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Sulzer AG (CH:SUN)
:SUN
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Sulzer AG
(SUN)
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Rating:65Neutral
Price Target:
CHF183.00
▲(14.37% Upside)
Action:DowngradedDate:03/01/26
The score is driven primarily by improving profitability and a generally positive outlook for 2026 margin expansion, tempered by choppy cash generation and still-meaningful leverage. Technicals are mixed (longer-term uptrend but short-term weakness), while valuation is reasonable with a moderate dividend yield. Earnings call risks (Chemtech downturn, FX headwinds, and project timing uncertainty) cap the upside to the overall score.
Positive Factors
Consistent Revenue Growth
Sustained ~7.6% top-line growth indicates enduring demand for engineered products and services across divisions. Over 2-6 months this supports greater scale, recurring service revenue, and funding for R&D and capex, strengthening competitive positioning and long-term earnings power.
Strong Profitability & Margins
Healthy gross and operating margins reflect pricing power and efficient production in specialized pump, separation and coating businesses. Margin durability underpins reinvestment, service economics and returns, enabling sustainable cash generation and resilience versus commoditized competitors.
Robust Cash Generation
Improving free cash flow and strong cash conversion from profits provide internal funding for growth, maintenance capex and service expansion. This reduces reliance on external financing, supports dividend/capex plans, and gives flexibility for strategic investments over multiple quarters.
Negative Factors
Moderate Leverage
Debt near parity with equity increases interest and refinancing exposure; in cyclical downturns higher leverage can constrain free cash flow and strategic flexibility. Maintaining or reducing leverage will be important to preserve ability to invest and absorb shocks over the medium term.
Low Equity Ratio
A relatively low equity base means a larger portion of assets is debt-financed, reducing the balance-sheet buffer against adverse shocks. This structural funding mix can limit capacity for large inorganic investment or require dilutive/equity actions to materially expand the business safely.
Cyclically Exposed End Markets
Concentration in capital-intensive and commodity-linked sectors creates structural demand variability tied to energy and industrial cycles. Over 2-6 months this can produce volatile order flows, margin pressure and uneven service demand, requiring conservative planning and diversified backlog to smooth earnings.
Sulzer AG (SUN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF5.41B
Dividend Yield2.9%
Average Volume (3M)40.88K
Price to Earnings (P/E)17.0
Beta (1Y)1.03
Revenue Growth5.79%
EPS Growth13.20%
CountryCH
Employees13,455
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)3.90
Shares Outstanding34,262,367
10 Day Avg. Volume37,888
30 Day Avg. Volume40,882
Financial Highlights & Ratios
PEG Ratio1.38
Price to Book (P/B)3.85
Price to Sales (P/S)1.40
P/FCF Ratio23.35
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
CHF181.21Price Target Upside13.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)10
Revenue Forecast (FY)CHF3.65B
Sulzer AG Business Overview & Revenue Model
Company DescriptionSulzer Ltd provides fluid engineering services. The company operates through Flow Equipment, Services, Chemtech, and Others segments. It offers side-mounted horizontal and top-mounted vertical agitators, dynamic chemical mixers, and tower and tank flow management products; tower management systems; turbo compressors, aeration systems, and mechanical aerators; cartridges, mixers, dispensers, and accessories; process solutions, which include the initial concept and pilot testing; medium consistency products; pumping solutions and auxiliary equipment; and control and monitoring equipment. The company also provides lifting stations; pump and lifting station accessories; products for distillation, absorption, stripping, evaporation, phase separation, liquid-liquid extraction, and crystallization; static and submersible mixers; solids reduction, separation, and removal systems; and screening, sedimentation, and filtration solutions. In addition, its services include rotating equipment services; static equipment services, welding, plant maintenance, and turnaround project services. Further, the company digital solution, which includes control and monitoring software solutions that include a range of software primarily designed to simplify set-up and maintenance for web-based alarm handling and monitoring software; sense condition monitoring solutions, which detects possible equipment failures early on and optimizes maintenance planning.; PumpsOnline services that allow access to equipment-related information; BLUE BOX, a collaborative digital solution; and DOC BOX, which allows users to systematically identify the root cause of a problem. It serves oil and gas; chemical; general industry; water; power; adhesive, dental, and healthcare; and beauty markets. The company operates in Switzerland, the United Kingdom, Saudi Arabia, Germany, Spain, Sweden, the Americas, and the Asia Pacific. Sulzer Ltd was founded in 1834 and is headquartered in Winterthur, Switzerland.
How the Company Makes MoneySulzer AG generates revenue through multiple key streams, primarily from the sale of its engineered products and services, which include pumps, mixing and separation technologies, and surface coatings. The company earns money by providing equipment for industrial applications, along with maintenance and service contracts that ensure ongoing revenue from existing clients. Significant partnerships with major players in sectors like oil and gas, power generation, and chemical processing contribute to its earnings, as these collaborations often lead to long-term contracts and projects. Additionally, Sulzer invests in research and development to innovate and improve its offerings, allowing it to stay competitive and meet evolving customer demands, thus driving further revenue growth.
Sulzer AG Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 24, 2026
Earnings Call Sentiment Positive
The call presents a predominantly positive operational and financial picture: record profitability, margin expansion, EPS growth, strong performance in Flow and Services, improved capital metrics, and an increased dividend. However, meaningful headwinds remain — notably a sharp Chemtech revenue decline, substantial FX losses, delayed large projects shifting into 2026 (creating H1/H2 timing risk), and Chemtech-driven cash flow weakness. Management expects continued execution of operational excellence and a stronger H2, but near-term visibility is limited.Q4-2025 Updates
Positive Updates
Record Profitability and EBITDA
Reported record EBITDA of CHF 556 million (would be close to ~CHF 600 million excluding CHF 40 million negative FX impact). EBITDA margin reached ~15.6%, and management guided further margin expansion to ~16.5% in 2026.
Sales and Order Growth (Adjusted)
Sales grew ~5.6% year-over-year and order intake reported ~2.1% growth. Book-to-bill remained positive at 1.06, indicating order intake above sales and ongoing growth momentum.
Strong Earnings Per Share and ROCE Improvement
Earnings per share increased by 19%. Return on capital employed improved by 140 basis points, reflecting better capital efficiency and profitable operations.
Flow Division Outperformance
Flow sales rose 12.3% with EBITDA margin up by ~160 basis points to 13.3%. Energy BU sales grew >20% and Water delivered double-digit growth. Q4 Flow performance showed an 18% year-over-year uplift.
Services (Aftermarket) Strength and Resilience
Aftermarket/Services now represent ~62% of turnover and have grown double-digit for three consecutive years. Services EBITDA improved by ~150 basis points; geographic and capacity investments (Argentina service center, Bahrain acquisition, expanded US turbomachinery center) were made to capture demand.
Strong Capital Structure and Liquidity
Cash and cash equivalents (Sulzer-only) at CHF 640 million; net debt CHF 555 million with net debt/EBITDA ~1.0x (stable). Market capitalization rose substantially since 2023 (TSR ~121% vs SPI 33%).
Shareholder Returns and Dividend Increase
Proposed dividend increase of CHF 0.50 to CHF 4.75 per share (payout ratio ~50%, within 40–70% policy). Dividend growth materially higher over recent years (~up ~40% cumulatively in the period noted).
Operational Improvements and Strategic Investments
Accelerated Sulzer Excellence program, investments in sales force and commercial excellence, supply chain upgrades, improved on-time delivery, quality and safety, launch of Global Water Treatment Center of Excellence, and creation of four shared business hubs (Mexico, Madrid, Pune, Suzhou).
Negative Updates
Chemtech Weakness and Sales Decline
Chemtech sales fell sharply (management cited a 13.6% sales decline) and EBITDA margin fell by ~2 percentage points. Market overcapacity (notably refining in China) and weak chemical-industry sentiment constrained results.
Large Project Delays and Pipeline Timing Risk
Geopolitical volatility and customer hesitancy led to many large-scale projects being delayed—management noted ~80% of large projects expected in 2025 moved into 2026—creating a muted H1 2026 outlook and concentration risk in H2.
Foreign Exchange Headwinds
Strong Swiss franc created a ~CHF 190 million negative FX impact on reported order intake and sales and ~CHF 40 million negative FX effect on EBITDA; EBIT would have been ~CHF 36 million higher excluding FX headwinds.
Free Cash Flow Shortfall and Chemtech Cash Drag
Free cash flow came in ~CHF 22 million lower than prior expectations; Chemtech contributed no free cash flow in 2025 due to one-offs and restructuring. Higher tax payments (~CHF 10 million) and lower interest income (~CHF 7 million) also weighed on cash flow.
Restructuring Costs and Workforce Reductions
Chemtech restructuring included centralization and cost cuts, with more than 200 manufacturing roles dismissed in China, reflecting execution costs and near-term disruptions.
Visibility and Geopolitical Uncertainty
Management emphasized low near-term visibility due to geopolitical risks (e.g., regional tensions) and therefore provided conservative guidance (order intake 1–5%, sales 2–5%), excluding some large pipeline projects.
Company Guidance
Sulzer guided 2026 order intake growth of 1–5%, sales growth of 2–5% and an improved EBITDA margin of about 16.5%, flagging a muted H1 and stronger H2 (noting a Q1 order-intake base of roughly CHF 1.0bn and ~80% of large 2025 projects shifted into 2026); the guidance is conservative despite a healthy book-to-bill of 1.06 and a growing pipeline, and it explicitly factors FX headwinds (≈CHF 190m negative on orders/sales and ≈CHF 40m on EBITDA). This outlook builds on 2025’s results (record EBITDA CHF 556m — ~15.6% margin, which would have been ~CHF 600m ex-FX — EPS +19% y/y, ROCE +140bp, Q4 order intake +12% y/y), expects continued strength from Services (aftermarket ~62% of turnover) and Flow (sales +12.3%, Flow EBITDA 13.3%, energy >20% sales growth), anticipates Chemtech to improve in 2026 but not fully recover to 2024 levels, and sits alongside a proposed dividend of CHF 4.75 (+CHF 0.50) with a ~50% payout ratio; liquidity and leverage remain robust (cash ≈CHF 640m, net debt ≈CHF 555m, net debt/EBITDA ~1.0x).Sulzer AG Financial Statement Overview
Summary
Fundamentals are improving with expanding gross/EBIT/EBITDA margins since 2022 and net margins improving to ~7–8%, but the balance sheet still carries meaningful leverage (debt-to-equity ~0.95–1.05 recently) and cash flow is uneven with volatile/negative FCF growth in 2024–2025 and only moderate operating cash flow coverage versus debt. Data irregularities (abnormal 2021 profitability and 2025 revenue growth inconsistency) also reduce trend clarity.Income Statement
Sulzer shows a clear profitability recovery and improving operating efficiency since 2022. Annual revenue grew steadily from 2022–2024, while gross, EBIT, and EBITDA margins expanded each year, and net margin improved to ~7–8% in 2023–2025. The main weakness is the 2025 revenue growth rate shown as sharply negative despite revenue being slightly higher than 2024, suggesting either a data inconsistency or a one-off reporting effect; additionally, 2021 net income and margin are unusually high versus other years, which makes the multi-year earnings trend less clean and reduces comparability.72
Positive
Balance Sheet
Leverage remains meaningful, with debt roughly in line with equity in the last three years (debt-to-equity around ~0.95–1.05) after being higher in 2020–2022 (peaking ~1.43 in 2022). Returns on equity improved strongly in 2023–2025 (low-20% range), indicating better profitability on the capital base. Offsetting this, the company is still not lightly levered for an industrial business, and the very elevated 2021 return on equity appears abnormal versus the rest of the series, which adds some quality-of-earnings uncertainty.64
Positive
Cash Flow
Cash generation is positive, with free cash flow positive each year and generally covering a meaningful portion of net income (roughly ~0.41–0.82 across the period). However, free cash flow growth is volatile and negative in 2024–2025, and operating cash flow is relatively small versus the debt balance (low-teens coverage in 2023–2025, and notably weaker in 2022). Overall, cash flow supports profitability, but the trend is choppy and debt service capacity looks only moderate based on operating cash flow.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.56B | 3.53B | 3.28B | 3.18B | 3.16B |
| Gross Profit | 1.22B | 1.18B | 1.08B | 939.60M | 946.90M |
| EBITDA | 563.40M | 503.00M | 440.00M | 250.10M | 355.40M |
| Net Income | 292.80M | 261.90M | 229.10M | 28.60M | 1.42B |
Balance Sheet | |||||
| Total Assets | 4.62B | 4.71B | 4.37B | 4.70B | 5.08B |
| Cash, Cash Equivalents and Short-Term Investments | 927.40M | 1.06B | 977.00M | 1.21B | 1.53B |
| Total Debt | 1.28B | 1.16B | 1.15B | 1.47B | 1.63B |
| Total Liabilities | 3.32B | 3.48B | 3.27B | 3.67B | 3.80B |
| Stockholders Equity | 1.29B | 1.22B | 1.10B | 1.02B | 1.27B |
Cash Flow | |||||
| Free Cash Flow | 213.00M | 231.40M | 296.60M | 49.50M | 230.30M |
| Operating Cash Flow | 303.00M | 323.80M | 362.20M | 119.30M | 316.40M |
| Investing Cash Flow | -101.00M | -98.20M | -104.80M | -87.80M | 414.50M |
| Financing Cash Flow | -290.10M | -151.60M | -448.60M | -286.30M | -365.20M |
Sulzer AG Technical Analysis
Negative
160.00
Price Trends
168.27
Negative
153.66
Positive
149.86
Positive
Market Momentum
-2.51
Positive
42.80
Neutral
65.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:SUN, the sentiment is Negative. The current price of 160 is below the 20-day moving average (MA) of 165.68, below the 50-day MA of 168.27, and above the 200-day MA of 149.86, indicating a neutral trend. The MACD of -2.51 indicates Positive momentum. The RSI at 42.80 is Neutral, neither overbought nor oversold. The STOCH value of 65.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CH:SUN.
Sulzer AG Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | CHF1.96B | 54.72 | ― | 2.17% | 11.43% | 6.46% | |
73 Outperform | CHF3.48B | 15.87 | ― | 2.99% | -11.64% | -24.17% | |
65 Neutral | CHF5.41B | 16.99 | 24.15% | 2.90% | 5.79% | 13.20% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | CHF1.25B | 33.61 | ― | 1.46% | -3.67% | -12.95% | |
54 Neutral | CHF1.22B | -55.43 | ― | 6.26% | -17.75% | 83.94% | |
49 Neutral | CHF3.27B | 42.66 | ― | 2.53% | -24.42% | 32.48% |
* Industrials Sector Average
CH:SUN
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.