Swiss oil services company Sulzer's shares have fallen less than other oil companies because it is more linked to production than exploration, says Simon Rowe, fund manager of the Henderson European Growth Fund (GB0030617699) and former Investors Chronicle journalist.
"The fund does not have any exposure to large oil and gas companies, because for some time I considered the returns on capital being made by the oil majors too low to be investible," says Mr Rowe. "Although they were talking about getting more disciplined, I thought this would not happen quickly or without a shock of the kind we are now seeing. I was also sceptical on most of the mid-cap oil services companies either because of their capital intensity or exposure to volatile exploration.
"But we do have a small holding in Sulzer (SW: SUN). One of the larger businesses within Sulzer makes specialist pumps which are used predominantly in oil production. Sulzer has a dominant share in this global niche. Shares in Sulzer have fallen, although not as far as some other oil services companies, because Sulzer is more diversified and also because it is more linked to production than exploration. Other parts of its business may benefit from greater investment by refineries."
Sulzer specialises in pumping solutions, rotating equipment maintenance and services, as well as separation, reaction and mixing technology. It combines engineering and application expertise, and its key markets as a provider are oil and gas, power and water.
In the oil and gas market, Sulzer's pump systems are used both onshore and offshore, including subsea, for the production and transportation of oil and liquefied natural gas. It also makes process components such as fractionation trays, structured and random packings, liquid and gas distributors, gas liquid separators and internals for separation columns.
The company services mechanical and electromechanical rotating equipment, and offers tray and packing installation, welding services, tower maintenance and plant turnaround projects.
Sulzer is listed on the SIX Swiss Exchange Zurich in Switzerland.
