Sulzer Orders Up 19% from Previous Year

All core divisions recorded increases in order intake. Good overall market conditions and strong competitive positions contributed positively to business performance. Sulzer is expecting a good order volume in the second half of the year, with somewhat lower growth rates.

The core divisions posted a 19.3% increase in orders over the same period last year. The oil and gas segments remained very strong, and automotive as well as partially power generation also performed well. Acquisitions helped promote growth, while currency effects had a slightly negative impact. The growth rate was 15.1% when adjusted for these two factors.

Order Intake by Division

Orders received at Sulzer Pumps climbed to CHF 680.5 million (up 26.0%). The acquisition of the pump lines Johnston, Crown, and Paco also contributed to this increase whereas the currency effect was of small negative influence. When adjusted1 for these factors, organic growth was 15.6%. The order volume in Asia and the Middle East continued to rise and North America showed a continued slight upward trend after the modest recovery of 2004. All market segments showed strength, with particular growth in the oil & gas and power applications. The outlook for the division in the second half of the year is good, even though lower growth rates compared to the first half year are expected.

At Sulzer Metco the volume of orders remained at a high level, as in the previous year. In the first six months of the current year, the division posted an increase of 8.2% (adjusted1 8.1%) to CHF 290.1 million. The segments automotive and specialty markets showed improvement. The aerospace segment recovered slightly, while power generation remained flat. The overall good course of business is expected to continue in the next few months, especially in the Thermal Spray unit, also supported by the improvement programs initiated earlier this year. The one exception is Turbine Components, which is located primarily in the Netherlands. Volume and profitability of this unit continue to be weak. Measures such as focusing of product lines and capacity reductions are being implemented.

Order intake at Sulzer Chemtech showed a very strong trend. Orders totaled CHF 200.2 million, an increase of 19.3% (adjusted 1 23.4%) over the first half of the previous year. In addition, to the continued excellent business situation in Asia, significant growth in the recovering North American market and individual large projects contributed to the strong performance. The division's outlook for the current year is good, even though some slow-down in growth is expected.

Sulzer Turbo Services increased new orders to CHF 123.6 million, a 12.8% rise (adjusted for currency effects 17.1%) over the previous year’s figure. Demand and profitability improved significantly in the US. The Dutch operation, however, encountered stiffer competition than expected. This unit is being restructured in order to improve the unsatisfactory earnings situation.

The search for potential partners for Sulzer Hexis is underway. Galileo, the new system generation, was introduced at the Hanover Fair.

Orders received by "Other" – generated primarily by Sulzer Innotec – totaled CHF 10.1 million, slightly higher than the previous year’s figure.

Outlook for the Second Half of 2005

In the first six months of 2005, the positive trend of the previous year continued. The growth rates in the order intake reflect a boom in many of Sulzer's end markets which may level off in the second half of the year. The restructuring required at Sulzer Metco and Sulzer Turbo Services in the Netherlands will be implemented rapidly in the second half of the year. The related costs will be in the single-digit million range. Sulzer Metco will be able to improve its operating income despite these charges, whereas Sulzer Turbo Services will incur a decline. Overall, Sulzer is expecting a good trend in order intake for the current year with positive influence on the operating results.