July 8, 2019 / 5:06 AM / 3 months ago

RPT-EXCLUSIVE-Sulzer CEO expects to raise forecast on strong customer inquiries

(Repeats story from Friday with no changes)

* Company benefiting from favourable oil and gas prices

* CEO targeting more acquisitions, perhaps bigger deals

* CEO distances himself from speculation over ABB job

By John Revill

ZURICH, July 8 (Reuters) - Sulzer has seen no slowdown in customer inquiries and could raise its full-year sales forecast despite gloomy industrial data and an ongoing trade war, the Swiss pump maker’s chief executive Greg Poux-Guillaume told Reuters.

Winterthur-based Sulzer, which also makes devices used by doctors and dentists to apply liquids and lotions, said in February it expected to increase orders by 2-5% and sales by 3-5% this year.

But after orders rose 8.4% in the first quarter, it could lift its forecast when it reports half-year figures on July 24.

“We have probably been a bit conservative because we acknowledge that the world is currently a complicated place,” Poux-Guillaume said. “On the basis of the first quarter it is more likely than not we will raise our guidance.”

Sulzer’s optimism contrasts with faltering factory output in Europe and concerns that U.S.-Chinese tensions will hurt economic growth.

Sulzer, whose products are also used in the water industry and paper and chemical processing, has seen growth in all businesses except for the power business where it sells pumps and maintenance services to customers such as General Electric and Siemens for generating electricity.

Oil and gas prices are at levels where customers feel confident about investing years ahead, the executive said.

“We function in countries where we see signs of a slowdown around us. But as it relates to Sulzer, it is not apparent in our leading indicators,” the 49-year-old Frenchman said.

“Customer inquiries, non-binding offers, things which happen before an order is booked — when we look at these, we don’t see signs of a slowdown,” Poux-Guillaume added.

Sulzer was temporarily shut out of the U.S. market last year after its majority owner, Russian oligarch Viktor Vekselberg, appeared on a U.S. sanctions list.

The company responded by buying some of Vekselberg’s shares to take his stake below 50%, later selling them for a profit.

“It didn’t have a knock-on effect on how the company is perceived by customer and suppliers,” Poux-Guillaume said, adding the U.S. business was growing faster than Sulzer overall.

ADD-ON ACQUISITIONS

The former GE and Alstom executive, who has led Sulzer since 2015, is focusing on growth, including acquisitions that could be larger than before.

“We will grow the business organically, and will also target add-on acquisitions. Sulzer has been growing organically by 8% over the last 18 months, and with acquisitions it’s another 4 percentage points.

“We have a very strong balance sheet....so essentially we have a bit of firepower to make acquisitions,” he said, adding that Sulzer could spend up to 1.5 billion Swiss francs ($1.5 billion) on deals.

It would look at large acquisitions in the pumps and applicators business and smaller deals in chemicals and maintenance services.

Poux-Guillaume appeared to rule out moving to run Swiss engineering company ABB, a move that has been the subject of speculation in Swiss media reports.

“It’s flattering (to be mentioned). But people have vivid imaginations. I love what we are doing at Sulzer and I’m very excited to continue for the years to come,” he said. ($1 = 0.9928 Swiss francs) (Reporting by John Revill; Editing by Michael Shields, Susan Fenton and Alexander Smith)

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