Sulzer AG ((CH:SUN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Sulzer AG’s recent earnings call painted a generally positive picture, highlighting strong financial results and double-digit growth in both sales and order intake. The company demonstrated improved profitability, although it acknowledged challenges in the Chinese market and lower than expected free cash flow as areas of concern.
Double-Digit Growth in Sales and Order Intake
Sulzer reported impressive double-digit growth in both sales and order intake for 2024, achieving CHF 3.5 billion in sales. This marks a significant increase from the previous year, underscoring the company’s robust market performance.
Strong Profitability Improvements
The company saw a notable improvement in profitability, with an EBITDA of CHF 436 million. Additionally, Sulzer’s return on capital employed reached 19.7% for 2024, reflecting enhanced operational efficiency and financial health.
Significant Increase in Dividend
In light of its solid financial performance, Sulzer proposed a substantial increase in dividend payments, raising them from CHF 3.75 per share to CHF 4.25 per share, signaling confidence in its financial stability.
Order Intake Margin Growth
The order intake margin increased by 110 basis points in 2024, indicating a strong market position and effective business strategies.
Strong Performance in Services and Flow Divisions
Sulzer’s Services division experienced a 12.5% growth in order intake, while the Flow division saw a 14.7% increase in the Energy segment and a 10.6% rise in the Water and Industry segment, showcasing the company’s diversified growth.
Challenges in the Chinese Market
Despite overall growth, Chemtech’s expansion was slower at 5.4% due to a significant market decline in China. However, this was partially offset by growth in the Americas and the Middle East.
Free Cash Flow Below Expectations
Sulzer’s free cash flow was CHF 235 million, falling short of expectations due to increased capital expenditures and higher tax payments, highlighting an area for potential improvement.
High Net Working Capital
The company reported high net working capital, driven by a significant increase in backlog from CHF 1.9 billion to CHF 2.3 billion, reflecting strong demand but also tying up resources.
FX Impact on Financials
A negative foreign exchange impact of 3% affected order intake and sales, though this was less severe than the 8% impact experienced in 2023, indicating some mitigation of currency risks.
Forward-Looking Guidance
Looking ahead, Sulzer anticipates continued growth, with sales expected to rise between 5% and 8% in 2025 and an EBITDA margin projected above 15%. The company remains focused on strategic industries such as energy, water, and chemicals, and plans to enhance operational excellence to sustain its growth trajectory.
In summary, Sulzer AG’s earnings call reflected a positive sentiment with strong financial results and growth across key divisions. While challenges in the Chinese market and cash flow were noted, the company’s strategic focus and operational improvements position it well for future success.