SULZF - Sulzer Ltd (SULZF) Q4 2024 Earnings Call Transcript

2025-02-28 17:12:01 ET

Sulzer Ltd (SULZF)

Q4 2024 Results Conference Call

February 27, 2025 04:00 AM ET

Company Participants

Suzanne Thoma - Executive Chairwoman

Thomas Zickler - CFO

Conference Call Participants

Alessandro Foletti - Octavian

Christian Arnold - ODDO

Patrick Rafaisz - UBS

Yannik Ryf - ZKB

Arben Hasanaj - Vontobel

Presentation

Suzanne Thoma

Ladies and gentlemen, welcome to our annual results presentation. Welcome to everybody here in the room. Welcome also to the participants who are here virtually. We are very pleased to provide you a very good result for 2024. This result in 2024 already mirrors the effect of the implementation of the Strategy 2028.

It also mirrors the industries that we are working for. We call these industries essential industries. Why are they essential? They are essential because they cater to the basic needs of a growing population. Worldwide, our population is growing. And we have, thankfully, more and more people moving into the middle classes. These people need more energy. They need more and cleaner water. They need access to base chemicals and also to green minerals. That is what we are doing. We are making these industries better, more efficient and cleaner.

And with that, we bridge the needs of prosperity with the needs of a sustainable society. And these essential industries, they are growing structurally. And this helps us in our results in 2024, in 2023, and it will also help us in 2025. Essential industry bridging prosperity and the need to reduce the ecological footprint, these are industries that are growing continuously, and they are a building block of Sulzer's resilience. We have several building blocks and one of the building block is that we are in this structurally growing market.

So what are we reporting on? Very quickly, our CFO, Thomas Zickler, is going to speak about that in more depth. We are reporting on double-digit growth in sales, double-digit growth in order intake, a good step forward in our profitability. And we are also reporting on a company that is financially very solid and keeps becoming stronger also financially. The results for sales, we have had CHF 3.5 billion sales in 2024. That is a significant growth over last year, as said, double digit as was the order intake. Of course, we are reporting in Swiss francs. And so we were still a little bit hampered by the increasing value of the Swiss franc, less than in 2023. There, the Swiss franc increased by 8%.

This time, it was 3%. Had the Swiss franc remained stable, we would almost have touched the CHF 4 billion order intake. EBITDA, CHF 436 million, strong improvement in profitability. Now if you look back at Sulzer over the last 2 years, what is it that we did? Over 2 years, we grew 25%, but we only have 5% more employees. We grew 25%, but we didn't open a new plant. We are producing within our existing production facilities. And as a result, of course, profitability goes up. And what also goes up, a very important parameter for us is the return on capital employed. You will hear more about that later.

If we look at cash flow, yes, we had a little bit some growing pains in the operating net cash flow, some more receivables that the strong sales in the fourth quarter, then that led to a lot of receivables that have only been paid in January and February. And of course, we're also paying more taxes given the fact that we have a higher profit. Here, you see the relative improvements then almost 11%, 2x EBITA, almost 25% up, 200 basis points in return of capital employed and cash flow slightly -- operating cash flow slightly lower. If you look at Sulzer, the last 10 years and on our return on capital employed, we always show this 10 years back, you do see that we are in the process of really achieving a step change in our profitability or in our return on capital employed this time this year, 2024, 19.7%. That is coming close to a very nice profitability. But of course, we aren't there. We haven't met our long-term targets at all.

The company is in good shape. The company continues to improve. And as a result, of course, our shareholders should participate, and we are going to propose to the general assembly that the dividend payment should be up quite -- let's say, substantially up to from CHF 3.75 per share to CHF 4.25 per share. With this, we are absolutely within our dividend policy, and it reflects the good situation in which Sulzer finds itself. This in a nutshell, I'll speak later a little bit more about what is going on in Sulzer behind the scenes, but now let's first dive into the figures. Thank you.

Thomas Zickler

Thank you Suzanne, and good morning also from my side. Let's now dig a bit into the numbers of 2024 and explain a bit with more color in detail what happened in 2024 compared to 2023. So as already addressed by Suzanne, when you look at our order intake and sales, you see that we are in the second year in a row, double digit. And when we talk about this, I would like to give you first a color what happened in Q4 because this is coming a bit too short in our press release when we talk about the financial year in total. So in Q4, when you compare Q4 2024 to Q4 2023, we had for the Sulzer Group an order intake increase of 16.3% on a Q4 to Q4 basis....

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