Sulzer with New Organizational Structure

13.11.2013

Setup for Profitable Growth with New Services Division and New Water Business Unit - Sulzer is adapting its organizational structure to support its key markets strategy.

  • Sulzer Turbo Services will be combined with the service ac-tivities for pumps into a new Services division. This will cre-ate a leading provider of services for rotating equipment.
  • New pumps and related systems, including spares, will form the Pumps Equipment division, with three regional business units offering engineered pumps for the oil and gas and the power markets.
  • A new Water business unit will combine all products and services for the water and wastewater market segments (as part of the Pumps Equipment division).
  • The streamlining and integration of central group functions is making good progress.
  • With the strategy focused on serving three key markets, cov-ering both equipment and services, leveraging assets and capabilities across the businesses and the specific business strategies, Sulzer is geared for profitable growth.
  • The organizational structure will be implemented as of Janu-ary 2014.

Sulzer CEO Klaus Stahlmann said, “The new operational structure with a Services division and a Water business unit is a next important step in the implementation of our strategic decision to focus the company’s activities in three attractive key markets—oil and gas, power, and water. Integrating all services for rotating equipment into one division will help us to increase sales and improve profitability. The integrated Water business unit will strengthen our position for profitable growth in the large and attractive wa-ter market. Together with the Pumps Equipment division and Chemtech, Sulzer will be a leading supplier of both equipment and services for our three key markets.”

The Sulzer executive Committee will present Sulzer’s overall strategy, the new organizational structure, the business strategies of the three divisions and the Water business unit today at Sulzer’s annual Capital Market Day for investors and analysts in Zurich.

Forming a leading provider of services for rotating equipment

The new Services division of Sulzer will combine the services for turbines, compressors, motors, and generators currently provided by Sulzer Turbo Services with the services for pumps, currently provided by Sulzer Pumps. As a leading provider for services for rotating equipment with sales of ap-proximately CHF 800 million (pro forma 2012), the Services division will be present with around 100 service locations around the globe.

Its key drivers for profitable growth in the future are:

  • Leveraging its combined geographical footprint by expanding local ser-vice portfolios where local market potential exists;
  • Gaining synergies through a combined sales force that offers the full range of services for rotating equipment;
  • Leveraging the combined customer base, and actively identifying ser-vice needs of current customers for other rotating equipment;
  • Providing bundled service offerings in the form of overhaul and repair services for combinations of rotating equipment (e.g., motors and pumps);
  • Offering long-term service agreements for combinations of rotating equipment;
  • Improving capacity utilization with growth and making use of operational synergies

Creating an integrated Water business unit with a comprehensive pumps offeringThe new Water business unit integrates the wastewater pumps business, the engineered pumps for water transport and production, and the pro-cess pumps business for the general industry. The new unit with sales of approximately CHF 700 million (pro forma 2012) is globally active with around 100 sales and service locations worldwide. With an addressable water market for its products and services of estimated CHF 18 billion, the new business unit has strong opportunities for profitable growth.

In order to leverage this potential, a clear business strategy has been de-fined and will now be put into place over the next two years:

  • Strengthening the market focus with a clear approach by market seg-ment, prioritizing the most important market segments. This includes leveraging cross-selling opportunities, e.g., to actively market clean wa-ter pumps to existing municipal wastewater customers, or wastewater products to industrial customers.
  • Increased cross-selling of the strong combined product offering into other segments of the water market, and further strengthening the product offer with, e.g., energy-saving pumps and compressors.
  • Improving the cost base by leveraging the global manufacturing network and combined purchasing power as well as improving the efficiency and effectiveness of sales processes.

Further developing strong positions with equipment for oil and gas and power

The engineered pumps and systems for oil and gas and for power will form the realigned division Pumps Equipment, which also includes the Water business unit. The portfolio ranges from highly engineered bespoke products to standard products and spares parts. A dedicated focus on the equipment business, continued technology leadership, strong customer relations, and the global manufacturing network are key success factors. Customer benefits are reliability in demanding applications, reduced ener-gy consumption through high efficiency, and a global footprint supporting efficient manufacturing. Major growth opportunities have been identified in the oil and gas market in areas like floating production, storage, and off-loading units (FPSOs); oil pipelines; and growing hydrocarbon processing markets, e.g., in Russia.

With a distinctive, strong product portfolio based on static separation and mixing technologies, the Chemtech division is well positioned in attractive markets worldwide. Further profitable growth will build on an innovation pipeline with strong growth potential, a global footprint to benefit from local market demand and to improve the cost base, and the successful integra-tion of acquisitions.

New organizational structure effective as of January 1, 2014

The new organizational structure will be effective as of January 1, 2014. As announced in mid-October, Sulzer also plans to streamline and inte-grate central support functions at group and divisional levels to better leverage collaborative advantages and synergies. The respective pro-cesses are well underway.

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