Sulzer Ltd

Good morning and welcome to the mid-year results presentation of SOLZR. Please feel free to ask your questions anytime in the Q&A section. Please use the Q&A and not the chat. We will get to them after the presentations. And now I hand over to our hosts, Executive Chair Suzanne Thoma and CFO Thomas Zickler.

Ladies and gentlemen, welcome to our mid-year result presentation 2026. The first half year of 2026 has been both a challenging year for Sulzer, half year, and a very successful half year. Looking at our order intake, of course with minus 3.9% we cannot be satisfied. At the same time, we have to put this result into perspective. In one of our growth markets, the Middle East, there is unfortunately a war taking place. And this is not the moment for our customers to make major decisions on large-size projects. At the same time we see an increasing planning activities for the time after the hopefully soon end of the war or the necessity of protecting the own infrastructure. The situation in the Middle East does not only impact the Middle East, but it also has repercussions outside of the region. For example, as you have read in the newspapers for the fertilizer production, where Sulzer is involved with its separation and purification technology. At the same time, and again to put numbers a little bit into perspective, for Sulzer in the half-year results, A minus of 3.9% or a flat result. The difference is an order intake of below 80 million Swiss Francs. Now the result is as it is, but one large bioplastic polymer order that was expected to come in February would have moved us up in the half year from this result to flat. At the same time, you see also that our base business and the small project business is holding up very well in this situation and is actually increasing its share of our business, which is a very good development for Sulzer because of the resilience of that business. At the same time, let me repeat, we see a clearly filling order pipeline, not only for the coming half year, but also for the years afterwards. What is the success for Sulzer? It is clearly the improvement in the profitability that we have gained against a more or less flat sales of plus 1%. Thomas is going to speak about that in more detail. This also means that we do not only have a higher percentage, it also means that we have a higher absolute EBITDA in Swiss Francs and a higher net income in Swiss Francs. So we have also compensated through our excellence journey the increase in value of the Swiss Francs. So we can summarize it as follows. Our division's flow and services are very well on track. They are resilient in a difficult environment and growing particularly the aftermarket and the small project business. Chemtech on the other hand is now in an accelerated transition situation of course also impacted by the decision patterns, the slow decision patterns that we see from our customers but we are also now strongly restructuring the division, we are reducing costs and we strengthen focus on the market and on the true needs of our customers. We are also happy to report that our core business, that is the purification and separation business, we also often refer to as the MTCS business, is stabilizing clearly. Again, as mentioned, we see a resilient aftermarket and base business, so we can call it the small project business. Nevertheless, we are still facing customer and investment decision cycles, which are slow, we believe, that are picking up in the second half of this year. To summarize hundreds of initiatives happening around the globe under the title of excellence, I can simply say the Sulzer Excellence Machine is working and is taking up speed. I am now handing over to our CFO, Thomas Zickler, to go a little bit deeper into the numbers. Thank you.

Thank you very much, Susan. And also a very warm good morning from my side. When we look a bit deeper into our H1 numbers, we really will see that Sulzer is a very resilient company. And as Susan already elaborated, in a very challenging environment, mentioning the geopolitical area in the Middle East. We also, as anticipated, have seen very few large orders in H1. And all in all, this impacted our order intake as already elaborated by Susan in H1. What is the story all about? We have flow and services really being on track, working very well. On the other hand side, when we talk about order intake, we have continued growth in flow and services. In the aftermarket, but also in our base business. Chemtech was mainly impacted by a lot of project delays and decision delays in our new technologies. When I talk about new technologies in Chemtech, what do I mean with this? I mean projects in the era of biopolymers like PLA, carbon capture and also sustainable aviation fuels. However, our core business in Chemtech, our MTCS business, remained stable and shows also some first signs of bottoming. In all our KPIs, We have seen a better development in Q2 when we talk about a comparison between Q1 to Q2. For example, when we look at our order intake for the Group, we have seen in Q1 A decrease of 8.6% compared to Q2 quarter to take an increase of plus 1.2%. On the sales side, we have also seen A good development despite the impact from Chemtech, because when you take the 0.5% growth in flow, you have to see that this is based on H1 2025, where flow grew with 10.7% in H1 last year. For services it's even more or a better performance because their 4.4% are in relation to a 14.8% growth of services in H1 last year. When we talk about our book-to-bill ratios, you will see that in all our BUs, I'm not talking about divisions, in all our BUs, the book-to-bill ratio is above 1, except of our new technologies in Chemtech, where it is below. And explicitly I say for MTCS also the book-to-bill ratio is above 1.0. As a last point on this slide, I want to talk about the currency impact. So we have on sales and on orders round about 100 million in absolute numbers or 5% FX impact. As a last point I want to address on this slide our order intake margin. You see that the order intake margin is at 35.7%. This is a decrease of 60 basis points compared to last year. What is it? Let me give you an explanation. It is mainly caused by Chemtech, by the business development in Chemtech, where we had a reduction of the order intake gross margin of 3.6 percentage points. So here the order intake gross margin reduced from 35.9 to 32.3%. And this is mainly coming from the new technologies area in Chemtech. So we miss in H1 this year a larger PLA order, which was highly profitable also in the past. Last year in H1 2025 we had a PLA order impact of around about 65 million. Also on the MTCS side we see a bit lower margins on the order intake side for MTCS. Let me now come to the next slide and talk about our profitability. So first of all, you see that our profitability again increased by 110 basis points. This is an almost one percentage point increase for the fourth year in a row. And it's caused, as I already explained to you, by a better gross margin. and also by rigorous implementation of our commercial and operational excellence. When we reflect on the EBITDA margin, I just want to remind and remember you that in H1 2023, our margin was for the group at 12.9%. Nowadays, today, we are at 15.5% in H1. Important to note when we talk about our profitability is the following fact. We have changed our measures, our KPIs and we are now reporting EBITDA without any adjustments. What does it mean? So this means every measure, every spend, every investment which we have to take on our Sulzer Ambition 2028 excellence program has to be financed by the current result, by the current profit of our business. So for example this year or in this first half year we had a lot of spend to improve our sales organization across our company. We also had some restructuring costs which we had to compensate on our profit for example as you can see in our Half year reporting for flow we have for this restructuring costs of 6 million, but in the same magnitude we also have one time spent in services and in Chemtech. Now let me talk about return on capital employed. Return on capital employed you see just a slight increase despite a very strong increase of EBITDA and EBIT. What is behind? Story is relatively easy. We have higher assets and the higher assets are mainly coming from a higher networking capital which is caused by many project delays on the customer side and To just give you a number when you compare our Networking Capital H1 2025 to H1 2026 we have around about 100 million more Networking Capital. Now let me talk about Flow. Here the headline says everything. In flow we have really an ongoing strong profitability improvement for many years. When we look back on the EBITDA percentage, on the EBITDA margin, we started in H1 2023 with 8.7%. I repeat it, with 8.7%. Today we have reached 13.3% and compared to H1 last year again a 100 basis point increase. When we talk about order intake, you see order intake is just up 1.4%. But let me also give you here the Q1, Q2 development for order intake. We have seen in flow in Q1 an order intake of minus 3.8%. But in Q2, we have seen a plus 6.6%. So you see also here that our flow division is regaining momentum in Q2 when we talk about the business development. When we further talk about order intake, we see overall in flow that we have a solid performance or a good performance of our base business. and this good performance in our base business is compensating a lot for the missing large orders and the missing large orders especially in energy and infrastructure which we have announced in our media conference already in February this year where we have seen in our order intake or in our order pipeline that Most probably all these bigger orders will come very back and loaded in H2 this year. We also see on the flow side, talking about the other BU, water and industry, impacts from the Middle East conflict, especially for industry where we have an industry in the fertilizer production seen supply chain disruptions because of the blocking of the Strait of Hormuz and therefore Our industry business is performing the weakest currently when we talk about order intake in flow. Now let me talk about sales. We have a stable development despite and I remember here all of the participants of this call on a strong H1 2025. In H1 2025 we had a sales growth inflow of 10.7%. So you see when we have now a sales growth of plus 0.5% this is based on a very strong sales growth in H1 last year. Last, let me also give a bit more details about the EBITDA margin development. You see, 100 basis points plus. So what is it? On the one hand side, yes, better gross margins. but also a very disciplined, structured implementation and execution, I say of our Sulzer Excellence machine, of Sulzer Excellence across the BU's inflow. And this is basically our sample case for the whole company when we talk about profitability improvement. Then let me talk about services. In services we have seen in the first half year a sales growth of 4.4%. This sales growth of 4.4%, as I said in the very beginning, you have to see in comparison to an H1 sales growth of 14.8%. So this is quite an achievement in my eyes. Also let me talk about the order intake development Q1 to Q2. In services we had in Q1 order intake of minus 2.6% and in Q2 we had an order intake development of plus 3.1%. So you see also here that we are getting momentum back with our services division. When we talk about orders, it is very important that you understand in services what is behind the relatively low increase of the rate when we come to orders. On the one hand side, as I told you, we have a record H1 2025. This is one point. On the other hand side we have received last year in H1 two larger orders for services in Europe with round about a value of 50 million and because of the geopolitical tensions and volatility and the increased oil and gas prices we have seen A lot of customers delaying their service cycles, especially in our repair business for basically a couple of months. And this is why we are impacted also on the services side with delays in repair business. However, they cannot delay forever. This is something which will come then back in the future with a higher growth rate. Order intake margin in services has grown by 140 basis points in H1 this year compared to H1 last year. So now we have an order intake gross margin of 40.6% for services. Then EBITDA margin. You see that services is also gaining 100 basis points on profitability. and this I want to stress is despite two facts. One is also in services we have a higher spend this year compared to last year for strategic growth areas and this is in the Middle East and in India but also because of the Middle East crisis or conflict We had some operational interruptions in the Middle East like in our service shops in Bahrain and Iraq. And therefore this performance here on services when it comes to the profitability increase is really outstanding seeing the current market situation in which we are in. Let me talk about Chemtech. Susan already addressed it. Chemtech, I think the story is very simple. In Chemtech we have the core business stabilizing. The core business, it seems that it's bottoming. It was stable in the first half of 2026 compared to the first half of 2025. However, we have still huge headwinds when it comes to larger orders, especially in the area of the new technologies, biopolymers, carbon capture and sustainable aviation fuels. Let me also do some good messaging about Chemtech. When we compare here order intake Q1 to Q2 and sorry for being here in negative numbers. So in Q1 we had an order intake minus of minus 27.7. It improved in Q2 to minus 16.1. So at least a slight improvement mainly caused by the missing larger orders in the new technologies business. But when we look in Chemtech and compare it to the H1 numbers in total for order intake and sales, I also want to tell you here the truth. We have currently minus 22.7 for H1 this year, last year we were minus 21.5 and when we talk about sales we have this year minus 4.9 and we had last year minus 15.1%. So now let me talk about sales before I come to the cost reduction programs. But let me first talk about sales. What is the main reason why we have less sales despite a reasonable high order backlog? The sales are down by 4.5% because many customers in this area, they are delaying the delivery timelines. And this means that we cannot record the sales and also we have lower orders as you have seen in the order intake numbers. So all in all this led to a very sizable sales decrease. Now let me talk about profitability and EBIT margin. So in Chemtech We have the following situation. We have, as I explained, lower volumes, lower sales and on the other hand side, we have starting underabsorptions in some of our factories and plants. However, When you see our EBITDA margin, the EBITDA margin remains stable for H1 2026. How was this possible? So we compensated through really stringent and continued execution of excellence plus and additional cost reduction program which we already started in H2 2025 for Chemtech when we have seen that the business and the market is not developing as we imagined originally in our plan. So in this additional cost reduction of H2 we have taken out round about 10% of our sales force and this enabled us together with some other cost reduction measures that we are staying stable on our profitability this year. However, as I mentioned, when you look at the numbers, we from the Sulzer Management, we have realized that based on the weak and lower order intake and sales numbers, and we have decided that we start an additional cost-cutting restructuring program for Chemtech. You will hear then from Susan after my presentation more details about this additional Cost adjustment and cost cutting program in the Chemtech division. But this only one goal to make Chemtech fit for the future and adjust the cost base to the current business situation. Then let me talk about our free cash flow. Free Cash Flow was in H1 highly impacted by our increased Networking Capital. I already talked about Networking Capital. It has increased when you look here at the Networking Capital H1 to H1 2026. You see a delta of 117 million. However, because of the year-end closing and bookkeeping rules, you cannot just take the 117 as the explanation for the higher net working capital. In reality, when you go into our cash flow statement, you will see that cost by higher net working capital We had an impact of around 40 million. So when you look at the 30 million plus 40 million, we would have been slightly above. Our free cash flow from last year and in addition to this you see in the second bullet point we have since we have not received really larger orders in H1 2026 we have also not received any larger down payments from customers and this also had a Thank you very much. All in all, when you see the networking in relation to our sales, you see we have an increase to 26% coming from 22% in the prior H1. This is mainly caused by more or less stable sales, but a much higher networking capital. With this, I would like to hand back to Susan. Thank you very much, Thomas.

I would like to take you now through a few strategic thoughts, but I will start with Chemtech, just underlying what Thomas just said. You can summarize it that Chemtech is in an accelerated transition. So the cost measures that we launched last year and that have now an effect on the division's profitability in H1 2026 have been even further accelerated. We are cutting costs and we are reducing personnel by another 10%. We decided that finally in July. So early this, well, we decided it in June and we executed it in In July this also means that the full cost benefit will be seen in the first half of 2027. What we didn't do is to reduce the sales force or any of our customer channels in any way. We do have now a simplified organizational setup. The setup is such that we have our core business in one BU and that we have our new technologies business, carbon capture, sustainable aviation fuel or biopolymers together in the second BU. You can also say that the second BU is heavily dependent on large projects coming to fruition. Another very important point in the reorganization is sharpening our R&D focus, making it much more customer oriented, making it much more oriented towards solving immediate customer problems like for example making the new technologies more cost effective, more practical to implement. All of that means that the division will be leaner, more effective and more oriented towards the customer needs. However, The underlying industry trends are intact. Why are we saying that? Because we see what is going on at customers. We see an ever increasing pipeline of early, mid-stage and late-stage project planning. We see this particularly in the area of the biopolymers and we see it in the area of the sustainable aviation fuels. We see it a little bit less in carbon capture. However, there are large projects also in the United States. We know of one large project to be precise where we are in the process of hopefully acquiring it. So this is the way forward for Chemtech. It's quite a cultural change, but we are very pleased to confirm that our colleagues understand and that we are moving ahead together. The Solstice Strategy 2028 is based on organic growth above markets that grow structurally. It doesn't mean they are growing every year. but they are growing structurally because of population growth, the increased need of more energy, more water, bigger role that base chemicals are playing. And at the same time just as important and also the base for Sulzer's growth in the market is Sulzer excellence along the value chain. What we have not spoken about and is emerging step by step is that there are new growth areas for energy, water and chemicals in regions and countries we don't speak about so often. This is important for Sulzow because Sulzow with its global setup being present in many, many countries can respond to emerging customer needs. In countries like Libya, where we have made a joint venture with a customer, a company from Libya for the service division for rotating equipment services. In Iraq, where we are already present. Of course, we had less activities now in the first half of this year. Egypt, which is preparing to invest heavily in its water infrastructure, but also in its energy infrastructure, Guyana, which is the place to be for deep-sea oil drilling, and depending on the political situation, how it will develop, the country of Venezuela, which of course has a huge need for reconstruction of its energy and water infrastructure. What we do see is that the gas turbine boom which is happening because of strongly increasing electricity consumption not only with the data centers but also with the data centers is driving our business mid and long term because all of these turbines sooner or later have to be repaired and refurbished and right now we also see many customers taking old We see an increasing interest in liquid natural gas transport infrastructure both for LNG pipelines but also for LNG transport on the sea. Of course going forward and hopefully soon there will be the topic of rebuilding and strengthening the Middle East infrastructure. for securing supply and also securing resilience of supply that becomes an ever more important topic not only in the Middle East but around the globe. We see this for example also in the build-up of the municipal waste water infrastructure in Asia. Now all of this Sulzer can provide and can provide very well if we follow in a very disciplined and very systematic way our strategy of operational excellence along the value chain. Operation Sulze Excellence is not only about production. It is also about production. And we have made great progress in on-time delivery, in-spec delivery, which reduces our quality costs and keeps our customers happy. In the commercial area, commercial excellence, there are several examples. I would like to highlight the market value pricing. Still a cultural change for Sulzer not to do cost plus but to see the pricing from the customer's perspective and price our products and services and solutions accordingly and order cycle time reduction. What does that mean? It means that with the existing The supply chain on which we have been working heavily in the last three years is now going into a new phase. Supply chain excellence, an important example, is designed to cost. What does that mean? really designing our products and services to the customers need and expectation what they really need even if it means quality that is a little bit inferior to what or fit for use so and maybe not what Sulzer is very proud of to do When it comes to people, excellence happens on the shop floor, it happens in the offices, it happens in the everyday work. And this is why we are doing a systematic training of our employees around the globe with black belt and green belt training. And as you can see in our results, the Sulzer Excellence machine delivers results. Now, what did we show with this little film? Excellence is about hundreds of actions, we call it initiatives, being taken around the globe. And we see a convergence of these initiatives coming together, giving results that you could see under the topic of one soldier. Let me speak a little bit, just shortly, about innovation. And before I spoke about design to cost and maybe sometimes accepting quality if the customer requires it, that is a little bit below what Sulzer would traditionally want to do. Now here you see a completely different example. Here you see pumps that are deployed right now, three of them. in a subsea application. What are they doing? It is a collaboration with our customer Petrobras and Technip. and the innovation is that you can separate on the seabed the oil coming out of the well and the CO2, the gas in general, which is about 50% of what is coming out. This technology of the separation comes from our customer Petrobras. What comes from Sulzer is this very advanced, very demanding pump technology Thank you very much. Now, this is not just an excitement of our engineering-oriented company Sulzer about a great project. If this works and the three pumps are now going to be deployed on the sea base, This is changing subsea drilling, making it more economical and making it also more environmentally friendly because the CO2 is never coming up on the platform again where often a lot of it did get lost. This is what SOLTZER can do and is still doing and is opening the road to a new generation of subsea pumps. On the other hand, on the other side of the spectrum, the new soldier with our new technologies that are struggling a little bit right now, but the need for overcoming plastic waste is unchanged. Sulzer is working in customer trials, I'm not speaking about early stage results, on a pet replacing technology that is known. But the key thing in this pet replacing technology is that the qualities All of the polymer that we call PETH is really dropped in or better than PETH, including the optical qualities. So we are in customer testing with this new technology, which we are very proud of. Speaking a short moment about Sulzer Excellence. Sulzer Excellence is sometimes very down to earth. And I give you an example here in a very, very short film. We are speaking here about replacing a large hall that we have in Houston where we store our customers' rotors. and we need that space so we can respond to the ever increasing demand of gas turbine services. Have a look. These are our customers rotors and they are there so the moment they're running equipment needs service they have as slow as short a off time than possible now what's the excellence behind it rather than building A new building for our capacity expansion. We take the existing building and we put these rotors in another building which is less expensive outside of Houston and we can do this very quickly so that we can respond to our customers' needs faster. Very practical, down to earth, operational or if you want investment excellence. So I'm coming to the end of my part of the presentation, the key takeaways. Division flow and services are growing and they are growing in a challenging environment and with improved profitability. Chemtech's core business, the separation and purification technology that you can apply across Many industries is stabilizing at the low level, no doubt, but stabilizing. The division is nevertheless impacted by delayed projects, as we have now mentioned several times for different reasons, but certainly linked to the geopolitical situation. We are now strengthening Chemtech, focusing on the essential part of it, essential which is necessary to grow, to be cost competitive and to do innovation that is relevant for our customers. We want Chemtech to return to growth as fast as possible. Our company's sales and profitability are on track and we expect, as we have already said in February, a stronger back-loaded H2 order intake. Solze Excellence, the machine, is clearly delivering results and will continue to do so. Taking a step back from the immediate daily Things that are happening, we do see around the globe an ever increasing importance of securing resilient and strong infrastructure for the supply of energy, water and chemicals. And this is why we are speaking of structurally growing markets and we wouldn't be surprised if exactly these markets would grow even faster in the aftermath of the geopolitical situations that we have because the necessity To have your own infrastructure for energy, for water and for chemicals is becoming very clear in many world regions. So Sulzer's growth potential going forward is fully intact. We are pushing sales. We are doing everything we can to increase order intake. And in the meantime, we are also doing our homework with Sulzer excellence. We are confirming the guidance that we presented to you in February with an order intake increase from 1 to 5%, sales up 2 to 5% and an EBITDA margin for the full year 2026 of around 16.5%. Ladies and gentlemen, thank you very much for your attention and now we are opening for Q&A session.

Thank you. I will start with the first question of Alessandro Folletti from Octavian. In service, can you quantify the impact of customer delaying orders because they run the equipment longer?

Let me answer the question like this. We have approximately 20% of services is repair business and in repair business I would say round about 20% to 30% are currently delaying their normal service cycles, partly by a couple of weeks, partly by a couple of months, but more precisely I cannot answer the question.

There is a follow-up question from Mr. Folletti. In the Middle East, there are or were projects for several pipelines in Saudi Arabia, Oman, Iran. Can you give an update here?

I can give an update. These projects are in the planning phase and we are participating in them. Doesn't mean we have the business, but we are very close to the customers preparing the final offer.

Next question is from Fabian Piasta from Jefferies. Can you please give further granularity on energy, infrastructure, water and industrial inflow? Looks like some strength offsetting other weaknesses.

In energy and infrastructure, we have a very good base business in H1. As I said in my presentation, this is compensating partly, but only partly, The missing larger orders and you see that energy and infrastructure grew in H1 by 9.8% so this is really a very good performance. On the other hand side we have the water business round about around zero. and Slyde Gross and we have the industry business which is in the signal digit minus because you know we are not publishing normally the more granular information about industry and water but industry is really maturely hit by the supply chain disruptions which we have in the in in the Strait of Hormuz and especially on the fertilizer side

Again, a follow up from Fabian Piasta. Turboservices plus 2% sales looks soft. Can you explain?

Here we are starting from a high base and also on the turbo services side we have the delays in the repair business because we are talking about higher oil and gas prices and the higher oil and gas prices they are driving the delays of the services. They don't want to stop their machine running. and this is why I think based on this extraordinary high base which we have on the gas turbine service it's a good performance when you look back for the last three years where we have grown in this section double digit.

Then another follow-up question for Mr Piasta. MTCS sales are down minus 18 percent. Is this the bottom when you refer to stabilizing?

Well, with the order intake stabilizing and the still backlog that is there, we would say with MTCS, so the core business that should be according to everything that we know, the bottom. Of course, this is bearing any unforeseen events. Would you like to add something?

No, this Susan, absolutely I agree in the sense that we have seen in MTCS also in Q1 a very weak Q1 and this also impacted the sales. Therefore, we have lower sales on H1 basis. On the other hand side, we have seen that this is all turning around a bit, the movement. We have a stable movement in MTCS when we talk about order intake in H1. So this should, and I say it really like in not knowing this exactly what will happen in the future, this should then now indicate somehow the bottoming of the MTCS business when it comes to sales and also order intake.

It is not only a question of the market, it is also a question of how we are selling, our approach to selling and how we are carrying across the value that we create with these technologies to our customers. Sales excellence is just as much a part of our Sulze excellence than all the other elements and we do see some results also there. For example, how our sales people around the globe are using their time. Do they do it by speaking to the customer and finding out their needs or are they using it partly for administrative stuff on their desks? Very basic examples.

Then a question from Arben Hazanay from Fontobo on the outlook. Do you have indications that larger projects will return in H2 or why are you confident in the 2026 order guidance?

Yes, we have indications. Indications is the right word. Why do we have them? Because we are working with our customers on large projects. Preparing tenders, for example. So preparing tenders is not the same as receiving an order, of course, but we see an increasing activity. However, I would like to also mention that it is rather likely that these orders will come in Q4, given where they are now in the decision making cycle.

Next question from Raphael Lucet from Moneta Asset Management. Good morning. With the large increase in refining margin disruption and Russia, do you expect a potential pickup in this activity?

Can you repeat the question?

With the large increase in refining margin disruption and Russia, do you expect a potential pick-up in this activity?

Let's start with the easy question. Part of the question is that we have no business in Russia. We are also not speaking about the refining margin per se, we are speaking about the margin in flow and therefore energy and infrastructure and in general we are expecting a pickup of demand.

The refining activity, now he defined it. Very good. Next question from Louis Billon from border Europe. My question is about your capacity expansion in Texas. Could you provide more details on your current capacity? What will the capacity look like after the investments? Is it fair to assume that your annual sales for gas turbine services in the US are around 100 to 150 million? What kind of growth do you expect in this business? And could order intake or sales exceed the mid single digit hundreds of millions by 2028?

What a difficult question and many questions in one question. We are increasing capacity for gas turbine repair with this investment by about 20%. We have a business for gas turbine in the service in the United States of around 150 million Swiss francs. The biggest The capacity inhibitor, so to speak, is skilled labour because this is still a lot of manual work and we need to attract the right people and also be an attractive employer to them. Now this has been the case also in the last years. We are pushing that increasingly. Why more gas turbine service business? Because there are more gas turbines out in the world and particularly in the United States. Now, given the supply delays from the gas turbine providers, this is not a step change. It is a positive for us, positive development over the years. It also means that older gas turbines are being run longer. That means they need more repair and are not taken out of service. Sometimes they have been taken out of service and are going back in.

Another question from Louis Billon. How confident are you that the delayed customer projects will ultimately convert into sales rather than be cancelled? Do your contracts include cancellation clauses or termination fees? What protections do you have in place and where are these customers based?

So the protection that we have in place is such that our, of course we have cancellation fees and so on. What cancellation In the contract we have method to work with the cancellations so to speak. Most importantly for us is that these large projects are always cash positive for Sulzer. So if something stops Then the money is in Sulzer and not somewhere else, which strengthens our position there. Cancellation of large projects. Yes, this is not excluded in our assessment. However, this would only be the case if the situation in the world and particularly in the Middle East would further escalate. In our prediction or our guidance we have not taken into account a major escalation of the situation in the Middle East.

Looking back a couple of decades, we haven't seen project cancellations on a high magnitude ever. Yes, we have from time to time a project cancellation, but the history has shown to us that normally in the area in which we work in, we don't have project cancellations per se.

Question from Christian Arnold from Otto. What is the gross margin of the FRC business being reclassified from Chemtech to Flow and are there further businesses being potentially reclassified?

The gross margin I don't have in mind to be honest. I know that the FRC business is around about 40 million on sales. I think we have something around 3-4 million on EBITDA for this business in the end, but the gross margin I cannot tell you.

I have another detailed question from Alessandro Folletti. Can you please give an update on the electromechanical side of service and OEM pump service? We speak a lot about turbines, but not much about the other two segments. Can you quantify growth here?

Very good question. I would like to start with the electromechanical. Mechanical part. Let's make a long story short. Every turbine needs a motor. And we see this business area growing strongly. We have not yet included it in our figures. We are going to most likely invest in the electromechanical business and we are working on also having very good margins in this area. So yes, this is developing very well. It was a sidearm of the services strategy a few years ago and now it has become an important part of the growth story of services. Pump services on the other hand is developing nicely. Of course there you have also the situation that if whole projects are being delayed it can also impact pump services.

Another one from Alessandro Folletti. Yes, and on Chemtech, are there any restructuring costs we should think of? And is the margin in H2 suffering because of that? Or will you be able to absorb any one of costs?

It's a very general question, but let me answer this like this. Yes, we will have in H2 no major impacts from restructuring. We are planning restructuring costs for Chemtech in the low single digit area. But we also, as you can see in the financial reporting, we have under subsequent events already announced that we foresee an impairment in the Chemtech division of around about 8 million and this impairment is for our R&D center in Singapore. So all in all, on the visibility which we have right now, we do not see that our profitability is impacted for Chemtech in H2. We think we can even slightly grow. Why? Because we have already taken action by end of H2. And all these measures, cost measures, which we have taken by end of H2, they are coming to a full run rate in the second half of this year. And additionally, we will have some impacts of this additional cost cutting program, which was addressed by Susan. So all in all, I don't think that we have an impact on the margin.

I think the last question is from Adrian Knoblauch from ZKB regarding the outstanding dividend payment to Tiwil. Regarding the notes on the full year report regarding the 170 million loan, if we can elaborate on this arrangement and if there are further such reductions to expect in the future.

This we published in our annual report in February. This in my eyes was a one-time exercise because as we already announced Our holding company, basically Tiwell, who holds the shares of Sulzer, they have negotiated and achieved from all authorities, OFAC, Brussels and also Switzerland, all approvals to make it possible to pay out. This part of our dividend and this money flow was not leaving Switzerland and this was used very important and this was used to pay back a debt because otherwise parts of our shares would have fallen into the hands of a Russian bank. So I think this was all in all an extraordinary situation which we have taken action on to secure the future for Sulze.

Sorry, there is again a question, so lots of interest today. Miro Zusak is asking, you mentioned that you expect the large orders just in Q4 rather than Q3. Given the large improvement needed to meet your guidance, would a weak Q3 mean that you adjust your guidance from today's perspective?

No, from today's perspective, we would not adjust Our guidance because of a weak order intake situation in Q3. Everything else being the same, of course.

From Alessandro Folletti, can you say something on networking capital in H2?

I hope that this will improve, but being serious on this. When we see the larger orders coming in, and yes, most of them, and I also want to pre-inform and pre-warn you, Yes, we are not seeing these larger orders really coming in in Q3. The larger orders are currently planned for Q4. And when these larger orders come in for Q4, we also will receive in Q4 a couple of larger down payments for these orders. And alone by this fact, our networking capital will improve. and also our free cash flow. So I'm foreseeing that our net working capital is decreasing to the year end. But I cannot tell you right now about the magnitude, because this is strongly dependent on the larger orders which we will get by H2.

This was the last question in the Q&A sections. Thank you very much.

Thank you.

Thank you very much.