Notes to the consolidated financial statements
1 General information
Sulzer Ltd (the “companyˮ) is a company domiciled in Switzerland. The address of the company’s registered office is Neuwiesenstrasse 15 in Winterthur, Switzerland. The unaudited consolidated interim financial statements for the six months ended June 30, 2020, comprise the company and its subsidiaries (together referred to as the “groupˮ and individually as the “subsidiariesˮ) and the group’s interest in associates and joint ventures. The group specializes in pumping, agitation, mixing, separation and application technologies for fluids of all types. Sulzer was founded in 1834 in Winterthur, Switzerland, and employs around 15’600 people. The company serves clients in over 180 production and service sites around the world. Sulzer Ltd is listed on the SIX Swiss Exchange in Zurich, Switzerland (symbol: SUN).
The interim financial statements have been prepared in accordance with the requirements of IAS 34 “Interim financial reportingˮ. Details of the group’s accounting policies are described in note 13.
2 Significant events and transactions during the reporting period
The financial position and performance of the group was particularly affected by the following events and transactions during the reporting period:
- COVID-19 has dominated the world stage in the first half of 2020. The lockdowns led to a standstill of public life in many countries, limited access to customer sites, travel restrictions and challenges in supply chain and sales channels.
- The group has initiated measures to mitigate the impact of market disruptions on Energy-related business activities caused by the pandemic. Up to June 2020, the group recognized restructuring costs of CHF 43.2 million (half year 2019: CHF 16.7 million), partly offset by released restructuring provisions of CHF 1.2 million (2019: CHF 0.4 million). Restructuring costs mainly relate to the closure or resizing of sites in Europe and the USA, as well as the resizing of supporting resources. Associated with restructuring initiatives, the group further recognized impairments on tangible and intangible assets of CHF 4.2 million (half year 2019: CHF 0.5 million).
For a detailed discussion about the group’s performance and financial position please refer to the Business review.
3 Segment information
Segment information by divisions
|
|
Pumps Equipment |
|
Rotating Equipment Services |
|
Chemtech |
|
Applicator Systems |
||||||||
millions of CHF |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Order intake 1) |
|
744.0 |
|
752.5 |
|
617.0 |
|
602.2 |
|
319.4 |
|
350.3 |
|
160.2 |
|
228.4 |
Nominal growth |
|
–1.1% |
|
4.5% |
|
2.5% |
|
5.3% |
|
–8.8% |
|
25.1% |
|
–29.9% |
|
–0.5% |
Currency-adjusted growth |
|
6.0% |
|
5.9% |
|
10.2% |
|
7.3% |
|
–3.2% |
|
25.9% |
|
–27.3% |
|
0.1% |
Organic growth 2) |
|
7.3% |
|
5.5% |
|
6.3% |
|
6.2% |
|
–12.0% |
|
23.3% |
|
–27.3% |
|
–2.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order backlog as of June 30/ December 31 |
|
999.1 |
|
924.3 |
|
485.0 |
|
422.2 |
|
408.5 |
|
385.3 |
|
53.6 |
|
60.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales recognized at a point in time |
|
389.4 |
|
466.6 |
|
431.5 |
|
463.6 |
|
182.4 |
|
181.5 |
|
166.1 |
|
218.2 |
Sales recognized over time |
|
227.2 |
|
223.7 |
|
96.6 |
|
97.9 |
|
105.4 |
|
122.3 |
|
– |
|
– |
Sales 3) |
|
616.6 |
|
690.3 |
|
528.1 |
|
561.4 |
|
287.8 |
|
303.8 |
|
166.1 |
|
218.2 |
Nominal growth |
|
–10.7% |
|
16.0% |
|
–5.9% |
|
12.3% |
|
–5.3% |
|
13.5% |
|
–23.9% |
|
–4.7% |
Currency-adjusted growth |
|
–4.4% |
|
17.8% |
|
1.3% |
|
14.9% |
|
0.2% |
|
14.4% |
|
–21.0% |
|
–4.3% |
Organic growth 2) |
|
–3.1% |
|
17.3% |
|
–1.2% |
|
13.7% |
|
–7.7% |
|
13.0% |
|
–21.0% |
|
–5.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
opEBITA |
|
19.2 |
|
20.0 |
|
64.0 |
|
67.9 |
|
23.0 |
|
27.3 |
|
19.5 |
|
47.3 |
opROSA |
|
3.1% |
|
2.9% |
|
12.1% |
|
12.1% |
|
8.0% |
|
9.0% |
|
11.8% |
|
21.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring expenses |
|
–28.9 |
|
–0.5 |
|
–8.0 |
|
–0.4 |
|
–3.0 |
|
–0.4 |
|
–1.1 |
|
–14.4 |
Amortization |
|
–14.8 |
|
–15.0 |
|
–3.9 |
|
–3.6 |
|
–3.3 |
|
–2.5 |
|
–9.0 |
|
–9.6 |
Impairments on tangible and intangible assets |
|
–0.4 |
|
–0.1 |
|
–0.0 |
|
–0.0 |
|
–3.7 |
|
–0.0 |
|
–0.1 |
|
–0.4 |
Non-operational items |
|
–2.2 |
|
–4.5 |
|
–0.8 |
|
0.2 |
|
–2.4 |
|
–0.2 |
|
–0.3 |
|
–6.9 |
EBIT |
|
–27.1 |
|
–0.1 |
|
51.2 |
|
64.1 |
|
10.6 |
|
24.1 |
|
9.0 |
|
15.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
–17.3 |
|
–17.9 |
|
–14.9 |
|
–12.5 |
|
–6.6 |
|
–5.9 |
|
–11.3 |
|
–12.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
|
1’499.0 |
|
1’605.5 |
|
893.5 |
|
960.8 |
|
538.6 |
|
590.9 |
|
611.5 |
|
608.3 |
Unallocated assets |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
Total assets as of June 30/ December 31 |
|
1’499.0 |
|
1’605.5 |
|
893.5 |
|
960.8 |
|
538.6 |
|
590.9 |
|
611.5 |
|
608.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating liabilities |
|
655.7 |
|
730.6 |
|
352.2 |
|
363.2 |
|
320.1 |
|
364.5 |
|
94.2 |
|
108.6 |
Unallocated liabilities |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
Total liabilities as of June 30/ December 31 |
|
655.7 |
|
730.6 |
|
352.2 |
|
363.2 |
|
320.1 |
|
364.5 |
|
94.2 |
|
108.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating net assets |
|
843.3 |
|
874.9 |
|
541.3 |
|
597.6 |
|
218.6 |
|
226.4 |
|
517.4 |
|
499.7 |
Unallocated net assets |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
Total net assets as of June 30/ December 31 |
|
843.3 |
|
874.9 |
|
541.3 |
|
597.6 |
|
218.6 |
|
226.4 |
|
517.4 |
|
499.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure (incl. lease assets) |
|
–21.0 |
|
–16.9 |
|
–23.8 |
|
–14.5 |
|
–6.5 |
|
–9.2 |
|
–22.7 |
|
–18.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees (number of full-time equivalents) as of June 30/ December 31 |
|
5’623 |
|
5’759 |
|
4’795 |
|
4’900 |
|
3’206 |
|
3’803 |
|
1’769 |
|
1’821 |
1) Order intake from external customers.
2) Adjusted for currency and acquisition effects.
3) Sales from external customers.
Segment information by divisions
|
|
Total divisions |
|
Others 4) |
|
Total Sulzer |
||||||
millions of CHF |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Order intake 1) |
|
1’840.5 |
|
1’933.3 |
|
– |
|
– |
|
1’840.5 |
|
1’933.3 |
Nominal growth |
|
–4.8% |
|
7.3% |
|
– |
|
– |
|
–4.8% |
|
7.3% |
Currency-adjusted growth |
|
1.7% |
|
8.7% |
|
– |
|
– |
|
1.7% |
|
8.7% |
Organic growth 2) |
|
–0.6% |
|
7.5% |
|
– |
|
– |
|
–0.6% |
|
7.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Order backlog as of June 30/ December 31 |
|
1’946.2 |
|
1’792.6 |
|
– |
|
– |
|
1’946.2 |
|
1’792.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales recognized at a point in time |
|
1’169.4 |
|
1’329.9 |
|
– |
|
– |
|
1’169.4 |
|
1’329.9 |
Sales recognized over time |
|
429.1 |
|
443.9 |
|
– |
|
– |
|
429.1 |
|
443.9 |
Sales 3) |
|
1’598.5 |
|
1’773.8 |
|
– |
|
– |
|
1’598.5 |
|
1’773.8 |
Nominal growth |
|
–9.9% |
|
11.5% |
|
– |
|
– |
|
–9.9% |
|
11.5% |
Currency-adjusted growth |
|
–3.9% |
|
13.1% |
|
– |
|
– |
|
–3.9% |
|
13.1% |
Organic growth 2) |
|
–5.5% |
|
12.1% |
|
– |
|
– |
|
–5.5% |
|
12.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
opEBITA |
|
125.8 |
|
162.5 |
|
–5.6 |
|
–0.9 |
|
120.2 |
|
161.5 |
opROSA |
|
7.9% |
|
9.2% |
|
n/a |
|
n/a |
|
7.5% |
|
9.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring expenses |
|
–41.0 |
|
–15.7 |
|
–1.0 |
|
–0.5 |
|
–42.0 |
|
–16.2 |
Amortization |
|
–31.0 |
|
–30.8 |
|
–0.5 |
|
–0.5 |
|
–31.6 |
|
–31.3 |
Impairments on tangible and intangible assets |
|
–4.2 |
|
–0.5 |
|
– |
|
– |
|
–4.2 |
|
–0.5 |
Non-operational items |
|
–5.7 |
|
–11.4 |
|
–0.7 |
|
–3.2 |
|
–6.4 |
|
–14.6 |
EBIT |
|
43.8 |
|
104.0 |
|
–7.8 |
|
–5.1 |
|
36.0 |
|
98.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
–50.1 |
|
–49.0 |
|
–1.5 |
|
–1.6 |
|
–51.6 |
|
–50.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
|
3’542.7 |
|
3’765.5 |
|
–1.1 |
|
35.6 |
|
3’541.6 |
|
3’801.1 |
Unallocated assets |
|
– |
|
– |
|
1’219.0 |
|
1’308.4 |
|
1’219.0 |
|
1’308.4 |
Total assets as of June 30/ December 31 |
|
3’542.7 |
|
3’765.5 |
|
1’218.0 |
|
1’344.0 |
|
4’760.7 |
|
5’109.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating liabilities |
|
1’422.2 |
|
1’566.9 |
|
77.8 |
|
135.8 |
|
1’500.1 |
|
1’702.7 |
Unallocated liabilities |
|
– |
|
– |
|
1’908.2 |
|
1’812.9 |
|
1’908.2 |
|
1’812.9 |
Total liabilities as of June 30/ December 31 |
|
1’422.2 |
|
1’566.9 |
|
1’986.0 |
|
1’948.7 |
|
3’408.2 |
|
3’515.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating net assets |
|
2’120.5 |
|
2’198.6 |
|
–78.9 |
|
–100.2 |
|
2’041.6 |
|
2’098.4 |
Unallocated net assets |
|
– |
|
– |
|
–689.1 |
|
–504.5 |
|
–689.1 |
|
–504.5 |
Total net assets as of June 30/ December 31 |
|
2’120.5 |
|
2’198.6 |
|
–768.0 |
|
–604.7 |
|
1’352.5 |
|
1’593.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure (incl. lease assets) |
|
–74.0 |
|
–59.3 |
|
–1.2 |
|
–1.2 |
|
–75.1 |
|
–60.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees (number of full-time equivalents) as of June 30/ December 31 |
|
15’393 |
|
16’284 |
|
207 |
|
222 |
|
15’600 |
|
16’506 |
1) Order intake from external customers.
2) Adjusted for currency and acquisition effects.
3) Sales from external customers.
4) The most significant activities under “Others” relate to Corporate Center.
For the definition of opEBITA, opROSA and adjustments for currency and acquisition effects, reference is made to the Sulzer Annual Report.
Information about reportable segments
Operating segments are determined based on the reports reviewed by the Chief Executive Officer that are used to measure performance, make strategic decisions and allocate resources to the segments. The business is managed on a divisional basis and the reported segments have been identified as follows:
Pumps Equipment
The Pumps Equipment division specializes in pumping solutions specifically engineered for the processes of its customers. The division provides pumps, agitators, compressors, grinders and screens developed through intensive research and development in fluid dynamics and advanced materials. The focus is on pumping solutions for water, oil and gas, power, chemicals and most industrial segments.
Rotating Equipment Services
Through a network of over 100 service sites around the world, the Rotating Equipment Services division provides cutting-edge parts as well as maintenance and repair solutions for pumps, turbines, compressors, motors and generators. The division services Sulzer original equipment, but also all associated third-party rotating equipment run by the customers, maximizing its sustainability and life cycle cost-effectiveness. The division’s technology-based solutions, fast execution and expertise in complex maintenance projects are available at its customers’ doorsteps.
Chemtech
The Chemtech division focuses on innovative mass transfer, static mixing and polymer solutions for petrochemicals, refining, LNG, biopolymers and biofuels. The division’s product offering ranges from process components to complete separation process plants, including licensing. Customer support covers engineering services and field services to tray and packing installation, tower maintenance, welding and plant turnaround projects.
Applicator Systems
Through its Mixpac, Cox, Transcodent and Geka brands, the Applicator Systems division develops and delivers innovative fluid applicators for the dental, adhesives, healthcare and beauty markets. The division’s IP-protected applicator solutions leverage its expertise in plastic-injection molding, micro-brushes and two-component mixing to make the customers’ products precise, safe, unique and more sustainable.
Others
Certain expenses related to the Corporate Center are not attributable to a particular segment and are reviewed as a whole across the group. Also included are the eliminations for operating assets and liabilities.
The Chief Executive Officer primarily uses opEBITA to assess the performance of the operating segments. However, the Chief Executive Officer also receives information about the segments’ order intake and backlog, sales, and operating assets and liabilities on a monthly basis.
Sales from external customers reported to the Chief Executive Officer are measured in a manner consistent with that in the income statement. There are no significant sales between the segments. No individual customer represents a significant portion of the group’s sales.
Operating assets and liabilities are assets or liabilities related to the operating activities of an entity and contributing to EBIT.
Segment information by region
The allocation of sales from external customers is based on the location of the customer.
Sales by region
|
|
2020 |
||||||||
millions of CHF |
|
Pumps Equipment |
|
Rotating Equipment Services |
|
Chemtech |
|
Applicator Systems |
|
Total Sulzer |
Europe, Middle East, Africa |
|
263.5 |
|
219.1 |
|
84.4 |
|
96.8 |
|
663.8 |
– thereof Germany |
|
30.8 |
|
23.8 |
|
13.3 |
|
37.8 |
|
105.7 |
– thereof United Kingdom |
|
11.6 |
|
52.8 |
|
4.9 |
|
6.8 |
|
76.2 |
– thereof Saudi Arabia |
|
35.3 |
|
11.4 |
|
17.0 |
|
0.0 |
|
63.7 |
– thereof Russia |
|
16.4 |
|
30.8 |
|
5.5 |
|
1.0 |
|
53.7 |
– thereof France |
|
14.1 |
|
9.8 |
|
2.3 |
|
12.0 |
|
38.3 |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
226.0 |
|
239.1 |
|
66.9 |
|
55.5 |
|
587.5 |
– thereof USA |
|
152.7 |
|
195.4 |
|
47.6 |
|
50.0 |
|
445.6 |
|
|
|
|
|
|
|
|
|
|
|
Asia-Pacific |
|
127.0 |
|
69.8 |
|
136.5 |
|
13.8 |
|
347.2 |
– thereof China |
|
93.8 |
|
10.2 |
|
89.5 |
|
6.4 |
|
199.9 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
616.6 |
|
528.1 |
|
287.8 |
|
166.1 |
|
1’598.5 |
|
|
2019 |
||||||||
millions of CHF |
|
Pumps Equipment |
|
Rotating Equipment Services |
|
Chemtech |
|
Applicator Systems |
|
Total Sulzer |
Europe, Middle East, Africa |
|
277.3 |
|
248.7 |
|
81.9 |
|
122.5 |
|
730.4 |
– thereof Germany |
|
29.5 |
|
23.1 |
|
12.6 |
|
48.1 |
|
113.3 |
– thereof United Kingdom |
|
12.0 |
|
60.6 |
|
3.4 |
|
11.4 |
|
87.3 |
– thereof Saudi Arabia |
|
20.0 |
|
21.9 |
|
6.8 |
|
0.0 |
|
48.7 |
– thereof Russia |
|
16.8 |
|
36.7 |
|
4.6 |
|
0.4 |
|
58.4 |
– thereof France |
|
15.0 |
|
16.1 |
|
2.2 |
|
13.7 |
|
47.1 |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
250.8 |
|
238.7 |
|
75.0 |
|
80.6 |
|
645.1 |
– thereof USA |
|
173.6 |
|
188.4 |
|
49.3 |
|
57.0 |
|
468.3 |
|
|
|
|
|
|
|
|
|
|
|
Asia-Pacific |
|
162.3 |
|
74.0 |
|
146.9 |
|
15.1 |
|
398.2 |
– thereof China |
|
90.2 |
|
11.4 |
|
81.9 |
|
6.4 |
|
190.0 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
690.3 |
|
561.4 |
|
303.8 |
|
218.2 |
|
1’773.8 |
Segment information by market segment
The following table shows the allocation of sales from external customers by market segment:
Sales by market segment
|
|
2020 |
||||||||
millions of CHF |
|
Pumps Equipment |
|
Rotating Equipment Services |
|
Chemtech |
|
Applicator Systems |
|
Total Sulzer |
Oil and gas |
|
124.8 |
|
198.1 |
|
87.6 |
|
– |
|
410.5 |
Chemicals |
|
114.7 |
|
86.2 |
|
180.5 |
|
– |
|
381.4 |
General industry |
|
152.7 |
|
80.3 |
|
17.8 |
|
– |
|
250.9 |
Water |
|
181.2 |
|
15.0 |
|
1.2 |
|
– |
|
197.4 |
Power |
|
43.1 |
|
148.5 |
|
0.6 |
|
– |
|
192.3 |
Adhesives, dental, healthcare |
|
– |
|
– |
|
– |
|
105.2 |
|
105.2 |
Beauty |
|
– |
|
– |
|
– |
|
60.8 |
|
60.8 |
Total |
|
616.6 |
|
528.1 |
|
287.8 |
|
166.1 |
|
1’598.5 |
|
|
2019 |
||||||||
millions of CHF |
|
Pumps Equipment |
|
Rotating Equipment Services |
|
Chemtech |
|
Applicator Systems |
|
Total Sulzer |
Oil and gas |
|
161.5 |
|
203.9 |
|
81.9 |
|
– |
|
447.3 |
Chemicals |
|
103.0 |
|
96.3 |
|
207.5 |
|
– |
|
406.8 |
General industry |
|
174.7 |
|
97.8 |
|
8.0 |
|
– |
|
280.5 |
Water |
|
193.6 |
|
18.5 |
|
0.3 |
|
– |
|
212.4 |
Power |
|
57.6 |
|
144.9 |
|
6.1 |
|
– |
|
208.6 |
Adhesives, dental, healthcare |
|
– |
|
– |
|
– |
|
141.6 |
|
141.6 |
Beauty |
|
– |
|
– |
|
– |
|
76.6 |
|
76.6 |
Total |
|
690.3 |
|
561.4 |
|
303.8 |
|
218.2 |
|
1’773.8 |
4 Acquisitions of subsidiaries
Cash flow from acquisitions of subsidiaries
millions of CHF |
|
2020 |
|
2019 |
Cash consideration paid |
|
–1.5 |
|
–39.9 |
Cash acquired |
|
– |
|
6.2 |
Payments for acquisitions in prior years |
|
–5.3 |
|
– |
Total cash flow from acquisitions, net of cash acquired |
|
–6.8 |
|
–33.7 |
Contingent consideration
millions of CHF |
|
2020 |
|
2019 |
Balance as of January 1 |
|
3.5 |
|
0.9 |
Assumed in a business combination |
|
0.9 |
|
3.6 |
Release to other operating income |
|
– |
|
–0.9 |
Currency translation differences |
|
0.4 |
|
–0.1 |
Total contingent consideration as of June 30/ December 31 |
|
4.8 |
|
3.5 |
5 Financial instruments
The following tables present the carrying amounts and fair values of financial assets and liabilities as of June 30, 2020, and December 31, 2019, including their levels in the fair value hierarchy. For financial assets and financial liabilities not measured at fair value in the balance sheet, fair value information is not provided if the carrying amount is a reasonable approximation of fair value.
Fair values are categorized into three different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
The fair value of financial instruments traded in active markets, including the outstanding bonds, is based on quoted market prices at the balance sheet date. Such instruments are included in level 1.
The fair values included in level 2 are based on valuation techniques using observable market input data. This may include discounted cash flow analysis, option pricing models or reference to other instruments that are substantially the same, while always making maximum use of market inputs and relying as little as possible on entity-specific inputs. The fair values of forward contracts are measured based on broker quotes for foreign exchange rates and interest rates.
Fair values measured using unobservable inputs are categorized within level 3 of the fair value hierarchy. This applies particularly to contingent considerations in business combinations.
Contingent considerations are linked to the fulfillment of certain parameters, mainly related to earnout clauses and technology transfer. For more information please refer to note 4.
Fair value table
|
|
|
|
June 30, 2020 |
||||||||||||||||
|
|
|
|
Carrying amount |
|
Fair value |
||||||||||||||
millions of CHF |
|
Notes |
|
Fair value hedging instruments |
|
Fair value through profit or loss |
|
Financial assets at amortized cost |
|
Other financial liabilities |
|
Total carrying amount |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total fair value |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current financial assets (at fair value) |
|
|
|
|
|
8.3 |
|
|
|
|
|
8.3 |
|
0.3 |
|
– |
|
8.0 |
|
8.3 |
Derivative assets – current |
|
|
|
6.1 |
|
|
|
|
|
|
|
6.1 |
|
– |
|
6.1 |
|
– |
|
6.1 |
Current financial assets (at fair value) |
|
|
|
|
|
0.0 |
|
|
|
|
|
0.0 |
|
– |
|
0.0 |
|
– |
|
0.0 |
Total financial assets measured at fair value |
|
|
|
6.1 |
|
8.3 |
|
– |
|
– |
|
14.4 |
|
0.3 |
|
6.1 |
|
8.0 |
|
14.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current financial assets (at amortized cost) |
|
|
|
|
|
|
|
2.1 |
|
|
|
2.1 |
|
|
|
|
|
|
|
|
Non-current receivables (excluding non-current derivative assets) |
|
|
|
|
|
|
|
5.0 |
|
|
|
5.0 |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
|
|
|
|
|
558.8 |
|
|
|
558.8 |
|
|
|
|
|
|
|
|
Other current receivables (excluding current derivative assets and other taxes) |
|
|
|
|
|
|
|
73.8 |
|
|
|
73.8 |
|
|
|
|
|
|
|
|
Current financial assets (at amortized cost) |
|
|
|
|
|
|
|
4.8 |
|
|
|
4.8 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
957.3 |
|
|
|
957.3 |
|
|
|
|
|
|
|
|
Total financial assets not measured at fair value |
|
|
|
– |
|
– |
|
1’601.7 |
|
– |
|
1’601.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities – non-current |
|
|
|
0.0 |
|
|
|
|
|
|
|
0.0 |
|
– |
|
0.0 |
|
– |
|
0.0 |
Derivative liabilities – current |
|
|
|
8.1 |
|
|
|
|
|
|
|
8.1 |
|
– |
|
8.1 |
|
– |
|
8.1 |
Contingent considerations |
|
4 |
|
|
|
4.8 |
|
|
|
|
|
4.8 |
|
– |
|
– |
|
4.8 |
|
4.8 |
Total financial liabilities measured at fair value |
|
|
|
8.1 |
|
4.8 |
|
– |
|
– |
|
12.9 |
|
– |
|
8.2 |
|
4.8 |
|
12.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding non-current bonds |
|
10 |
|
|
|
|
|
|
|
1’199.3 |
|
1’199.3 |
|
1’215.6 |
|
– |
|
– |
|
1’215.6 |
Other non-current borrowings |
|
|
|
|
|
|
|
|
|
0.0 |
|
0.0 |
|
|
|
|
|
|
|
|
Other non-current liabilities (excluding non-current derivative liabilities) |
|
|
|
|
|
|
|
|
|
4.1 |
|
4.1 |
|
|
|
|
|
|
|
|
Outstanding current bonds |
|
10 |
|
|
|
|
|
|
|
110.0 |
|
110.0 |
|
110.0 |
|
– |
|
– |
|
110.0 |
Other current borrowings and bank loans |
|
|
|
|
|
|
|
|
|
24.0 |
|
24.0 |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
|
|
|
|
|
|
|
|
423.3 |
|
423.3 |
|
|
|
|
|
|
|
|
Other current liabilities (excluding current derivative liabilities, other taxes and contingent considerations) |
|
|
|
|
|
|
|
|
|
318.3 |
|
318.3 |
|
|
|
|
|
|
|
|
Total financial liabilities not measured at fair value |
|
|
|
– |
|
– |
|
– |
|
2’079.0 |
|
2’079.0 |
|
|
|
|
|
|
|
|
Fair value table
|
|
|
|
December 31, 2019 |
||||||||||||||||
|
|
|
|
Carrying amount |
|
Fair value |
||||||||||||||
millions of CHF |
|
Notes |
|
Fair value hedging instruments |
|
Fair value through profit or loss |
|
Financial assets at amortized cost |
|
Other financial liabilities |
|
Total carrying amount |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total fair value |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current financial assets (at fair value) |
|
|
|
|
|
10.3 |
|
|
|
|
|
10.3 |
|
0.3 |
|
– |
|
10.0 |
|
10.3 |
Derivative assets – non-current |
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
– |
|
0.1 |
|
– |
|
0.1 |
Derivative assets – current |
|
|
|
6.7 |
|
|
|
|
|
|
|
6.7 |
|
– |
|
6.7 |
|
– |
|
6.7 |
Total financial assets measured at fair value |
|
|
|
6.8 |
|
10.3 |
|
– |
|
– |
|
17.1 |
|
0.3 |
|
6.8 |
|
10.0 |
|
17.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current financial assets (at amortized cost) |
|
|
|
|
|
|
|
2.4 |
|
|
|
2.4 |
|
|
|
|
|
|
|
|
Non-current receivables (excluding non-current derivative assets) |
|
|
|
|
|
|
|
6.2 |
|
|
|
6.2 |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
|
|
|
|
|
645.9 |
|
|
|
645.9 |
|
|
|
|
|
|
|
|
Other current receivables (excluding current derivative assets and other taxes) |
|
|
|
|
|
|
|
87.9 |
|
|
|
87.9 |
|
|
|
|
|
|
|
|
Current financial assets (at amortized cost) |
|
|
|
|
|
|
|
57.5 |
|
|
|
57.5 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
1’035.5 |
|
|
|
1’035.5 |
|
|
|
|
|
|
|
|
Total financial assets not measured at fair value |
|
|
|
– |
|
– |
|
1’835.3 |
|
– |
|
1’835.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities – current |
|
|
|
8.2 |
|
|
|
|
|
|
|
8.2 |
|
– |
|
8.2 |
|
– |
|
8.2 |
Contingent considerations |
|
4 |
|
|
|
3.5 |
|
|
|
|
|
3.5 |
|
– |
|
– |
|
3.5 |
|
3.5 |
Total financial liabilities measured at fair value |
|
|
|
8.2 |
|
3.5 |
|
– |
|
– |
|
11.7 |
|
– |
|
8.2 |
|
3.5 |
|
11.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding non-current bonds |
|
10 |
|
|
|
|
|
|
|
1’199.2 |
|
1’199.2 |
|
1’234.0 |
|
– |
|
– |
|
1’234.0 |
Other non-current liabilities (excluding non-current derivative liabilities) |
|
|
|
|
|
|
|
|
|
6.2 |
|
6.2 |
|
|
|
|
|
|
|
|
Outstanding current bonds |
|
10 |
|
|
|
|
|
|
|
109.9 |
|
109.9 |
|
110.3 |
|
– |
|
– |
|
110.3 |
Other current borrowings and bank loans |
|
|
|
|
|
|
|
|
|
21.1 |
|
21.1 |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
|
|
|
|
|
|
|
|
522.4 |
|
522.4 |
|
|
|
|
|
|
|
|
Other current liabilities (excluding current derivative liabilities, other taxes and contingent considerations) |
|
|
|
|
|
|
|
|
|
257.8 |
|
257.8 |
|
|
|
|
|
|
|
|
Total financial liabilities not measured at fair value |
|
|
|
– |
|
– |
|
– |
|
2’116.7 |
|
2’116.7 |
|
|
|
|
|
|
|
|
6 Other operating income and expenses
millions of CHF |
|
2020 |
|
2019 |
Gain from sale of property, plant and equipment |
|
0.3 |
|
0.1 |
Operating currency exchange gains, net |
|
– |
|
2.4 |
Other operating income |
|
7.4 |
|
9.4 |
Total other operating income |
|
7.7 |
|
12.0 |
|
|
|
|
|
Restructuring expenses |
|
–42.0 |
|
–16.2 |
Impairments on tangible and intangible assets |
|
–4.2 |
|
–0.5 |
Cost for mergers and acquisitions |
|
–0.2 |
|
–0.8 |
Loss from sale of property, plant and equipment |
|
–0.1 |
|
–0.1 |
Operating currency exchange losses, net |
|
–1.6 |
|
– |
Total other operating expenses |
|
–48.1 |
|
–17.7 |
|
|
|
|
|
Total other operating income and expenses, net |
|
–40.3 |
|
–5.7 |
Other operating income includes income from litigation cases, government grants and incentives, and recharges to third parties not qualifying as sales from customers.
The group has initiated measures to mitigate the impact of market disruptions on Energy-related business activities caused by the pandemic. Up to June 2020, the group recognized restructuring costs of CHF 43.2 million (half year 2019: CHF 16.7 million), partly offset by released restructuring provisions of CHF 1.2 million (2019: CHF 0.4 million). Restructuring costs mainly relate to the closure or resizing of sites in Europe and the USA, as well as the resizing of supporting resources. The group further performed impairment tests on the related production machines and facilities leading to impairments of CHF 4.2 million (half year 2019: CHF 0.5 million).
The functional allocation of the total restructuring expenses and impairments is as follows: cost of goods sold CHF –32.3 million (half year 2019: CHF –12.0 million), selling and distribution expenses CHF –3.2 million (half year 2019: CHF –0.0 million), general and administrative expenses CHF –9.7 million (half year 2019: CHF –4.8 million) and research and development expenses CHF –1.0 million (half year 2019: CHF –0.0 million).
7 Financial income and expenses
millions of CHF |
|
2020 |
|
2019 |
Interest and securities income |
|
2.5 |
|
2.9 |
Total interest and securities income |
|
2.5 |
|
2.9 |
Interest expenses on borrowings and lease liabilities |
|
–10.3 |
|
–10.0 |
Interest expenses on employee benefit plans |
|
–1.4 |
|
–2.4 |
Total interest expenses |
|
–11.7 |
|
–12.4 |
Total interest income and expenses, net |
|
–9.3 |
|
–9.5 |
|
|
|
|
|
Income from investments and other financial assets |
|
0.0 |
|
0.0 |
Fair value changes |
|
11.9 |
|
4.7 |
Other financial expenses |
|
–1.3 |
|
–1.2 |
Currency exchange gains/losses, net |
|
–13.6 |
|
–6.0 |
Total other financial income and expenses, net |
|
–3.0 |
|
–2.5 |
|
|
|
|
|
Total financial income and expenses, net |
|
–12.3 |
|
–12.0 |
– thereof fair value changes on financial assets at fair value through profit and loss |
|
11.9 |
|
4.7 |
– thereof other income from financial assets at fair value through profit and loss |
|
0.0 |
|
0.0 |
– thereof interest income on financial assets at amortized costs |
|
2.5 |
|
2.9 |
– thereof other financial expenses |
|
–1.3 |
|
–1.2 |
– thereof currency exchange gains/losses, net |
|
–13.6 |
|
–6.0 |
– thereof interest expenses on borrowings |
|
–9.1 |
|
–8.5 |
– thereof interest expenses on lease liabilities |
|
–1.2 |
|
–1.5 |
– thereof interest expenses on employee benefit plans |
|
–1.4 |
|
–2.4 |
Total financial expenses amounted to CHF 12.3 million, compared with CHF 12.0 million in the first half of 2019.
The “Fair value changesˮ are largely related to derivative financial instruments that are classified as financial assets or financial liabilities at fair value through profit and loss and that are used as hedging instruments to hedge foreign exchange risks.
8 Income taxes
Income tax expenses comprise current and deferred tax. Income tax expenses are recognized based on the estimated income tax rate for the full financial year. The estimated average annual tax rate used for the year 2020 is 28.4%, compared with 22.8% for the six months ended June 30, 2019. The effective income tax rate used for 2020 was impacted by restructuring expenses related to closed facilities with no corresponding tax effects.
9 Share capital
The share capital amounts to CHF 342’623.70, made up of 34’262’370 shares with dividend entitlement and a par value of CHF 0.01. All shares are fully paid in and registered.
Treasury shares
The total number of shares held by Sulzer Ltd as of June 30, 2020, amounted to 281’477 treasury shares (December 31, 2019: 240’924 shares).
The treasury shares are mainly held for the purpose of issuing shares under the management share-based payment programs.
Dividends
On April 15, 2020, the Annual General Meeting approved an ordinary dividend of CHF 4.00 (2019: ordinary dividend of CHF 3.50) per share to be paid out of reserves. The dividend was paid to shareholders on April 21, 2020. The total amount of the dividend to shareholders of Sulzer Ltd is CHF 136.1 million (2019: CHF 119.2 million), thereof paid dividends of CHF 92.6 million (2019: CHF 77.5 million) and unpaid dividends of CHF 43.5 million (2019: CHF 41.7 million). The unpaid dividends are reflected in the balance sheet position “other current and accrued liabilitiesˮ (see note 12).
10 Borrowings
|
|
2020 |
||||
millions of CHF |
|
Non-current borrowings |
|
Current borrowings |
|
Total |
Balance as of January 1 |
|
1’199.2 |
|
131.0 |
|
1’330.2 |
Additions (cash flow effective) |
|
0.1 |
|
43.2 |
|
43.3 |
Repayments (cash flow effective) |
|
–0.0 |
|
–39.0 |
|
–39.0 |
Currency translation differences |
|
–0.0 |
|
–1.2 |
|
–1.2 |
Total borrowings as of June 30 |
|
1’199.3 |
|
134.0 |
|
1’333.3 |
|
|
2019 |
||||
millions of CHF |
|
Non-current borrowings |
|
Current borrowings |
|
Total |
Balance as of January 1 |
|
1’308.7 |
|
16.9 |
|
1’325.6 |
Acquired through business combination |
|
0.4 |
|
- |
|
0.4 |
Additions (cash flow effective) |
|
0.3 |
|
153.8 |
|
154.1 |
Repayments (cash flow effective) |
|
–0.0 |
|
–149.2 |
|
–149.2 |
Reclassifications |
|
–110.1 |
|
110.1 |
|
– |
Currency translation differences |
|
–0.0 |
|
–0.7 |
|
–0.7 |
Total borrowings as of December 31 |
|
1’199.2 |
|
131.0 |
|
1’330.2 |
The group arranged a CHF 500 million syndicated credit facility with maturity date May 2022. The facility is available for general corporate purposes including financing of acquisitions. The facility is subject to financial covenants based on net financial indebtedness and EBITDA, which were adhered to throughout the reporting period. As of June 30, 2020, and December 31, 2019, the syndicated facility of CHF 500 million was not used.
Outstanding bonds
|
|
2020 |
|
2019 |
||||
millions of CHF |
|
Amortized costs |
|
Nominal |
|
Amortized costs |
|
Nominal |
0.375% 07/2016–07/2022 |
|
325.2 |
|
325.0 |
|
325.3 |
|
325.0 |
0.875% 07/2016–07/2026 |
|
125.0 |
|
125.0 |
|
125.0 |
|
125.0 |
0.250% 07/2018–07/2020 |
|
110.0 |
|
110.0 |
|
109.9 |
|
110.0 |
1.300% 07/2018–07/2023 |
|
289.6 |
|
290.0 |
|
289.4 |
|
290.0 |
0.625% 10/2018–10/2021 |
|
209.8 |
|
210.0 |
|
209.7 |
|
210.0 |
1.600% 10/2018–10/2024 |
|
249.8 |
|
250.0 |
|
249.8 |
|
250.0 |
Total as of June 30 |
|
1’309.3 |
|
1’310.0 |
|
1’309.1 |
|
1’310.0 |
– thereof non-current |
|
1’199.3 |
|
1’200.0 |
|
1’199.2 |
|
1’200.0 |
– thereof current |
|
110.0 |
|
110.0 |
|
109.9 |
|
110.0 |
All outstanding bonds are traded at the SIX Swiss Exchange.
11 Provisions
|
|
2020 |
||||||||||
millions of CHF |
|
Other employee benefits |
|
Warranties/ liabilities |
|
Restructuring |
|
Environmental |
|
Other |
|
Total |
Balance as of January 1 |
|
54.4 |
|
67.6 |
|
20.0 |
|
14.7 |
|
51.9 |
|
208.7 |
Additions |
|
6.7 |
|
15.4 |
|
43.2 |
|
– |
|
17.8 |
|
83.0 |
Released as no longer required |
|
– |
|
–2.9 |
|
–1.2 |
|
–0.2 |
|
–2.0 |
|
–6.3 |
Utilized |
|
–5.7 |
|
–7.7 |
|
–12.5 |
|
–0.3 |
|
–13.9 |
|
–40.2 |
Currency translation differences |
|
–1.6 |
|
–3.5 |
|
–2.4 |
|
–0.4 |
|
–1.4 |
|
–9.3 |
Total provisions as of June 30 |
|
53.8 |
|
68.9 |
|
47.1 |
|
13.7 |
|
52.4 |
|
236.0 |
– thereof non-current |
|
37.2 |
|
3.0 |
|
3.3 |
|
13.7 |
|
10.9 |
|
68.1 |
– thereof current |
|
16.7 |
|
65.9 |
|
43.8 |
|
0.0 |
|
41.5 |
|
167.9 |
The category “Other employee benefitsˮ includes provisions for jubilee gifts, early retirement of senior managers and other obligations to employees.
The category “Warranties/liabilitiesˮ includes provisions for warranties, customer claims, penalties, litigation and legal cases relating to goods delivered or services rendered.
The group has initiated measures to mitigate the impact of market disruptions on Energy-related business activities caused by the pandemic. Up to June 2020, the group recognized restructuring costs of CHF 43.2 million (half year 2019: CHF 16.7 million), partly offset by released restructuring provisions of CHF 1.2 million (2019: CHF 0.4 million). Restructuring costs mainly relate to the closure or resizing of sites in Europe and the USA, as well as the resizing of supporting resources. The remaining restructuring provision as of June 30, 2020, is CHF 47.1 million, of which CHF 43.8 million is expected to be utilized within one year.
“Environmentalˮ mainly consists of expected costs related to inherited liabilities.
“Otherˮ includes provisions that do not fit into the aforementioned categories. A large number of these provisions refer to indemnities, in particular related from divestitures. In addition, provisions for ongoing asbestos lawsuits and other legal claims are included. Based on the currently known facts, Sulzer is of the opinion that the resolution of the open cases will not have material effects on its liquidity or financial condition. Although Sulzer expects a large part of the category “Otherˮ to be realized in one year, by their nature the amounts and timing of any cash outflows are difficult to predict.
12 Other current and accrued liabilities
millions of CHF |
|
2020 |
|
2019 |
Liability related to the purchase of treasury shares |
|
102.1 |
|
104.2 |
Outstanding dividend payments |
|
157.6 |
|
114.1 |
Taxes (VAT, withholding tax) |
|
34.1 |
|
29.4 |
Derivative financial instruments |
|
8.1 |
|
8.2 |
Notes payable |
|
7.8 |
|
9.3 |
Other current liabilities |
|
55.5 |
|
30.2 |
Total other current liabilities as of June 30/ December 31 |
|
365.3 |
|
295.5 |
|
|
|
|
|
Contract-related costs |
|
86.0 |
|
104.7 |
Salaries, wages and bonuses |
|
79.2 |
|
113.7 |
Vacation and overtime claims |
|
33.8 |
|
31.8 |
Other accrued liabilities |
|
144.9 |