Resilient Performance in Challenging Market Environment
Image source: Sulzer Ltd.
Executive Chairwoman Dr. Suzanne Thoma stated: “This solid underlying result proves our resilience in a market environment characterized by geopolitical tensions and uncertainties. Our technologies are making a significant contribution to solving some of the most pressing challenges our society faces – while driving profitable growth. Our confidence in Sulzer’s future performance is reflected in the proposed dividend of CHF 3.50 per share.”
In 2022, the company performed well considering the challenges global economies face. Orders rose 9.1% year on year, buoyed in particular by the Flow Equipment division (+8.9%) and the Chemtech division (+22.5%), where our Renewables business continued its strong growth path and capitalized on soaring demand (+ 37.8%). Order intake in the Services division grew by 1.6% despite the impact from the exit from Russia, which caused a drop for the region Europe, the Middle East and Africa of 6.5%. This was more than offset by a strong performance in the Americas (11.1%) and solid order intake in Asia-Pacific (2.4%).
Sales increased by 1.8% compared to 2021, reaching CHF 3’179.9 million. This solid result was achieved despite continuing supply chain restrictions and multiple Covid-related factory lockdowns in China.
Operational profit amounted to CHF 317.6 million in 2022, an increase of 8.6% compared with 2021, which was mainly driven by higher margins, and continued spending discipline leading to a year-on-year increase of operational profitability by 70 basis points to 10.0%.
By Dec 31, 2022, net income amounted to CHF 28.0 million compared with CHF 140.7 million in the previous year, mainly due to the one-off impacts driven by the Russia exit. Without those one-off effects, net income would have been 15% higher year over year.
Free cash flow amounted to CHF 58.3 million, down from CHF 210.5 million on a comparable basis. The main driver for the reduction in free cash flow for the period is the need for higher working capital in the context of the fluctuating market conditions and to mitigate the difficult global supply chain environment. Excluding these one-off effects, free cash flow would have been comparable to the prior year.
Proposals of the Board at Annual General Meeting
The Board of Directors will propose an unchanged ordinary dividend of CHF 3.50 per share at the Annual General Meeting (AGM) on April 19, 2023. This reflects our confidence in Sulzer’s future performance.
As previously announced, Peter Bichsel and Hanne Birgitte Breinbjerg Sørensen will not stand for re-election at the April 2023 AGM, after long and distinguished tenures at Sulzer. The Board of Directors will propose to increase the number of board members from the current six to seven, and to elect three independent Board members: Dr. Prisca Havranek-Kosicek (designated CFO of Jenoptik), Mr. Per Utnegaard (former CEO of Bilfinger and Swissport) and Dr. Hariolf Kottmann (former CEO and Chairman of Clariant). These experienced business leaders will add important know-how to the Board and be instrumental in the further strategic development of the group. All other Board members will stand for re-election.
Corporate Governance
To ensure effective corporate governance, the Board is furthermore planning to implement the following measures:
- Appointment of an independent lead director
- Formation of a governance committee
- Adjustments to the composition of the existing committees of the Board of Directors
Due to her appointment as Executive Chairwoman, Suzanne Thoma will not stand for re-election as member of the Remuneration Committee and will not serve as Chair of the Nomination Committee.
Furthermore, the Board of Directors plans to entrust Mr. Markus Kammüller with the position of Lead Independent Director and – in that capacity – to appoint him as Chair of the new Governance Committee. It is further planned to appoint him as Vice-Chairman of the Board. More details to the new composition of the Board committees will be disclosed in the invitation to the AGM, including the members of the Remuneration Committee proposed for election.
Outlook
Sulzer has started the year with a strong order backlog and expects continued growth in its markets despite ongoing uncertainties. We believe that fundamental megatrends will continue to drive strong demand for Sulzer’s technologies.
For 2023, Sulzer expects orders to increase by 3 to 6%. Sales are expected to grow by 7 to 9%. Operational profitability is expected to further improve to above 10.0%.
One-off effects have impacted net income negatively in 2022. As no comparable impacts are expected for 2023, Sulzer expects net income in 2023 to be significantly higher compared to 2022.
Source: Sulzer Ltd.
