31, Employees (FTE) as of Dec 31, 2015

7 O&G exposure mitigated by geographic and aftermarket balance Order intake 2015 split by market Order intake 2015 split by region Order intake 2015 split by type 7

8 Performance-critical applications throughout oil and gas value chain Offshore production, FPSO, FLNG Equipment Water injection Seawater lift Firewater systems Crude off-loading Produced water separation technology Services Rotating equipment services Equipment Oil transport and boosting Pipelines Services Oil and gas pipeline services Equipment Subsea Multiphase and single phase pumps Services Pump services Equipment Water injection Water transfer Firewater Onshore production Services Rotating equipment services Gas processing, refining, petrochemical Equipment Process pumps for cracking, coking, gas-to-liquids, and coal-toliquids processes Separation Polymer and process technologies Services Rotating equipment services Turnaround and tower field services 8

9 Performance-critical applications across power generation segments Nuclear Hydro Coal Solar Carbon capture and storage Geothermal Distributed power Biomass Waste-toenergy Combined cycle Wind Equipment Solutions for power generation Services Boiler feed water Cooling water Condensate extraction Molten salt circulation Carbon capture and storage Power recovery (reverse running pumps) Auxiliary pumps Pumps Compressors Turbines Motors and engines Generators 9

10 Serving the water cycle with mostly standard applications in wastewater Municipal water treatment Municipal water distribution Municipal water intake Dewatering Wastewater Treatment Industrial water and wastewater Domestic and commercial wastewater collection Municipal wastewater treatment and storm water retention Municipal wastewater collection and flood protection Solutions for water Submersible pumps Mixers and agitators Aeration systems Compressors Vertical pumps High pressure pumps Control and monitoring Key applications Wastewater collection and treatment Clean water abstraction and transport Desalination Mine and construction dewatering Water transport and production Municipal wastewater 10

11 Leading positions in selected general industry segments Pulp and Paper Health Care Market leader Tight customer relationships and references Strong process knowledge and long history Extensive installed base drives aftermarket business Leveraged Sulzer capability into health care Unique two-component mixing and dispensing systems Broad product portfolio Co-creating products with users State of the art application center 11

12 Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 12

13 Oil and gas market downturn continues Oil and Gas No rebound expected before H at best Project delays, re-bidding and pricing pressure ~46% Upstream Midstream Downstream ~10% ~7% ~29% Customers squeezing costs Postponements of nonessential purchases also impact aftermarket Some early signs of resuming project activity Down significantly vs. previous years Some opportunities in H2 (Americas) Regulatory and environmental concerns contribute to slowdown Pockets of activity at steady levels (Middle East) Fierce price competition Capex constraints continue Slight pick-up from delayed maintenance Order intake share H

14 O&G CAPEX expectations 1 continue to be reduced 1. Bloomberg figures and consensus estimates as of August 28,

15 All other market segments up or flat Power Water General Industry ~17% ~13% ~24% Overcapacity in fossil and slowdown in China US still driven by gas, some nuclear activity Pricing pressure carried over from O&G slump Municipal water stable in continental Europe, China and US Slight pick-up in Brazil Desalination active in Middle East Pulp & Paper solid in Europe and Americas, overcapacity in China Fertilizers and healthcare with positive outlooks Metals and Mining slump Order intake share H

16 Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 16

17 Sulzer Full Potential (SFP) program guides our transformation journey SFP key pillars SFP key characteristics STRATEGY Portfolio OPERATING MODEL Organization OPERATIONAL EXCELLENCE Procurement Initiated in late Sets out to complete Sulzer s transformation into a marketoriented, globally operating and integrated company. Focus areas Innovation/R&D Integration Operational excellence G&A Go-to-Market Service Targets to achieve total annual cost savings of CHF 200m in a steady state from 2018 onwards. Mitigates the current market headwinds and closes the profitability gap to top-tier competitors. 17

18 Sulzer Full Potential continues to pick up speed Cost savings by lever (in CHF millions) ~200m H1 16: 36m FY 15: 36m Indirect Procurement Pumps Equipment SG&A Rotating Eqt. Service Chemtech 2018 steady state Highlights H Global procurement organization fully operational Advanced production planning tools increase flexibility; Acceleration of value engineering Closure of Oberwinterthur Chemtech plant announced SG&A: finance processes harmonized 18

19 SFP well on track to deliver cost savings of ~ CHF 200m by (in CHF millions) ~200 Cost savings (excl. direct procurement) ~ H2 E ~ CHF 72m achieved to date (P&L impact) 75% of CHF 200m secured through actions already launched H1 A All restructuring to be launched in 2016 Main risk is timing Implementation costs 31 H1 A H2 E ~ ~ A 2016E 2017E 2018E 1 vs baseline 19

20 Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 20

21 Stable sales and opebita despite oil & gas headwinds Key figures In CHF millions H H YOY YOY adj. 1 Order intake 1,423 1, % -9.1% Order intake gross margin 34.6% 32.9% Order backlog (Dec 31) 1,548 1, % Sales 1,381 1, % -0.1% opebita % 0.8% oprosa % 7.1% 7.1% EBIT % ROS % 5.9% 3.4% Net income % EPS (in CHF) % Free cash flow % FTEs (June 30) 13,876 15, % Commentary Q2 orders down 5% YOY 1, but up 8% QOQ Order intake gross margin up on mix effect Order backlog stabilized Sales and opebita stable despite continued headwinds in O&G market and significant price pressure EBIT increased due to gain on pension plan of CHF 35.4m FCF lower due to lower advance payments and net working capital timing 1 Adjusted for currency effects 21

22 Orders up quarter-on-quarter Order intake (in CHF millions) Quarterly order intake development Commentary % Q2 on Q Drivers of Q2 order intake: PE down 7% YOY 1 on significant decline in O&G, but up sequentially (also in O&G) RES down 5% YOY 1, despite O&G slightly up (YOY and QOQ) CT flat YOY 1 and slightly up QOQ with a slight decline in O&G balanced by the other segments FX impact in Q2 CHF 5.4m (CHF 16.6m for H1 16) Acquisition effect in Q2 CHF 26.1m (CHF 35.5m for H1 16) Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q Adjusted for currency effects 22

23 SFP savings fully offsetting headwinds Operational EBITA (in CHF millions ) 98-1 Headwinds ~2.6pp SFP cost savings ~2.6pp Significant price pressure in O&G Mainly underabsorption H1 15 Volume Margin Mix Other SFP H1 16 costs 7.1% 1 Calculated based on H sales oprosa% unchanged %

24 Amortization 27 Depreciation 35 FCF down on lower customer advance payments and net working capital timing Free Cash Flow (in CHF millions ) Fewer large projects Net income H1 16 Inventories Accounts receivable Accounts payable Net advance payments D&A Capex Others FCF H

25 Sulzer has one of the strongest balance sheet compared to peers (after special dividend) (in CHF millions) Net liquidity Net debt / EBITDA versus industry peers 1, x x 1.4x 0.7x 1.2x 1.2x 0.2x 0.1x 0.6x 1.3x (0.2x) 200 (1.0x) (2.0x) (2.0x) (3.0x) Sulzer Industry peers 1. Sulzer June 2016 (after special dividend of CHF 500m and regular dividend of CHF 120m paid in April 2016) 2. Net debt / EBITDA Sulzer calculated with opebitda Industry peers include: Flowserve, Weir, SPX Flow, Xylem, ITT, Ebara, KSB, Wood Group, Pentair 25

26 Agenda Introduction to Sulzer Market Outlook Sulzer Full Potential Key Financials Outlook 26

27 Financial guidance Order Intake 2 At higher end of previously communicated range of down 5 10% Sales 2 down 5 10% Operational ROSA 3 % around 8% 1 As of July 26, Adjusted for currency effects 3 Operational EBITA divided by sales 27

28 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 a shared industrial core in high-precision plastic injection molding technologies Attractive top-line synergies through complementary regional manufacturing footprints Geka is expected to generate sales of CHF ~165m in 2016 at a opebita margin of ~13% The transaction is expected to close in Q3 We also acquired PC Cox on April 4, dispensers specialist with CHF 20m sales in 2016 Pro-forma 2016, SMS+GEKA+PC Cox CHF ~365m sales OpEBITA CHF ~63m (~17% oprosa) Broken out of Chemtech, will report to CEO at closing 28

29 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% YOY 1 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% with SFP savings mitigating headwinds SFP progressing well SFP savings in H1 of CHF 36m, bringing total SFP savings to date to CHF 72m Accelerating SFP and making it more robust Outlook Updated for order intake: higher end of previous range of down 5 10% Confirmed for sales: down 5 10% Confirmed for oprosa: around 8% 1 Adjusted for currency effects 29

30 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 factors that could cause the actual results or performance to differ materially from the statements made herein. Furthermore, the information shown herein has been compiled to the best knowledge of the authors. However, Sulzer Ltd. and its affiliated companies, including all directors, officers and employees cannot assume any responsibility for the quality of the information, and therefore any representations or warranties (expressed or implied) as to the accuracy or completeness of the information is excluded. 30