Good Start to 2012 for Sulzer: 9 Percent Growth in Order Intake
On a nominal basis, Sulzer achieved a significant increase of 9.1% in order intake compared with the very high first quarter of the previous year (0.8% adjusted*). The increase was driven by the strong organic growth of Sulzer Metco, Sulzer Chemtech, and Sulzer Turbo Services as well as by the effect of the large acquisition by Sulzer Pumps in 2011.
The strong Swiss franc still had a negative currency translation effect, but the company’s global presence is a natural hedge against material impacts of currency on profitability.
Strong demand continued in the oil and gas market, the automotive, the aviation industry, and other general industrial markets. In the hydrocarbon processing industry, chemical processing developed well while demand from other sectors, in particular refineries, was still lackluster. The power generation segment remained to be weak. Asia-Pacific was the main growth driver.
Outlook for full year 2012: high single-digit growth in order intake
The impact of ongoing uncertainties in the financial markets cannot be currently fully assessed and bears a certain downside risk. Based on present knowledge, activity in the oil and gas industry is expected to remain stable at a high level based on the current favorable market conditions in this segment. Activity in the hydrocarbon processing industry is forecast to stay at the current level. In the power generation market, Sulzer anticipates further stabilization with some growth potential mainly in the second half of the year. The activity levels in the water market are expected to rise, mainly driven by emerging markets. The automotive, the aviation, and other general industries are likely to remain stable at the current high levels.
Despite the ongoing uncertainties in the financial markets and their potential negative effects on the economy, Sulzer expects order intake to increase with a high single-digit growth rate for the full year 2012. The newly acquired Cardo Flow Solutions business will contribute with a first full year to order intake, whereas only five months were consolidated in 2011.
Results in detail
Sulzer Pumps: double-digit growth
On a nominal basis, Sulzer Pumps increased its order intake by 12.4% compared with the same period of the previous year. This growth was achieved with contributions from the strategic acquisition of Cardo Flow Solutions, which overcompensated for the negative currency translation effect. On an adjusted* basis, orders decreased by 7.6% compared with the strong first quarter in 2011, which included large orders from the oil and gas industry. Compared with the second half of 2011, activity in the oil and gas segment was at a good level and the hydrocarbon processing industry showed some signs of recovery, while the power generation industry remained at a low level. The water market showed good activity levels. The integration of the acquired businesses is progressing well. All regions were on a similar level to that of the first quarter of the previous year with the exception of the Americas, where large orders were received in the first quarter of 2011.
For the full year 2012, Sulzer Pumps anticipates an order intake increase of over 10%. The activity in the oil and gas industry is expected to remain at a high level. Activity in the hydrocarbon processing industry is forecast to remain at the current levels, supported by non-OECD countries. In the power generation market, further stabilization is anticipated with some growth potential, mainly in the second half of the year. The activity levels in the water market are expected to rise, mainly driven by emerging markets.
Sulzer Metco: continued success with innovative solutions
In the first quarter, the division showed nominal growth of 3.7% and adjusted* growth of 8.0% compared to the very high first quarter of 2011. The increase reflects the continuously positive environment in the division’s main markets. The division experienced good demand for its innovative solutions in the automotive segment and in aviation. Geographically, demand was particularly high in North America and Asia.
For the full year 2012, the division expects moderate growth in order intake. The positive environment in the division’s main markets is forecast to continue. The automotive, the aviation, and other general industries are likely to remain stable at the current high levels.
Sulzer Chemtech: substantial increase in order intake
Compared with the first quarter of 2011, the division continued to substantially increase its order intake by 10.4% on a nominal and 9.4% on an adjusted* basis. This increase was supported by most of the markets. Good developments with various larger projects in chemical processing was noted in the hydrocarbon processing industry. In other markets, a strong order intake was achieved for two-component mixers. Geographically, the demand was particularly high in the Americas and Asia.
For the full year 2012, the division expects moderate growth in order intake. Activity in the hydrocarbon processing industry and for two-component mixers is anticipated to remain at the current levels. The activity levels for innovative polymer applications are forecast to rise further.
Sulzer Turbo Services: record high order intake volume
The division increased its order intake by 4.3% on a nominal and 7.2% on an adjusted* basis despite a very high first quarter in the previous year. Order intake reached a record high of CHF 141 million also supported by continued success from synergies from the acquisition of electromechanical competencies in 2010. Growth was very strong in Asia-Pacific.
For the full year 2012, Sulzer Turbo Services anticipates a moderate increase in order intake. Demand for the division’s services in the oil and gas, power generation, and other industrial markets is expected to remain at the current high levels. The hydrocarbon processing industry is forecast to continue on a stable level. The sales synergies from the acquisition and long-term service agreements are predicted to continue to support the positive development.
* Adjusted for currency effects as well as acquisitions and divestitures