Order intake returned to organic growth
Pumps Equipment reported growing order intake on a currency-adjusted basis and organically. Sales, operational EBITA, and operational ROSA decreased. Sulzer announced the acquisition of JWC Environmental, LLC, a leading supplier of wastewater equipment, and completed the acquisition of pump manufacturer Ensival Moret.
Extending pumping portfolio for industrial and wastewater applications
In the first quarter of 2017, Sulzer completed the acquisition of Ensival Moret. The French company offers a wide range of industrial pumps with strong positions in a variety of industrial applications such as fertilizers, sugar, mining, and chemicals.
It is an honor to take over from César as Division President Pumps Equipment. I am determined to take our business to the next level.
Michael Streicher Division President Pumps Equipment (as of January 1, 2018)
At year-end, Sulzer announced the acquisition of the US company JWC Environmental, LLC (JWC) (completed in January 2018). JWC is a leading provider of products to reduce and remove solids, such as grinders, screens, and dissolved air flotation systems for municipal, industrial, and commercial wastewater applications. The acquisition strengthened Sulzer’s wastewater treatment offering through complementary equipment and improved its access to the key US municipal wastewater treatment market.
After 40 successful years with Sulzer, César Montenegro, Division President of Sulzer’s Pumps Equipment division, chose to formally retire and stepped down from the Executive Committee as of December 31, 2017. Michael Streicher succeeded César Montenegro on January 1, 2018, as Division President Pumps Equipment and Sulzer Executive Committee member.
Returning to organic order intake growth
In 2017, the Pumps Equipment division reported growing order intake on a currency-adjusted basis (8.1%) and organically (1.5%) compared with the previous year. The organic increase was largely triggered by the improved oil and gas market. Order intake in the water market remained flat on fewer large orders for the engineered water business in 2017, despite 3% organic growth in Municipal Water. Order intake in the power market decreased, due to project delays in a highly competitive market. Order intake in the general industry markets grew organically and supported by the Ensival Moret acquisition.
Regionally, Europe, the Middle East, and Africa grew on a currency-adjusted basis but decreased organically. Demand in the Americas and Asia-Pacific regions grew significantly.
Our order intake grew organically in 2017. Healthy growth in general industry and early signs of recovery in oil and gas upstream helped us fill our order pipeline.
César Montenegro Division President Pumps Equipment (until December 31, 2017)
Decreasing sales, operational EBITA, and operational ROSA
Compared with 2016, sales decreased on a currency-adjusted basis (–4.3%) and organically (–12.9%). This was largely due to the significantly lower sales volumes from the energy markets (oil and gas and power) because of the lower order backlog at the beginning of 2017.
Operational EBITA decreased, impacted by lower organic sales volumes and the Ensival Moret acquisition. The slightly negative operational EBITA resulted in an operational ROSA of –0.3%.
Sales by market segment
Sales by region
Higher accident frequency rate
In 2017, Pumps Equipment could not sustain its excellent safety performance that it achieved over the past five years. The division reported an increased accident frequency rate (AFR) of 2.2 cases per million working hours (2016: 1.3). The accident severity rate (ASR) amounted to 41.4 lost days per million working hours (2016: 33.8). The main reason for the increase is a high amount of accidents in the Asia-Pacific region. In Europe, the Middle East, and Africa, the number of accidents decreased considerably, whereas it remained stable in the Americas. The newly acquired companies were able to halve their number of accidents compared with 2016. In 2018, Sulzer will pay special attention to and implement measures at its sites in the Asia-Pacific region. Please read more about the company’s safety and health efforts in the chapter “Social sustainability”.
If not otherwise indicated, changes compared with the previous year are based on currency-adjusted figures.
Key figures Pumps Equipment
|
millions of CHF |
2017 |
2016 3) |
Change in +/–% |
+/–% adjusted 1) |
+/–% organic 2) |
|
Order intake |
1’189.7 |
1’090.4 |
9.1 |
8.1 |
1.5 |
|
Order intake gross margin |
28.3% |
26.7% |
|
|
|
|
Order backlog as of December 31 |
847.0 |
697.4 |
21.5 |
|
|
|
Sales |
1’122.7 |
1’159.0 |
–3.1 |
–4.3 |
–12.9 |
|
EBIT |
–61.7 |
–64.9 |
n/a |
|
|
|
opEBITA |
–3.7 |
13.0 |
n/a |
n/a |
n/a |
|
opROSA |
–0.3% |
1.1% |
|
|
|
|
opROCEA |
–0.6% |
1.8% |
|
|
|
|
Employees (number of full-time equivalents) as of December 31 |
5’453 |
5’156 |
5.8 |
|
|
1) Adjusted for currency effects.
2) Adjusted for acquisition and currency effects.
3) Reclassified numbers according to new operational structure, effective since January 1, 2017.
Abbreviations
EBIT: Operating income
opEBITA: Operating income before restructuring, amortization, impairments, and non-operational items
opROSA: Return on sales before restructuring, amortization, impairments, and non-operational items (opEBITA/sales)
opROCEA: Return on capital employed (opEBITA/average capital employed)