Order intake increased to CHF 828 million
First quarter 2014
The first quarter of 2014 is the first one for which Sulzer is reporting order intake numbers according to its new operational structure, which has been effective since January 1, 2014. The company consists of three divisions: Pumps Equipment (pumps and spares), Rotating Equipment Services (maintenance and repair services for turbines, compressors, generators, motors, and pumps), and Chemtech (separation, mixing, and service solutions). The previous year's numbers have been restated accordingly.
In the first quarter of 2014, order intake increased slightly by a nominal 2.7% to CHF 828.4 million for continuing operations. On an adjusted basis, orders increased by 8.6%. The order intake of Pumps Equipment and Rotating Equipment Services increased compared with the first quarter in 2013, while Chemtech's order intake did not match the high level of the previous year. The currency translation effect was negative CHF 48.5 million, while the effect from acquisitions was negligible. Sales lagged slightly behind the previous year, mainly due to the timing of the execution of orders.
Sulzer's largest key market, oil and gas, showed growth in some areas. Demand in the water and power markets as well as in the general industry was flat. Geographically speaking, the Americas was the most active region. Demand in Asia-Pacific decreased slightly compared with the first quarter of 2013, while Europe remained comparably weak. The Middle East was strong compared with the same period in 2013.
Outlook 2014 for order intake
Based on present knowledge and excluding major changes in the general economic conditions, activity levels for parts of the oil and gas industry are expected to remain solid, in particular in the Americas. Based on positive developments in selected regions, especially the Americas and China, some recovery is expected for the water market. Activity in the power industry and in the general industry is forecast to continue at similar levels. Sulzer anticipates a slightly lower second quarter in 2014 compared with the very strong second quarter in 2013. The company expects slight growth in order intake for the full year.
Quarterly results in detail
In the first quarter of 2014, the division moderately increased its order intake compared with the same previous-year period. Activity in the oil and gas market remained high in selected areas while demand in the power market was flat on a low level. As expected, the start of the year in the water market was slow. The main drivers for the order intake by region were the Middle East and Asia-Pacific.
For the full year, demand in the oil and gas industry for selected areas is expected to continue at the respective current high levels. Activity in the power market is forecast to be flat. Some recovery is predicted for the water market.
Rotating Equipment Services
In the first three months of the year, the division achieved a strong increase in order intake compared with the first quarter of the previous year. This increase was driven by good activity levels in the Americas, in particular in North America. In addition, some recovery was recorded in Europe, driven by good demand for services in the United Kingdom. The Asia-Pacific region did not match the previous-year level for the same period. The oil and gas industry showed some good growth, particularly in the Americas. Demand in the power market and in the general industry was flat.
For 2014, the division expects some growth in North America, driven by the continuing shale gas boom. Growth in Europe is forecast to remain weak 2014. Some growth is also predicted in Asia-Pacific, especially in China.
The power market is expected to remain at its current level. The division anticipates slow growth in the general industry.
In the first quarter of the year, Chemtech's order intake decreased from the same period of the previous year, mainly due to a delay of larger projects. Activity in the oil and gas downstream market remained on previous year's level. Demand in the general industry was stable on a high level. Geographically speaking, the Middle East and the Americas were strong, with good orders in the tower field service business, while Europe and Asia-Pacific were lagging behind last year's first quarter results.
For the full year, the division anticipates the oil and gas downstream market to stabilize at a high level. The general industry is expected to develop stable with growth opportunities.
This document may contain forward-looking statements including, but not limited to, projections of financial developments, market activity, or future performance of products and solutions containing risks and uncertainties. These forward-looking statements are subject to change based on known or unknown risks and various other factors that could cause actual results or performance to differ materially from the statements made herein.
Sulzer, headquartered in Winterthur, Switzerland, since 1834, specializes in pumping solutions, rotating equipment maintenance and services as well as separation, reaction, and mixing technology. The company is a leading provider in its key markets: oil and gas, power, and water. Sulzer serves clients around the world through a network of over 150 production and service sites, and it has a strong footprint in emerging markets. In 2013, the company achieved sales of over CHF 3.2 billion with around 15 000 employees. www.sulzer.com