Net sales of CHF 1873 million for the first six months rose nominally by 5 percent, or 6 percent adjusted for acquisitions/divestitures and currency effects. Operating income increased to CHF 161 million and was strongly affected by exceptional items. On the one hand these comprised extraordinary expenses, and on the other hand a book profit before tax of CHF 185 million in total from the Sulzer Turbo, Sulzer Infra and Sulzer Textil divestitures (the latter at a book loss).

Sulzer CEO Fred Kindle comments as follows on the mid-year figures: "The results demonstrate clearly the earnings and growth potential of Sulzer. After selling three of the four targeted businesses, we have thus made excellent progress both operationally and strategically. The Sulzer Hexis new venture business is likewise developing according to plan".

The first half-year 2001 was characterized by a number of exceptional events: Sulzer fended off an unfriendly takeover bid by InCentive Capital Ltd, the Sulzer Medica spin-off was completed on July 10, and the Sulzer Turbo, Sulzer Infra and Sulzer Textil businesses were divested. Our goal of at least CHF 400 million net proceeds from the four planned divestitures has been nearly met with these three divestitures alone. The turnaround now almost reached by Sulzer Burckhardt lays a solid foundation for the forthcoming divestiture of this business.

Order intake totalling CHF 1013 million by the core businesses is 39 percent above the prior mid-year level. Adjusted for acquisitions, divestitures, and currency effects, this growth is still a notable 16 percent. Sales the first half-year totalled CHF 893 million (+35% compared with mid-2000, or +5% adjusted). The increased order intake for the first six months will positively impact net sales during the second half of the year. Operating income before goodwill amortization and exceptional items has almost tripled to CHF 59 million compared with the prior mid-year level of CHF 21 million. The respective figure for all of the continuing activities (core businesses, Sulzer Hexis and Others) totals CHF 54 million (prior year CHF 17 million). 

Order intake by the discontinuing businesses (Sulzer Textil, Sulzer Infra, Sulzer Burckhardt) declined by 21 percent to CHF 1122 million compared with mid-2000. Sales by these businesses totalled CHF 937 million (–21% compared with mid-2000). The total operating loss of the discontinuing businesses before goodwill amortization and exceptional items increased to CHF –21 million (mid-2000: CHF –6 million). The bulk of the reductions are attributable to the elimination of Sulzer Turbo (divested).

Individual core business developments

Sulzer Metco order intake rose to CHF 211 million (+18%, or +1% adjusted). Above all the business in thermal spray coating components and materials as well as jobbing orders was very satisfactory. Aircraft component business likewise developed well.
Net sales grew by 32 percent compared with the prior mid-year level, to CHF 208 million. Operating income before goodwill amortization and exceptional items rose steeply by 41 percent to CHF 24 million. These high growth rates are also attributable to the ELDIM acquisition, which has been successfully integrated.

Sulzer Turbomachinery Services order intake rose by 72 percent (adjusted: +28%) to CHF 112 million. Service demand remained high in all relevant markets, particularly in the power generation segment.
Net sales for the first half of 2001 likewise rose steeply by 72 percent compared with the prior mid-year level (adjusted: +31%) to CHF 103 million. Operating income before goodwill amortization and exceptional items rose to the extraordinary high level of CHF 15 million, five times more than at mid-year 2000. Elbar B.V., acquired in September 2000, has now been successfully integrated. It contributed very satisfactorily to the growth. 

Sulzer Pumps profited from positive developments in all relevant markets, in particular the oil & gas industry and the power generation segment. Order intake totalling CHF 529 million is 49 percent higher than at mid-year 2000, (adjusted: +20%).

Net sales rose by 38 percent to CHF 433 million (adjusted: –7%). Operating income before goodwill amortization and exceptional items increased to CHF 20 million, here again five times higher than at mid-year 2000. As in previous years, higher sales are expected for the second half of 2001.

Despite stagnation in Sulzer Chemtech’s markets, order intake rose markedly by 22 percent (adjusted +23%) to CHF 161 million, and gross margins also improved.

Net sales rose by 15 percent to CHF 149 million (adjusted: likewise +15%). As against a loss of CHF 3 million per mid-2000, operating income before goodwill amortization and exceptional items reached breakeven for the first half-year 2001. Net sales increased but they did not yet benefit from the improving price quality of the order intake. 

The Sulzer Hexis new venture business booked orders for around 200 fuel cell systems in the first half of 2001. Pre-production is now underway for delivery of the first units in autumn 2001. Sulzer Hexis plans to produce about 600 such units until the end of 2003 for distribution by marketing partners mainly in Germany, Austria and Switzerland. Experts attest Sulzer Hexis with a substantial lead in fuel cell technology development. This lead will be fully exploited by Sulzer to assure commercial market success.

Sulzer expects positive business developments to continue in the second half of the year. The core divisions envisage further earnings growth. Net income of the Sulzer Corporation for 2001 as a whole will be high, in particular due to extraordinary proceeds.

The mid-year accounts are presented here on a pro-forma basis for the industrial businesses alone. According to interpretation of the IAS guidelines by our auditors, the financial statements of Sulzer Medica for the first six months will be included in the Sulzer accounts both per mid-year and year-end 2001. Sulzer will publish the official mid-year accounts according to IAS guidelines in September 2001 when the Sulzer Medica figures are available.

Main key corporate figures (in million CHF)

Main key figures of the core businesses (in million CHF)