Continued profitable growth

Note: Unless otherwise indicated, changes from the previous year are based on organic figures (adjusted for currency effects and acquisitions, divestitures/deconsolidations).

Sulzer’s continued growth momentum reflects the strength of its portfolio, its focus on value creation and its ability to meet the increasing demand of its structurally growing markets. In the first half of the year, order intake growth was 8.9%, after an order intake growth of 24.1% in H1 2023. Sales continued to rise in all divisions, recording double-digit growth of 10.5% on a year-on-year basis. Sulzer achieved operational profitability of 11.4%, up 130 basis points compared with H1 2023. Free cash flow amounted to CHF 55.4 million, down CHF 51.1 million from CHF 106.6 million reported at the end of June 2023.

Strong growth momentum in all three divisions

Compared with the first half of 2023, order intake grew by 8.9% and reached CHF 2’078.8 million. Excluding currency conversion impacts, order intake would be CHF 2’167.9 million. Order intake gross profit margin improved by 120 basis points to 34.2%.

Order intake in Flow increased by 6.3%, after a growth of 25.1% in H1 2023. The Water and Industrial business recorded solid growth of 10.7%, whereas Energy and Infrastructure orders increased by 1.3%. In the Services division, orders continued to benefit from market trends in energy efficiency and carbon neutrality, leading to double-digit growth of 12.6% on a year-on-year basis. The increase was particularly supported by a rise of 21.2% in the Asia-Pacific region and 15.9% in the Americas; Europe, the Middle East and Africa (EMEA) region registered 6.0% year-on-year growth. Chemtech’s order intake growth remained robust at 8.3% on a year-on-year basis, after an order intake growth of 25.3% in H1 2023 and reflecting the strong momentum in biopolymers and carbon capture markets.

Sulzer enters the second half of 2024 with an order backlog of CHF 2’404.3 million (December 31, 2023: CHF 1’946.8 million). Excluding currency conversion impacts, order backlog would be CHF 2’313.5 million.

Sulzer’s integrated solutions create significant value in the markets we serve. Exceeding last year’s strong performance, sales and profits rose as a result of better margins and sound execution on operational excellence. We expect this growth momentum to continue in the second half of 2024 and have therefore increased our full-year guidance.”

Thomas ZicklerChief Financial Officer

Orders

Sales reached CHF 1’699.3 million in the first half of 2024, an increase of 10.5% compared with the same period last year. The increase was mainly a result of a strong focus on delivery of large orders and disciplined backlog execution. Excluding currency conversion impacts, sales would be CHF 1’767.3 million.

The Flow division was the largest contributor to sales growth in absolute value, with a sharp increase of 11.2% compared with the same period in 2023. This was mainly driven by 32.3% growth in the Energy and Infrastructure business, whereas the Water and Industrial business remained constant. Sales in the Services division grew by 12.0%, driven by growth of 16.9% in the Americas and 8.8% in the EMEA region. Positive developments in spares and repairs as well as retrofits significantly contributed to the performance of Services. In Chemtech, sales were up by 7.2%, primarily as a result of solid execution on large orders in the first half of 2024 and continued momentum in the Americas and Asia-Pacific regions.

Higher gross profit margin

The gross profit margin increased to 33.7%, up by 140 basis points from the 32.3% reported in June 2023. Continued operational excellence contributed to the gross profit margin progression. Coupled with increased sales volume, gross profit reached CHF 573.1 million, up by 15.0% compared with the first half of 2023. Excluding currency conversion impacts, the gross profit would be CHF 593.8 million.

Operational profitability up 130 basis points to 11.4%

Operational profit increased by 25.9% on a year-on-year basis, reaching CHF 193.5 million compared with CHF 162.4 million reported in the first half of 2023. Higher sales volumes, better margins as well as sound execution on operational excellence were the main contributors to operational profitability of 11.4%, up by 130 basis points compared with the same period in 2023 (10.1%).

Operational profitability in the Flow division increased to 9.5% compared with 7.0% in the first half of 2023. Chemtech achieved solid operational profitability of 13.2%, up by 150 basis points from 11.7% reported in the first half of the previous year. In the Services division, operational profitability remained stable at 14.2% in a year-on-year comparison as a result of ongoing investment in its geographic reach and technical capabilities to meet growing demand.

Bridge from operational profit to EBIT (January 1 – June 30)

Return on sales of 10.0%

As of June 30, 2024, EBIT increased 18.7% to CHF 170.1 million from CHF 151.5 million in the same period in the previous year. Excluding currency conversion impacts, EBIT would be
CHF 180.4 million. Return on sales (ROS) recorded a solid 10.0%, 50 basis points above the 9.5% reported in the first half of 2023.

ROS and operational profitability (January 1 – June 30)

Financial result

In the first half of 2024, total net financial expenses amounted to CHF 11.8 million, compared with CHF 12.8 million in the same period in 2023. Net interest expenses improved to CHF 4.4 million from CHF 5.6 million reported in the first half of 2023. Fair value changes primarily from hedging instruments for foreign exchange risk had a negative impact of CHF 11.4 million (CHF 9.1 million as of June 30, 2023). Other currency exchange gains amounted to CHF 3.7 million compared with a gain of CHF 2.7 million in the first half of 2023.

Effective tax rate at 24.9%

The estimated average annual tax rate for 2024 is projected to be 24.9%, compared with 24.2% for the six months ending June 30, 2023. Income tax expenses amounted to CHF 38.9 million the first half of 2024, compared with CHF 33.3 million for the six months ending June 30, 2023, due to higher taxable income.

Higher net income and core net income

Net income increased to CHF 117.4 million in H1 2024 compared with CHF 104.3 million in H1 2023. Core net income, which excludes restructuring expenses, amortization, impairments, non-operational items and the tax-adjusted effects of non-operational items, totaled CHF 135.2 million in the first half of 2024 compared with CHF 114.4 million in the first half of 2023. Basic earnings per share increased from CHF 3.07 for the period to June 30, 2023, to CHF 3.44 for the same period in 2024, primarily due to higher profits.

Bridge from net income to core net income

Key balance sheet positions

Unless otherwise indicated, balance sheet movements from the previous year are based on nominal figures.

Total assets as of June 30, 2024, amounted to CHF 4’575.4 million, up by CHF 205.9 million from December 31, 2023. Non-current assets increased by CHF 78.9 million to CHF 1’764.8 million, mainly resulting from a CHF 33.4 million increase in goodwill (of which CHF 22.5 million related to currency translation impacts and CHF 10.8 million came from acquisitions), together with an increase in property, plant and equipment of CHF 30.2 million and defined benefits assets of
CHF 20.4 million. Current assets increased by CHF 127.0 million to CHF 2’810.5 million, mainly driven by an increase of CHF 145.1 million relating to inventories, trade receivables and advanced payments to suppliers. In addition, total cash and cash equivalents decreased to CHF 931.4 million (CHF 974.7 million in December 2023), mainly as a result of dividend payments.

Total liabilities increased by CHF 156.3 million to CHF 3’427.1 million as of June 30, 2024. The main reason was an increase of CHF 119.1 million in other current and accrued liabilities. Current income tax liabilities decreased by CHF 18.1 million.

Equity increased by CHF 49.6 million to CHF 1'148.2 million. This was mainly driven by dividend distributions of CHF 127.3 million, partly offset by positive currency translation effects of CHF 61.5 million and by net income of CHF 117.4 million.

Free cash flow 

Free cash flow decreased to CHF 55.4 million in the first half of 2024, compared with CHF 106.6 million reported on June 30, 2023. This was mainly driven by increased networking capital levels compared to December 31, 2023, further capital expenditures and higher income tax payments.

Bridge from cash flow from operating activities to free cash flow

Cash outflow from financing activities totaled CHF 113.6 million, compared with CHF 124.3 million in the first half of 2023. Dividend payments amounted to CHF 86.5 million, compared with CHF 80.9 million in 2023.

The net change in cash and cash equivalents since January 1, 2024, amounted to CHF –43.3 million, including exchange gains on cash and cash equivalents of CHF 23.3 million.

Outlook for 2024

Sulzer is active in structurally growing markets that are expected to continue growing in 2024. Based on this positive development, Sulzer increases its 2024 guidance for order intake to +9 to 12% (up from +2 to 5%) and for sales to +9 to 11% (up from +6 to 9%). The updated guidance reflects our confidence in Sulzer’s ability to capitalize on our strengths in highly demanding, critical customer applications and on the quality of our business portfolio.

Abbreviations

EBIT: Earnings before interest and taxes
ROS: Return on sales
EBITDA: Earnings before interest, taxes, depreciation and amortization
FCF: Free cash flow
For the definition of the alternative performance measures, please refer to “Supplementary information” in the Annual Report 2023.

Our key figures

Flow