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.