Half Year 2026 Sulzer Ltd Earnings Call Transcript
Key Points
- Sulzer AG (SULZF) achieved a significant 110 basis point improvement in EBITDA margin to 15.5%, marking the fourth consecutive year of margin expansion.
- The Flow and Services divisions demonstrated strong resilience and growth, with Services posting a 4.4% sales increase despite a high comparison base from the prior year.
- The company's core Chemtech business (MTCS) is showing signs of stabilization and bottoming, with order intake and sales trends improving from Q1 to Q2.
- Sulzer AG (SULZF) is executing a disciplined cost reduction and restructuring program in Chemtech, including a 10% workforce reduction, to align costs with current market conditions.
- The company confirmed its full-year 2026 guidance, expecting order intake growth of 1% to 5%, sales growth of 2% to 5%, and an EBITDA margin of around 16.5%.
- Group order intake declined by 3.9% in H1 2026, primarily due to project delays and the impact of geopolitical tensions in the Middle East.
- Chemtech division faced significant headwinds, with order intake down 22.7% and sales down 4.9%, driven by delays in large projects for new technologies like biopolymers and carbon capture.
- Free cash flow was negatively impacted by a CHF 117 million increase in net working capital, largely due to customer project delays and lower down payments.
- The Services division experienced delays in repair business as customers extended equipment run times due to high oil and gas prices, impacting order intake growth.
- Currency headwinds had a notable impact, with a 5% negative FX effect on both sales and orders, amounting to approximately CHF 100 million in absolute terms.
Good morning, and welcome to the mid-year results presentation of Sulzer. (Operator Instructions) And now, I hand over to our host, Executive Chair, Suzanne Thoma; and CFO, Thomas Zickler.
Ladies and gentlemen, welcome to our midyear results presentation 2026. The first half year of 2026 has been both a challenging year for Sulzer -- half year -- and a very successful half year.
Looking at our order intake, of course, with minus 3.9%, we cannot be satisfied. At the same time, we have to put this result into perspective. In one of our growth markets, the Middle East, there is, unfortunately, a war taking place. And this is not the moment for our customers to make major decisions on large-size projects.
At the same time, we see increasing planning activities for the time after the, hopefully soon, end of the war or the necessity of protecting the owned infrastructure. The situation in the Middle East
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