1. Performance

1. Performance

This section explains the results and performance and includes the segment results, which are reported on the same basis as GF's internal management structure. It also provides details of selected income and expense items and shows the earnings per share for the period. 

1.1 Segment information 

1. Performance

This section explains the results and performance and includes the segment results, which are reported on the same basis as GF's internal management structure. It also provides details of selected income and expense items and shows the earnings per share for the period. 

1.1 Segment information 

Sales
in CHF
Sales by region
in CHF
Income statement
in CHF million
Balance sheet
in CHF million
Investments
in CHF
Investments by region
in CHF

Segment information

 

 

GF Piping Systems

 

GF Automotive

 

GF Machining Solutions

 

Total segments

CHF million

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order intake 1

 

1’718

 

1’488

 

1’527

 

1’346

 

1’030

 

917

 

4’275

 

3’751

Orders on hand at year-end 1

 

107

 

73

 

439

 

353

 

227

 

189

 

773

 

615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales 2

 

1’678

 

1’494

 

1’482

 

1’335

 

992

 

916

 

4’152

 

3’745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

579

 

546

 

1’227

 

1’120

 

442

 

419

 

2’248

 

2’085

– Thereof Germany

 

151

 

139

 

749

 

724

 

146

 

134

 

1’046

 

997

– Thereof Switzerland

 

111

 

107

 

3

 

3

 

59

 

51

 

173

 

161

– Thereof Austria

 

23

 

22

 

52

 

51

 

19

 

17

 

94

 

90

– Thereof Rest of Europe

 

294

 

278

 

423

 

342

 

218

 

217

 

935

 

837

Americas

 

363

 

315

 

42

 

38

 

187

 

189

 

592

 

542

Asia

 

553

 

448

 

197

 

169

 

311

 

271

 

1’061

 

888

– Thereof China

 

436

 

326

 

196

 

168

 

186

 

180

 

818

 

674

Rest of world

 

183

 

185

 

16

 

8

 

52

 

37

 

251

 

230

Sales

 

1’678

 

1’494

 

1’482

 

1’335

 

992

 

916

 

4’152

 

3’745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

245

 

214

 

158

 

161

 

96

 

77

 

499

 

452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation on tangible fixed assets

 

–50

 

–49

 

–65

 

–61

 

–12

 

–12

 

–127

 

–122

Amortization on intangible assets

 

–6

 

–3

 

 

 

–2

 

–3

 

–8

 

–6

Operating result (EBIT)

 

189

 

162

 

93

 

100

 

82

 

62

 

364

 

324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets 3

 

1’404

 

1’254

 

1’304

 

1’094

 

758

 

674

 

3’466

 

3’022

– Thereof current assets

 

868

 

759

 

465

 

394

 

560

 

498

 

1’893

 

1’651

– Thereof non-current assets

 

536

 

495

 

839

 

700

 

198

 

176

 

1’573

 

1’371

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

23

 

28

 

44

 

65

 

14

 

11

 

81

 

104

– Thereof Germany

 

3

 

1

 

22

 

26

 

 

 

1

 

25

 

28

– Thereof Switzerland

 

13

 

18

 

 

 

11

 

8

 

24

 

26

– Thereof Austria

 

5

 

5

 

22

 

39

 

 

 

 

 

27

 

44

– Thereof Rest of Europe

 

2

 

4

 

 

 

 

 

3

 

2

 

5

 

6

Americas

 

11

 

10

 

48

 

13

 

1

 

1

 

60

 

24

Asia

 

14

 

7

 

11

 

11

 

2

 

3

 

27

 

21

– Thereof China

 

10

 

7

 

11

 

11

 

1

 

1

 

22

 

19

Rest of world

 

4

 

6

 

 

 

 

 

 

 

 

 

4

 

6

Investments

 

52

 

51

 

103

 

89

 

17

 

15

 

172

 

155

– Thereof capital expenditures

 

50

 

49

 

102

 

88

 

16

 

13

 

168

 

150

– Thereof investments in intangible assets

 

2

 

2

 

1

 

1

 

1

 

2

 

4

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

759

 

712

 

910

 

766

 

502

 

435

 

2’171

 

1’913

– Thereof current liabilities

 

443

 

378

 

459

 

380

 

305

 

258

 

1’207

 

1’016

– Thereof non-current liabilities

 

316

 

334

 

451

 

386

 

197

 

177

 

964

 

897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

43

 

38

 

19

 

18

 

50

 

48

 

112

 

104

1 Order intake and orders on hand at year-end were not in scope of the audit by the statutory auditor.

2 Sales between other divisions are not material.

3 The amount of investments in associates accounted for by the equity method is not material.

Reconciliation to the segment information

CHF million

 

2017

 

2016

 

 

 

 

 

Sales

 

 

 

 

Sales of reportable segments

 

4’152

 

3’745

Elimination of intercompany sales

 

–2

 

–1

Consolidated sales

 

4’150

 

3’744

 

 

 

 

 

Operating result (EBIT)

 

 

 

 

Total EBIT for reportable segments

 

364

 

324

Total EBIT Corporate Center and Corporate Services

 

–12

 

–13

Consolidated operating result (EBIT)

 

352

 

311

 

 

 

 

 

Interest income

 

2

 

2

Interest expense

 

–28

 

–30

Other financial result

 

–5

 

–3

Ordinary result

 

321

 

280

 

 

 

 

 

Non-operating result

 

1

 

1

Extraordinary result

 

 

Profit before taxes

 

322

 

281

 

 

 

 

 

Income taxes

 

–64

 

–56

Net profit

 

258

 

225

 

 

 

 

 

Assets

 

 

 

 

Assets of reportable segments

 

3’466

 

3’022

Elimination of intercompany positions

 

–454

 

–359

Other assets

 

 

 

 

– Current assets (mainly cash and cash equivalents)

 

413

 

394

– Non-current assets

 

186

 

145

Other unallocated amounts

 

–1

 

Consolidated assets

 

3’610

 

3’202

 

 

 

 

 

Investments

 

 

 

 

Investments of reportable segments

 

172

 

155

Other investments

 

 

 

 

– Germany

 

4

 

26

– Switzerland

 

35

 

3

Investments of Corporation

 

211

 

184

 

 

 

 

 

Liabilities

 

 

 

 

Liabilities of reportable segments

 

2’171

 

1’913

Elimination of intercompany positions

 

–666

 

–637

Other liabilities

 

 

 

 

– Current liabilities

 

227

 

57

– Non-current liabilities

 

481

 

638

Other unallocated amounts

 

28

 

31

Consolidated liabilities

 

2’241

 

2’002

Geographical information

 

 

Non-current assets

Sales

CHF million

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

Total

 

1’333

 

1’178

 

4’150

 

3’744

 

 

 

 

 

 

 

 

 

Europe

 

924

 

831

 

2’247

 

2’084

– Thereof Germany

 

364

 

340

 

1’046

 

997

– Thereof Switzerland

 

274

 

244

 

173

 

161

– Thereof Austria

 

229

 

207

 

93

 

90

– Thereof Rest of Europe

 

57

 

40

 

935

 

836

Americas

 

152

 

91

 

592

 

542

Asia

 

219

 

212

 

1’060

 

888

– Thereof China

 

207

 

202

 

817

 

674

Rest of world

 

38

 

44

 

251

 

230

Information about major customers

There are no single customers whose sales amount to 10% or more of the sales of the Corporation.

Accounting principles

In accordance with the management structure and the reporting to the Executive Committee and the Board of Directors, the reportable segments are the three operating divisions of GF Piping Systems, GF Automotive, and GF Machining Solutions.

GF Piping Systems is a leading supplier of piping systems made of plastics and metal. The division focuses on system solutions, high-quality components for the safe transport of water, chemicals, and gas, as well as corresponding services.

GF Automotive is a technologically pioneering development partner and manufacturer of lightweight casting solutions and systems made of aluminum, magnesium, and iron for the global automotive industry as well as for industrial applications.

GF Machining Solutions is one of the world’s leading providers of complete solutions to the tool and mold making industry and to manufacturers of precision components. The portfolio includes milling, wire cutting and EDM machines as well as spindle systems, laser texturing, additive manufacturing, as well as automation and digitalization solutions.

Business units within these segments have been aggregated as a single reportable segment because they manufacture similar products with comparable production processes and supply them to similar customer groups using similar distribution methods. Segment accounting is prepared up to the level of operating result (EBIT) as this is the key figure used for management purposes. All operating assets and liabilities that are directly attributable or can be allocated on a reasonable basis to the segments are reported in the corresponding divisions. No distinction is made between the accounting policies of the segment reporting and those of the consolidated financial statements.

1.2 Sales and other operating income

1.2 Sales and other operating income

1.2.1 Products, services and most important revenue sources

 

 

Sales

CHF million

 

2017

 

2016

 

 

 

 

 

GF Piping Systems

 

1’678

 

1’494

 

 

 

 

 

Utility 1

 

667

 

561

Industry 2

 

578

 

540

Building technology 3

 

433

 

393

 

 

 

 

 

GF Automotive

 

1’482

 

1’335

 

 

 

 

 

Passenger cars

 

948

 

877

Trucks

 

450

 

393

Industrial applications

 

84

 

65

 

 

 

 

 

GF Machining Solutions

 

992

 

916

 

 

 

 

 

Milling

 

318

 

292

EDM (Electric Discharge Machining)

 

293

 

276

Customer service

 

269

 

253

Automation/Tooling/Laser

 

112

 

95

1 Products for the supply of gas and water.

2 Products for the treatment and transport of water and other media for industrial applications.

3 Products for the supply of water und floor-heating systems in buildings.

Accounting principles

Billings for goods and services are recognized as sales when they are delivered or when the principal risks and benefits incidental to ownership are transferred.

An assessment as to whether the principal risks and opportunities were transferred for a particular delivery is made separately for each sales transaction on the basis of the contractual agreement underlying the transaction. The transfer of legal ownership alone does not necessarily result in the transfer of the principal risks and opportunities. This is the case, for instance, if:

  • the recipient of the delivery makes a claim against insufficient quality of the delivered item that exceeds a normal warranty claim
  • the receipt of the proceeds depends on the resale of the goods by the buyer
  • the installation of the goods at the recipient is an essential part of the contract
  • the buyer has the right to return the item for a contractually specified reason and the likelihood of such a return cannot be assessed with any certainty

Services rendered are booked as sales depending on the degree of their completion if the result of the service can be reliably assessed.

Sales are stated before value-added tax, sales tax, and after the deduction of discounts and credits. Appropriate warranty provisions are recognized for anticipated claims.

1.2.2 Other operating income

CHF million

 

2017

 

2016

 

 

 

 

 

Sales of material, waste, and scrap

 

11

 

7

Income from insurance contracts

 

7

 

14

Income from services

 

7

 

9

Gains on disposals of property, plant, and equipment

 

2

 

1

Foreign exchange gains/losses

 

 

–2

Other operating income

 

16

 

16

Total

 

43

 

45

1.3 Expenses

1.3 Expenses

1.3.1 Operating expenses

CHF million

 

2017

 

2016

 

 

 

 

 

External services 1

 

170

 

162

Selling costs, commissions

 

123

 

125

Repair, maintenance

 

108

 

101

Advertisements, communication

 

98

 

93

External energy supply

 

95

 

93

Rent, leases

 

50

 

46

Other expenses 2

 

56

 

54

Total

 

700

 

674

1 External services include e.g. temporary employees, IT costs, R&D, insurance costs as well as consulting services.

2 Other expenses include compensation to the members of the Board of Directors of CHF 3.1 million.

1.3.2 Personnel expenses

CHF million

 

2017

 

2016

 

 

 

 

 

Salaries and wages

 

853

 

793

Employee benefits

 

24

 

27

Social security

 

171

 

158

Total

 

1’048

 

978

In accordance with a plan defined by the Board of Directors, Georg Fischer registered shares are granted to members of the Executive Committee and members of the Senior Management as a long-term financial incentive. Taking into account the registered shares granted to members who left the firm during the year under review, the expenses related to the long-term incentive plan recognized in the personnel expenses amount to CHF 9.7 million.

1.4 Income taxes

1.4 Income taxes

 

 

 

 

 

 

2017

 

 

 

 

 

2016

CHF million

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax rate reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxes

 

322

 

 

 

 

 

281

 

 

 

 

Expected income tax rate in % (rounded)

 

20

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax expense

 

66

 

69

 

–3

 

61

 

65

 

–4

 

 

 

 

 

 

 

 

 

 

 

 

 

Use of unrecognized tax loss carryforwards

 

–7

 

–9

 

2

 

–9

 

–12

 

3

Effect of non-recognition of tax losses in current year

 

1

 

1

 

 

 

1

 

1

 

 

Recognition of previously unrecognized tax loss carryforwards

 

 

 

 

 

 

 

–1

 

 

 

–1

Tax charges and credits related to prior periods, net

 

2

 

1

 

1

 

3

 

3

 

 

Effect of change in tax rates

 

 

 

 

 

 

 

–1

 

–1

 

 

Other effects

 

2

 

5

 

–3

 

2

 

3

 

–1

Effective income tax expense

 

64

 

67

 

–3

 

56

 

59

 

–3

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate in %

 

20

 

 

 

 

 

20

 

 

 

 

Management assumptions and estimates

Current tax liabilities are calculated based on an interpretation of the tax regulations in place in the relevant countries. The adequacy of such an interpretation is assessed by the tax authorities in the course of the final assessment or tax audits. This can result in material changes to tax expense. Furthermore, in order to determine whether tax loss carryforwards may be capitalized, it is first necessary to assess critically the probability that there will be future taxable profits against which to offset them. This assessment depends on a variety of influencing factors and developments. The carrying amounts of current and deferred tax assets and liabilities are disclosed in the consolidated balance sheet.

The difference between the expected income tax expense and the effective income tax expense recorded in the financial statements can be explained as follows:

The expected income tax rate of the Corporation amounts to 20% (previous year: 22%) and corresponds to the weighted average tax rate which is based on the profit/loss before taxes and the income tax rate of each individual Corporate Company. The change of the expected income tax rate is due to the variation in profitability and the change of the tax rate of different Corporate Companies. The expected income tax rate based on the ordinary result also amounts to 20% (previous year: 22%).

The unrecognized tax loss carryforwards in 2017 totalling CHF 159 million (previous year: CHF 185 million) have a potential tax relief effect of CHF 44 million (previous year: CHF 49 million), whereas CHF 135 million (previous year: CHF 146 million) expiry is unlimited. To expire within one year is CHF 2 million only.

As of 31 December 2017, based on the above mentioned estimates, tax loss carryforwards of CHF 18 million (previous year: CHF 20 million) were activated resulting in a deferred tax asset of CHF 4 million (previous year: CHF 5 million). In doing so, the country-specific tax related regulations and opportunities were respected.

The tax implication of the recently enacted US tax reform on the year-end closing 2017 is considered not to be material.

Accounting principles

The recognition of tax loss carryforwards is assessed on an annual basis and is based on current assumptions and estimates of the management. Tax loss carryforwards are recognized only to the extent that, within the next two to three years, sufficient taxable profit is expected to be available to allow the deferred tax asset to be utilized. In countries or Corporate Companies where such utilization is not probable, tax loss carryforwards are not recognized.

Taxes are accrued for all tax obligations, irrespective of their due date. Current income taxes are calculated on the taxable profit. Deferred taxes are calculated by applying the balance sheet liability method for any temporary difference between the carrying amount according to Swiss GAAP FER and the tax basis of assets and liabilities. Tax loss carryforwards are recognized only to the extent that it is probable that future taxable profits or deferred tax liabilities will be available against which they can be offset. The calculation of deferred taxes is based on the country-specific tax rates. Tax assets and liabilities are offset if they concern the same taxable entity and tax authority and if there exists an offset entitlement for current taxes. No deferred tax is provided for temporary differences on investments in subsidiaries where the timing of the reversal of the temporary difference is controlled by the Corporation and it is probable that the temporary difference will not reverse in the foreseeable future.

1.5 Earnings per share

1.5 Earnings per share

 

 

2017

 

2016

 

 

 

 

 

Earnings per share (CHF)

 

62

 

53

Number of shares (Ø)

 

4’091’237

 

4’090’412

There was no dilution of earnings per share in either the year under review or the previous year.

Accounting principles

Earnings per share is calculated by dividing the portion of net profit attributable to Georg Fischer Ltd shareholders by the weighted average number of shares outstanding in the reporting period. Diluted earnings per share takes into account any potential additional shares that may result, for instance, from exercised options or conversion rights.