Sulzer income plummets amid painful restructuring

Sulzer's Ueli Roost is overseeing a major re-organisation of the company Keystone Archive

The Sulzer group saw its net income plummet by nearly a fifth last year to SFr206 million ($124 million). The company blamed the decline on exceptional costs caused by its restructuring programme and still claimed a successful year.

Releasing its annual results on Friday, the group said turnover had risen by four per cent to SFr5.7 billion. It added its net profit would have climbed by 39 per cent to SFr244 million, if exceptional costs had not been included.

The industrial part of the group is undergoing a painful transition which will lead to the sale of many industrial divisions. The company wants to concentrate on the most profitable technological parts of the business.

“It’s certainly been a challenge this past year,” Sulzer Industries CEO, Fred Kindle, told swissinfo. “But we’ve achieved a lot and that’s reflected in the results.”

The company is facing another challenging period, following its announcement on Friday that it wants to complete a full spin-off of Sulzer Medica by August. Sulzer Industries owns 74 per cent of Sulzer Medica.

“We believe the separation of Sulzer Industries and Sulzer Medica is essential as it will bring more freedom and flexibility to both companies,” said Kindle. “Markets like pure players that focus on their own sector.”

Responding to its current difficulties in the United States, caused by faulty hip implants, Sulzer Medica said it only expected a slight decline in US sales this year. Its US subsidiary, Sulzer Orthopedics, is facing class action lawsuits over the recall of around 25,000 faulty hip implants.

The Sulzer Group is also trying to beat off a hostile SFr4.4 billion takeover bid by InCentive capital. “We feel the offer by InCentive undervalues our core businesses as well as the huge potential of Sulzer Medica,” said Kindle.

Most analysts say InCentive only launched the bid to force Sulzer’s management’s to proceed with the Sulzer Medica spin off.

The Sulzer group plans to continue a two-pronged strategy for growth to increase its core business sales from about SFr1.9 billion to SFr3 billion by 2003.

“We’ll have internal growth factors but acquisitions, too,” says Kindle. “And we’ll take an opportunistic approach in three fields – surface technology, turbo machinery surfaces and we also want to be an active consolidator in the pumps industry.’

swissinfo with agencies