Sulzer’s order intake increased in 2010 by 9.0% (adjusted1 7.5%) to CHF 3 288.7 million. This improvement, in a still challenging economic environment, was driven by acquisitions and the recovery in early-cycle markets. Adjusted1, order intake is predicted to grow moderately in 2011. A continued recovery is forecasted in the early-cycle markets, albeit at a slower pace. In the late-cycle markets, the oil and gas segment is anticipated to show growth, while the hydro-carbon processing and the power generation industries are expected to remain mostly flat in 2011.
Sulzer increased its order intake by 9.0% in the full year 2010 compared with that of 2009 despite a still challenging economic environment in late-cycle markets. Order intake growth was driven by acquisitions, the recovery in the early-cycle markets, and the initial success of new innovative solutions. The early-cycle automotive and pulp and paper industries as well as other general industrial markets recovered from the very low levels of 2009. The aviation industry also started to show improvement toward year-end. The oil and gas industry showed a positive development during 2010, although many customers remained cautious with regard to large-scale investments. The hydrocarbon processing industry remained flat. As predicted, the power generation market declined substantially from the high levels of the previous years. The emerging markets continued to be the growth driver for the company. North America also showed growth, while the order intake in Europe was stable. Acquisitions, mainly the integration of Dowding & Mills into Sulzer Turbo Services, had a positive effect on the order intake, while the strong Swiss franc had a negative translation impact.
Outlook for 2011: Adjusted1 order intake expected to grow moderately
For 2011, Sulzer expects the adjusted1 order intake to grow moderately. The positive trend in the early-cycle markets is forecasted to continue, albeit at a somewhat slower pace. Activity in the automotive industry is likely to continue at its current high level. Further recovery in the aviation industry is projected. The pulp and paper market is likely to continue its positive trend at a somewhat slower pace. For other general industrial markets, moderate growth is anticipated. The oil and gas industry is expected to grow, especially in the second half of the year, as the number of project studies has increased. The hydrocarbon processing industry will probably remain flat. After a sharp decline in 2010, activity in the power generation industry is predicted to stabilize. Newly developed applications offer promising business opportunities.
Based on the strengthening Swiss franc — especially toward the end of 2010 — further negative currency translation effects have to be expected in 2011. However, with its global manufacturing and service network, Sulzer is naturally hedged against major currency impacts on profitability. Geographically, the emerging markets are likely to remain the growth drivers.
Based on its leading market positions, focused strategy, and ongoing operational measures, Sulzer is well positioned for continued long-term success.
Order intake by division
Orders received by Sulzer Pumps totaled CHF 1 613.7 million (–4.2%), showing an almost flat development with a small adjusted1 decrease of1.7%. Market activity in the oil and gas industry showed some recovery from the low levels of 2009. Activity in the hydrocarbon processing industry increased in some of the emerging markets, but was unchanged in the established markets. The activity in the power generation market was substantially reduced, but the market showed positive signals in the renewable energy and the nuclear power industries. The pulp and paper industry showed an increase in activity. For 2011, the division expects order intake to grow moderately.
The order intake of Sulzer Metco reached CHF 643.1 million. This figure represents an increase of 17.9% (adjusted1 21.8%). The integration of Bekaert’s diamond-like carbon coatings activities is well advanced. Market demand in the automotive industry as well as in other industrial markets recovered substantially. The aviation market started to show improvement toward year-end, while the power generation industry softened. Demand was particularly high in Asia and the Americas. For 2011, the division anticipates moderate growth of order intake.
Sulzer Chemtech posted an increase in order intake of 24.7% (nominal as well as adjusted1), resulting in an order intake of CHF 621.3 million. Activity in the hydrocarbon processing industry was higher, but many customers were still reluctant to release major investments. Order volume for the Tower Field Service business unit was encouraging. Increased tendering activity in Process Technology was turned into growing order intake toward year-end. The markets of Sulzer Mixpac Systems showed strong improvement over their performance in the previous year. For 2011, the division expects moderate growth of order intake.
Sulzer Turbo Services increased its order intake by 43.9% (adjusted1 5.0%) to CHF 400.4 million, driven by the acquisition of Dowding & Mills. Demand for the division’s services in the power generation industry increased, while business generated in the oil and gas and the hydrocarbon processing industries was comparatively low. Activity in the newly acquired electro-mechanical service businesses was healthy. Order intake in Europe was supported by acquisition effects. The Americas and Asia-Pacific developed strongly. An exceptional one-off debooking of asizeable order in the Middle East region was a result of government export restrictions. The division anticipates a higher order intake for 2011, strongly supported by the acquisition of Dowding &Mills.
1 Adjusted for currency effects as well as acquisitions and divestitures