#1SULZER Bond Investor Presentation Thomas Dittrich | CFO | June 3, 2016 THE SAFE HARBOR STATEMENT UNDER THE US PRIVATE SECURITIES LITIGATION REFORM ACT 1995 SULZER This presentation may contain forward-looking statements, including but not limited to, projections of financial developments, market activities or future performance of products and solutions, containing risks and uncertainties. These forward-looking statements are subject to change based on known or unknown risks and various other factors, which could cause the actual results or performance to differ materially from the statements made herein. Bond Investor Presentation 2#2Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 3 Sulzer is an attractive investment with strong fundamentals SULZER Bond Investor Presentation SULZER STRONG BUSINESS FUNDAMENTALS ■Focusing on leading positions in long-term attractive markets ■ Equipment and services for performance-critical applications ■Diversified business portfolio with high aftermarket share ■ Global footprint with a strong presence in emerging markets ATTRACTIVE GROWTH POTENTIAL ■Self help through Sulzer Full Potential program well under way ■Strong balance sheet allows for bolt-on small- to medium-sized acquisitions Commitment to efficient capital structure and financial discipline 4 Bond Investor Presentation#3SULZER A Leading Equipment and Service Provider Sulzer creates reliable and sustainable solutions for its markets oil and gas, power, water, and the general industry Engineering and application expertise in: SULZER Pumps Equipment Pump technology and solutions 52% Share of order intake 1 501 Order intake (in millions of CHF) 6.996 Employees (FTE) as of Dec 31, 2015 Rotating Equipment Services Service solutions for rotating equipment 24% Share of order intake 698 Order intake (in millions of CHF) 3 538 as of Dec 31, 2015 Employees (FTE) Chemtech Separation technology and services, mixing and dispensing systems 24% Share of order intake 709 Order intake (in millions of CHF) 3 539 Employees (FTE) as of Dec 31, 2015 Bond Investor Presentation O&G exposure mitigated by geographic and aftermarket balance Order intake 2015 split by market 21% 13% 16% SULZER Order intake 2015 split by region Order intake 2015 split by type 18% 45% 49% 51% 50% 37% ■Oil and Gas Power ■Europe, Middle East, Africa Americas ■ Equipment Aftermarket Water Asia-Pacific ■General Industry 6 Bond Investor Presentation#4Performance-critical applications throughout oil and gas value chain Offshore production, FPSO, FLNG Equipment ■ Water injection Services Pipelines Equipment Services ■ Seawater lift ■ Firewater systems ■ Crude off-loading ■ Produced water separation technology Rotating equipment services Equipment Multiphase and Subsea single phase pumps Services Pump services SULZER Oil transport ■ Oil and gas pipeline and boosting services Onshore production Equipment Services ■ Water injection ■ Rotating equipment ■ Water transfer services ■ Firewater ☐ Gas processing, refining, petrochemical Equipment Process pumps for cracking, coking, gas-to-liquids, and coal-to- liquids processes Separation Polymer and process technologies Services ■ Rotating equipment services ■ Turnaround and tower field services 7 Performance-critical applications across power generation segments Coal Nuclear Hydro Distributed power Biomass Waste-to- energy Bond Investor Presentation SULZER Solar Carbon capture and storage Geothermal Combined cycle Solutions for power generation Equipment Services ■ Boiler feed water Cooling water ■ Condensate extraction ■ Molten salt circulation ■ Carbon capture and storage ■ Power recovery (reverse running pumps) Pumps Compressors ■ Turbines ■ Motors and engines ■ Generators ☐ Auxiliary pumps 8 Wind Bond Investor Presentation#5Serving the water cycle with mostly standard applications in wastewater SULZER Municipal water distribution <-PUM Dewatering Municipal water treatment Municipal water intake Wastewater Treatment Industrial water and wastewater Water transport and production Domestic and commercial wastewater collection Solutions for water ■ Submersible pumps ■ Mixers and agitators ■ Aeration systems Compressors Vertical pumps High pressure pumps ■ Control and monitoring Municipal wastewater collection and flood protection Municipal wastewater treatment and storm water retention Key applications ■ Wastewater collection and treatment ■ Clean water abstraction and transport ■ Desalination ■ Mine and construction dewatering Municipal wastewater 9 Leading positions in selected general industry segments Pulp and Paper Health Care Bond Investor Presentation SULZER ■ Market leader Tight customer relationships and references ■ Strong process knowledge and long history ■ Extensive installed base drives aftermarket business ☐ ▪ Leveraged Sulzer capability into health care Unique two-component mixing and dispensing systems Broad product portfolio Co-creating products with users ■ State of the art application center 10 Bond Investor Presentation#6Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook O&G market challenging Upstream SULZER 11 Bond Investor Presentation Oil and Gas SULZER Order intake 2015 vs 2014 (-13%1) 50% Midstream Downstream ~16% -4% ■ Midstream construction slowed notably Activity strongly impacted Significant price pressure Aftermarket impacted by postponements of non-essential work Ol share 2015 1. Adjusted for currency effects 12 " -30% High refinery utilization building opportunity pipeline Postponements of major non- essential maintenance work China challenging Petrochemical stable Bond Investor Presentation#71. O&G CAPEX expectations¹ reduced significantly since early 2015 900 800 Capex USD bn 400 ggŏ 500 600 700 300 200 100 SULZER -20% -30% -30% -6% NI -35% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E Cumulated capex global 300 listed companies (USD bn, Jan 2015) ■Cumulated capex global 300 listed companies (USD bn, Jan 2016) In January 2015, oil and gas capex was expected to decrease by 6% until 2017. In January 2016 expectations foresee cuts of 35%. 1. Bloomberg figures and consensus estimates as of January 20, 2016 13 Bond Investor Presentation O&G upstream CAPEX hit the hardest - Sulzer compares well to market development O&G CAPEX 2015E1 vs 2014 Sulzer 2015 vs 2014 Sulzer PE O&G Equipment Upstream Midstream Refining Integrated sales 0% -10% וווין -20% -30% -40% Sulzer PE+RES O&G Aftermarket sales SULZER Bloomberg figures and consensus estimates as of January 20, 2016 14 Bond Investor Presentation#8SULZER Other Sulzer segments proved resilient Power Water General Industry Order intake 2015 vs 2014 16% 13% 21% ■ Good activity levels in Asia driven by China and India ■ US driven by gas, EMEA overall slow ■ Low O&G activity levels drove increased competition in power ■ Solid municipal water market in US and China ■ Engineered Water: active desalination in Middle East and South East Asia Large water infrastructure projects active globally ■ Overall positive environment particularly in Pulp and Paper and in Healthcare ■ Weaker Metals and Mining, impacting also aftermarket ■ China remained key demand driver for many segments Pricing pressures increased Ol share 2015 Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 15 16 Bond Investor Presentation SULZER Bond Investor Presentation#9Sulzer Full Potential (SFP) program guides our transformation journey SULZER SFP key pillars STRATEGY OPERATING OPERATIONAL MODEL EXCELLENCE ☐ Portfolio Organization Procurement Focus areas Integration Operational excellence ☐ Innovation/R&D G&A ☐ Go-to-Market Service SFP - key characteristics Initiated in late 2014. Sets out to complete Sulzer's transformation into a market-oriented, globally operating and integrated company. Targets to achieve total annual cost savings of CHF 200m in a steady state from 2018 onwards. Mitigates the current market headwinds and closes the profitability gap to top-tier competitors. 17 Bond Investor Presentation Profitability gap to top-tier competitors narrowed by ~200bps1 2014 profitability comparison SULZER Expected 2015 profitability² Company A Company B Company B Company C Company D Company E Company F Company A Company C Company H Company E Company F Company H Company G Company G Sulzer 8.6% -530bps Sulzer 9.4% -730bps Company D Company K Company K Company I Company I Company L Company M Company J 1. Comparison based on opEBITA margin 2. Bloomberg figures and consensus estimates as of January 20, 2016 18 Company L Company M Company J Bond Investor Presentation#10SFP targets cost savings of approx. CHF 200m by 20181 with implementation costs of 1.0–1.2x SULZER (in CHF millions) Targeted cost savings 36 ~160-200. Steady state 2018 going forward -200 Previous range given CHF 120-180m -60-80 ~100-120 ~60-80 2015 2016 2017 2018 Expected implementation -40-60 costs 79.5 -80-90 1. Pre market impact Agenda Introduction to Sulzer Market Update Sulzer Full Potential Key Financials Outlook 19 Bond Investor Presentation 20 20 SULZER Bond Investor Presentation#11FY2015 impacted by headwinds in O&G Key figures SULZER Commentary In CHF millions 2015 20141 Order intake 2'895.8 3'160.8 -8.4% YOY YOY adj.² -3.7% Q4 orders down 22% YOY² Order intake gross margin Order intake gross margin 33.8% 33.5% 0.3pp 0.4pp slightly up on mix effects Order backlog (Dec 31) 1'510.7 1'699.6 -11.1% -4.6% Sales opEBITA 254.1 2'971.0 3'212.1 -7.5% 302.9 -16.1% -3.2% opROSA % 8.6% 9.4% EBIT 120.9 271.0 -55.4% -53.2% ROS % 4.1% 8.4% Core net income 175.0 205.4 -14.8% Core EPS (in CHF) 5.11 5.95 -14.1% Free cash flow 155.8 98.0 FTES (Dec 31) 14'253 15'494 59.0% -8.0% More than half of order backlog decrease driven by FX -11.8% Sales decreased due to headwinds in O&G market, negatively impacting opROSA EBIT decreased mainly due to market headwinds and SFP related costs of CHF 79.5m Free cash flow improved due to lower volumes and collection focus 1. 2. 2014 figures exclude impairment of CHF340m in EBIT Adjusted for currency effects 21 Order intake in Q1 in all markets improved except for O&G (in CHF millions) 828 755 719 Key figures 859 801 784 685 685 627 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 1. Adjusted for currency effects 22 22 Bond Investor Presentation SULZER Commentary ■ Q1 order intake fell by 13.1% YOY¹, but improved 10.2%1 sequentially ■Drivers of Q1 order intake: ■ Power, Water and General Industry moderately increased YOY1 ■ O&G declined substantially YOY, but was flat sequentially, with PE down, RES flat and CT up ■ China grew double digit YOY and sequentially (from a low base) ■FX impact in Q1 CHF -11.2m ■ Acquisition effect in Q1 CHF 9.4m Bond Investor Presentation#12SULZER Sulzer Full Potential partially offset headwinds (in CHF millions) 303 Operational EBITA Headwinds 2pp SFP cost savings ~1.2pp1 38 -28 25 Impact of headwinds in O&G in PE and lower volumes in Chemtech -22 36 254 -22 Translational Higher share of aftermarket in Pumps Equipment Mainly under- absorption impact: 13.1m transactional impact: CHF 8.5m 2014 Actual Volume Margin Mix Other costs FX SFP 2015 Actual opROSA% 9.4% 8.6% A -0.8pp 1. Calculated based on 2015 sales 23 Bond Investor Presentation Free cash flow improved by CHF 58m, resulting in net income to FCF conversion of >100% SULZER (in CHF millions) 50 50 33 33 Free Cash Flow 56 156 -28 ↑ -33 98 Mainly tax payments 75 ↑ Lower sales volumes and reversal of 2014 build-up Cash collection 73 25 Net income Inventories Accounts Accounts 2015 receivable payable Net advance payments Net of D&A Others FCF FCF and Capex 2015 2014 24 Metco contribution to FCF in 2014 Bond Investor Presentation#13Sulzer has one of the strongest balance sheet compared SULZER to peers (after special dividend) (in CHF millions) 1. 2. 1000 800 600 400 200 Net liquidity Net debt / EBITDA versus industry peers 1,2 774 2.0x 1.4x 1.2x 1.2x 1.3x 696 1.0x 0.7x 0.6x 0.2x 0.1x 2011 2012 2013 2014 2015 (0.2x) (1.0x) 761 0 2011 2012 2013 -36 2014 2015 (2.0x) -96 -200 -337 -400 (3.0x) Sulzer 2015 pro-forma excluding special dividend of CHF 500m and regular dividend of CHF 120m paid in April 2016 Net debt / EBITDA Sulzer calculated with opEBITDA Industry peers include: Flowserve, Weir, SPX Flow, Xylem, ITT, Ebara, KSB, Wood Group, Pentair Agenda Introduction to Sulzer Market Outlook Sulzer Full Potential Key Financials Outlook 25 26 (2.0x) ■Sulzer Industry peers Bond Investor Presentation SULZER Bond Investor Presentation#14Market assessment for 2016: O&G continues to be weak, flat to slight growth in other segments SULZER 2016 market assessment Oil & Gas Power Water General Industries 50% 16% 13% 21% ■ Further capex and opex reductions Pricing under pressure ■ Conventional and nuclear growth driven by China and India ■ Low gas price continues to impact energy mix in the US ■ Low O&G increases competition in Power Growth driven by municipal wastewater and clean water Opportunities in large water infrastructure projects globally ■ Positive outlook for pulp and paper and health care ■ Outlook for services flat due to weak metals and mining Uncertainty about China's growth Ol share 2015 Financial guidance 20161 27 Order Intake² down 5-10% Sales2 down 5-10% Operational ROSA³ % around 8% 1. As of February 25, 2016 23 2. 3. Adjusted for currency effects Operational EBITA divided by sales Bond Investor Presentation SULZER 28 Bond Investor Presentation#15SULZER Summary for credit investors ■ Significant market headwinds in 2015 expected to continue in 2016 - rebound will lead to over-proportional margin expansion ■Unleashing Sulzer's Full Potential ■ ☐ SFP accelerated and cost savings target increased from CHF 120-180m to CHF ~200m from 2018 onwards Additional cost savings of CHF ~60-80m expected in 2016 Sulzer narrowed profitability gap versus top tier competitors in 2015 Commitment to financial discipline and investment grade credit profile Confidence in Sulzer's strong free cash flow generation and SFP Keeping sufficient headroom for accretive M&A ■ ☐ Sulzer continues to have a net cash position and one of the strongest balance sheets in its industry (post special dividend; with CHF 500m bond fully refinanced) ■ Highly cash-generating business 29 29 Bond Investor Presentation SULZER Reconciliations and supplementary slides 30 Bond Investor Presentation#161. Swiss franc recovered, but not fully against Euro CHF 8% Others 26% 1.3 1.2 Sulzer FX exposure 1.1 USD 29% 1 0.9 31.12.2013 1.1 BRL 3% GBP 11% CNY 7% EUR 1 16% 0.9 0.8 31.12.2013 31 CHF/EUR 31.03.2014 30.06.2014 30.09.2014 31.12.2014 CHF/USD 31.03.2015 30.06.2015 30.09.2015 31.12.2015 31.03.2014 30.06.2014 30.09.2014 31.12.2014 31.03.2015 EBIT impacted by SFP costs of CHF 80m and legal case of CHF9m Operational EBITA to EBIT (in CHF millions) 254 -42 Д SFP costs of 80m 30.06.2015 30.09.2015 31.12.2015 SULZER Bond Investor Presentation SULZER -41 -13 121 -28 -9 PE 24 RES 10 CT 7 opEBITA 2015 Amortization Restructuring Impairment of assets Other non-operat ional items Legal case 1 EBIT 2015 Following the decision of the arbitral tribunal in a legal case relating to a dispute with the purchaser of the locomotive business (sold in 1998), Sulzer recognized in addition to the existing provision CHF 8.7m in cost of goods sold and CHF 5.2m as interest expenses. 32 Bond Investor Presentation#17Core net income In CHF millions 2015 2014 Net income reported 75.0 278.1 Metco divestiture -435.7 Impairment on tangible and intangible assets 13.0 340.4 Amortization 42.3 43.3 Restructuring expenses 41.2 11.2 Other non-operational items 36.7 -23.0 Tax impact -33.2 -8.9 Core net income 175.0 205.4 Minorities -1.1 -3.1 Core net income to shareholders 173.9 202.3 Average number of shares outstanding (m) 34.036 34.007 Core EPS 5.11 5.95 Dividend development Ordinary dividend per share (Ihs) Special dividend per share (Ihs) Payout ratio of ordinary dividend (rhs)1 Dividend (CHF) 20 15 10 SULZER 33 Bond Investor Presentation Dividend SULZER Payout ratio (%) 100 18.10 69% 14.60 50 5 3.00 3.00 3.20 3.20 3.50 3.50 0 2010 2011 2012 2013 2014 2015 Dividend yield² 2.1% 3.0% 2.2% 2.2% 3.3% 3.7% 1. Based on DPS / reported EPS (core EPS for 2015) 2. Dividend yield ordinary dividend per share / share price on Dec 31. 34 Bond Investor Presentation#18SFP cost savings by lever Cost savings by lever (in CHF millions) ✓ See details on following slides 1 3 SULZER 2 ~200m 2017 PE CT 2018 steady Procurement operational G&A Service Go-to-market operational state excellence excellence ■ Comprehensive program across all functions and divisions ■ Procurement, G&A and Operational Excellence are the main levers ■Short term (2015) impact delivered by procurement and CT Operational Excellence 35 2016 Cost savings 2015 of CHF 36m (vs. 18m expected) Bond Investor Presentation 1 New procurement organization fully staffed and with significant success already in 2015 SULER Objectives Establish new global procurement organization and advanced sourcing processes Clearly defined sourcing strategy by category Establish full spend transparency and strict demand control Reduce direct spend by ~5% across major categories, reduce indirect spend by ~9% SULZER Achievements Savings achieved based on both short-term re- negotiations and reengineered mid-/ long term procurement processes/strategies Direct categories: shift to best cost region for machined castings and motors delivered CHF ~4m savings Indirect categories: logistics, travel and insurance of CHF ~10m combined 36 Bond Investor Presentation#192 Strengthen operational capabilities to compete efficiently in the years to come SULZER Objectives Adjust global footprint to market demand and develop global production strategy Leverage best cost regions to improve cost of components without compromising quality Right-size capacities according to market requirements and increase productivity Reduce overall operating cost by 10% SULZER Achievements Reorganization of PE division into three market-oriented business units Introduction of a dedicated global aftermarket organization PE division: adapted manufacturing footprint and streamlined capacities CT division: adapted operational setup 3 37 Bond Investor Presentation G&A transformation targets cost reduction of >20% Objectives Share resources across divisions for an integrated and more cost- efficient setup Improve service levels internally and through selective outsourcing Decrease complexity: by significant reduction of number of legal entities and locations Rationalize country footprint and create local platforms across divisions SULZER Achievements Harmonized finance processes with strong orientation towards shared service options Successful IT cost improvement (e.g. consolidation of data centers and networks) Simplified organizational setup with reduction of 24 legal entities Shift of resources to best cost regions for all support functions 38 Bond Investor Presentation#20SULZER Notes 39 Bond Investor Presentation SULZER This document may contain forward-looking statements, including, but not limited to, projections of financial developments and future performance of materials and products, containing risks and uncertainties. These statements are subject to change based on known and unknown risks and various other factors that could cause the actual results or performance to differ materially from the statements made herein. Furthermore, the information shown herein has been compiled to the best knowledge of the authors. However, Sulzer Ltd. and its affiliated companies, including all directors, officers and employees cannot assume any responsibility for the quality of the information, and therefore any representations or warranties (expressed or implied) as to the accuracy or completeness of the information is excluded. 40 Bond Investor Presentation