Profit slips at Sulzer

Sulzer has been feeling the effects of the strong Swiss franc. Sulzer

The Sulzer industrial group has reported a net profit of SFr25 million ($17.63 million) for the first half, down from SFr42 million a year ago.

The Winterthur-based company said last year’s figure had been boosted by larger real estate earnings and the disposal of a business unit.

Sulzer said sales had fallen by eight per cent to SFr866 million compared with last year, adding that the decline was principally due to currency effects.

The group said cost cutting and other efficiency-boosting measures had begun to bite, but it was still suffering from the strength of the Swiss franc.

Adjusted for acquisitions, divestitures and currency effects, sales grew by one per cent.

The firm said Sulzer’s medium-term target of SFr3 billion in sales by 2005 was still feasible, but becoming more ambitious.

First-half orders climbed five per cent in local currencies and after adjustments for acquisitions to SFr1.001 billion. Sulzer expects the order volume to continue growing in 2003 despite the slugglish global economy.

In the firm’s largest division – Pumps – the gas and oil sector developed positively, while the power generation unit remained at a low level.

Downbeat forecast

The group said in a statement on Tuesday that the second half of the year remained “challenging”.

“The bottom has been found, there are signs for a recovery” in Europe and Asia, but not in the United States, a spokesman said. The targets would be reviewed later this year, he added.

Nevertheless, Sulzer said it expected operating income at its four core divisions to top last year’s figure. However, it warned that net income would be lower.

“We were able to end the first half of this year with a slightly improved operational performance and a better outlook than one year ago,” commented Sulzer CEO Fred Kindle.

“Sulzer remains committed to profitable growth,” he added.

Analysts had expected a net profit of SFr17 million for the January to June period on sales estimates of SFr901 million.

Sulzer shares rose 3.8 per cent during Tuesday morning trading to SFr254.50 after slipping more than five per cent on Monday.

swissinfo with agencies

Key facts

Sulzer has four core businesses – coating solutions, turbomachinery services, pumps and chemicals process technology.
It also has a venture division called Hexis, which has been developing fuel cell systems for residential applications.
The company made a profit of SFr83 million in 2002.
The firm’s shares are being dropped from the blue-chip Swiss Market Index.

In brief

Sulzer profit for the first half was down to SFr25 million from SFr42 a year ago.

But it says the lower figure was due to larger real estate earnings and a gain from business disposal in 2002.

It warns that the economic climate remains “challenging”.