April 19, 2018 / 6:43 AM / a year ago

UPDATE 1-Sulzer confirms 2018 outlook despite hit from sanctions impact

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VIENNA, April 19 (Reuters) - Swiss pump maker Sulzer confirmed its 2018 outlook on Thursday, saying it expected a one-off hit of around 10 million Swiss francs ($10.3 million) from business disruption when its main Russian shareholder was slapped with U.S. sanctions.

“Sulzer does not expect any longer-term impact to its businesses,” it said while confirming 2018 guidance for order intake growth of 5 to 7 percent, sales growth of 4 to 6 percent, and an operational EBITA margin of around 9.5 percent.

First-quarter orders rose 18.6 percent on a currency-adjusted basis and by 12.8 percent organically, it said.

Its shares were indicated 3.1 percent higher in pre-market activity.

“Order intake was stronger than expected, driven by a higher number of larger orders in Pumps Equipment and Chemtech than in the same period a year ago,” it said.

Order intake from its core oil and gas sector business rose 27 percent from the year-earlier period.

Orders increased across all regions and were particularly strong in Asia-Pacific, followed by the Americas and the Europe, Middle East, and Africa (EMEA) regions.

Sulzer bought back 5 million shares from Russian oligarch Viktor Vekselberg’s Renova investment vehicle, dropping his stake below half and freeing the company from U.S. sanctions that had briefly frozen its dollar accounts and prompted big Swiss banks to halt trading its securities.

Sulzer said it paid 109.13 francs each for the shares it repurchased, or 546 million francs in all.

“Sulzer books the proceeds of the share purchase as a non-interest-bearing payable not due for 180 days. The transaction also foresees a full price adjustment mechanism without time limit. Should Sulzer sell the shares for a lower price, it will be fully compensated,” it said.

$1 = 0.9684 Swiss francs Reporting by Michael Shields

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