• Sales: CHF 3.5 billion in 2024, significant double-digit growth over the previous year.
• Order Intake: Increased by 10.8% overall, with a 16.3% increase in Q4 2024 compared to Q4 2023.
• Profitability: Improved by 130 basis points in 2024.
• Return on Capital Employed: 19.7% in 2024, a 200 basis points increase from 2023.
• Free Cash Flow: CHF 235 million, slightly lower due to higher CapEx and tax payments.
• Net Debt/EBITDA Ratio: Improved to 1.0.
• Dividend Proposal: Increase from CHF 3.75 to CHF 4.25 per share.
• Flow Division Sales Growth: 9.4% in 2024.
• Services Division Order Intake Growth: 12.5% in 2024.
• Camtech Division Sales Growth: 10.9% in 2024.

• Warning! GuruFocus has detected 6 Warning Sign with SULZF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sulzer AG (SULZF) reported double-digit growth in both sales and order intake for 2024, reflecting strong market demand.
• The company achieved a significant improvement in profitability, with EBITDA increasing by 25% and a 200 basis point rise in return on capital employed.
• Sulzer AG (SULZF) is financially solid, with a proposal to increase dividend payments from CHF3.75 to CHF4.25 per share, reflecting its strong financial position.
• The company has successfully implemented operational excellence initiatives, leading to improved efficiency and cost savings.
• Sulzer AG (SULZF) has a strong market position in essential industries, which are structurally growing, providing a stable growth trajectory.

Negative Points

• The company faced challenges with cash flow, partly due to increased receivables and higher tax payments, resulting in a slightly lower operating cash flow.
• Sulzer AG (SULZF) experienced a negative impact from foreign exchange fluctuations, which affected order intake and sales.
• There is uncertainty in the Chinese market, which could impact future growth, particularly for the Camtech division.
• The company is cautious about its 2025 order intake guidance, projecting only 2-5% growth due to the unpredictability of large project timings.
• Sulzer AG (SULZF) has not yet met its long-term profitability targets, indicating room for further improvement.

Q & A Highlights

Q: Can you elaborate on Sulzer's involvement in desalination and its ecological impact? A: Suzanne Thoma, Executive Chairman and CEO, clarified that Sulzer is not heavily involved in desalination, with minimal turnover from this sector in 2024. She emphasized that the ecological impact depends on energy sources and salt disposal methods, and noted that the Middle East is moving towards more ecological practices.

Q: Why is the order intake guidance for 2025 lower than the past two years despite no slowdown in services and pumps? A: Thomas Zickler, CFO, explained that the lower guidance is due to the unpredictable nature of the project business and the desire to provide reliable guidance. The company prefers to reassess the situation mid-year before making any adjustments.

Q: Will the profitability improvement be driven mainly by the service division? A: Thomas Zickler stated that while the service division has potential for margin improvement, all three divisions have significant opportunities to enhance profitability. The focus is on operational excellence across the board.

Q: What are the expectations for CapEx in 2025? A: Thomas Zickler mentioned that 2024 saw a peak in CapEx due to one-off investments for excellence and growth. The expectation is that CapEx will stabilize around the 100 million mark, without significant increases.

Q: How does Sulzer plan to address the FX impact on financial results? A: Thomas Zickler noted that while the Swiss franc's appreciation has impacted top-line results, the company has not engaged in hedging or restructuring to mitigate this. The impact on profitability is less significant due to regional balancing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.