Sulzer Order Intake on the Upswing

17.07.2003

Orders received by the Sulzer Corporation for the first half year 2003 totaled CHF 1001 million. In local currencies and adjusted for acquisition effects, this represents a substantial growth of 5 percent. The nominal decline of 4 percent is primarily attributable to currency effects. Order volume again increased in the second quarter 2003 – as in the two previous quarters –, and Sulzer expects further stabilization of the markets with partial recovery. Despite the normal slowdown during the summer vacation period, the growth of adjusted order volume is expected to continue throughout the year.

By mid year the negative effects both of the Iraq conflict and the SARS outbreak had receded significantly, while at the same time a slow recovery was evident in Sulzer markets. Business development in the core divisions varied but was encouraging on the whole:

Sulzer Metco’s order intake for the first half year was still affected by market weakness in the aviation and power generation industries. Compared with prior year, volume declined by 7 percent to CHF 205 million (adjusted: –3%). On the other hand, there was a significant rise in orders received from industrial markets in general and also from the automotive industry. While Sulzer Metco was still seriously affected in the first quarter 2003 by insufficient order intake and margin erosion, the situation is currently showing significant improvement. For the rest of the year, Sulzer Metco expects a further recovery.

Sulzer Turbomachinery Services’ order volume rose nominally by 5 percent to CHF 106 million (adjusted: –1%). Demand in the North American power generation sector is still weak, but this is compensated by positive developments in the Near East. While order intake by the US subsidiaries has declined somewhat due to the difficult market situation there, strong growth was achieved by the Dutch units. Overall, a slow market recovery is expected.

Sulzer Pumps enjoyed continued good demand, particularly in the second quarter of 2003, which considerably exceeded the four prior quarters. Order volume for the first half year totaled CHF 505 million, 7 percent higher than the prior mid-year level in terms of local currencies. The conversion into Swiss francs caused a nominal decline of 4 percent. While business development in the market regions North and South America was still restrained, demand in Asia – particularly China – rose significantly. Sulzer Pumps looks to the remainder of 2003 with confidence.

Sulzer Chemtech’s order intake rose to a respectable CHF 170 million with high growth rates accordingly (nominal: +4%, adjusted: +14%). This positive development is attributable above all to projects in Europe, the Near East, and China. Like other divisions, Sulzer Chemtech’s business development in North America remains unsatisfactory. Prospects for the year as a whole are good.

As the “HXS 1000 Premiere” pre-series fuel cell units are sold as planned, Sulzer Hexis estimates only insignificant order intake until the launch of the next system generation in 2004/2005. Substantial development progress has been made over the past few months in extending fuel cell service life and reducing production costs.

The steep percentage decline under Others (38%) reflects the progressive downsizing of Sulzer International sales offices and companies.

Although no clear global upswing is yet in sight, and investment activities particularly in the USA remain at a low level, there has been a more active demand for Sulzer products and services in recent months. From today’s standpoint this positive trend is expected to continue during the second half of the year. Currency effects are expected to remain significant and will continue to impact nominal order volume figures.

Mid-year results of the Sulzer Corporation for 2003 will be announced on August 26.

Order intake figures per mid-year (in million CHF)

2003
1st half year
2002
1st half year
  Change in % adjusted in %1) 
 Sulzer10011039–45
 Core divisions

986

1013

–3

5

    Sulzer Metco

205

221

–7

–3

    Sulzer Turbomachinery Services

106

101

5

–1

    Sulzer Pumps

505

528

–4

7
    Sulzer Chemtech

170 

163

4

14
 Venture division (Sulzer Hexis)0 

– 

– 

 Consolidation, Other15 24 –38 – 

1)Adjusted for acquisitions, divestitures and currency effects

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