As head of the board of directors and management, Thoma puts the strategy to the test. The Ukraine crisis is forcing Sulzer to act – but that doesn’t mean abandoning business with the oil and gas industry.
Suzanne Thoma has transformed the energy supplier BKW and is to repeat this at Sulzer.
The Sulzer industrial group is surprisingly realigning itself, both in terms of personnel and content. Suzanne Thoma, President of the Board of Directors, will take over the management of the company in a dual mandate, as Sulzer announced on Monday. Thoma will embark on a major overhaul of the pump and equipment manufacturer’s strategy for using liquids. In order to get the change underway safely, the Board of Directors is placing both management functions in her hands.
After eight months, the CEO has to go again
In return, company boss Frédéric Lalanne is leaving the company at the end of October. He took over the post of CEO in February – ironically, because he should harmonize well with Thoma. Thoma himself had only assumed the chairmanship of the board of directors in April. Having been in office for around six months, she is now initiating a transformation. “We want to ask ourselves the question: What is the Sulzer?” Thoma explained in an interview with the NZZ.
The new strategy should provide answers. Participation in topics such as resource and energy efficiency, decarbonization, the circular economy and biodegradable plastics is considered key. Although these trends are not brand new, according to Thoma, they have become particularly urgent as a result of the Ukraine conflict. Sulzer sees the danger of falling behind the competition. According to Thoma, many companies have become more dynamic and mobilized as a result of the crisis.
“When the Ukraine war broke out, it became clear that if we could deal with Sulzer’s strategy now, we could accelerate the company’s growth,” she says. However, this does not mean that Sulzer wants to say goodbye to a traditional mainstay: the manufacture and maintenance of pumps for the oil and gas industry. According to Thoma, this area will become even more important, similar to the mining industry.
Criticism of the Medmix spin-off
On the one hand, the pumps for these industries must also become more efficient. On the other hand, Sulzer sees an opportunity in offering other things to such industries in order to become more sustainable and greener. This includes, for example, the capture and storage of CO2. “But to be able to do that, you have to be part of these industries,” says Thoma. A sale of the oil and gas segment is out of the question.
In 2021, Sulzer spun off Medmix, a maker of precision liquid handling equipment. The same thing happened to other good, new business segments, says Thoma – and sees it critically. “The question arises as to whether this is the right path or whether the aim should not be to further develop the company in a more integrated way, as a whole.” She is sober about the fact that Sulzer was forced to stop its activities in Russia because of the war in Ukraine. “The Russian business corresponded to almost 3 percent of sales, you shouldn’t overestimate that.”
The Russian business is gone, but the problem remains
bet. There is no shortage of crises, but Sulzer is still doing well: In the first half of the year, the company closed slightly above expectations and had a record high order backlog of 1.7 billion francs. Sales increased slightly to CHF 1.5 billion. However, the operating profit at EBIT level resulted in a loss of CHF 26 million. This was due to the withdrawal from Russia and the associated depreciation of almost 133 million francs.
Sulzer got rid of its Russian business, but not its Russian “problem”: Major shareholder Viktor Vekselberg, a Russian magnate, is subject to sanctions. The risk of the company being sanctioned is weighing on its share price, similar to Medmix. Poland has already imposed sanctions on both companies. While Vekselberg cannot exercise its voting rights, it cannot sell its frozen stake either.
Suzanne Thoma sees her role as decidedly active. Sulzer is already active in many segments that it addresses. In addition to the classic manufacture and maintenance of pumps and separating columns for industrial companies, the portfolio includes technologies for water treatment, for the production of biogas from sewage sludge or for the recycling of textiles. These are good prerequisites for a promising corporate strategy, says Thoma. “But it has to be done. It doesn’t happen by itself, you don’t stumble into it.”
Thomas grabs
Ironically, CEO Frédéric Lalanne should have gotten along well with the hands-on nature of the board president. That was why he was called. Lalanne’s longtime predecessor as CEO, Greg Poux-Guillaume, was considered less suitable. Thomas’ predecessor Peter Loescher had given Poux-Guillaume a lot of freedom. Poux-Guillaume used them and also thought strategically. Thoma, on the other hand, is considered to be analytical and objective, she likes to have a say. This should have been a better fit for Lalanne, who is seen as more willing to compromise and more operationally focused. He had realigned the important Flow Equipment division, which includes the pump business.
“The personal chemistry between us was right. This is not a vote of no confidence,” says Thoma. Lalanne has done a very good operational job in recent months. “The focus of the task is now different from what we saw before,” she emphasizes, with a view to the upcoming transformation. In order to implement a strategy, the board of directors and group management must work very closely together.
Perhaps Lalanne’s willingness to compromise wasn’t great enough in the end. Analysts at US investment bank Stifel wrote that Lalanne would most likely have been less open to a fundamental review of the company’s direction given its longer history at Sulzer. The outgoing CEO was with the group for six years. At least the last of these overlap with Suzanne Thoma, who has been on the Sulzer Board of Directors since 2021. Thoma was the full-time CEO of the Bern-based energy supplier BKW from 2013 to 2022 – and received a lot of praise for its transformation.
No expiry date for the dual mandate
Now Thoma also holds the CEO position at Sulzer and is once again initiating a transformation. How long will she keep the dual mandate? “I don’t have a fixed time horizon,” says Thoma. “I have a horizon of what we must have achieved so that the advantages of a separation between the President of the Board of Directors and the CEO outweigh the disadvantages again.” She wants to keep both posts until the implementation of the new strategy begins.
A new CEO is not yet being sought – because he has to fit the strategy that is still being sought. However, Thoma promises to introduce structures at the next general assembly that will put the concentration of power into perspective. Investors put aside any concerns on Monday and let the Sulzer share price rise by almost 4 percent.
You can refer to Benjamin Triebe, Editor for Business and Business Twitter follow.