UPDATE: Sulzer CEO Sees Pump Business Weak Until Early 2011
October 14 2010 - 4:58AM
Dow Jones News
Swiss engineering company Sulzer AG (SUN.EB) doesn't expect its
late-cycle business, which includes its main pump division, to
recover before early next year, chief executive Ton Buechner said
Thursday.
Still, he was cautiously optimistic about orders intake for the
group as a whole.
"As a company I expect our order intake to be slightly better
than last year, in single digit percentage points," Buechner told
Dow Jones Newswires in an interview.
He said early cycle business--which includes metal coatings and
chemical technology--had seen an earlier recovery, but was now
leveling off.
But he doesn't expect an improvement in new orders in late cycle
business--which involves Sulzer pumps--until the beginning of next
year.
New pump orders were down 4.6% to CHF1.22 billion from CHF1.28
in the first nine months of 2010.
"Before our customers build refineries and power plants, they
want a bit of visibility themselves and at the moment they are a
bit unsure themselves of the economic recovery," said Buechner.
Sulzer's competitiveness wasn't affected by the strength of the
Swiss franc, but the company would be significantly affected when
profits are translated into francs from US dollars and euros.
It faces a "double whammy" because around 60% of its business is
in both currencies, Buechner said.
"In the fourth quarter the low dollar will have a significant
effect," Buechner said. "In the year to date it has had a
noticeable, but not huge effect."
Sulzer has around CHF1 billion for acquisitions in the next
year. Buechner wouldn't reveal targets but said it was continuing
to look at companies around the world and for all of its
divisions.
The firm is particularly looking at emerging markets, but is
finding it hard to find companies who want to sell.
The integration of U.K. repair and maintenance company Dowding
and Mills, which was bought in June, is going well and is adding to
Sulzer's sales.
"The first common projects are coming out of this acquisition
and lots of exciting ones in the system," said Buechner.
For the rest of the year, Sulzer expects sales of around CHF100
million from Dowding and Mills.
-By John Revill, Dow Jones Newswires; +41 43 443 8047;
john.revill@dowjones.com