Good Development of Order Intake
Sulzer recorded a high order intake during 2005: up 19.9% to CHF 2,635.1 million. Adjusted for acquisition, divestitures, and currency effects, the increase was 12.8% over the previous year. For the current year, Sulzer expects a continuation of good order activity.
All core divisions increased their order intake, benefiting from largely favorable conditions in their relevant end markets and regions. Acquisitions and divestitures had a net positive influence on the growth, whereas the currency translation effect added only little to it.
Order Intake by Division
Achieving double-digit growth also in the fourth quarter, Sulzer Pumps increased its year-on-year order intake by an impressive 27.4% to CHF 1,367.5 million. The difference to the adjusted1 13.5% is mainly due to acquisitions. The Asian market remained strong and business volume in North America rose; order activity in other regions was high and stable. All industry segments performed well, above all the oil and gas sector. Additional orders have already been generated from the rapid optimization of synergies in market presence following the successful integration of the Johnston and Crown pump lines, which strengthened Sulzer’s presence in the vertical pumps sector for the energy, process engineering, and water segments. The division’s prospects for the current year remain good, but fewer large projects are expected.
Sulzer Metco reported a 10.3% (adjusted1 9.0%) higher year-on-year order intake of CHF 589.2 million in 2005. The number of orders posted in the last quarter was markedly higher than in previous quarters, partly due to substantial contracts for new equipment. Overall, the segments performed strongly throughout the year. Newly introduced coating applications helped to boost orders, in particular from the automotive industry and other growth segments, while the aerospace and power generation markets remained stable. Sulzer Metco expects further growth in 2006, with an increase also from the aerospace industry and gas turbine segment.
Order intake for Sulzer Chemtech rose by an excellent 20.1% (adjusted 20.5%) to CHF 415.5 million in the reporting year. Despite already robust growth in 2004, the division posted further strong gains, with its solid Asian business making a major contribution. The positive trend continued in the North and South American markets. Business was moderate in Western Europe, while order volumes in Eastern Europe and the Middle East were encouragingly higher. The fourth quarter saw good order intake, but, as anticipated, below the peak levels posted for the second and third quarters. Sulzer Chemtech expects market conditions to remain very favorable for 2006.
Although, as expected, the final quarter was weaker due mainly to seasonal factors, Sulzer Turbo Services increased its total 2005 order intake over last year by 7.9% (adjusted1 7.5%) to CHF 244.0 million. The markets in the USA, Canada and Latin America performed well and the Asian market remained positive while the competition in the Middle East remained intense. The growth was in part the result of a high level of large projects in the utility sector. The oil price, which is forecast to stay high, is having a positive impact on Sulzer Turbo Services' business in the current year.
Sulzer sold all shares of Sulzer Hexis AG to a Swiss foundation on January 1, 2006.
Orders received by Others - generated primarily by Sulzer Innotec—totaled CHF 18.3 million, slightly higher than the previous year's figure.
Outlook for 2006
The rise in the 2005 order intake is the result of Sulzer’s good position in very active end markets. For the current year, Sulzer again expects a good order situation. But growth rates will likely decline significantly, given their very high levels last year.