Supplementary information

Alternative performance measures (APM)

– Financial reporting – Consolidated financial statements – Supplementary information

Alternative performance measures (APM)

The financial information included in this report includes certain alternative performance measures (APMs), which are not accounting measures as defined by IFRS. These APMs should not be used instead of, or considered as alternatives to, the group’s consolidated financial results based on IFRS. These APMs may not be comparable to similarly titled measures disclosed by other companies. All APMs presented relate to the performance of the current reporting period and comparative periods.

Definition of alternative performance measures (APM)

Order intake from continuing operations

Order intake from continuing operations includes all registered orders from continuing operations of the period that will be recorded or have already been recorded as sales. The reported value of an order corresponds to the undiscounted value of sales that the group expects to recognize following delivery of goods or services subject to the order, less any trade discounts and excluding value added or sales tax. Adjustments, corrections and cancellations resulting from updating the order backlog are respectively included in the amount of the order intake.

Order intake gross margin from continuing operations

The order intake gross margin from continuing operations is defined as the expected gross profit of order intake from continuing operations divided by order intake from continuing operations.

Order backlog from continuing operations

Order backlog from continuing operations represents the undiscounted value of sales the group expects to generate from orders from continuing operations on hand at the end of the reporting period.

Return on sales (ROS) from continuing operations

ROS from continuing operations measures the profitability from continuing operations relative to sales. ROS from continuing operations is calculated by dividing EBIT from continuing operations by sales.

Operational profit from continuing operations

Operational profit from continuing operations is used to determine the profitability of the business, without considering impairments, restructuring expenses and other non-operational items and before interest, taxes and amortization. Other non-operational items include significant acquisition-related expenses, gains and losses from sale of businesses or real estate, and certain non-operational items that are non-recurring or do not occur in similar magnitude.

Operational profitability from continuing operations

Operational profitability from continuing operations measures how the group turns sales from continuing operations into operating profits. Operational profitability is calculated by dividing operational profit from continuing operations by sales from continuing operations.

Operational ROCEA (operational return on capital employed adjusted)

Operational ROCEA measures how the group generates operational profits from its capital employed. Operational ROCEA is calculated by dividing operational profit by average capital employed.

Capital employed

Capital employed refers to the amount of capital investment the group uses to operate and provides an indication of how the group is investing its money. For the calculation of the capital employed, please refer to the reconciliation statement below.

EBITDA (earnings before interest, taxes, depreciation and amortization)

The group uses EBITDA to determine the net debt/EBITDA ratio. EBITDA is defined as EBIT before depreciation and amortization.

Core net income from continuing operations

Core net income from continuing operations is used to determine the dividend proposal. Sulzer’s long-term target is to maintain a dividend payout ratio of approximately 40% to 70% of core net income from continuing operations with due consideration to liquidity and funding requirements as well as continuity. Core net income from continuing operations is defined as net income from continuing operations before tax-adjusted effects on restructuring, amortization, impairments and non-operational items.

Free cash flow (FCF)

FCF is used to assess the group’s ability to generate the cash required to conduct and maintain its operations. It also indicates the group’s ability to generate cash to finance dividend payments, repay debt and to undertake merger and acquisition activities. FCF is calculated based on the IFRS cash flow from operating activities and adjusted for capital expenditures (investments in property, plant and equipment and intangible assets).

Net debt

Net debt is used to monitor the group’s overall short- and long-term liquidity. Net debt is calculated as the sum of total current and non-current borrowings and lease liabilities less cash and cash equivalents and current financial assets.

Net debt/EBITDA ratio

Net debt/EBITDA is a ratio measuring the amount of income generated and available to pay down debt before covering interest, taxes, depreciations and amortization expenses. The net debt/EBITDA ratio is used as a measurement of leverage. It is calculated as net debt divided by EBITDA.

Gearing ratio (borrowings-to-equity ratio)

The gearing ratio compares the borrowings and lease liabilities relative to the equity. The gearing ratio represents the group’s leverage, comparing how much of the business’s funding comes from borrowed funds (lenders) versus company owners (shareholders). The gearing ratio is defined as borrowings and lease liabilities divided by equity attributable to shareholders of Sulzer Ltd.

Currency-adjusted growth

Certain percentage changes in the financial review and the business review divisions have been calculated using constant exchange rates, which allow for an assessment of the group’s financial performance with the effects of exchange rate fluctuations eliminated. The currency-adjusted growth is calculated by applying the previous year’s exchange rates for the current year and calculating the growth without currency effects.

Organic growth

Organic growth measures changes with the same period in the previous year after adjusting for effects arising from acquisitions, divestments and foreign exchange differences.

The impact of the organic growth is determined as follows:

  • Currency-adjusted growth as described above
  • For the current-year acquisitions, by deducting the currency-adjusted amount generated during the current-year by the acquired entities
  • For prior-year acquisitions, by deducting the currency-adjusted amount generated over the months during which the acquired entities were not consolidated in the previous year
  • For current-year disposals, by adding the currency-adjusted amount generated by the divested entities in the previous year over the months during which those entities were no longer consolidated in the current year
  • For the prior-year disposals, by adding for the current year the currency-adjusted amount generated in the previous year by the divested entities

Reconciliation statements for alternative performance measures (APM)

For reconciliation statements of operational profit, operational profitability, core net income and free cash flow, please refer to the section “Financial review”, for EBITDA, net debt and gearing ratio to note 6 and for operational ROCEA to the table below.

Operational ROCEA reconciliation statement

millions of CHF

 

2021

 

2020 1)

Total assets

 

5’010.4

 

5’367.0

./. Other intangible assets

 

–276.5

 

–401.0

./. Cash and cash equivalents

 

–1’505.4

 

–1’123.2

./. Current financial assets

 

–26.7

 

–305.1

./. Total current and non-current income and deferred tax assets and liabilities

 

–64.3

 

–56.0

./. Total non-current liabilities

 

–1’568.8

 

–1’976.0

./. Total current liabilities

 

–2’162.3

 

–1’973.8

Non-current borrowings

 

1’164.6

 

1’491.3

Current borrowings

 

345.5

 

231.8

Liability related to the purchase of treasury shares

 

98.1

 

103.4

Outstanding dividend payments

 

201.1

 

157.6

Adjustment for average calculation and currency translation differences

 

74.4

 

–321.3

Average capital employed from continuing operations

 

1’290.1

 

1’194.6

 

 

 

 

 

Operational profit from continuing operations

 

293.3

 

255.0

Average capital employed

 

1’290.1

 

1’194.6

Operational ROCEA

 

22.7%

 

21.3%

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7 to the consolidated financial statements).

Five-year summaries of key financial data

– Financial reporting – Consolidated financial statements – Five-year summaries

Five-year summaries of key financial data

Key figures from consolidated income statement and statement of cash flows

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Order intake from continuing operations

 

3’167.6

 

3’049.2

 

3’322.1

 

3’081.9

 

2’729.4

Currency-adjusted growth order intake from continuing operations

 

3.6%

 

–1.1%

 

n/a

 

n/a

 

n/a

Order intake gross margin from continuing operations

 

33.1%

 

32.6%

 

32.0%

 

31.4%

 

32.9%

Order backlog from continuing operations

 

1’724.1

 

1’676.8

 

1’731.8

 

1’721.9

 

1’526.7

Sales from continuing operations

 

3’155.3

 

2’967.8

 

3’307.9

 

2’911.0

 

2’627.5

Operating income (EBIT) from continuing operations

 

221.8

 

132.5

 

202.8

 

120.9

 

73.3

Operational profit from continuing operations

 

293.3

 

255.0

 

283.1

 

226.8

 

168.6

Operational profitability from continuing operations

 

9.3%

 

8.6%

 

8.6%

 

7.8%

 

6.4%

Net income attributable to shareholders of Sulzer Ltd

 

1’416.7

 

83.6

 

154.0

 

113.7

 

83.2

– in percentage of equity attributable to shareholders of Sulzer Ltd (ROE)

 

111.2%

 

6.0%

 

9.7%

 

7.0%

 

5.0%

Basic earnings per share (in CHF)

 

41.93

 

2.46

 

4.52

 

3.56

 

2.44

Depreciation from continuing operations

 

–81.0

 

–78.3

 

–79.7

 

–52.2

 

–50.9

Amortization from continuing operations

 

–50.2

 

–46.7

 

–45.5

 

–49.4

 

–36.8

Impairments of tangible and intangible assets from continuing operations

 

–4.2

 

–9.4

 

–3.1

 

–0.7

 

–15.4

Research and development expenses from continuing operations

 

–64.4

 

–63.8

 

–62.7

 

–63.9

 

–57.2

Personnel expenses from continuing operations

 

–1’018.1

 

–1’014.4

 

–1’078.7

 

–1’241.9

 

n/a

Capital expenditure (incl. lease assets) from continuing operations

 

–119.4

 

–88.0

 

–100.8

 

–64.7

 

–52.3

Free cash flow (FCF) from continuing operations

 

210.5

 

262.6

 

156.8

 

115.5

 

n/a

FCF conversion (free cash flow/net income) from continuing operations

 

1.50

 

3.67

 

1.18

 

1.80

 

n/a

Employees (number of full-time equivalents) from continuing operations as of December 31

 

13’816

 

13’197

 

14’685

 

13’708

 

13’016

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Key figures from consolidated balance sheet

millions of CHF

 

2021

 

2020 1)

 

2019

 

2018

 

2017

Non-current assets

 

1’834.2

 

2’279.9

 

2’172.0

 

2’057.7

 

1’990.5

– thereof property, plant and equipment

 

394.0

 

545.3

 

544.4

 

527.0

 

531.6

Current assets

 

3’176.2

 

3’087.1

 

2’937.5

 

2’840.6

 

2’126.8

– thereof cash and cash equivalents

 

1’505.4

 

1’123.2

 

1’035.5

 

1’095.2

 

488.8

Total assets

 

5’010.4

 

5’367.0

 

5’109.5

 

4’898.3

 

4’117.3

Equity attributable to shareholders of Sulzer Ltd

 

1’273.8

 

1’404.3

 

1’580.7

 

1’629.9

 

1’680.1

Non-current liabilities

 

1’568.8

 

1’976.0

 

1’644.1

 

1’646.8

 

900.1

– thereof non-current borrowings

 

1’164.6

 

1’491.3

 

1’199.2

 

1’316.3

 

458.7

– thereof non-current lease liabilities

 

64.5

 

90.2

 

82.3

 

 

Current liabilities

 

2’162.3

 

1’973.8

 

1’871.5

 

1’610.4

 

1’514.8

– thereof current borrowings

 

345.5

 

231.8

 

131.0

 

18.0

 

255.1

– thereof current lease liabilities

 

24.3

 

29.5

 

27.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

66.8

 

414.5

 

346.9

 

239.0

 

225.0

Net debt/EBITDA ratio

 

0.15

 

1.26

 

0.84

 

0.73

 

0.81

Equity ratio 2)

 

25.4%

 

26.1%

 

30.9%

 

33.3%

 

40.8%

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7). The balance sheet as of December 31, 2020, has been adjusted following the finalization of the purchase price accounting and measurement period adjustments related to acquisitions in 2020. A reconciliation to the previously published balance sheet is provided in note 4. Defined benefit assets are presented as non-current assets and comparative information is re-presented. Further details are available in note 9.

2) Equity attributable to shareholders of Sulzer Ltd in relation to total assets.

Five-year summaries by division

Five-year summaries by division

 

 

Order intake from continuing operations

 

Sales from continuing operations

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Flow Equipment

 

1’324.7

 

1’297.6

 

1’458.9

 

1’372.1

 

1’180.2

 

1’389.0

 

1’296.3

 

1’477.0

 

1’284.2

 

1’120.0

Services

 

1’163.4

 

1’130.8

 

1’193.2

 

1’109.7

 

1’047.7

 

1’117.7

 

1’078.3

 

1’167.0

 

1’063.7

 

1’029.5

Chemtech

 

679.5

 

620.8

 

670.0

 

600.1

 

501.5

 

648.5

 

593.1

 

664.0

 

563.2

 

478.0

Total

 

3’167.6

 

3’049.2

 

3’322.1

 

3’081.9

 

2’729.4

 

3’155.3

 

2’967.8

 

3’307.9

 

2’911.0

 

2’627.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order backlog from continuing operations

 

Employees from continuing operations 2)

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Flow Equipment

 

811.5

 

845.0

 

924.3

 

982.9

 

847.0

 

5’325

 

5’362

 

5’759

 

5’713

 

5’453

Services

 

479.5

 

435.0

 

422.2

 

393.1

 

364.4

 

4’571

 

4’449

 

4’900

 

4’721

 

4’485

Chemtech

 

433.2

 

396.9

 

385.3

 

345.9

 

315.3

 

3’734

 

3’221

 

3’803

 

3’063

 

2’878

Divisions

 

1’724.1

 

1’676.8

 

1’731.8

 

1’721.9

 

1’526.7

 

13’631

 

13’032

 

14’463

 

13’497

 

12’816

Others

 

 

 

0.0

 

0.0

 

–0.0

 

 

185

 

165

 

222

 

211

 

200

Total

 

1’724.1

 

1’676.8

 

1’731.8

 

1’721.9

 

1’526.7

 

13’816

 

13’197

 

14’685

 

13’708

 

13’016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational profit from continuing operations

 

Operational profitability from continuing operations

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Flow Equipment

 

81.4

 

55.2

 

59.7

 

41.4

 

–3.7

 

5.9%

 

4.3%

 

4.0%

 

3.2%

 

–0.3%

Services

 

158.7

 

150.3

 

164.5

 

146.1

 

144.0

 

14.2%

 

13.9%

 

14.1%

 

13.7%

 

13.9%

Chemtech

 

64.8

 

56.9

 

63.8

 

50.0

 

25.0

 

10.0%

 

9.6%

 

9.6%

 

8.9%

 

5.2%

Divisions

 

304.9

 

262.4

 

288.0

 

237.5

 

165.3

 

9.7%

 

8.8%

 

8.7%

 

8.2%

 

6.3%

Others

 

–11.6

 

–7.4

 

–4.9

 

–10.7

 

3.3

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total

 

293.3

 

255.0

 

283.0

 

226.8

 

168.6

 

9.3%

 

8.6%

 

8.6%

 

7.8%

 

6.4%

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

2) Number of full-time equivalents as of December 31.

Five-year summaries by region

Five-year summaries by region

Order intake from continuing operations by region

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Europe, the Middle East and Africa

 

1’281.2

 

1’211.6

 

1’375.8

 

1’275.9

 

1’176.8

Americas

 

1’051.8

 

1’009.5

 

1’134.6

 

1’144.8

 

902.3

Asia-Pacific

 

834.6

 

828.2

 

811.7

 

661.2

 

650.2

Total

 

3’167.6

 

3’049.2

 

3’322.1

 

3’081.9

 

2’729.4

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Sales from continuing operations by region

millions of CHF

 

2021

 

2020 1)

 

2019 1)

 

2018 1)

 

2017 1)

Europe, the Middle East and Africa

 

1’297.5

 

1’198.1

 

1’306.9

 

1’203.5

 

1’172.8

Americas

 

978.1

 

1’027.1

 

1’165.3

 

964.4

 

865.9

Asia-Pacific

 

879.7

 

742.6

 

835.8

 

743.1

 

588.7

Total

 

3’155.3

 

2’967.8

 

3’307.9

 

2’911.0

 

2’627.5

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Employees from continuing operations by company location1)

millions of CHF

 

2021

 

2020

 

2019

 

2018

 

2017

Europe, the Middle East and Africa

 

5’795

 

5’709

 

6’246

 

5’943

 

5’899

Americas

 

4’207

 

3’960

 

4’429

 

4’211

 

3’748

Asia-Pacific

 

3’815

 

3’528

 

4’010

 

3’555

 

3’369

Total

 

13’816

 

13’197

 

14’685

 

13’708

 

13’016

1) Number of full-time equivalents as of December 31.