Strong performance on all KPIs

Note: If not otherwise indicated, changes from the previous year are based on organic figures (adjusted for currency effects, acquisitions and divestitures/deconsolidations).

All divisions demonstrated strong performance, with order intake growing by 13.9% and sales achieving a year-on-year increase of 13.2%. Operational profitability reached 11.1%, showing a significant improvement of 110 basis points compared with 2022. Free cash flow amounted to CHF 301.3 million, up by CHF 243.0 million from CHF 58.3 million.

Orders and sales growing double-digit in all divisions

Group order intake increased by 13.9% compared with 2022 and reached CHF 3’580.3 million, which represents the highest amount of order intake over the last decade. Given the strong appreciation of the Swiss franc against most currencies Sulzer operates in, currency translation effects had a negative impact on order intake of CHF 276.1 million. The impact from divestitures and deconsolidations was CHF 46.9 million. The order intake gross margin¹ increased by 0.4 percentage points to 33.9%.

In the Flow Equipment division, order intake grew by 11.2%, with a significant contribution from large orders booked in the beginning of 2023 supporting energy transition and energy security. Positive end-market development in the Americas contributed to order intake growth of 19.8% in the Services division. Order intake in the Chemtech division increased by 10.5%, driven by large order bookings in the first half of the year and strong fundamentals in its products and components business. 

As of December 31, 2023, the order backlog amounted to CHF 1’946.8 million (December 31, 2022: CHF 1’844.7 million). Negative currency translation effects on backlog totaled CHF 162.1 million.

1) Order intake gross margin is defined as the expected gross profit of order intake divided by order intake.

Order intake 

Sales reached CHF 3’281.7 million in 2023, an increase of 13.2% compared with the previous year. Negative currency translation effects totaled CHF 247.8 million and the impact from divestitures and deconsolidations accounted for CHF 71.1 million.

In the Flow Equipment division, sales increased by 10.9%, with all business units, particularly Industry, benefitting from the high order backlog and the general stabilization of the supply chain. Sales in Services also grew, leading to an overall increase of 14.5%, with all regions contributing. In Chemtech, sales were up by 15.5% thanks to solid execution of the high order backlog.

Our strong performance in 2023 demonstrates the value of our solutions and expertise to essential industries. Demand for our critical services and products is strong in both our traditional and evolving markets.”

Thomas ZicklerChief Financial Officer

Healthy gross profit margins

Gross profit margin increased from 29.5% in 2022 to 33.0% in 2023, driven by operational excellence and a more profitable product mix, while 2022 was impacted by Russia-related write-offs. Along with increased sales volumes, margins improved and gross profit reached CHF 1’084.6 million (2022: CHF 939.6 million).

Operational profitability up 110 basis points to 11.1%

Higher sales volumes and better margins led to an operational profit increase of 25.3% and amounted to CHF 365.6 million (2022: CHF 317.6 million). This translates into record operational profitability for the last ten years of 11.1%, up by 110 basis points compared with the previous year (2022: 10.0%). All divisions successfully increased operational profitability.

Bridge from operational profit to EBIT

Return on sales of 10.0%

By December 31, 2023, EBIT amounted to CHF 329.7 million, compared with CHF 111.4 million in 2022, which included CHF 147.3 million write-offs relating to the exit from Russia and the closure in Poland. Return on sales (ROS) was 10.0%, compared with 3.5% by December 31, 2022. In 2023, the definitive deconsolidation of Russian business activities was booked and resulted in a minor gain, which was recorded as a non-operational item. Restructuring expenses of CHF 3.0 million were also incurred, mostly related to the reorganization of the Flow Equipment division.

Calculation of return on sales (ROS) and operational profitability

Financial results

Total net financial expenses amounted to CHF 22.2 million compared with CHF 1.6 million in 2022.

Total net interest expense decreased by CHF 5.7 million as a result of higher interest income on cash and cash equivalents. Fair value changes on financial assets and liabilities had a positive impact of CHF 5.1 million (CHF 24.0 million in 2022) and currency exchange losses amounted to CHF 17.9 million (CHF 6.6 million in 2022). In the previous year, this figure was influenced by a positive impact of CHF 21.0 million arising from unhedged intercompany loans to Russian entities, prior to their classification as "held for sale." Other financial income amounted to CHF 2.5 million (CHF –1.5 million in 2022).

Effective tax rate of 24.2%

Income tax expenses decreased to CHF 73.8 million (2022: CHF 79.0 million) despite higher pre-tax income. This could be achieved thanks to an improved utilization of tax losses, obtained R&D tax credits and successfully concluded tax audits. The effective tax rate (ETR) decreased from 73.8% (excluding Russia and Poland: 30.7%) in 2022 to 24.2% in the financial year 2023. 

Higher net income and core net income

In 2023, net income amounted to CHF 230.5 million. This compares to CHF 28.0 million in the previous year when the Russia and Poland related exit costs of CHF 133.7 million affected Sulzer’s bottom line. Core net income, excluding the tax-adjusted effects of non-operational items, totaled CHF 257.9 million compared with CHF 213.1 million in 2022. Basic earnings per share increased from CHF 0.85 in 2022 to CHF 6.76 in 2023.

Bridge from net income to core net income 

Better balance sheet efficiency

Note: If not otherwise indicated, balance sheet movements from the previous year are based on nominal figures.

Total assets as of December 31, 2023, amounted to CHF 4’369.5 million, which is a decrease of CHF 250.7 million from December 31, 2022. This is mainly attributable to the repayment of borrowings, more efficient use of working capital management and increased defined benefit assets.

Non-current assets increased by CHF 101.7 million to CHF 1’685.9 million. Negative foreign exchange impacts of CHF 38.9 million on goodwill, together with a decrease in other intangible assets of CHF 37.5 million, were offset by an increase in defined benefit assets of CHF 169.2 million. Current assets decreased by CHF 352.4 million, including CHF 30.4 million attributable to the deconsolidation of the Russian operations that were previously classified as "held for sale." Cash and cash equivalents decreased by CHF 221.7 million and were significantly influenced by a bond repayment. Working capital related assets, such as inventories, supplier advances, trade account receivables and contract assets, decreased overall by CHF 85.5 million.

Total liabilities decreased by CHF 320.7 million to CHF 3’270.8 million as of December 31, 2023. This decrease was mainly supported by a bond repayment of CHF 290.0 million. Trade accounts payable also decreased by CHF 73.1 million, whereas an increase was recorded for contract liabilities (CHF 68.7 million). Liabilities previously classified as "held for sale" (CHF 25.4 million) were derecognized as a result of the deconsolidation of the Russian business.

Equity increased by CHF 70.0 million to CHF 1’098.6 million. Increases from net income (CHF 230.5 million) and the remeasurement of defined benefit plans (CHF 128.8 million) were partly offset by negative currency translation effects (CHF 146.0 million), dividend distribution (CHF 119.2 million) and the acquisition of non-controlling interests (CHF 22.8 million).

Net debt decreased from CHF 234.6 million in 2022 to CHF 172.3 million in 2023, largely due to strong operational cash flow. The net debt to EBITDA ratio improved from 0.87 in 2022 to 0.39 due to the increase in EBITDA and the reduction in net debt.

Record free cash flow

At CHF 301.3 million (2022: CHF 58.3 million), free cash flow significantly improved and was in excess of CHF 300 million for the first time in over a decade.

Thanks to higher net income, efficient working capital management and lower tax payments, cash flow from operating activities increased by CHF 243.0 million to CHF 362.2 million (2022: CHF 119.2 million).

Bridge from cash flow from operating activities to free cash flow

Cash outflow from investing activities amounted to CHF 104.8 million, compared to CHF 87.8 million in 2022. At CHF 61.0 million, the net cash outflow for purchases and proceeds from the sale of property, plant and equipment, and intangible assets was similar to the previous year (2022: CHF 60.9 million). In addition, acquisitions and divestiture/deconsolidation related outflows amounted to CHF 45.7 million.

Cash outflow from financing activities totaled CHF 448.6 million, compared with CHF 285.4 million in 2022. This mainly consisted of the bond repayment of CHF 290.0 million and dividend payments of CHF 81.2 million.

Overall, the net change in cash and cash equivalents since January 1, 2023, amounted to CHF -250.3 million, including exchange losses of CHF 59.0 million.

Outlook for 2024

Despite a global environment characterized by uncertainty, Sulzer has delivered strong financial results across all its divisions and is well-positioned for growth in the coming year and beyond. For 2024, Sulzer expects year-on-year organic order intake growth of 2 to 5%. The first half of the year is expected to see a slow development of order intake compared to the very strong first half of 2023, with performance picking up in the second half of the year – this expectation reflects the nature of the project business in Sulzer’s markets. Further, Sulzer expects organic sales growth of 6 to 9% and operational profitability to continue its upwards trajectory to around 12% of sales.

Abbreviations

EBIT: Earnings before interest and taxes

ROS: Return on sales

EBITDA: Earnings before interest, taxes, depreciation, amortization and impairment

FCF: Free cash flow

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

Our Key Figures

Business review BRD Flow Equipment