Improved operational profitability despite lower volumes

Despite a challenging market environment and thanks to excellence in execution and cost measures, Pumps Equipment (PE) increased operational profitability by 30 basis points to 4.3%. Orders and sales declined by 4.1% and 5.7% respectively. Sulzer strengthened its water business by acquiring Nordic Water, a leading supplier of water treatment technology.

Taking structural action and strengthening water business

In anticipation of adverse conditions in the oil and gas market, PE took structural actions early on to make its Energy-related business leaner and adapt to the slowdown of market demand. The fast and successful execution of the Energy Resilience program paid off and resulted in an improved operational profitability despite lower volumes.

In January 2021, Sulzer announced to acquire Nordic Water, a leading supplier of water treatment technology. The acquisition complements PE’s wastewater portfolio and provides further access to the fast-growing clean water market. It is expected that Nordic Water, with 200 employees at 13 sites in six countries, will achieve sales of around CHF 80 million in 2021, in addition to generating significant sales and aftermarket synergies.

In the past year, we’ve demonstrated our agility and ability to quickly adapt, anticipating the impact of a challenging market environment. This led to an improved operational profitability despite lower sales. The acquisition of Nordic Water opens up exceptional opportunities to further grow in the water market going forward.

Frédéric Lalanne, Division President Pumps Equipment

Key figures Pumps Equipment

Resilient order intake in challenging markets

Orders in the water market continued to grow and were up 2.3%, excluding two large Engineered Water orders in 2019. Orders in Energy decreased by 1.9%, due to fewer investments in a volatile environment. Order intake in Industry remained stable (–0.5%), because the decline in Pulp and Paper was offset by higher activity in other industrial processing industries.

Order intake grew by 4.6% in Asia-Pacific on robust demand in China. The Americas reported a decrease in orders of 5.1%, impacted by less investment activity in oil and gas in the USA, whereas orders in EMEA (Europe, the Middle East, Africa) declined by 7.6%.

Improved profitability on strict cost management and solid operational performance

Strong sales in Water (+3.4% organic, –0.8% currency-adjusted) and stable sales in Industry (–1.0%) did not offset the decrease in Energy (–11.8%), leading to a sales decrease of 5.7% compared with 2019. The rapid execution of the Energy Resilience program and associated structural cost-out measures led to an increase in operational profitability by 30 basis points to 4.3%.

Safety performance in 2020

In 2020, PE reported an accident frequency rate (AFR) of 2.0 cases per million working hours (2019: 1.8), despite fewer major accidents. The accident severity rate (ASR) increased to 53.5 lost days per million working hours from a low level of 37.3 in the previous year, largely impacted by an incident that occurred in late 2019 and carried over lost days into 2020. Thorough contingency planning and the application of COVID-19 adapted safe working processes during the pandemic were key to continue to serve customer needs. Through these efforts, all PE facilities were able to maintain workshop operations throughout 2020.

Abbreviations

EBIT: Earnings before interest and taxes

For the definition of the alternative performance measures, please refer to “Supplementary information”.