Very Strong Growth in the Third Quarter 2004
Sulzer registered a high growth in order intake during the first nine months of the year by a nominal 12.2% to CHF 1,662.4 million. Adjusted for acquisition and currency effects the increase was 11% over the prior year.
The trend is expected to remain favorable for the year overall. Currently Sulzer expects both operating income and net income in the second half of 2004 to be ahead of the first half year’s results, and for the year as a whole, to be well over the prior year.
Order intake for the first nine months amounted to CHF 1,662.4 million, a nominal increase of 12.2%. The adjusted figure for new orders climbed a solid 11% over the prior-year period. All divisions contributed to this growth. (For more information please visit the web site.)
Sulzer Metco increased its order intake 27.7% to CHF 394 million. On an adjusted basis1 this is equal to a growth rate of 14.9%.The segments coating systems, materials, and thin film technology posted solid gains in new orders. However, in the thin-film segment, some orders had to be cancelled and the results adjusted as per end of September because the head of a German subsidiary had manipulated the figures for new orders and sales. After closing down and moving a location in the United States, it has been detected that work in progress has been overvalued. The value adjustment has also been conducted per end of September. The two incidents, which are unrelated, are impacting the operating income with about CHF 9 million, but with no impact on cash. Action with regard to personnel decision was taken immediately. The monitoring system will be improved further. Despite these one-off charges, the division’s operating income for 2004 will exceed that of the prior year, although not to the extent that had been expected. The outlook for order intake in 2004 is intact. The medium-term growth and profitability targets remain unchanged.
The order intake for Sulzer Turbomachinery Services was very strong in the third quarter, up 16.0% for the first nine months (adjusted1 20.0%) to a solid CHF 177.4 million. The power market, however, continues to show signs of sluggishness. Orders are expected to be good over the next few months.
Sulzer Pumps also experienced a lively third quarter, with orders received for the first nine months advancing by 9.3% (adjusted1 9.4%) to CHF 816.6 million. Solid growth was recorded in all segments and geographic regions even though the prior-year period was already at a high level. The outlook for the year 2004 is good. The acquisition of the pump activities of Johnston, Crown and Paco, which was announced on 24 September, is scheduled for closing in November.
An excellent third quarter helped Sulzer Chemtech achieve an order intake of CHF 259.6 million in the first nine months, up 2.6% (adjusted1 5.0%) over the prior-year period. Orders increased in all regions. For 2004 the overall order intake is expected to lie above last year’s figure.
Sulzer Hexis will not see any appreciable new orders for the time being. The near-series unit is the focus of further development going forward. The pre-series systems that have been delivered have shown good results in field tests for both reliability and level of effectiveness. The targeted cost reductions of the Galileo product series are achieved in the manufacturing of the first units. Customer feedback is very positive.
Order intake of CHF 14.4 million for Others concerns mainly Sulzer Innotec.
Divestment in India
Sulzer India Ltd. and Burckhardt Compression AG have signed an agreement for the sale of the compressor business (sales of approximately CHF 7 million) of Sulzer India. Sulzer India Ltd. is a publicly listed company in India and is 80% owned by Sulzer AG. In the future, Sulzer India Ltd. plans to concentrate fully on its core business Sulzer Chemtech. The transaction is scheduled to be completed in January 2005.
Outlook for 2004
Sulzer anticipates that the growth trend for the first nine months of 2004 will continue for the core divisions. Currently Sulzer expects both operating income and net income in the second half of 2004 to be ahead of the first half’s results and for the year as a whole, to be well over the prior year.
The order intake for the full year 2004 will be published on January 18, 2005.