– Business review – Flow Equipment
Rising orders and sales, record operational profitability
Note: If not otherwise indicated, changes from the previous year are based on currency-adjusted figures.
In 2021, the Flow Equipment division returned a robust set of results, with orders up 1.8%, significant sales growth of 6.9% and a rise in operational profitability to a record 5.9%. The division also changed its name to Flow Equipment in 2021, representing our evolution far beyond the division’s renowned pumps offering as well as our comprehensive portfolio of water treatment solutions.
Changing division name to reflect portfolio evolution
As part of Sulzer’s brand refresh and refocus on its core businesses as a pure play flow-control company, the Pumps Equipment division changed its name to Flow Equipment. The name change encompasses the division’s evolution far beyond its market-leading pumps offering — to blowers, grinders, filters, agitators, digital and more. Flow Equipment also encapsulates our comprehensive portfolio of water treatment solutions. You can learn more in this report about how our solutions are helping to manage the entire water life cycle, bringing water to growing populations while helping to protect this precious natural resource.
At the beginning of February 2021, Sulzer closed its acquisition of Nordic Water, a leading supplier of water treatment technologies. With its broad water treatment solutions complementing Flow Equipment’s portfolio, Water is now the largest single business in the Flow Equipment division, representing 39% of its order intake in 2021. As part of our strategic shift towards sustainable technologies and our continued order selectivity, our Energy business represented 31% of total orders in 2021, down from 41% in 2020.
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With profitability at record levels in 2021 and Water representing the largest share of the division’s order intake, our transformation is yielding very positive results. I am proud of what Flow Equipment has achieved and become, and I look forward to using my experience leading Sulzer’s largest division as CEO of the Company.”
Frederic LalanneDivision President Flow Equipment
Key figures Flow Equipment
|
millions of CHF |
|
2021 |
|
2020 |
|
Change in +/–% |
|
+/–% adjusted 1) |
|
+/–% organic 2) |
|
Order intake |
|
1’324.7 |
|
1’297.6 |
|
2.1 |
|
1.8 |
|
–3.9 |
|
Order intake gross margin |
|
30.0% |
|
28.4% |
|
|
|
|
|
|
|
Order backlog as of December 31 |
|
811.5 |
|
845.0 |
|
–4.0 |
|
|
|
|
|
Sales |
|
1’389.0 |
|
1’296.3 |
|
7.1 |
|
6.9 |
|
2.0 |
|
EBIT |
|
35.1 |
|
–16.1 |
|
n/a |
|
|
|
|
|
Operational profit |
|
81.4 |
|
55.2 |
|
47.5 |
|
46.6 |
|
35.5 |
|
Operational profitability |
|
5.9% |
|
4.3% |
|
|
|
|
|
|
|
Employees (number of full-time equivalents) as of December 31 |
|
5’325 |
|
5’362 |
|
–0.7 |
|
|
|
|
1) Adjusted for currency effects.
2) Adjusted for acquisition and currency effects.
Water and Industry driving strong order growth
Flow Equipment’s orders increased by 1.8% including the Nordic Water acquisition (–3.9% organically). Our strategic shift towards sustainable solutions in the Flow Equipment division is yielding results, with Water and Industry growing by a significant 11.4% (organically) and 6.9% respectively. Pulp and Paper and Mining were the key contributors to the growth in Industry, while Wastewater drove the rise in our Water market segment. These strong increases were able to offset a decline in Energy orders (–22.6%), which fell due to the anticipated soft markets in 2021 and our continued order selectivity to protect our margins.
Order intake by market segment
2021
Order intake by region
2021
Significant sales increase and record profitability
In 2021, sales saw a significant increase of 6.9%, also thanks to Water and Industry’s strong performance which was able to more than offset the decline in Energy. Operational profitability reached record levels in 2021 with an increase to 5.9%, mainly driven by our focus on operational excellence in all business units and savings resulting from structural actions to resize our Energy business. We were also able to mitigate the adverse impact of supply chain pressures thanks to our agility in our procurement and manufacturing processes.
Safety performance in 2021
In 2021, Flow Equipment reported a slightly improved accident frequency rate (AFR) of 1.8 cases per million working hours compared to the previous year (2020: 2.0). The accident severity rate (ASR) decreased to 35 lost days per million working hours, from a high level of 51.1 in the previous year.
Thorough contingency planning and the application of continuously updated COVID-19 safe working processes during the pandemic were key in allowing us to keep serving our customers' needs. Through these efforts, all Flow Equipment facilities were able to maintain workshop operations throughout 2021.
Flow Equipment's Take Care safety campaign was released in Q4 of 2021 and early signs of improvements are encouraging. This campaign will continue into 2022.
Abbreviations
EBIT: Earnings before interest and taxes
For the definition of the alternative performance measures, please refer to “Supplementary information”