Sulzer AG Unsponsored ADR

Sulzer did not give a full income statement in this presentation, but it reported H1 group order intake down 3.9%, sales up 1%, and EBITDA margin at 15.5%, up 110 basis points year over year. Order intake margin was 35.7%, down 60 basis points, with Chemtech’s order intake gross margin falling from 35.9% to 32.3%. Flow EBITDA margin rose to 13.3% from 12.9% in H1 2023, and Services order intake gross margin improved to 40.6% with EBITDA margin up 100 basis points. Free cash flow was hit by higher net working capital; management said net working capital increased by about CHF 100 million year over year, and later referenced a CHF 117 million increase on an H1-to-H1 basis. For the full year 2026, Sulzer reaffirmed guidance for order intake growth of 1% to 5%, sales growth of 2% to 5%, and an EBITDA margin of around 16.5%.

Suzanne Thoma framed the quarter as challenging but ultimately successful, emphasizing that the company’s “Excellence” program is translating into better profitability and stronger execution. She said Flow and Services are on track, while Chemtech is in an accelerated transition with a simplified structure, reduced costs, and a sharper customer focus. Her tone was confident about structural demand in energy, water, and chemicals, and she repeatedly pointed to a stronger, back-loaded H2 order pipeline.

Thomas Zickler focused on the improving profitability profile and the operational drivers behind it. He cited group EBITDA margin of 15.5%, Flow EBITDA margin of 13.3%, Services order intake gross margin of 40.6%, and group order intake margin of 35.7%; he also noted a 5% FX impact, or about CHF 100 million, on sales and orders. On cash flow, he said free cash flow was pressured by higher working capital and the lack of large customer down payments, and he pointed to a year-over-year net working capital increase of about CHF 100 million and a CHF 117 million delta on an H1-to-H1 comparison. He also said Chemtech restructuring costs in H2 would be in the low-single-digit area, alongside an announced CHF 8 million impairment for the Singapore R&D center.

Analysts pressed on the timing of large orders, especially whether they would arrive in H2 and whether a weak Q3 would force a guidance change. Management said the large projects are now more likely to land in Q4, that tendering activity is increasing, and that it would not revise guidance solely because Q3 order intake is weak if other assumptions hold. Questions also focused on Services delays, Chemtech’s bottoming, Texas capacity expansion, and the dividend/loan arrangement; management said some repair customers are delaying cycles by weeks or months, MTCS is likely bottoming, Texas gas turbine repair capacity is being expanded by about 20%, and the Tiwel-related loan/dividend arrangement was described as a one-time, exceptional measure to protect Sulzer.