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.
Certain APMs previously disclosed are no longer presented as APMs in 2025. These APMs are “Operating Profit”, “Operating Profitability”, “Operational ROCEA”, “Capital employed” and "EBIT Margin". The definitions of these APMs are deleted from the “Supplementary information” section.
Additionally, “EBITDA margin” has been introduced as a new APM.
Definition of alternative performance measures (APM)
Order intake
Order intake includes all registered orders 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
The order intake gross margin is defined as the expected gross profit of order intake divided by order intake.
Order backlog
Order backlog represents the undiscounted value of sales the group expects to generate from orders on hand at the end of the reporting period.
Return on sales (ROS)
ROS measures the profitability relative to sales. ROS is calculated by dividing EBIT by sales.
Operating income (EBIT)
Operating income (EBIT) as presented in the consolidated income statement is the profit before income tax expenses, interest income and expenses, other financial income and expenses and share of profit / (loss) of associates and joint ventures.
EBITDA (earnings before interest, taxes, depreciation and amortization)
EBITDA is used to assess the performance of the business. EBITDA is defined as EBIT before depreciation, amortization and impairment.
EBITDA margin
EBITDA margin measures EBITDA relative to sales. EBITDA margin is calculated by dividing EBITDA by sales.
Core net income
Core net income 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 with due consideration to liquidity and funding requirements as well as continuity. Core net income is defined as net income 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, divestitures / deconsolidations 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 core net income, EBITDA and free cash flow, please refer to the section “Financial review”, for EBITDA, net debt and gearing ratio to note 5.