Ladies and gentlemen, welcome to our annual results presentation. Welcome to everybody here in the room. Welcome also to the participants who are here virtually. We are very pleased to provide you a very good result for 2024. This result in 2024 already mirrors the effect of the implementation of the Strategy 2028. It also mirrors the industries that we are working for. We call these industries essential industries. Why are they essential? They are essential because they cater to the basic needs of a growing population. Worldwide, our population is growing, and we have, thankfully, more and more people moving into the middle classes. These people need more energy. They need more and cleaner water. They need access to base chemicals and also to green minerals. That is what we are doing. We are making these industries better, more efficient, and cleaner.
With that, we bridge the needs of prosperity with the needs of a sustainable society. These essential industries, they are growing structurally. This helps us in our result in 2024, in 2023, and it will also help us in 2025. Essential industry bridging prosperity and the need to reduce the ecological footprint. These are industries that are growing continuously, and they are a building block of Sulzer's resilience. We have several building blocks, and one of the building blocks is that we are in this structurally growing market. What are we reporting on? Very quickly, our CFO, Thomas Dittrich, is going to speak about that in more depth. We are reporting on double-digit growth in sales, double-digit growth in order intake, a good step forward in our profitability.
We are also reporting on a company that is financially very solid and keeps becoming stronger also financially. The results for sales. We have had CHF 3.5 billion in sales in 2024. That is a significant growth over last year, as said, double-digit, as was the order intake. Of course, we are reporting in Swiss francs, and so we were still a little bit hampered by the increasing value of the Swiss franc. Less than in 2023, there, the Swiss franc increased by 8%. This time, it was 3%. Had the Swiss francs remained stable, we would almost have touched the CHF 4 billion order intake. EBITDA, CHF 436 million. Strong improvement in profitability. Now, if you look back at Sulzer over the last two years, what is it that we did? Over two years, we grew 25%, but we only have 5% more employees.
We grew 25%, but we didn't open a new plant. We are producing within our existing production facilities. And as a result, of course, profitability goes up. And what also goes up, a very important parameter for us, is the return on capital employed. You will hear more about that later. If we look at cash flow, yes, we had a little bit of some growing pains in the operating net cash flow, some more receivables. We had strong sales in the fourth quarter. Then that led to a lot of receivables that have only been paid in January and February. And of course, we're also paying more taxes given the fact that we have a higher profit. Here you see the relative improvements, then almost 11%, two times EBITDA, almost 25% up, 200 basis points in return on capital employed, and operating cash flow slightly lower.
If you look at Sulzer the last 10 years and on our return on capital employed, we always show this 10 years back. You do see that we are in the process of really achieving a step change in our profitability or in our return on capital employed. This time, this year, 2024, 19.7%. That is coming close to a very nice profitability, but of course, we aren't there. We haven't met our long-term targets at all. The company is in good shape. The company continues to improve, and as a result, of course, our shareholders should participate. We are going to propose to the General Assembly that the dividend payments should be up quite, let's say, substantially up from CHF 3.75 per share to CHF 4.25 per share.
With this, we are absolutely within our dividend policy, and it reflects the good situation in which Sulzer finds itself. This in a nutshell. I'll speak later a little bit more about what is going on in Sulzer behind the scenes, but now let's first dive into the figures. Thank you.
Thank you very much, Suzanne Thoma, and good morning also from my side. Let's now dig a bit into the numbers of 2024 and explain a bit with more color and detail what happened in 2024 compared to 2023. So, as already addressed by Suzanne Thoma, when you look at our order intake and sales, you see that we are in the second year in a row double-digit, and when we talk about this, I would like to give you first a color what happened in Q4, because this is coming a bit too short in our press release when we talk about the financial year in total, so in Q4, when you compare Q4 2024 to Q4 2023, we had for the Sulzer Group an order intake increase of 16.3% on a Q4 to Q4 basis, and this was mainly driven by Flow and Services.
In Flow, we had an increase of 29%. So, we had, especially in energy, a very strong H2. In Services, we had an increase in Q4 of 11.3%. So, also a very strong Q4 2024. In Chemtech, we grew 2.3%, a bit less than in the other divisions, but this is mainly caused by many projects which were delayed into H1 2025, and this is what we also address when you read then our guidance that as higher we get on the absolute levels and as more bigger projects we get, as more difficult for us it is to really predict the numbers on a quarterly basis because of the nature of the project business, and we cannot really influence when we then have to book the orders. The overall growth, as you see, is intact. We don't see in Q4 for the group any signs of a slowdown.
Now, let me come to the order intake overall for the group. When you look at this 10.8% order intake growth, it is very important that I address here the order intake margin. Our order intake margin increased in 2024 by 110 basis points. So, what does it mean? Just for a comparison, in the two years before in 2023 and 2022, we had an increase of our order intake gross margin of 40 basis points only each year. So, you see that the order intake we are not getting in for every price. It is really visible in the market that we have a good market position in all the essential markets for Sulzer, in all the industries where we do critical applications, and also our brand name, Sulzer, comes more and more into place where we have a position where we can ask for a certain pricing.
Therefore, this is a very good order intake, the 10.8% plus, because we have increased our order intake margin almost three times to what we have increased in the two last years before. When we talk about sales, I will then go a bit deeper into the sales performance of the individual divisions. You see we have growth in all the divisions. We have growth between 9% and 12%. Suzanne Thoma already addressed it. When we talk about our FX impact this year or for the year 2024, we had more or less 3% FX impact, still negative FX impact. However, when you compare with the year before, we had 8% FX impact. So, in absolute numbers, round about, we have between CHF 110 million and CHF 120 million FX impact negatively on order intake and on sales.
One year ago, we had between CHF 250 million and CHF 280 million FX impact on order intake and on sales. Let's come to the profitability. You see that the profitability in 2024 went up by 130 basis points. The year before, the profitability went up by 110 basis points. So that you see the increase also of our operational profit was almost 25%, is really proving and showing that we have a good market momentum, yes, agreed, but also that our operational excellence initiatives, which we have started, that they are now getting executed and implemented. In addition, the better gross margins, which I explained to you already on the first page, which is also reflected in the higher order intake margins. The growth in profitability is led overall in 2024 by Flow and Chemtech. You will then be surprised.
I know that you all know what we have announced this morning, but for me, it was the biggest surprise when you see the profitability increase in Chemtech of 180 basis points. Now, let me talk about our return on capital employed. For capital employed, it was very difficult for me how to phrase this because we have 200 basis points increase in 2024 compared to 2023. So, it looks like a lot, but what you have to understand in the two years before, we had each year an increase of return on capital employed of 300 basis points each year. So, when you look back three years, you have 300 plus 300 plus 200. So, this gives eight percentage points more on our return on capital employed over the last three years. This is, I think, quite impressive when you see the numbers reflected in our capital employed.
Now, let me talk about Flow. In Flow, we have really a strong momentum when it comes to our energy and infrastructure business, as I already told you, but we have also a good momentum in our Water and Industry BU. The numbers for 2024 are the following. In energy, we had almost 15% plus, so 14.7% plus on energy and infrastructure when I talk about orders, and in our Water and Industry BU, we have a plus of 10.6%. This is the first bullet point, so you see on the right side, we are growing in Flow on both sides in both areas, in Industry and Water, as well as in energy with double digit, and this is quite impressive, especially when you see in order intake. This year, we have closed with 12.3%. Last year, the order intake growth in Flow was 11.3%.
So, you see that we are on a very high level, sustainably growing in Flow. Profitability, when we talk about profitability, you see again, Flow is up by 150 basis points profitability. When I was last year here, not at this location, but when I did this conference, I reported to you that the year before, they were 140 basis points better. So, just in the last two years, almost 300 basis points better profitability in our Flow business. When we talk about sales, you see that the sales 9.4%, this is a very good sales after 10.9% sales in the prior year. We have here solid backlog execution, especially from the energy side, a higher book-to-bill. I told you that especially in energy, we had a very good H2. And also on the Flow side, Water and Industry side, we had in sales a very strong Q4.
Now, let me come to Services. Services, it's, I called it the last time, the surprise for all of us because services was growing last year, 19.8%, so almost 20%. And then we were very cautious with our forecast for 2024. And you see in 2024, again in order intake, after 20% the year before, they grew again 12.5%. And when we talk about this order intake, and I discussed in the last MISs with our business, so is there a slowdown visible? Do we see anything? So, it's still really, I call it the machine, is still going on, especially in the U.S. We closed last year in the Americas with a plus of almost 16% compared to the year before. And in APAC, so Asia-Pacific, with 14% more. When I talk to the people now, they don't see a slowdown in this market.
It's really on this high level further growing. Talking about sales, sales, you see 12.3%, also to bring this in relation after 14.5% sales growth the year before. We have here in sales the same suspects. So, this is really led by the Americas and also supported by Europe, Middle East, Africa, and the Asia-Pacific. Now, I come to a point which I discussed with most of you a couple of times during the year, and now I present you the numbers. I always told you that in services, don't expect this year a too high increase in the profitability because services is investing this year a lot in the future growth in excellence, and this has happened to see it. When you talk here about operational profitability, you see only 20 basis points increase in the operational profitability.
But when we talk about only, you also have to see the year before. They increased by 60 basis points, and they also have our highest profitability when we talk about the three divisions. So, for what did they spend the money? What did they do? Why is the profitability impacted by this so-called one-offs for operational excellence? I give you some examples. Since we are really growing more than, I'll say, double-digit in Americas Turbo Servicess, we have invested in more capacity in land, in workshops, in Houston, and this costs us money. We have opened for services, new service centers, and I just read it out, the list in Thailand, India, Malaysia, Kuwait, Sweden, Denmark. So, we are really expanding our footprint to come closer to the customer.
On the other hand side, we have realized in the U.K., we have too many service centers, too many small service centers, which makes no sense from an operational excellence perspective. There in the U.K., we have closed some service centers. You see here, Services is really preparing for higher profitability this year, 2025. They have initiated a lot of measures which should be then visible in the performance of 2025. Let's come to Chemtech. When we talk about Chemtech, Chemtech is when you compare it, order intake year on year, our slowest growing division was 5.4%. But let me say something to the 5.4%. The 5.4% is with knowing that Chemtech has a very high dependency on the Chinese market. The Chinese market is around 60-65% for the whole division.
When you look that the Chinese market went down by around about 20-25% in our segment, you see that the plus 5.4% in order intake is a quite good result. We have taken action and measures during the year 2024, where we then also expanded with Chemtech more to the Americas and to the Middle East in carbon capture area and other areas. This helped us a lot by the end of this year to compensate this and also land with Chemtech on a plus 5.4% order intake number. When we talk about order intake, I think this is also very interesting for you to reflect this today. I told you the 5.4%, this is also impacted by China, but nevertheless a positive growth. When you look for Chemtech the last three years, you see 2024, 5.4%.
The year before, they had an order intake growth of 10.5% and the year before of 22.5%. So, please also see this year a bit in relation what would have happened if we wouldn't have seen the slowdown in these Chinese markets. When we come to sales, you see on the sales side, double digit again, now 10.9%. The year before, we were 15.5% on the sales growth. And on the sales growth, it's really the third year in a row where Chemtech grows double digit. So, it's not only the second, it's the third year. They grew 10.9% in 2024, 15.5% the year before, and 14.8% the year before, the last year. So, the third year double digit in sales. But now you see what I addressed before, the profitability increase. Look at Chemtech. Chemtech has the highest profitability increase with 180 basis points between all our divisions.
And Chemtech has done a lot when it comes to supply chain management. They have bundled their, say, operations in Asia to optimize procurement. They have also done excellence in their factories. And they also benefit a bit from a mixed impact. What do I mean with mixed impact? I mean they have more turnaround services and upstream applications, which has normally a higher margin than the downstream business. And therefore, by this mixed change, they also achieved higher gross margins and then in the end, a much higher profitability. , based on this, what I explained to you, I think it's more or less the logic, the outcome that we have reached new highs when it comes to EBIT and net income. You see our EBIT is increasing by almost 22% and the net income 20%, why a bit less?
Because we have, when you calculate net income, tax expenses, and as already addressed also by Suzanne Thoma, when you have more profits, you pay higher taxes, and we had also profits in countries like in the U.S., where you pay higher taxes than here in Switzerland, and therefore, the tax expenses, they have basically eaten up a bit more from the net income than in the past years. Cash flow. Cash flow, let me first read the headline, the second part. For me, it is in line with expectations. When I stood here one year ago, I gave you around 250, 270, what I have expected one year ago. So, when we go into this, and maybe you will ask yourself, what is this box here on top, why we have done this? Let me shortly explain to you.
We achieved CHF 235 million free cash flow, which is recorded under IFRS but unfortunately, we had a big down payment from a customer in the Middle East in our agent's bank account, and we were not able on the 31st of December, talking to the customer in the afternoon so that we get this money transferred to our bank account. So, it was a question in the end of two or three hours, and this is why I allow to tell you that actually we would have had a CHF 30 million higher free cash flow if this money would have arrived. Under IFRS, it's clear we cannot show this, but just that you know why I'm explaining this to you. When we talk about why is the free cash flow a bit lower than last year, there are in my eyes three main reasons for this.
The first one, you see it, it's CapEx. So, we always said we are investing in our excellence and growth initiatives, and this costs money. And the money is refinanced from the running results. So, this means we had 2024, a higher CapEx of around about CHF 28 million. And this higher CapEx for excellence and growth had to be refinanced out of our cash flow, of our operating cash flow. And therefore, the free cash flow is alone by this CHF 30 million on a like-for-like comparison lower than the cash flow last year where we had lower CapEx investments. Then, because of the increase which we have in our EBIT and in our profits, we have round about CHF 30 million more payments for taxes.
In 2024, when you compare to 2023, you have alone two positions, round about CHF 60 million, CHF 30 million for taxes, CHF 30 million for CapEx, which you haven't had in 2023. And this alone has an impact of CHF 60 million. What we additionally had is an impact on our net working capital. And when you look at net working capital, I ask you first to really reflect why net working capital is higher. There are mainly two reasons. One, already addressed by Suzanne Thoma, and I explain a bit in more detail, our accounts receivable. And the other one is our much higher backlog. When we had last year, basically 2023 year end, we had a backlog of round about CHF 1.9 billion, CHF 1.9 billion. 2024 year end, we had a backlog of CHF 2.3 billion. So, we have a CHF 350 million higher backlog than the year before.
Because of this, yes, you need a bit more inventory. Yes, you need a bit more WIP. You need a bit more on the net working capital side. I think this is understood by all of you. What happened, talking now about accounts receivable, because you see it in our balance sheet, you see that when we talk about accounts receivable, we have around CHF 680 million accounts receivable in total. And out of these CHF 680 million receivables, and I have here the number, 490, so almost 500 million are receivables which are not yet due. What happened when we had really a good run on the sales side in Q4? We basically made a lot of sales. This gave us also the upside on the sales side. Unfortunately, all these invoices, they are paid in January, February, March of this year.
But since we have the higher accounts receivable, and accounts receivable is part of the net working capital, the net working capital increased because of these not yet due receivables. That's it basically to the free cash flow. Let me come to our balance sheet. Balance sheet, our net debt EBITDA ratio, you see it has improved and is further down to 1.0. There are two reasons. Our EBITDA has increased. This is the first one by 20%. Just that you have the numbers in mind. It's increased from 440 round about to 503. So, this is 65 million more. So, we have a higher EBITDA. And on the other hand side, our net debt has decreased. And you see that our net debt has decreased when you see the net debt 2023 and 2024 by 28 or round about 30 million.
Then it's logical that then also the net debt EBITDA ratio has become a better one with it down to 1.0. Our net, sorry, our gross debt or our debt when you see here has not changed because we have refinanced last year a bond on the Swiss capital markets. And therefore you see our debt is more or less the same. The first bullet point I want to address now in the end, here also you see our debt levels remain the same. I explained to you bond refinanced, so nothing done here. But we have an increase in our CapEx. We have an increase of CHF 30 million plus alone for excellence and growth. And in total, I think almost CHF 40 million more, which we have invested in P&E, in property, plant, and equipment.
Now coming to the dividend and the reflection of the good results over the last years, you see especially when you look at the performance over the last three years that the curve is really getting a bit more, say, stiffer than it was before. And this allows us now to suggest then for the General Assembly a dividend increase by 50 Rappen. And not maybe as some of you have expected by only 25. With the 50 Rappen dividend increase, we have in our calculation, which is based on our dividend policy, and our dividend policy says dividend payment should be between 40% and 70% of core net income. So with this dividend proposal of CHF 4.25 or 50 Rappen more, you see here, and this is the last bullet point, we are close to the lower limit of our dividend payout ratio with 46.7%.
With this, I would like to give back to Suzanne Thoma. I hope that you have seen that our numbers really have sustainably improved over the last two years. And with this, I hand back to you, Suzanne Thoma.
Thank you very much, Thomas. Always nice to see these figures like evolving the way they do. Now let's take a little bit deeper look into what is really happening in the company that is then reflected in the development of our figures. What are the industries that we are serving? I spoke about the essential industries. What does it mean, the essential industries? You can summarize it with the energy industry, both security of supply in energy and energy transition. Of course, this market is structurally growing. We need more energy. We need more energy because population is growing and because people want to live better.
Natural resources speak about water sustainability: more water, cleaner water, better water around the globe and also natural resources like green minerals with the digitalization that is going on worldwide, we need more of it, but we also need it better because we need to reduce the environmental impact on our planet and then the process industries, the chemical industry, fundamental to prosperity and to well-being. What are the big process industries? They are ammonia, they are plastics, they are steel and cement and these industries are also at the root of about 15%-20% of the worldwide CO2 production so very important to provide and at the same time to make it cleaner so why are we so sure that our industries are growing, well, because we look at what is the world, what is happening in the world.
But we're not the only one who says that our industries are growing. You see here from 2024, from Standard & Poor's prognosis going till 2035 about investments in the key industries in which Sulzer is active: water, chemicals, metals, and of course energy and power. Now these industries are not exploding. They are growing step by step and structurally, which is also very good for a company like Sulzer because we can grow along with them. And keep that chart in mind. Our strategy, our strategy is in a way a very simple strategy. It doesn't mean that the implementation is simple. But we do predominantly two things. We grow organically in our markets and we have tailwinds from our market because they are growing as well.
At the same time, we are looking inwards and making ourselves better, more efficient, reducing complexity and increasing the quality of what we are doing every day. Our vision for Sulzer is that we are very strong, a top industrial company, industrial and engineering company. We definitely are not there yet, but we are on the way to do that. Organic growth and operational excellence along the value chain is of course linked with each other. These are not two separate elements. If we are really good in, for example, commercial excellence, the way we set our prices and how we deal with our customers, it supports our growth. Our growth helps us, of course, to become even more efficient in our operations. It has been very good to communicate the strategy to our people around the world. They can identify with it.
Everyone that is our goal knows how he or she can contribute to these goals. What is it doing? What is it that we do in these industries? We help our customers to produce more with less, to increase their quality and to reduce their emissions. You remember some of our industries are these heavy emission industries. We need them for our well-being around the world, but still we also need to reduce the emissions, the CO2 footprint. We are also working very strongly on improving our customer-facing functions. Now we are an engineering company. We're an industry company. So sometimes these customers for us are a little bit difficult. What do they want? We have to change our mindset and become very customer-centric is the word that is often used, putting the customer at the center of what we are doing.
And not only in the business, but also in our group functions. Which leads me to an important point. Thomas has been working heavily on that is to make our overhead functions just better, more efficient, increase the quality and reduce the time and money that we need for these functions. I also would like to mention here that Thomas has also said something in the context of Chemtech regarding a supply chain. It's not only in Chemtech that we have greatly improved a supply chain. We have also improved it in the other divisions and also in the function. And if you look at our results, you see that we had to invest quite a bit in excellence. But all the additional costs that we have had, cost, not investment, all the additional costs that we have had in 2024 were overcompensated by the savings that we could achieve.
So we do not have to stand in front of you and say we went into a full operational excellence exercise and that is why our result is not so good. On the contrary, we ran it in a way that it could immediately improve, not immediately, but could within the year already make a major contribution. I also would like to mention IT here. We have a very complex IT system grown over the years and the decades. This is also something we are working on just to make it leaner and to make it better so it serves both our customers better, but also our colleagues around the globe. Thomas had quickly mentioned this is a small slide. Just we are not only saving and we are not only investing for operational excellence.
We are also investing in expanding our business, not in the large production capacity because we still definitely have enough, but in the quality of our business with three very small acquisitions, two in the service area, one in the water area, then we have expanded service centers and test centers that we already have, and we have invested in three innovation and test centers that I would like to show you here. I like these pictures. It shows you a little bit what our world is. We have an innovation and technology hub in Singapore. What are we doing there? We are piloting for our customers their processes. For example, for the recycling of battery electrolytes, we ran a big pilot test to give the customer exactly the right process parameters and also the right equipment for their specific need.
And it's important to do that as close as possible to the customer. We also have a test center in Allschwil. Then we expanded the test center in Mexico. Selling pumps means selling good pump parameters. And to have testing close to the customer reduces our lead time and makes us more reliable, at least in the perception of a customer, because it's much easier for the customer to fly to Mexico to see our test center than to go, for example, to the U.K. And the third one that is an investment in Europe, in the heart of the chemical industry of Europe. What we are doing there is for the maintenance of the existing infrastructure of our customers. We have a rapid response center. So if a column is not working, we can go and provide a new one as fast as possible or repair one.
I like this picture because you see the dimensions of what we are doing. That is a column internals and you see the people behind it. These are really huge, huge installations. I would like to give you a little bit more of a flavor, not very long, don't worry, about what it is that we are doing. I'm speaking about making the process industry better and more efficient and reducing our planet's ecological footprint. One example is an order that we received from the Middle East for bioplastic plants, a plant producing plastics out of natural raw material. It is supposed to become the biggest bio-based plastic, the biggest bioplastic installation in the Middle East. It runs with our technology, our licenses, and it runs with our installation. It will have a future. It is in two steps.
With the second step together, it will have a capacity of 160,000 tons per year. This, of course, is a drawing with artificial intelligence, but this is how it will look. Typical way of doing more and better. Another important business that was not such a huge business, but it leads the way in what is going to happen slowly, probably over the years. That is not only to capture CO2, but also to use CO2, particularly the C out of the CO2. Our customer in Japan is running not a pilot plant. It's bigger than that. It's a demonstration plant. Our customer came to Sulzer for our carbon capture technology. We could design, engineer exactly the right configuration for them and improve the capacity by 20%, which also means improving the energy efficiency of this very energy-intensive process by 20%.
You have to capture the CO2 and then you have to regain it. You capture it with a solvent, then it's in the solvent, then you have to get it out of the solvent. That is quite a process, and speaking about solvent, it's of course very important that the solvent stays in the cycle and doesn't go out into the environment, and Sulzer Technology is very good in containing the solvents. This is a very innovative company and they want to do large-scale polyurethane. That's one of the big chemicals that we use in every all of us, whether we know it or not, are using polyurethane and they want to start with the C out of the CO2. Another interesting project that we have had and that is now running, it has to do with making infrastructure better in the area of energy.
That is our customer in Indonesia. Of course, Indonesia can do a lot of geothermal energy. That is due to the geological situation like in Iceland, and it is our responsibility to keep their how many plants? There are 93 customer units running, and these 93 customer units, they represent about 330 megawatts. That is pretty much the performance of Mühleberg to give you a little feeling for the size. We were particularly proud because we already had a three-year contract with them and now they extended it for five years. The last example that I would like to mention again, we go back to the chemical industry. Here we are speaking about a plant that is producing ammonia, very important chemical, use it for fertilizers, but for many other things. Now we are not in the chemical process here, but we're doing something else that is very important.
We are providing the water. We're of course pumping the water. It is salt water, so it's very abrasive. These pumps have to run for a very long time, have to have very high quality, and we combine it with another offer of Sulzer, and that is to clean this water, so it can be used in the plant as clean process water. This is a very good example of making, let me call it heavy-duty industry that we all need to make it better and to make it cleaner, so key messages, very slowly. We serve markets which are essential. All of us have to do with these markets, but this is true for most people around the world, and these markets are growing because they are structurally growing. Our value proposition is that we make very critical customer processes and infrastructure. We make it better.
We extend the lifetime of critical infrastructure. We reduce the energy consumption. We reduce the emissions. So we balance both the need for more with the need for better. And that is a growing market. When we look inside, we are now in the phase of a very rigorous implementation, both of growth and of Sulzer Excellence. Sulzer Excellence and Sulzer growth, it's actually the same. It is very much linked. And when I say rigorous implementation, I give you an example. In the Sulzer Excellence part, we track 400 initiatives. 400 initiatives, we track them every month. Because we are now in the phase of the doing and not of the planning. And that is always the moment where it becomes difficult in the transformation process because things change and they weren't that bad before. So 400 initiatives, you can say it's less or more.
I say we track 400. That's why I speak of 400, and we track them on completion, on cost, on everything. That's very important right now. All of these things lead to a step change in profitability. We are very happy that we can report a higher profitability in spite of the additional costs that we have had in 2024 to start with Sulzer Excellence. And we see how Sulzer is evolving step by step as quite a resilient company, also because we are very global, we're very strong in three regions, and we are generating cash that can be used for our shareholders, but also to invest in the improvement of the quality of our company, so now the outlook. Outlook, ladies and gentlemen, end of February 2025, with everything that is going on in the world right now, is quite a challenge. You will understand that.
It is also quite a challenge when we speak about order intake. Thomas spoke about it. We are moving into larger projects, CHF 100 million projects, CHF 150 million projects. And depending on when we get this order, the comparisons with previous year can be distorted. They can be distorted in a positive way or a negative way. So let's say we get a big order from the Middle East in December or in January, will impact our order intake result for 2025. And it's even worse if we compare quarterly. So we are somewhat cautious here as we were last year, same time. And we say we have an order intake between 2% and 5%. That would mean we are more or less growing with our markets. Sales will be up, of course, between 5% and 8% is right now our prediction for 2025. Strong.
The key issue for us, of course, is execution on the high backlog that we have, and the EBITDA margin, we will from now on only report EBITDA when it comes to profitability, will be above 15%. We see that our measures of Sulzer Excellence are really gaining ground, and as it stands today, we will have less expenses, less cost for implementation of the Sulzer Excellence measures than we had in 2024, so I come to the conclusion of my presentation. What do we want to do with Sulzer? We want to make a very good company. Sulzer has always been a good company. We want to make it a great company. Now we are not Americans, so we don't speak that much about great. We say a top industrial company and one that is really creating value, value for the shareholder. That is our job.
It comes through creating value for our customers, and it implies also to create values for value for our employees. Thank you very much. We are now ready to answer some questions. There seems to be the first one already, and then the second one. We first take the questions from the people in the room and then afterwards outside.
Alessandro Foletti, Octavian AG, thank you for taking my questions. I have two financial and one strategic, if I may. Can I go back in the pipeline? Can you start with the strategic? Then I don't have to write it down. It's maybe a bit of a side note, more curiosity for me, but you are very strong in desalination, and that's not a very ecological process, if you ask me. It's actually a big ecological disgrace.
But when I see what you are doing, particularly with the CO2, for example, sorry, carbon capture, separation from the solvents, and those are the other projects I mentioned in this ammonia thing. That's exactly separating salt from water. Isn't there a huge business potential there to solve that problem? I know it would be costly, but they put billions of tons of brine into the ocean, changing the climate, changing the salinization of the ocean, killing the corals and the fish. It's really terrible.
I don't see it like that at all. It depends what you do with the salt after you gained it. Number one, with desalination, it depends where the energy comes from. It is, of course, very energy intensive. And then it depends what you do with the salt. You don't necessarily have to put it back into the ocean.
But that's what they do in the Middle East. That may be, but that will improve over time. The Middle East is quite moving now towards being much more ecologically oriented. When we speak about Sulzer, just to correct the misperception, we are not very strong in desalination. Actually, I think we have had hardly any turnover in 2024 from desalination. There are more specialized companies who do that and companies that go into the very large projects, which is not. So it's not a business for you, in other words.
It is a little bit, but it's definitely. We sold nothing in 2024 in desalination.
Okay. Good.
Then on the guidance for the order intake, you mentioned. I understand what you just said about visibility and so on, but you mentioned during your presentation, Thomas, that you don't see a slowdown in service and you don't see a slowdown in pumps.
. Yes. And then 2%-5% is below what has been the last two years. So you must see the slowdown somewhere else.
Let me answer the question in the following way. When you look back two years and to last year, we always started the year because of the nature of the project business with this lower guidance in H1. And we also don't want to change this this year because it's really difficult for us to predict in February for the full year 2025.
So let's see how this develops in the first couple of months this year and then where we stand by mid of the year. And then let's see what we have to do with the guidance of order intake. But I don't want or we don't want to come into a situation where we promise something when then whatever the market changes or we hear some political situation, whatever. And this is not the way we want to do it. We want to really stand for what we give you on guidance and also then hold to the guidance.
Okay. And then the second question is on the profitability. Now you moved to EBITDA. So I understand it's up your guidance. You will take 80-100 basis points maybe.
Yes.
Is it going to be the same on the EBIT level or is there something that will be captured then between the two lines? What do you mean with captured between the two lines, well, is it EBIT also going up?
Yes, it's not in the same amount because you know the difference is amortization and depreciation in between, and we have a bit of higher CapEx investments because we invest in our excellence, so over time, the depreciation will slightly increase and therefore you have a bit of a difference between the EBIT and the EBITDA, but it's a minimal difference. It's not big, and just to follow up on this one, do I understand correctly that the main driver here would be the service division this year? For the EBITDA growth?
For the profitability improvement?
No, no.
This is not how I would like to have this be understood. We have three divisions. As Suzanne Thoma said rightly, in all three divisions, we have enormous potential to improve our profitability. As Suzanne Thoma said, we do not only do procurement excellence in Chemtech. I just addressed it because they have the highest profitability increase. We do it all over the place in all three divisions. I would not say that most of it is coming out of Services. I just gave the Services division president for this year, say, a higher margin increase than the other two divisions. Overall, the profitability increase will come from all three divisions also in the future.
Excuse me. Saying it a little bit differently and also the division president is sitting here. Services has some catching up to do. They were very busy growing.
Now they have some catching up to do with the profitability. No pressure, Tim Schulten. We have here, and then somebody has to keep the sequence.
Christian Arnold from ODDO BHF. Two or three questions from my side as well. On the growth CapEx, I mean, you have mentioned that you are investing in services, but it looks like that you don't have to invest in production capacities in the other two divisions. Is that correct? And when would you have to invest, actually? If your sales are some 20%-30% higher, how much free capacity do you still have?
Well, it depends when you look at it. We have started with what one calls value stream mapping. I'll give you an example of our plant in Pune where we just did that. Just by systematically going through the production processes, we found, depending on how you calculate it, 30% additional capacity.
Now, of course, Ashish, who is sitting back behind you, will criticize me for taking a too low number, but we can go from three shifts to two shifts with the same capacity. So we are at the beginning, at least in that plant of being able to fill it up. It may be a bit less, for example, in Leeds where we do the high energy, the high energy pumps, but we still have, we are really at the point where we can still improve with the capacity. So no further large CapEx? Not for the moment. Also in services, when we do CapEx, these are small CapEx. We are speaking of quite small service centers, but they have to be close to the customer. And that's why we do these investments.
Then, on Chemtech profitability increase, I mean, besides the excellence, you also mentioned the positive product mix effect. I wondered, do we also have a geographic positive mix effect because China was less important and then America, Middle East became more important? And if that moves back to normalized Chinese exposure, would we then see a negative impact on profitability?
No, I wouldn't answer the question like you proposed. We have also in our core business, in the mass transfer business in Chemtech, in China, and also in the rest of the world, we have an additional, say, enormous potential of improving the profitability, say, in our base business.
What happened in 2024? We have seen now the first sales coming out of these Jindan projects and first also from the Balrampur and these PLA projects because we are here leading the technology in this PLA area.
These projects, they have a relatively high margin. This is coming on top to my explanation.
There may be last questions. A little bit of this, , I don't know how to phrase it, but I mean, Sulzer had three fantastic years, so to say. I think you are stronger than ever, and I think the last three to six months, we have seen lots of changes in the executive board. So why are you leaving such a great place to work? I mean, , can you give us here a little bit insight? Thank you.
Well, we are, of course, in the transformation phase. We're also adjusting the strategy, particularly also in Chemtech, and we are also speaking about personal situation, so let me put that way. The second departure is maybe because we had such good two years because that has been seen also in the German industry.
And our colleague who is leaving us by his own decision has a very, very good new job in a German company. I think I'm not allowed to say which one. So that is also a little bit a result of our success. We also have a strong talent pipeline. We have been able to fill both positions with internal candidates.
Thank you. It's Patrick Rafaisz from UBS. Three questions as well. The first would be on the, let's say, more near-term developments, right? You mentioned yourself, 2025 will be about executing the backlog, which really spiked again in the second half, big move up. Does that mean we should also, given the comparables from 2024, expect a more dynamic revenue growth in H1 on the backlog execution and then a bit of a slowdown in the second half, just on a year-on-year comparison? Yes. Simple answer, yes.
Depending on how then our project business develops in the second half of the year because of overtime and POC revenue recognition. But this is in general right, what you say.
Good. And then, Thomas, you also mentioned some larger orders in Chemtech got delayed, but you also said you expect them to be booked in H1. Any chance of giving us a quantification?
So it's difficult to answer. What I can tell you but not for sure with a high probability because we shouldn't celebrate before we have the signature. But you know this Emirates Biotech project on the Chemtech side. We have taken in December only a small portion of this project for a bit pre-engineering. And we expect that we get the contract from Emirates Biotech, say, in May, sometime around the spring, say this way.
And this is then in the same magnitude as you have seen the order intake, for example, for Balrampur. And this is why we started to say with these bigger and larger orders, we get now more and more the swings between the Q1s and Q2s and so on between all the quarters. But this is one which I can address. The other ones, sorry, but I'm not allowed to say this before we have the signature.
, but thanks. That's already helpful. And then the last one on CapEx. I understand what you said, but what does that mean in your absolute spend for 2025? Did we have a peak in 2024? Will that come back a bit or percentage of sales same? What would be your guidance?
For the productivity improvement, we had a peak.
For what we had to invest and also spend in order to get Sulzer Excellence going, we had a peak. Regarding other CapEx for growth, that is difficult to say right now.
And I would add to this, we have round about CHF 100-110 million on CapEx, and you can treat this as a peak also for the future because, as we explained, we had a lot of so-called one-off investments for excellence and growth. And most of these investments we have done in 2024. So let's see how the world goes in the next couple of quarters. But actually, yes, you can see it more or less as a peak around the CHF 100 million CapEx. So you won't see us investing then CHF 150 million or more CapEx. This is what you don't see.
Good. And sorry, I'll sneak in just a quick one on the margin.
If I understood you correctly, services, because of the catch-up, will have to deliver a bit more than the others. But then if I look at the order intake margin, I mean, Chemtech was astonishing, right? Huge change. So why isn't then Chemtech the biggest change in the margin versus prior year in 2025?
Because when you see Chemtech, how they developed over the last two, three years, Chemtech, we have to do the same what we did with services. Yes, we will look for the OpEx, we will look for COGS, we will look for more efficiency and excellence. But we have prepared now for services. This is why I focused on the services side.
Chemtech, they will further improve, but they first have now to really consolidate this, what they have done to really see in the organization what are the next step for excellence, how we are going to do this. And this is the only reason. It's just because we invested a lot in services and now we want to prove that this was worth to invest and you see the, say, biggest profitability increase. I'm not saying that the other two divisions, again, and I repeat it, that they are not improving their profitability because otherwise one percentage point again in profitability increase means a lot also for the others to contribute. It's not good enough if just one division is providing us 1% growth in profitability. Thank you very much. Now we have maybe go here and then here.
, and then also, of course, I need some help with the sequence of who is first. Maybe you can watch out a little bit. Thank you. Please.
Thank you. Ingo-Martin Schachel from UBS as well. Two, on the financial side, you specifically highlighted that your FX impact is less. Is there something you're actively doing to make yourself more resilient?
No. Simple answer is no. The Swiss franc is weakening. And when you basically remember what I said, that we had two years ago round about CHF 250-280 million, this year CHF 120 million. So if you add up the two numbers, we would have been CHF 400 million better in our top line. Just to make you aware of what it means with this, say, appreciation of the Swiss franc over time. But we haven't done anything on the hedging or restructuring of our portfolio.
On the top line, yes.
On the profitability, it is not such a big impact because our hedges and our regional Aufstellung, we are everywhere, more or less in Asia, in the Americas and in Europe. Not equally, but we have also a lot in sales, of course, in Europe.
Thank you. And if I remember correctly, at the capital markets, you said you would likely refinance most of your bond capital stack with maturity in September. Do you expect to refinance this bond as well?
Your answer, yes. Shorter, I cannot answer.
We go back here and then we go here. Yes.
Yannik Ryf from Zürcher Kantonalbank. I have a quick question regarding your free cash flow definition because I'm a bit confused here.
You are not the only one.
Because you said you had a free cash flow of CHF 235 million, but you also think you have roughly CHF 30 million in leasing repayments, in financial leasing repayments?
Not, no.
But when I go back to your capital markets day, you laid out there the CapEx, and I think within those CapEx, you have also included the repayments of leasing, right? But now, when I mean, when I compare it to the free cash flow now, I mean, those are two separate approaches, right?
It is. I can guarantee it's the same number. We haven't changed any definition, but what is true is that every company has a bit of a different definition when it comes to free cash flow.
When it comes to our free cash flow, for example, leasing and the treasury shares, the expenses for the treasury shares, that they are not included in our free cash flow definition. That's it.
But they weren't in spring either.
Yes.
No change.
No change.
But they are not included in spring there.
. No, no, no. Okay.
Adrian Knoblauch, also Zürcher Kantonalbank, but from the bond side. Your Tiwel cash is now roughly two-thirds of the regular cash stack that you have. CHF 410 million, . CHF 410 million, and then you have the CHF 650 million regular cash. And the gap is now CHF 250 million. And I think the, you know, closing the gap, the catch-up is actually accelerating because you're increasing the dividend. So I appreciate that we see certain KPIs like the leverage ratio that you have excluded and adjusted that for the cash pile of Tiwel. .
But what is with all the others? With equity ratio, ROCE, and all these other KPIs that you show, are they also excluding the escrow money that you have for Tiwel?
Yes. What we have done when we show the equity ratio, for example, with the 26%, this is including the Tiwel liability. And the 26% is just showing the equity ratio with our cash, say it this way. If we wouldn't, sorry, with the total cash and the liability, the 26%. If we would basically take the cash and the liability out because it blows up.
What's the liability?
No, we have on the one hand side the liability, on the one hand side the cash.
Right.
And if you take both out, it's like a balance sheet prolongation.
Right.
And then if you would take both out, you would have a result of our equity ratio, if I have it rightly in mind, of 28.6% or 4%. So when you would take out Tiwel, which is prolonging our balance sheet, if you would take it out completely, the equity ratio would be 28.4%. Don't quote me on this. 28.4%, 28.6%, something like this.
Okay. But what you show is not excluding it.
Yes.
Right. Okay. Then the question is also, has there been any discussion internally that maybe share buybacks is rivaling your increase of the dividend because you're creating, you're missing the problem?
No, because share buyback is not an option for us because, you know, of our shareholder. And if we would do a share buyback, we would automatically increase his stake.
And therefore, a share buyback is not possible for us in our situation with our excess liquidity.
Okay. And can you give any indication what is here the end game with this overall cash pile?
No, we cannot clarify yet. We execute on Sulzer Strategy 2028 as fast and as well as we can.
Okay.
And then maybe one day we will, I shouldn't even say that. We are now doing what we said we're doing, and that is the plan.
Okay.
Good morning, Arben Hasanaj from Vontobel. I would have three questions. First, on market share. So I think you've developed more dynamically than many of your peers. So maybe looking at the last two years, where would you say that you've gained the most market share? Which segments, which applications that you are in?
Number one, we are in very large markets.
To really have a meaningful comparison, you have to be in, you have to speak about segments. So where we have definitely gained market share is in what we call high energy pump, in the pumps that we engineer in detail and then produce. We have also, we have in a way increased market share in all industries. If I look at Chemtech, of course we have lost in China, but that is not because we lost market share. That is because the market went down. And we see that the pipeline of renewable type project is there. And those projects that make it into execution, we get them. So there we have a very, we have a very high market share. We definitely have increased our market share in the service division, particularly in the Turbo Services area.
And then you mentioned before that also portfolio adjustments and portfolio pruning would be an important driver for your margin. So I'm wondering, was this already a driver last year? Will it be this year?
Well, we have worked on the portfolio pruning, particularly in the Flow division there, again, particularly in the energy division. The work has been done mostly in 2024, and we are going to reap some fruit of it in 2025.
And then a more specific question. So around nuclear power plants, , if you could share how big of a business is this today? Do you see it kind of as a growth driver because there's kind of some renaissance going on there, not so much in Europe, but elsewhere? If you could share how you see that market.
, we see the market in general increasing because of the need of more energy and more CO2, less intensive energy. We are in a very small fragment in the nuclear energy, mainly surrounding the pumps for the cooling of the plants. We in Sulzer do not see a big hike there. I mean, we all know about the project EDF in France. Électricité de France, we will participate probably somewhat in it. We see more maintenance work for nuclear plants going on in the United States. We are not active in nuclear power in India, and to the best of my knowledge, also not in China.
Thank you.
, Arben.
Holger Arens from AWP. Maybe follow up on this free cash flow definition. Just to understand right what it means for the equity provider. So you reported 235, I think.
And then we should subtract the leases and the management if share buyback.
Yes, if you have this view, yes. As I said, there are different views on the free cash flow definition. We have had also some calls about this topic. And as explained in comparison also, because you raised the same question related to the free cash flow definition. And I checked it also with some of our peers and others in the market. We have different definitions of cash flow, and they deviate because of these two impacts. That's it. And you can take it out for your calculation as maybe some others do it when they say in other areas when they calculate our equity ratio. This was the question when we said, okay, when you take all the Tiwel things out, equity ratio would be even higher.
In this case, then the real, real cash flow in your definition would be then a bit lower. But the jump for these management share buybacks is quite significant. It goes from 2023 to 2024 up with like CHF 12 million.
So what do you expect then going forward? I mean, the leases is a bit stable.
Yes.
Leases are CHF 19 million. Yes, stable. , . 19 a bit. But for shares, for the management, it goes from 20 and a bit to 30 and a bit. . What should we expect then going forward? Because on the 235, that's a sizable number. . What should we expect going forward?
On the treasury shares, I wouldn't expect a higher increase.
We have around currently 550,000 treasury shares now in our stock being available for the PSP and RSU plans for the board and for the executives for the next three years. We have a regular purchasing program on the market, but I would not expect that this is increasing. It's around this number, what you see for 2024. Okay. So the 30 million. . All right.
Thank you.
And the answer is because we increased our budget. We increased basically the KPIs which have to be achieved. And therefore, we are not getting in the end more and more shares because we are getting higher and it's much more difficult in the future to achieve the targets. And this is why also this remains around at the 30 million level for treasury shares.
We also increased the number of people who can benefit from such programs.
It's quite a few. We want to enlarge that base somewhat.
Yes, thank you for taking my follow-up. Again, two questions. Maybe one start with you again and strategy. I saw this acquisition in Texas on the electromechanical business, and that I thought it is interesting because electrification is booming everywhere. So is it something that you're willing to push, expand more, etc.? So far, it has been a bit of a stiefväterlich-mütterlicher design.
Yes, that is indeed true. We also made an acquisition in Bahrain that is for electromechanical services. So we do see a growth, and we also see a nice margin development. Also, these are relatively small investments. So they are helping us in the resilience of the company. I would not see an explosion of that business going forward.
Right. And more in general on M&A.
Last time, I think we spoke, you mentioned don't expect us to make huge steps, etc. Is this still?
That is still the case. We are perfectly busy in executing on our strategy. We will probably make acquisitions that are adjacent to what we are doing, complementary, but we are not planning and have nothing in the pipeline of a major acquisition for the time being at least, but that's for a long time now.
All right, great. Thanks. And maybe one for you again on the gross margin. . I saw what you have mentioned on the order gross margin. But when I look at the H1, H2, I think in H2, 24, there was a slight decline in the gross margin. Can you explain that and just.
It is because of, say, many of these internal things which we have to do, which cost the one-off costs because we have now a gross margin of, I think, 33.5%. It went up 50 basis points for the year. And on this half-year comparison, really, this you cannot do because you have so many influences where you have then more costs in the execution and where not. And also we have, from the Sulzer Excellence perspective, we have, say, less material, which we have to scrap material and so on. So actually, it should improve, but we also have some special effects coming from all these measures which we are taking. So actually, this number you cannot use for a qualitative and quantitative really comparison of the gross margin development because we have too many impacts. Right.
So should I expect that like in 2025, 2026, then it starts to trend up? Maybe not reach the 35%, but.
It trends up for sure, yes. On a year-by-year basis, yes. But don't do this on a half-yearly basis with the half-year report. It makes no sense.
35% is quite high, also historically speaking. I mean, it's good, right? But I wonder if it can be reached at some point, like for a full year in the P&L, 35%.
We're working on it. That's all I can say. Are there any other questions in the room? If not, then we ask if there are any questions from our side.
Yes, I have three questions, all from Fabian Haecki from Jefferies that haven't been answered already. So the first one of Mr.
Haecki, can you please provide more information on the specific measures to drive margin growth in 2025 in Flow and Chemtech?
Yes, I can start with that. You may have something to add. We are moving from cost-plus pricing to value-based pricing and see that we can improve our prices, not everywhere. And of course, there's also pushback, but the general tendency is there. Secondly, of course, in the margin that we are speaking, order intake, we also have a cost element. And since we are working very systematically on improving the operational excellence in the plants, having less quality, less cost of poor quality, all these small elements that add up quite significantly. So it is now a question of good commercial excellence and of systematic implementation of operations improvements.
Nothing to add from my side. Absolutely.
How are costs expected to move?
I don't understand the question.
Probably for Flow and Chemtech as well.
When I answer as a CFO, there's only one answer possible. The costs can only move down. Yes.
If you look at what we are doing, we have had very good cost development in the OpEx area. Our target is not in the OpEx area, in the production-related costs, COGS. Thank you. In the COGS. And there is definitely some room of improvement in the OpEx area. That is something that we are tackling now, which we tackled less in 2024. We also tackled it less because it is a bit more difficult to do it. It takes projects that are a bit longer. And then, of course, you have to make sure you are saving smartly and not stupidly. What do I mean with that? I'm speaking, for example, about the sales force.
We should rather increase our sales force than decrease it, but we definitely can also improve the quality of the sales force and that cost you find in the OpEx.
So, and lastly, which end markets look most favorable for 2025 and which ones do you see under pressure?
Should I start?
Ja, fang du mal an, dann kann ich nachfragen. So, most favorable, I still Turbo Servicess across the world, the gas and steam turbine business. Here, when you see how long it takes to get a new gas or steam turbine, we have still waiting times for three plus years. So, I don't see that this market is really impacted in the near-term future. So again, steam and gas turbines, I see really a good and most favorable market for 2025.
When we look then also on the energy side, I still see a lot of orders possibly coming in our pipeline on the energy side. There's a huge demand for more energy. And then when you ask me where do I see markets under pressure, I'm still not certain about China, what will happen in China. This is why we have started, especially with Chemtech, to see where they can compensate the downturn in China with other markets in the Middle East and in the Americas. Overall, I think from our portfolio, we are not so impacted by China when we look at our portfolio because we are very well allocated across the globe. But this is what I would see as the most critical market.
I would like to add one point, which we don't know exactly what's going to happen in 2025, and that is pertaining to our renewables, carbon capture, for example, sustainable aviation fuels, biopolymer. , we have these large orders already and we are working on others. So what we do see right now in our dialogue with customers is these projects are still alive and kicking. They are still happening. We also know that there is some pushback when it comes to green, maybe not around the globe, but some important countries. But we see no thinning out of the pipeline. But what all these projects have, most of them is you do need some regulation that support it, or you need customers who really want to be more environmentally conscious, or you need subsidies. And if this continues, our green business is going to develop extraordinarily well.
If it doesn't come, then we see a good growth trajectory, but not in that sense an explosion. Any other questions? , bitte. Online now. Of course, people in the room can always ask another question. Please.
Thank you. Since there was quite a big swing in net working capital, what do you expect going forward? Is this going to reverse or is?
I expect that this is going to reverse and our net working capital is coming down to the level where we were one year ago. However, what you have to reflect is we are a very traditional industrial company and we are growing now for two plus years, double digit in sales.
So it's not so simple to make a statement that we have to easily then reduce net working capital because, as I told you, we are sitting on a backlog of CHF 2.3 billion and we are growing double-digit. Yes, the target is clearly that next year when we stand here, that our net working capital in relation to sales is back, say, to the 20-something level and not as it is now, 22, but nothing more I can here say.
Thank you. Any more questions? Marlene? No questions? Okay. Questions from online? , questions from online, please. No more. Okay, thank you very much. Any in the room? So if I don't overlook anybody, then that brings us to the end of our meeting. Thank you again very much for taking the time and for letting us present our company.
We're very proud of what we did in 2024 and 2023, but we are even more enthusiastic about the future. Thank you very much.
Thank you.