(Bloomberg) -- Sulzer AG shares rose after the Swiss industrial company said a decline in orders is slowing and cost savings are taking hold.
The maker of pumps for crude production and mining expects a fall in orders this year to be closer to 5 percent than the previous outlook of between 5 and 10 percent, the Winterthur, Switzerland-based company said in a statement Tuesday. Orders fell 9 percent in the first half of the year, excluding currency effects, as a downturn in commodity prices stymies demand for equipment used for oil platforms and refineries.
Shares rose 2.9 percent to 97.45 Swiss francs at 10:58 a.m. in Zurich, giving the company a market capitalization of 3.3 billion francs ($3.4 billion).
Sulzer has been grappling with a downturn in cyclical commodities industries as well as slower growth in China. As part of Russian billionaire Viktor Vekselberg’s Swiss industrial holdings, Sulzer earlier this month unveiled a deal to buy German mascara-brush maker Geka GmbH. The bid to expand into cosmetics supplies was the first strategic shift since CEO Greg Poux-Guillaume took the helm in December.
“Oil and gas orders in the second quarter are up versus the first quarter,” he said on a conference call. “Having said that, it’s way too early to declare victory, in any way shape or form. The market is still quite volatile, very difficult.”
While order intake in all other market segments increased, in oil and gas “we’re not seeing the light at the end of the tunnel,” the CEO added.
Sulzer’s adjusted first-half operating income before restructuring and other items increased 0.9 percent from a year earlier to 98.7 million francs, the company said. A cost savings plan is “running at full speed” and is expected to reach as much as 80 million francs by the end of the year.
Poux-Guillaume took over on Dec. 1 after Klaus Stahlmann quit the post in August when the company announced a streamlining of capacity in Brazil, the U.S. and China as well as job cuts.
To contact the reporter on this story: Niclas Rolander in Stockholm at firstname.lastname@example.org. To contact the editors responsible for this story: Tara Patel at email@example.com, John Bowker
©2016 Bloomberg L.P.