Managing temporary disruptions
In the first six months of 2020, Chemtech’s order intake decreased, due to market disruption and customers postponing projects in the wake of COVID-19. Sales remained stable, while operational EBITA and operational ROSA decreased as a consequence of the lockdowns. To adapt the business to the current situation and make it more resistant, Chemtech has introduced structural measures and reduced OPEX spend.
If not otherwise indicated, changes from the previous year are based on currency-adjusted figures.
Ramping up capacities after temporary closures
Due to the quick implementation of business contingency plans during the lockdowns, Chemtech’s Shanghai factory was able to reopen on February 10, 2020, among the first companies in the region to resume production. Manufacturing in India and Russia was also temporarily disrupted. By the beginning of May, all factories had recommenced operations in line with local governmental regulations. India is still impacted by governmental restrictions and has not yet reached full capacity.
While introducing the strictest possible safety measures to protect employees, Chemtech’s separation technology played its part in speeding up the fight against COVID-19. The division supported Farmhispania Group to increase the production capacity of one of its drugs, which has been critical in the treatment of COVID-19 patients.
Supporting strategic direction towards sustainable business
As a technology partner for BEWiSynbra Group, one of Europe’s leading producers of expandable polystyrene (EPS), Sulzer is helping to reach an ambitious target to collect and recycle 60’000 tonnes of EPS per year. Converting waste EPS into new EPS material used in building insulation or packaging, Chemtech’s production line enables BEWiSynbra to achieve their circular economy aims while expanding their manufacturing capacity.
To further support Sulzer’s clear strategic direction towards sustainable businesses, Chemtech strengthened its activities in this area and formed a global bio-based and renewables application development team in 2020. The team will lead innovation for the conversion of renewable feedstocks into oleochemicals, biofuels, biochemicals and biopolymers, in addition to driving the development of cutting-edge solutions for plastic recycling.
The temporary factory closures and customers postponing projects impacted our performance. We have launched decisive measures to adapt our business to the current market environment and make it more resistant.
Torsten Wintergerste, Division President Chemtech
Lower order intake
Chemtech’s order intake was 3.2% lower in the first half of 2020 compared with the same period last year. Market disruption, lower volumes in all areas except for China, limited site access and customers postponing projects as well as oil and gas turmoil impacted order intake and project execution.
Order intake increased by 20.2% in the Asia-Pacific region, whereas it decreased by 25.8% in the Americas and by 22.1% in EMEA (Europe, the Middle East and Africa).
Order intake by segment
Order intake by region
Temporary factory closures impacting sales and profitability
In the first six months of 2020, sales remained stable, mainly supported by the acquisition of GTC, despite the six-week lockdown of the Indian factory from the end of March until the beginning of May.
Operational EBITA decreased by 9.6% compared with the first half of 2019. The temporary closure of the India factory had a large impact on the performance of other regions such as Europe, Russia and Africa. Consequently, operational ROSA decreased to 8.0% in the first half of 2020 after a significant increase to 9.0% in the same period of 2019. Chemtech has initiated structural actions and reduced OPEX spend to adapt its business to the current market environment and make it more resistant.
Key figures Chemtech (January 1 – June 30)
|
millions of CHF |
|
2020 |
|
2019 |
|
Change in +/–% |
|
+/–% adjusted 1) |
|
+/–% organic 2) |
|
Order intake |
|
319.4 |
|
350.3 |
|
–8.8 |
|
–3.2 |
|
–12.0 |
|
Order intake gross margin |
|
30.5% |
|
29.7% |
|
|
|
|
|
|
|
Order backlog as of June 30/ December 31 |
|
408.5 |
|
385.3 |
|
6.0 |
|
|
|
|
|
Sales |
|
287.8 |
|
303.8 |
|
–5.3 |
|
0.2 |
|
–7.7 |
|
EBIT |
|
10.6 |
|
24.1 |
|
–56.0 |
|
|
|
|
|
opEBITA |
|
23.0 |
|
27.3 |
|
–15.8 |
|
–9.6 |
|
–22.3 |
|
opROSA |
|
8.0% |
|
9.0% |
|
|
|
|
|
|
|
Employees (number of full-time equivalents) as of June 30/ December 31 |
|
3’206 |
|
3’803 |
|
–15.7 |
|
|
|
|
1) Adjusted for currency effects.
2) Adjusted for acquisition and currency effects.
Abbreviations
EBIT: Earnings before interest and taxes
opEBITA: Operational earnings before interest, taxes and amortization
opROSA: Operational return on sales adjusted
For the definition of the alternative performance measures, please refer to the Sulzer Annual Report 2019.