Market sentiment in the end markets and regions relevant for Sulzer was very positive throughout the past year. Sulzer Pumps and Sulzer Chemtech in particular benefited from brisk demand and were able to acquire an above-average number of large orders. Sulzer Metco reported attractive growth. Sulzer Turbo Services, too, achieved a small growth. Acquisitions and divestitures as well as currency conversion had only a small impact. Order intake in the fourth quarter of 2006, at CHF 785.8 million, was substantially above the figure for the same quarter last year. However, as in previous years it was weaker than in the first three quarters.
Order intake by division
The order intake of Sulzer Pumps increased by 28.2% (adjusted1 by 30.9%) to CHF 1,752.6 million. All segments and regions contributed to this success and an even greater number of big projects were placed than in the previous year. In Asia and the Middle East there was an increase in the number of infrastructure projects. Furthermore, anticipated electricity bottlenecks gave a boost to power generation projects in North America and Europe. The pulp and paper segment remained stable at a good level. The prospects for Sulzer Pumps continue to be promising. Order intake is expected to remain at a high level, although growth rates will be declining due to the base effect.
Sulzer Metco increased its order intake compared to the equivalent period of the previous year by 11.8%, adjusted1 by 10.5%, to CHF 658.7 million. This good figure also includes markups connected with the rising price of raw materials. The strongest growth was recorded by the aerospace segment. Demand from the automotive industry remained stable, while the power generation segment and other growth industries posted more orders than in the previous year. In Europe the division received important long-term orders from the automotive industry in connection with the new carbon coatings. Business in North America continued to develop positively and in Asia activities were expanded, with good results being achieved in Japan in particular. For 2007 Sulzer Metco expects to achieve further growth, on the basis of good market opportunities and an enlarged product portfolio.
Sulzer Chemtech produced further impressive results, with a record volume for the third year in a row. Order intake for 2006 increased year-on-year by 44.9% (adjusted1 40.2%) to CHF 602.1 million. Demand rose sharply in the oil and gas, petrochemical and plastic market segments. More and partially very sizable contracts for services and products were received from all regions. Asia and the Middle East saw investments in a large number of new plants. In North America and Europe the number of orders for installation service for separation columns and new bioethanol plants was higher than in the previous year. Sulzer Chemtech’s order intake is set to increase further in 2007. This is largely due to the integration of the non oil and gas related mixer and cartridges business acquired from Mixpac, Werfo and Mold at the end of 2006 and Knitmesh’s separation technology, which together generated an order volume of around CHF 120 million in the last business year.
Including a strong fourth quarter Sulzer Turbo Services posted an order intake in 2006 of CHF 252.4 million, 3.4% (adjusted1 2.7%) above the prior-year figure. The division was subject to different trends in the various regions in the year under review. In North and Latin America, market demand was healthy and incoming orders increased. Europe reported a mixed picture, with the demand stagnating in the power generation market and rising in other segments. In the Middle East and South East Asia, price pressure persisted unabatedly, resulting in fewer orders compared with the previous year. Although regional differences will persist during the current year, Sulzer Turbo Services expects a higher order intake.
Orders received by Others declined to CHF 11.1 million. Sulzer Innotec booked more orders. However, the deduction for the elimination of intra-divisional business increased.
Outlook for 2007
For the current year, Sulzer expects brisk demand. The available projections for the main segments of oil and gas, power generation, aerospace and general industries continue to be promising. A high level of incoming orders is expected with the impact of large orders being hard to assess. More modest growth rates are likely due to the very strong 2006 base effect.
As announced in October already, the company expects to report a significant increase in sales and earnings for 2006. Sulzer will announce increased midrange targets with its annual results for 2006 on March 1, 2007.
Order Intake 2006
(in millions CHF)
|
|
2006 |
2005 |
Δ |
Δ adjusted1 |
|
Divisions |
3 265.8
|
2 616.2 |
24.8% |
25.0% |
|
Sulzer Pumps |
1 752.6 |
1 367.5 |
28.2% |
30.9% |
|
Sulzer Metco |
658.7 |
589.2 |
11.8% |
10.5% |
|
Sulzer Chemtech |
602.1 |
415.5 |
44.9% |
40.2% |
|
Sulzer Turbo Services |
252.4 |
244.0 |
3.4% |
2.7% |
|
Other |
11.1 |
18.9 |
– |
– |
|
Total |
3 276.9 |
2 635.1 |
24.4% |
24.9% |
1 Adjusted for acquisitions, divestitures, and currency effects
|