| For the first half of this year, order intake grew 28.9% compared with the first half of 2006 (adjusted1 24.6%). Sales rose significantly by 23.7% (adjusted1 18.6%) to CHF 1 653.7 million. The order backlog mounted to almost CHF 2 billion. Operating income (EBIT) of the divisions increased by 45.9% to CHF 188.3 million. This figure corresponds to a return on sales of 11.4%. All four divisions significantly improved profitability. Overall net income attributable to shareholders grew to CHF 131.8 million from CHF 104.3 million (+ 26.4%). Cash generation from operating activities was CHF 11.4 million. It was significantly influenced by an increase of net working capital triggered by the growth, as well as by higher tax payments due to the increased profit. The share buyback program reduced net liquidity by about CHF 122 million in the first half of 2007.
Individual Results of the Divisions
Sulzer Pumps continued to show double-digit growth. The division increased order intake by 19.5% (adjusted1 19.1%), and sales improved by 14.6% (adjusted1 14.7%) to CHF 768.8 million. Operating income rose by 24.3% to CHF 82.4 million; return on sales reached 10.7%. Activities in all segments and regions continued at high levels. As in recent years, both the new equipment and service businesses expanded, but the new equipment business continued to grow faster. Due to the favorable market conditions, order intake, sales, and operating income for the full year are expected to be clearly above 2006 results.
For Sulzer Metco, the first six months of 2007 depicted considerable impact from the operational improvement measures that were started some years ago. Order intake rose by 18.8% (adjusted1 17.3%), and sales improved by 23.1% (adjusted1 21.3%) to CHF 368.0 million. The operating income was up 64.8% to CHF 36.1 million. Return on sales reached 9.8%, compared with 7.3% in the previous year’s first half. The key segments were in a good condition. Although the positive trend is likely to continue over the next few years, Sulzer Metco does not expect to develop at the same pace as in this reporting period.
Sulzer Chemtech achieved exceptional organic growth and its results were additionally boosted by the acquisition of Mixpac, Werfo, and Mold. Order intake was 59.0% (adjusted1 39.2%) higher than in the previous year’s period, and sales rose by 56.0% (adjusted1 29.5%) to CHF 376.7 million. Operating income grew by 83.9% to CHF 58.1 million, resulting in a return on sales of 15.4%. Markets remained buoyant in all segments and regions. Large projects were received in North America, China, and the Middle East. The division’s outlook for 2007 remains positive. The level of customer investments is likely to continue—strong demand for energy and fuel being the major driver. Sulzer Chemtech expects to clearly exceed the order intake, sales, and operating income of 2006.
Sulzer Turbo Services started well in the first half of 2007; the operational improvement measures are showing initial results. The order intake showed healthy growth of 45.3% (adjusted1 45.3%) and sales climbed 10.0% (adjusted1 10.2%) to CHF 134.4 million. Operating income rose by 25.8% to CHF 11.7 million; return on sales reached 8.7%. The market environment was strong in Europe and even stronger in the Americas. Order intake in Asia was significantly better than that of last year. In the Middle East, expansion of the service sector is creating opportunities for the division. As a result of the significantly increased number of orders in the first half of this year, the division expects an increase in sales and operating income for 2007.
Operating income of Other amounted to CHF –10.9 million. Sulzer Real Estate had a relatively quiet start of the year compared with the exceptionally high sales level in the first half of 2006. Corporate Center costs exceeded those of the previous year due to increased project activities involving external support.
Outlook for 2007
Sulzer modified its midterm targets at the start of the year. The increased targets reflect the trust the company has in its end markets and operations today. The order intake of 2007 is predicted to be strong. Growth rates are likely to decline due to the base effect. Going forward sales should gradually catch up with new orders going. Positive nonrecurring items will in 2007 most likely be below those of 2006. Overall, earnings are expected to be well above those of the previous year due to operating improvements and volume leverage.
Key Figures for the First Half of the Year 2007
(January to June)
| Key Figures of the Corporation (in millions of CHF) |
| |
1H 2007 |
1H 2006 |
Δ |
Δ adjusted1 |
| Order intake |
2 132.9 |
1 654.8 |
28.9% |
24.6% |
| Sales |
1 653.7 |
1 336.6 |
23.7% |
18.6% |
| Operating income (EBIT) |
177.4 |
136.3 |
30.2% |
– |
| Net income2 |
131.8 |
104.3 |
26.4% |
– |
| Basic earnings per share (in CHF)2 |
38.51 |
29.29 |
31.5% |
– |
| Order backlog (30.06./31.12.) |
1 995.7 |
1 484.5 |
34.4% |
– |
| Employees (30.06./31.12.) |
11 604 |
10 393 |
– |
– |
|
| Key Figures by Division (in millions of CHF) |
| Order intake |
1H 2007 |
1H 2006 |
Δ |
Δ adjusted1 |
| Divisions |
2 127.2 |
1 650.3 |
28.9% |
24.6% |
| Sulzer Pumps |
1 047.7 |
877.0 |
19.5% |
19.1% |
| Sulzer Metco |
395.0 |
332.6 |
18.8% |
17.3% |
| Sulzer Chemtech |
512.2 |
322.1 |
59.0% |
39.2% |
| Sulzer Turbo Services |
172.3 |
118.6 |
45.3% |
45.3% |
| Other3 |
5.7 |
4.5 |
– |
– |
| Total |
2 132.9 |
1 654.8 |
28.9% |
24.6% |
|
| Key Figures by Division (in millions of CHF) |
| Sales |
1H 2007 |
1H 2006 |
Δ |
Δ adjusted1 |
| Divisions |
1 647.9 |
1 333.4 |
23.6% |
18.5% |
| Sulzer Pumps |
768.8 |
670.9 |
14.6% |
14.7% |
| Sulzer Metco |
368.0 |
298.9 |
23.1% |
21.3% |
| Sulzer Chemtech |
376.7 |
241.4 |
56.0% |
29.5% |
| Sulzer Turbo Services |
134.4 |
122.2 |
10.0% |
10.2% |
| Other3 |
5.8 |
3.2 |
– |
– |
| Total |
1 653.7 |
1 336.6 |
23.7% |
18.6% |
|
| Key Figures by Division (in millions of CHF) |
| Operating Income (EBIT) |
1H 2007 |
1H 2006 |
Δ |
| Divisions |
188.3 |
129.1 |
45.9% |
| Sulzer Pumps |
82.4 |
66.3 |
24.3% |
| Sulzer Metco |
36.1 |
21.9 |
64.8% |
| Sulzer Chemtech |
58.1 |
31.6 |
83.9% |
| Sulzer Turbo Services |
11.7 |
9.3 |
25.8% |
| Other3 |
–10.9 |
7.2 |
– |
| Total |
177.4 |
136.3 |
30.2% |
|
1 Adjusted for acquisitions, divestitures, and currency effects
2 Attributable to shareholders of Sulzer Ltd
3 Other consists of: Real Estate, Sulzer Innotec, Corporate Center, and consolidation adjustments
|