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Sulzer Annual Results 2012
Page 1
Strong double-digit growth in orders and record high sales
Annual Results Presentation 2012
February 15, 2013
Sulzer Annual Results 2012 | slide 2
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.
Sulzer Annual Results 2012
Page 2
Sulzer Annual Results 2012 | slide 3
Agenda
Business Performance
Update on Strategic Priorities
Financial Results
Outlook and Conclusion
Sulzer Annual Results 2012 | slide 4
Highlights 2012
Strong double-digit growth in order intake and sales
Stable profitability and substantial increase of cash flow
Further strengthening of global production and service network
Strategic priorities defined
Solid balance sheet remained
Increased dividend proposed
Outlook 2013: moderate growth of orders and sales; profitability to improve slightly
Solid performance and well positioned for the future
Sulzer Annual Results 2012
Page 3
Sulzer Annual Results 2012 | slide 5
Key figures
in millions of CHF 2012 2011 % % adj.1
Order intake 4 023.4 3 566.1 +12.8% +3.9%
Order backlog (Dec 31) 1 829.2 1 864.0 –1.9%
Sales 4 021.6 3 577.9 +12.4% +4.1%
EBITDA 540.9 482.8 +12.0%
ROSDA (EBITDA in % of sales) 13.5% 13.5%
EBIT 409.5 364.1 +12.5%
ROS (EBIT/sales) 10.2% 10.2%
ROCE (EBIT/capital employed) 15.5% 18.8%
Net income attr. to shareholders 307.1 279.8 +9.8%
EPS (in CHF) 9.03 8.25 +9.5%
Free cash flow 347.9 82.4 –
Net liquidity (Dec 31) –95.9 –336.8 –
Employees (Dec 31) 17 936 17 002 +5.5%
1) Adjusted for currency effects as well as acquisitions and divestituresNote: Newly acquired Cardo Flow Solutions (herein after called wastewater pump business) consolidated as of August 1, 2011
Growth supported by acquisition and organic growth
Solid financials in a challenging environment
Strongly improved cash flow; net debt position reduced
Sulzer Annual Results 2012 | slide 6
Top-line development
Strong double-digit growth; sales at record level
4 023
3 566
2011 2012
Order intake(in millions of CHF)
1) Adjusted for currency effects as well as acquisitions and divestitures
Book-to-bill: 1.0
Order backlog:CHF 1829 million
Sales(in millions of CHF)
4 022
3 578
2011 2012
+13%nominal
(+4% adj.1)
+12%nominal
(+4% adj.1)
Sulzer Annual Results 2012
Page 4
Sulzer Annual Results 2012 | slide 7
307280
2011 2012
Bottom-line development
Stable double-digit profitability; net income further increased
410
364
2011 2012
Operating income (EBIT)(in millions of CHF)
Net income attributable to Sulzer’s shareholders(in millions of CHF)
8.25 EPS 9.03in CHF
+13%nominal
+10%nominal
10.2% ROS 10.2%
Sulzer Annual Results 2012 | slide 8
Guidance check 2012
2012 results: delivered as promised
High single-digit growth
High single-digit growth
Guidance:
To remain double-digit
Achievements: Check:
+12% nominal
+13% nominal
10.2%
Orders
Sales
ROS Achieved
Achieved
Achieved
Sulzer Annual Results 2012
Page 5
Sulzer Annual Results 2012 | slide 9
Krøger A/S
Acquisitions
Various acquisitions at various magnitudes in all four divisions in the last years
Latest additions were at the end of 2012/beginning of 2013:
Assets of the carbon business of Thermoset Inc. to complement Sulzer Metco’s high performance carbon-friction product line for the automotive business
Krøger, a transaction to complement Sulzer Chemtech’s product range in the dispenser business (Mixpac Systems)
2008 2009 2010 2011
TowerTech
Freeze Tech
Kühni
Select Trans-mission, Borg Warner assets
SAB
Preu
Sulzer India (taken private)
Dentaco
Dowding& Mills
DLC from Bekaert
Black Magic Crew (BMC)
Engenharia
Cardo Flow Solutions
Capime
2012
Hidrotecar
CGT Cold Gas Technology
Thermoset
Smaller bolt-on acquisitions in 2012
2013
Note: Dowding & Mills (Sulzer Turbo Services) and Cardo Flow Solutions (Sulzer Pumps) were of significant size; remaining acquisition of small- to midsized character
Monitoring the markets for further targeted acquisitions
Sulzer Annual Results 2012 | slide 10
Footprint changes in 2012
Decisions driven by market demand and strategic considerations
New production facility
Pump production facility in Kunshan, China opened to serve the local watermarkets
New service locations added
Brazil, Colombia, Russia, Singapore, South Korea, and Sweden
Other changes
Move of global headquarters of Sulzer Chemtech’s MTT1 business to Singapore
Additions from newly acquired companies
New pump production facility in Kunshan, China
Adding new service centers to increase customer proximity
1) Mass Transfer Technology
Sulzer Annual Results 2012
Page 6
Sulzer Annual Results 2012 | slide 11
Major production and service facilities(not exhaustive, for illustration purpose only)
Global headquarters, Switzerland
Footprint
Truly global with a focus on market and customer needs
170 production and service sites serving the world
Sulzer Annual Results 2012 | slide 12
Geographical breakdown – share of sales
North America:25%
Central and South America:8%
Africa:3%
Asia, Australia:23%
Europe:37%
Balanced presence and strong positions in emerging markets
39% of sales in emerging markets
Middle East:4%
Sulzer Annual Results 2012
Page 7
Sulzer Annual Results 2012 | slide 13
Market developments 2012 vs. 2011 – from a Sulzer viewpoint
Oil and Gas Power Water
TransportationGeneralindustry
Growth onhigh level
Moderate growthon low level
Note: Arrows indicative and for illustration purpose only
Growth
Moderate growthon high level
FlatMixed picture
Sulzer Annual Results 2012 | slide 14
Markets – share in sales
Oil and Gas Power Water
Transportation General industry
Upstream, pipelines, downstream Production and transport, wastewater
Automotive, aviation, rail, shipping
Conventional, renewable
Pulp and paper, mining, dental, other
40%(39%)
Sales share2012 (2011)
15%(18%)
12%(8%)
9%(10%)
24%(25%)
Sulzer Annual Results 2012
Page 8
Market leader in pump technology and solutionsSulzer Pumps
Main markets
Oil and gas (upstream, midstream and downstream)
Water (production and transport, wastewater)
Power generation
Main products
Engineered pumps
Configured pumps
Associated services
Sulzer Annual Results 2012 | slide 16
Sulzer PumpsKey figures
in millions of CHF 2012 2011 % % adj.1
Order intake 2 094.3 1 705.6 +22.8% +7.1%
Order backlog (Dec 31) 1 309.1 1 343.5 –2.6%
Sales 2 097.5 1 747.8 +20.0% +5.9%
EBITDA2 245.9 210.2 +17.0%
ROSDA (EBITDA in % of sales) 11.7% 12.0%
EBIT3 191.2 168.2 +13.7%
ROS (EBIT in % of sales) 9.1% 9.6%
ROCE (EBIT in % of capital employed) 13.1% 20.5%
Employees (Dec 31) 8 573 8 211 +4.4%
1) adjusted for currency effects as well as acquisitions and divestitures2) including non-recurring costs of CHF 7 million (2011: CHF 30 million) for acquisition of wastewater pump business3) including non-recurring costs of CHF 7 million (2011: CHF 30 million) and amortization charges for intangibles
of CHF 22 million (2011: CHF 9 million) for acquired wastewater business4) excluding 0.5-percentage-point higher corporate fees charged to divisions in 2012 compared with 2011 achievements
ROS 9.1% | 9.6%4
StableROCE 13.1%Value creating
Sales +20%Strong increase
| 9.6%4
Sulzer Annual Results 2012
Page 9
Sulzer Annual Results 2012 | slide 17
1817 1857
1576
1748
2098
9.6%
12.0%
9.1%
12.8%
11.0%
2008 2009 2010 2011 2012
Sales ROS in %
1) Excluding 0.5-percentage-point higher corporate fees charged to divisions
Sulzer PumpsBreakdown by market and geography
Sales by market segment Sales by geography
Remark: acquired wastewater pump business consolidated since August 2011 (mainly serving water market)
45%
17%
10%16%
23%
15% 15% 15%
46%50%
23%25%
2010 2011 2012
Water
Oil and gas
Power
General industry
Sales and ROS development (in millions of CHF)
9.6%1
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, AustraliaAfrica11%
5%
20%
7%
34%
23%
Sulzer Annual Results 2012 | slide 18
Sulzer PumpsHighlights 2012 and outlook 2013
Outlook 2013:
Moderate growth in order intake and an increase in sales expected. Profitability forecast to increase slightly.
Strategic priorities and highlights 2012:
New high efficiency products launched
Subsea products launched; long-term exclusive collaboration agreement with FMC Technologies signed
Service network and offering expanded
Additional production plant in Kunshan, China
Inclusion of high-tech coatings from Sulzer Metco
Outstanding services
Continuous operationalimprovements
Technology leadership
Collaborative advantage
Sulzer Annual Results 2012
Page 10
Market leader in surface solutionsSulzer Metco
Main markets
Transportation (Automotive, Aviation)
Power
General industry
Main products Coating materials (thermal spray) Coating systems (thermal spray)
Coating services
Sulzer Annual Results 2012 | slide 20
Sulzer MetcoKey financials
in millions of CHF 2012 2011 % % adj.1
Order intake 689.5 673.6 +2.4% +1.2%
Order backlog (Dec 31) 76.5 77.4 –1.2%
Sales 690.3 667.3 +3.4% +2.3%
EBITDA 91.7 91.9 –0.2%
ROSDA (EBITDA in % of sales) 13.3% 13.8%
EBIT 68.7 68.7
ROS (EBIT in % of sales) 10.0% 10.3%
ROCE (EBIT in % of capital employed) 17.1% 18.2%
Employees (Dec 31) 2 399 2 259 +6.2%
1) Adjusted for currency effects as well as acquisitions and divestitures2) Excluding 0.5-percentage-point higher corporate fees charged to divisions in 2012 compared with 2011 achievements
ROCE 17.1%Clearly value creating
Sales +3%Growth on high base
ROS 10.0% | 10.5%2
Stable
| 10.5%2
Sulzer Annual Results 2012
Page 11
Sulzer Annual Results 2012 | slide 21
744
556
624667
690
10.0%
10.3%
9.2%
3.7%
9.4%
2008 2009 2010 2011 2012
Sales ROS in %
11%
52% 51% 50%
36% 36% 37%
2%2%2% 11%10%
2010 2011 2012
Sulzer Metco Breakdown by market and geography
Sales by geographySales by market segment
Oil and gas
Power
General industry
Transportation
Sales and ROS development (in millions of CHF)
10.5%1
1) Excluding 0.5-percentage-point higher corporate fees charged to divisions 2) Automotive 22%; Aviation 28%
2
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, Australia
1%
52%
24%
2%
21%
Sulzer Annual Results 2012 | slide 22
Sulzer MetcoHighlights 2012 and outlook 2013
Outlook 2013:
Moderate growth in order intake and sales expected. Profitability forecast to increase slightly.
Outstanding services
Continuous operationalimprovements
Technology leadership
Collaborative advantage
Strategic priorities and highlights 2012:
Acquisition of carbon friction materials business
Strengthened coating service business with shop-in-shop center in China
Further progress with LEAN
Joined the CCAM1
Joint development of solutions together with Sulzer Chemtech
1) Commonwealth Center of Advanced Manufacturing, Virginia, USA
Sulzer Annual Results 2012
Page 12
Market leader for separation, mixing and service solutionsSulzer Chemtech
Main markets
Oil and gas (mainly downstream)
General industry
Main products
Separation solutions
Separation tower services
Two component mixing and dispensing systems
Sulzer Annual Results 2012 | slide 24
Sulzer ChemtechKey financials
in millions of CHF (as reported) 2012 2011 % % adj.1
Order intake 705.1 701.7 +0.5% –4.1%
Order backlog (Dec 31) 293.6 310.7 –5.5%
Sales 724.6 667.0 +8.6% +4.0%
EBITDA 105.5 97.8 +7.9%
ROSDA (EBITDA in % of sales) 14.6% 14.7%
EBIT 70.7 63.1 +12.0%
ROS (EBIT in % of sales) 9.8% 9.5%
ROCE (EBIT in % of capital employed) 16.3% 15.3%
Employees (Dec 31) 4 086 3 634 +12.4%
ROCE 16.3%Clearly value creating
Sales +9%Increased
ROS 9.8% | 10.3%2
Stable
1) Adjusted for currency effects as well as acquisitions and divestitures2) Excluding 0.5-percentage-point higher corporate fees charged to divisions in 2012 compared with 2011 achievements
| 10.3%2
Sulzer Annual Results 2012
Page 13
Sulzer Annual Results 2012 | slide 25
Sulzer ChemtechBreakdown by market and geography
Sales by market segment Sales by geography
Oil and Gas
General Industry
Transportation
64% 69% 70%
3%3%3%
27%28%33%
2010 2011 2012
823
632575
667725
10.2% 9.8%
8.6%
17.0%
9.5%
2008 2009 2010 2011 2012
Sales ROS in %
Sales and ROS development (in millions of CHF)
10.3%1
1) Excluding 0.5-percentage-point higher corporate fees charged to divisions 2) Automotive: two-component dispensing
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, AustraliaAfrica
3%
37%
5% 23%
32%
Sulzer Annual Results 2012 | slide 26
Sulzer ChemtechHighlights 2012 and outlook 2013
Outlook 2013:
High single-digit growth in order intake and sales expected. Profitability forecast to reach a double-digit level.
Strategic priorities and highlights 2012:
Start up of biopolymer pilot plant
Process technology test center put into operation
Expansion of service offering of static equipment
Expansion of capacity and capabilities in Asia, Australia
Joint service project in HPI plant with Sulzer Pumps
Outstanding services
Continuous operationalimprovements
Technology leadership
Collaborative advantage
Sulzer Annual Results 2012
Page 14
Leading independent service provider for rotating equipmentSulzer Turbo Services
Main markets
Oil and gas
Power
General industry
Main services for
Industrial gas and steam turbines
Turbo compressors
Generators and motors
Sulzer Annual Results 2012 | slide 28
Sulzer Turbo ServicesKey financials
in millions of CHF (as reported) 2012 2011 % % adj.1
Order intake 535.2 477.6 +12.1% +8.4%
Order backlog (Dec 31) 151.6 130.1 +16.5%
Sales 510.5 488.0 +4.6% +0.8%
EBITDA 71.6 69.2 +3.5%
ROSDA (EBITDA in % of sales) 14.0% 14.2%
EBIT 54.9 53.2 +3.2%
ROS (EBIT in % of sales) 10.8% 10.9%
ROCE (EBIT in % of capital employed) 14.8% 14.9%
Employees (Dec 31) 2 703 2 654 +1.8%
ROCE 14.8%Value creating
Sales +5%Increase
1) Adjusted for currency effects as well as acquisitions and divestitures2) Excluding 0.5-percentage-point higher corporate fees charged to divisions in 2012 compared with 2011 achievements
ROS 10.8% | 11.3%2
Stable
| 11.3%2
Sulzer Annual Results 2012
Page 15
Sulzer Annual Results 2012 | slide 29
314291
488511
399
10.8%11.3%
9.7%10.9%10.5%
2008 2009 2010 2011 2012
Sales ROS in %
Sales by market segment Sales by geography
Oil and gas
Power
General industry
32%
25%27% 22%
35%35%
38% 43% 43%
2010 2011 2012
Sales and ROS development (in millions of CHF)
11.3%1
1) Excluding 0.5-percentage-point higher corporate fees charged to divisions
Sulzer Turbo ServicesBreakdown by market and geography
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, Australia
7%
4% 36%
37%
16%
Sulzer Annual Results 2012 | slide 30
Sulzer Turbo ServicesHighlights 2012 and outlook 2013
Outlook 2013:
Moderate growth in order intake and an increase in sales expected. Profitability forecast to increase slightly.
Strategic priorities and highlights 2012:
New tools for turbine inspection implemented
Capabilities and resources added for LTSA1
strategy deployment
Service offerings in new markets launched
Further steps toward LEAN
Closer collaboration with the Sulzer divisions
1) Long-term service agreements (large and long-term relationship)
Outstanding services
Continuous operationalimprovements
Technology leadership
Collaborative advantage
Sulzer Annual Results 2012
Page 16
Sulzer Annual Results 2012 | slide 31
Agenda
Business Performance
Update on Strategic Priorities
Financial Results
Outlook and Conclusion
Sulzer Annual Results 2012 | slide 32
Vision and values
Vision:Our customers recognize us for our leading technology and services, delivering innovative and sustainable solutions.
We are committed to high standards and show respect for people.
We exceed the expectations of our
customers with innovative and
competitive solutions.
We perform on the basis of structured work
processes andLEAN principles.
Values:
Customer and people oriented, making sure that we act excellently
Sulzer Annual Results 2012
Page 17
Sulzer Annual Results 2012 | slide 33
Strategic priorities
Outstanding services
Continuous operationalimprovements
Technology leadership
Collaborative advantage
Oriented toward our customers with a focus onvalue creation and profitable growth
Profitable growth
Customerorientation
Midterm targets 2015
Sulzer Annual Results 2012 | slide 34
Strategic priorities
Outstanding services
Continuous operational
improvements
Technology leadership
Collaborative advantage
Share of sales in services 41%
Expansion of service network
Service offerings for new markets
Safety KPIs further improved
On-time delivery improved by 14% through LEAN initiatives
Cross-divisional projects launched
Continued partnerships with universities and technical institutes
Continued investments in R&D
Further expansion of technology portfolio
Further strengthening of service network
Expanding service offering for the power industry
Improvement programs for safe behavior and Safety KPIs
Leverage on-time delivery potential
Increasing focus on company-wide cooperation
Seizing additional opportunities for shared services
Actions 2013Achievements 2012
New innovative solutions launched
Technology portfolio expanded
Start up of biopolymer pilot plant
First achievements and further actions
Sulzer Annual Results 2012
Page 18
Sulzer Annual Results 2012 | slide 35
Agenda
Business Performance
Update on Strategic Priorities
Financial Results
Outlook and Conclusion
Sulzer Annual Results 2012 | slide 36
Financial highlights 2012
Double-digit growth of order intake and sales
Supported by acquisition and organic growth
Record level of sales
Strong financial performance
Return on sales in double-digits
Increased net income
Strong cash flow
Healthy financing and balance sheet
New credit line established
Capital structure solid
Increased dividend proposed
Strong financial performance and high cash flow
Sulzer Annual Results 2012
Page 19
Sulzer Annual Results 2012 | slide 37
millions of CHF 2012 2011 adj.1
Divisions 4 024.1 3 558.5 +13.1% +4.0%
Sulzer Pumps 2 094.3 1 705.6 +22.8% +7.1%
Sulzer Metco 689.5 673.6 +2.4% +1.2%
Sulzer Chemtech 705.1 701.7 +0.5% –4.1%
Sulzer Turbo Services 535.2 477.6 +12.1% +8.4%
Other –0.7 7.6 – –
Total 4 023.4 3 566.1 +12.8% +3.9%
1) adjusted for currency translation effects as well as acquisitions and divestitures
A strong year with more than CHF 4 billion of order intake
Order intake – by division
Sulzer Annual Results 2012 | slide 38
Strong growth in North America and Europe
Europe driven by high demand in Russia and supported by acquisition effect
Central and South America declined, mainly due to lower activity in Brazil
Asia, Australia continued to grow on a high level
Order intake – by region
millions of CHF 2012 2011
Europe 1 487.4 1 301.9 +14.2%
North America 1 091.5 891.1 +22.5%
Central and South America 296.7 334.3 –11.2%
Middle East 156.7 139.5 +12.3%
Asia, Australia 839.6 786.1 +6.8%
Africa 151.5 113.2 +33.8%
Total 4 023.4 3 566.1 +12.8%
37%
27%
7%
4%
21%
4%
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, AustraliaAfrica
Sulzer Annual Results 2012
Page 20
Sulzer Annual Results 2012 | slide 39
millions of CHF 2012 2011 % adj.1
Divisions 4 022.9 3 570.1 +12.7% +4.2%
Sulzer Pumps 2 097.5 1 747.7 +20.0% +5.9%
Sulzer Metco 690.3 667.3 +3.4% +2.3%
Sulzer Chemtech 724.6 667.0 +8.6% +4.0%
Sulzer Turbo Services 510.5 488.0 +4.6% +0.8%
Other –1.3 7.8 – –
Total 4 021.6 3 577.9 +12.4% +4.1%
1) adjusted for currency translation effects as well as acquisitions and divestitures
Record level of sales, supported by all four divisions
Total sales from services 1 632.2 1 457.9 +12.0% –in % of total sales 40.6% 40.7%
Sales – by division
Sulzer Annual Results 2012 | slide 40
Strong growth in North America and Europe
Europe driven by high demand in Russia and supported by acquisition effect
Central and South America declined, mainly due to lower activity in Brazil
Share of sales in emerging and developing markets: 39% (2011: 41%)
Sales – by region
millions of CHF 2012 2011
Europe 1 483.3 1 268.0 +17.0%
North America 1 015.9 837.1 +21.4%
Central and South America 306.5 330.4 –7.2%
Middle East 157.9 148.6 +6.3%
Asia, Australia 915.3 835.7 +9.5%
Africa 142.7 158.1 –9.7%
Total 4 021.6 3 577.9 +12.4%
36%
25%
8%
4%
23%
4%
EuropeNorth AmericaCentral and South AmericaMiddle EastAsia, AustraliaAfrica
Sulzer Annual Results 2012
Page 21
Sulzer Annual Results 2012 | slide 41
1864
3703247 73 -3722
-232-68 -36 1829
Backlog Dec 31,2011
New ordersorganic
Order relatedacquisition
effects
FX effects onorders
Sales organic Sales relatedacquisition
effects
FX effects onsales
FX effect onopening/ending
balance
Backlog Dec 31,2012
Backlog bridge
Order backlog remained at a high level as of December 31, 2012
Currency translation vs. prior year was positive
Acquisition effects: wastewater pump acquisition as well as some smaller acquisitions
Order backlog breakdown(in millions of CHF)
Share by division:Sulzer Pumps 72%Sulzer Metco 4%Sulzer Chemtech 16%Sulzer Turbo Services 8%
Sulzer Annual Results 2012 | slide 42
Influence factors
Gross margin2011: 30.6%
Gross margin 2012: 31.0%
Note: No material impact from raw material price changes
To the negative:
Changed business mix
Some lower-marginlong lead time orders
–+
To the positive:
Operating leverage
Operational excellence
Gross margin
Stable gross margin despite changes in business mix
Sulzer Annual Results 2012
Page 22
Sulzer Annual Results 2012 | slide 43
Operating income (EBIT)
millions of CHF 2012 2011 %
Total Divisions 385.5 353.2 +9.1%
Sulzer Pumps 191.2 168.2 +13.7%
Sulzer Metco 68.7 68.7 –
Sulzer Chemtech 70.7 63.1 +12.0%
Sulzer Turbo Services 54.9 53.2 +3.2%
Others 24.0 10.9 –
Total Sulzer 409.5 364.1 +12.5%
2012 20121 2011
9.6% 10.1% 9.9%
9.1% 9.6% 9.6%
10.0% 10.5% 10.3%
9.8% 10.3% 9.5%
10.8% 11.3% 10.9%
– – –
10.2% 10.2% 10.2%
Operating income (EBIT) Return on sales in %(EBIT/sales)
Strong increase of operating income; stable ROS
1) Excluding 0.5 percentage points higher corporate fees charged to divisions; no impact on Total Sulzer
Sulzer Annual Results 2012 | slide 44
364 -18 23 536 410
EBIT 2011 asstated
Real estategains
Non-recurringeffects from
Cardoacquisition
FX translationeffect
Underlyingchange in EBIT
EBIT 2012 asstated
EBIT bridge
Operating income (EBIT) bridge 2011 to 2012(in millions of CHF)
Acquisition-relatednon- recurring effects (integration, transaction, step-up)
FX had no material impact on ROS due to natural hedge
Real estate gains from block sale bookedin 2011
ROS:10.2%
ROS:10.2%
Good underlying increase excluding non-recurring items
Sulzer Annual Results 2012
Page 23
Sulzer Annual Results 2012 | slide 45
From operating income to net income
millions of CHF 2012 2011 %
Operating income (EBIT) 409.5 364.1 +12.5%
Net interest income –17.6 –6.1 –
Other financial income 22.3 11.4 +95.6%
Income before income tax expenses (EBT) 414.2 369.4 +12.1%
Income tax expenses –102.2 –89.4 –14.3%
Net income 312.0 280.0 +11.4%
Attributable to shareholders of Sulzer Ltd. 307.1 279.8 +9.8%
Attributable to non-controlling interests 4.9 0.2 –
Earnings per share – basic (EPS) in CHF 9.03 8.25 +9.5%
Higher interest expenses due to CHF denominated bond and lower interest income
Other financial income included gain on sale of third-party shares
Effective income tax rate at 24.7% (2011: 24.2%) at a relatively low level, influenced positively by various non recurring items
Sulzer Annual Results 2012 | slide 46
363
529
150
82
348
2008 2009 2010 2011 2012
Free cash flow (FCF)
Free cash flow1 development over multiple years(in millions of CHF)
Focus on cash showed first results; strongly improved FCF1) Cash flow from operating activities less capital expenditure and sale of PP&E/intangibles
Proceeds from sale of real estate included in FCF – in millions of CHF:22 144 5 - -
Sulzer Annual Results 2012
Page 24
Sulzer Annual Results 2012 | slide 47
“Cash for Growth” project1 update
Strong focus on volume growth after downturn year 2009
Post 2009, NWC increased over proportionally compared with volume growth
Negative implications on cash flow
“Cash for Growth” project phase I initiated
We aim for a sustainable improvement of net working capital
Year 2011:Strong increase of
net working capital (NWC)
Year 2012: First improvements
of cash flow
First positive implications from phase I of project became visible
Strong improvement of operating cash flow based mainly on
better cash collection
improved payment terms
Year 2013 ff.: Sustainable reduction
of NWC
Launch of “Cash for Growth” phase II with the ambition of building a more “cash-conscious culture”
Goal: further reduction of NWC in % of sales
Focus on processes:
Lower inventories
Better timing of purchases
1) Cash for Growth: Sulzer’s internal initiative to reduce net working capital on a sustainable basis.
Sulzer Annual Results 2012 | slide 48
Cash flow statement (condensed)
millions of CHF 2012 2011 %
Cash flow from operating activities 472.8 188.6 –
Capital expenditure –128.2 –113.2 –13.3%
Sales of PP&E and intangible assets 3.3 6.9 –52.2%
Free cash flow 347.9 82.3 –
Acquisitions and divestitures –37.5 –815.4 –
Purchase/sale of financial assets/marketable securities 33.4 4.1 –
CF from operating and investing activities 343.8 –729.0 –
Dividend –102.2 –102.0 –0.2%
Changes in borrowings –157.0 619.7 –
Treasury stock/changes in non-controlling interests 7.7 –18.5 –
Exchange gains/losses on cash and cash equivalents –7.6 –15.7 –51.6%
Net change in cash and cash equivalents 84.7 –245.5 –
Improvements driven by operating cash flow
Sulzer Annual Results 2012
Page 25
Sulzer Annual Results 2012 | slide 49
Cash and debt overview
Strong cash generation and further reduction of net debt position to CHF 96 million
Successful refinancing of a newCHF 500 million five-year creditfacility
Debt position mainly refers to CHF 500 million CHF-denominated bond
Cash and marketable securities
Debt
Net liquidity
Net liquidity (millions of CHF)
-182-97 -128
-768-609
513431
681767
489
-96
-337
553
671
306
-800
-600
-400
-200
0
200
400
600
800
2008 2009 2010 2011 2012
Net debt position further reduced
Sulzer Annual Results 2012 | slide 50
Balance sheet
(debt/equity)
Equity Liabilities
Equity in % of total assets Gearing in %
Balance sheet (millions of CHF)
Ratios:
Equity ratio at 50%
Gearing at 27%
Capital allocation:
Business needs
Dividends
Acquisitions
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2009 2010 2011 2012
0%
10%
20%
30%
40%
50%
60%
Solid capital structure to support growth ambitions
Sulzer Annual Results 2012
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Sulzer Annual Results 2012 | slide 51
2.80 2.80
3.00 3.00
3.20
2008 2009 2010 2011 2012
Dividend
Increase of dividend to CHF 3.20Note: Proposal by Board of Directors to Annual General Meeting 2013 of Sulzer Ltd. which will take place on March 27, 2013
Dividend over multiple years(in CHF)
Payout: 29% 35% 34% 36% 35%
Sulzer Annual Results 2012 | slide 52
Agenda
Business Performance
Update on Strategic Priorities
Financial Results
Outlook and Conclusion
Sulzer Annual Results 2012
Page 27
Sulzer Annual Results 2012 | slide 53
Assessment of key markets for 2013
Sales share2012
Marketconditions
2012
Assessmentfor 20131
Oil and gas ~40%Growth
at high levels
Further growthfor parts of the
market
Power ~15%Moderate growth
at low levels
Forecast to continue at similar
levels
Water ~12%Growth, supported
by acquisitionFurther growth
expected
Transportation ~9%Moderate growth
at high levels
Forecast to continue at similar
levels
1) published on February 15, 2013; Based on present knowledge and excluding major changes in the general economic conditions
Sulzer Annual Results 2012 | slide 54
Financial midrange targets – by the year 2015
1) Targets 2015: compound annual growth rate in %; base year 2011; organic; portfolio as of December 31, 2011; constant FX
2) Basis: EBIT before major non-recurring items (major restructuring, M&A related expenses such as step ups, integration, transaction costs etc.); from 2012 including 0.5% higher corporate charges to divisions compared with 2011; Capital Employed including Goodwill and other intangible assets.
Midrange targets 2012-2015
Sulzer Pumps Sulzer Metco Sulzer ChemtechSulzer Turbo
ServicesTotal Divisions
FY 2012
Targetcorridorby 2015
FY 2012
Targetcorridorby 2015
FY 2012
Targetcorridorby 2015
FY 2012
Targetcorridorby 2015
FY 2012
Targetcorridorby 2015
Salesgrowth1 +5.9% 6-8% +2.3% 5-7% +4.0% 6-8% +0.8% 5-7% +4.2% 6-8%
EBITmargin(ROS)2
9.5% 11-13% 10.0% 11-13% 9.8% 12-14% 10.8% 12-14% 9.8% 11-13%
Returnon capital (ROCE)2
13.6% >20% 17.1% >20% 16.3% >20% 14.8% >18% 14.7% >20%
Issued: February 2012
Sulzer Annual Results 2012
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Sulzer Annual Results 2012 | slide 55
Corporate Governance – Board of DirectorsAnnual General Meeting of Shareholders (March 27, 2013)
Board membersince April 2012 elected until 2013
Proposed for re-election for a one-year term of office:
Board membersince December 2007 elected until 2013
Board membersince April 2011 elected until 2013
Board membersince August 2009 elected until 2013
Board membersince April 2011 elected until 2013
Board membersince April 2004 elected until 2013
Not to stand for re-election as chairman and member of the board:
Following internal age limitation rules.
Proposed for election to the board and designated to be elected as chairman:
Jürgen Dormann
ManfredWennemer
Thomas Glanzmann
Vladimir V. Kuznetsov
JillLee
MarcoMusetti
LucianoRespini
KlausSturany
For a one-year term of office.
Born 1947, German origin
Broad international experience in major industrial companies on operational leadership level and as chairman of advisory boards.
Sulzer Annual Results 2012 | slide 56
Summary and conclusion
Significant growth of orders and sales
Solid financial performance in a still challenging environment
Strong cash flow improvement
Global manufacturing and service footprint further strengthened
Strong balance sheet maintained; increased dividend proposed
2012 achievements
Vision and strategic priorities
Outlook
Clear vision and strong values
Strategic priorities launched with a focus on value creation and profitable growth
2013: moderate growth of orders and sales; profitability to improve slightly
Midterm targets 2015: confirmed
The Sulzer team is committed to deliver as promised
Sulzer has all the ingredients for sustainable future success
Sulzer Annual Results 2012
Page 29
Sulzer Annual Results 2012 | slide 57
Q&A
Thank you for your attention.
Visit us online: www.sulzer.com
Sulzer Annual Results 2012 | slide 58
Investor contact, event dates and stock information
Investor Relations:Philippe DewitzPhone +41 52 262 20 22Fax +41 52 262 00 [email protected]/Investor-Relations
Key reporting dates and events in 2013:February 15, 2013 Full Year Results 2012 publication (Analyst conference 4p.m. CET at SIX, Zurich, Switzerland)March 27, 2013 Annual General Meeting 2013, Winterthur, SwitzerlandApril 16, 2013 Order intake release first quarter 2013 (media release)July 23, 2013 Midyear Results publication (six months 2013) (Conference call/webcast)October 17, 2013 Order intake release first nine months 2013 (media release)November 8, 2013 Capital Market Day 2013
Sulzer Ltd is listed on SIX Swiss Exchange:
Identifier Number Number of shares issued: Largest shareholders (>3%):
SIX (security number) 3838891 34 262 370 Renova Group 31.2%
ISIN CH 003 838891 1 Blackrock 3.0%
Ticker Symbol SUN
Bloomberg SUN VX
Reuters SUN.S
Company address:
Sulzer LtdZürcherstrasse 148401 Winterthur, Switzerland