Sulzer AG Q2 2025 Earnings Call Highlights: Strong Sales Growth Amidst Geopolitical Challenges

Sulzer AG reported a 6.3% sales increase in H1 2025, with double-digit growth in the Flow and Services divisions. The Chemtech division faced challenges due to geopolitical uncertainties and overcapacity in Asia, leading to a 13.6% sales decline and 20% decrease in order intake. The company is on track to meet its midterm financial goals, but faces market uncertainties and a negative impact from currency fluctuations.

Sulzer AG (XSWX:SUN) reported a 6.3% increase in sales for the first half of 2025, driven by robust performance in its Flow and Services divisions. The company's overall sales grew by 6.3%, with the Flow division seeing a 10.3% increase and the Services division experiencing almost 15% growth [1].

However, the Chemtech division faced significant challenges, recording a 13.6% decline in sales and a 20% decrease in order intake. These setbacks were primarily attributed to geopolitical uncertainties and overcapacity in Asia [1]. The division's EBITDA margin also decreased by nearly 3 percentage points, underscoring the impact of ongoing market challenges.

Despite these challenges, Sulzer AG is well-positioned to meet its midterm financial goals. The company reported a 210 basis point improvement in order intake margin, indicating a healthy order book. Additionally, the EBITDA margin improved by 90 basis points to 14.4%, with a potential 120 basis points increase excluding currency effects [1].

The company's return on capital employed increased by 270 basis points, reflecting its strong operational performance. The Services division, in particular, showed double-digit growth in all regions, driven by increased demand for energy infrastructure and efficiency improvements [1].

Currency fluctuations, particularly the appreciation of the Swiss franc against the US dollar, negatively impacted sales and order intake by approximately 4%, equating to around CHF70 million [1]. This impact was significant but did not deter the company's overall performance.

Sulzer AG faces market uncertainties, including tariff-related challenges and geopolitical tensions, which affect visibility and decision-making. The company is focusing on smaller projects and products in China and anticipates more projects in the renewable energy sector outside of China [1].

The company's free cash flow was CHF12 million lower compared to the first half of 2024, due to project delays and increased inventory and accounts receivable [1]. Despite these setbacks, Sulzer AG remains confident in its ability to achieve its midterm financial goals and continues to prioritize growth and profitability.

References:
[1] https://finance.yahoo.com/news/sulzer-ag-xswx-sun-h1-070243125.html