Sulzers Order Intake Decreased in the First Nine Months of 2016
In the first nine months of 2016, currency-adjusted order intake decreased by 7.8%, compared to the same period in 2015. Order intake in the third quarter was impacted by normal seasonality, continued weakness in the oil and gas market, and timing of some orders.
As of January 2017, the recently acquired GEKA business and Sulzer Mixpac Systems (SMS) will be reported as a new division called Applicator Systems. For the full year 2016, Sulzer confirms its guidance1: order intake is expected to be at the higher end of the –5% to –10% range, closer to –5%. Sales are forecast to decline in the range of 5% to 10%. The operational EBITA margin (opROSA) is expected to be approximately 8%.
In the first nine months of 2016, currency-adjusted order intake decreased by 7.8%, compared to the same period in 2015. The currency impact was a negative 1.2%. In the third quarter, currency-adjusted order intake was down by 4.9%, compared to last year’s third quarter, while currency impact was a negative 1.4%. Sequentially, order intake in the third quarter was down due to normal seasonality, continued weakness in the oil and gas market, and timing of some orders.
Year-to-date, the power market increased. The water and the general industry markets were flat while the oil and gas market continued to decline. In the third quarter, the power market continued to grow in the Pumps Equipment and Rotating Equipment Services divisions. General industry was also slightly up, driven by the first-time consolidation of the acquired GEKA business in the Chemtech division. The water market was down in the third quarter due to timing of orders.
Headwinds in the oil and gas market persist and the pricing environment continues to deteriorate. Order intake in the third quarter was again down substantially compared with the same period in the previous year, and also decreased sequentially.
Regionally, order intake in the Asia-Pacific region was driven by China, which continues to perform well and was up again in all divisions in the third quarter, compared to the same period last year. Orders in Europe, Middle East, and Africa as well as in Americas were down in the third quarter, mainly due to the oil and gas market.
The Sulzer Full Potential program is progressing according to plan, and will deliver the expected savings in 2016 and total CHF 200 million run-rate savings from 2018 onwards. More than 75% of total savings are secured through actions already launched. All restructuring actions will have been launched by the end of 2016.
At the beginning of the third quarter, Sulzer announced the acquisition of GEKA. The transaction was closed at the end of August. The integration is advancing as planned. From January 1, 2017, the combined businesses of GEKA and Sulzer Mixpac Systems (SMS) will be reported as a new division called Applicator Systems.
On January 1, 2017, Sulzer is also transferring its spare parts business from Pumps Equipment to the Rotating Equipment Services division, in order to further simplify its setup for customers.
Outlook
For the full year 2016, Sulzer confirms its guidance1: order intake is expected to be at the higher end of the –5% to –10% range, closer to –5%. Sales are forecast to decline in the range of 5% to 10%. The operational EBITA margin (opROSA) is expected to be approximately 8%.
Sulzer will report its 2016 annual results on March 1, 2017.
