1. Performance

1. Performance

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

1.1 Segment information 

1. Performance

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

1.1 Segment information 

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

Segment information

 

 

GF Piping Systems

 

GF Casting Solutions

 

GF Machining Solutions

 

Total segments

CHF million

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order intake 1

 

1’865

 

1’718

 

1’617

 

1’527

 

1’042

 

1’030

 

4’524

 

4’275

Orders on hand at year-end 1

 

134

 

107

 

289

 

439

 

200

 

227

 

623

 

773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales 2

 

1’821

 

1’678

 

1’687

 

1’482

 

1’066

 

992

 

4’574

 

4’152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

631

 

579

 

1’380

 

1’227

 

484

 

442

 

2’495

 

2’248

– Thereof Germany

 

165

 

151

 

792

 

749

 

160

 

146

 

1’117

 

1’046

– Thereof Switzerland

 

110

 

111

 

25

 

3

 

70

 

59

 

205

 

173

– Thereof Austria

 

26

 

23

 

59

 

52

 

15

 

19

 

100

 

94

– Thereof Rest of Europe

 

330

 

294

 

504

 

423

 

239

 

218

 

1’073

 

935

Americas

 

427

 

363

 

61

 

42

 

214

 

187

 

702

 

592

Asia

 

590

 

553

 

226

 

197

 

315

 

311

 

1’131

 

1’061

– Thereof China

 

457

 

436

 

216

 

196

 

142

 

186

 

815

 

818

Rest of world

 

173

 

183

 

20

 

16

 

53

 

52

 

246

 

251

Sales

 

1’821

 

1’678

 

1’687

 

1’482

 

1’066

 

992

 

4’574

 

4’152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

269

 

245

 

160

 

158

 

102

 

96

 

531

 

499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation on tangible fixed assets

 

–50

 

–50

 

–73

 

–65

 

–12

 

–12

 

–135

 

–127

Amortization on intangible assets

 

–2

 

–6

 

–1

 

 

–2

 

–2

 

–5

 

–8

Operating result (EBIT)

 

217

 

189

 

86

 

93

 

88

 

82

 

391

 

364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets 3

 

1’417

 

1’404

 

1’023

 

1’304

 

763

 

758

 

3’203

 

3’466

– Thereof current assets

 

865

 

868

 

417

 

465

 

552

 

560

 

1’834

 

1’893

– Thereof non-current assets

 

552

 

536

 

606

 

839

 

211

 

198

 

1’369

 

1’573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

35

 

23

 

51

 

44

 

19

 

14

 

105

 

81

– Thereof Germany

 

2

 

3

 

16

 

22

 

1

 

 

 

19

 

25

– Thereof Switzerland

 

24

 

13

 

3

 

 

16

 

11

 

43

 

24

– Thereof Austria

 

4

 

5

 

25

 

22

 

 

 

 

 

29

 

27

– Thereof Rest of Europe

 

5

 

2

 

7

 

 

 

2

 

3

 

14

 

5

Americas

 

15

 

11

 

35

 

48

 

2

 

1

 

52

 

60

Asia

 

14

 

14

 

7

 

11

 

11

 

2

 

32

 

27

– Thereof China

 

12

 

10

 

7

 

11

 

10

 

1

 

29

 

22

Rest of world

 

4

 

4

 

 

 

 

 

 

 

 

 

4

 

4

Investments

 

68

 

52

 

93

 

103

 

32

 

17

 

193

 

172

– Thereof capital expenditures

 

65

 

50

 

92

 

102

 

26

 

16

 

183

 

168

– Thereof investments in intangible assets

 

3

 

2

 

1

 

1

 

6

 

1

 

10

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

754

 

759

 

647

 

910

 

498

 

502

 

1’899

 

2’171

– Thereof current liabilities

 

439

 

443

 

288

 

459

 

313

 

305

 

1’040

 

1’207

– Thereof non-current liabilities

 

315

 

316

 

359

 

451

 

185

 

197

 

859

 

964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

47

 

43

 

22

 

19

 

58

 

50

 

127

 

112

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

 

2018

 

2017

 

 

 

 

 

Sales

 

 

 

 

Sales of reportable segments

 

4’574

 

4’152

Elimination of intercompany sales

 

–2

 

–2

Consolidated sales

 

4’572

 

4’150

 

 

 

 

 

Operating result (EBIT)

 

 

 

 

Total EBIT for reportable segments

 

391

 

364

Total EBIT Corporate Center and Corporate Services

 

–9

 

–12

Consolidated operating result (EBIT)

 

382

 

352

 

 

 

 

 

Interest income

 

2

 

2

Interest expense

 

–31

 

–28

Other financial result

 

–6

 

–5

Ordinary result

 

347

 

321

 

 

 

 

 

Non-operating result

 

1

 

1

Extraordinary result

 

 

 

Profit before taxes

 

348

 

322

 

 

 

 

 

Income taxes

 

–69

 

–64

Net profit

 

279

 

258

 

 

 

 

 

Assets

 

 

 

 

Assets of reportable segments

 

3’203

 

3’466

Elimination of intercompany positions

 

–353

 

–454

Other assets

 

 

 

 

– Current assets (mainly cash and cash equivalents)

 

320

 

413

– Non-current assets

 

274

 

186

Other unallocated amounts

 

 

–1

Consolidated assets

 

3’444

 

3’610

 

 

 

 

 

Investments

 

 

 

 

Investments of reportable segments

 

193

 

172

Other investments

 

 

 

 

– Germany

 

6

 

4

– Switzerland

 

45

 

35

– Rest of Europe

 

4

 

 

Investments of Corporation

 

248

 

211

 

 

 

 

 

Liabilities

 

 

 

 

Liabilities of reportable segments

 

1’899

 

2’171

Elimination of intercompany positions

 

–613

 

–666

Other liabilities

 

 

 

 

– Current liabilities

 

94

 

227

– Non-current liabilities

 

613

 

481

Other unallocated amounts

 

24

 

28

Consolidated liabilities

 

2’016

 

2’241

Geographical information

 

 

Non-current assets

Sales

CHF million

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Total

 

1’316

 

1’333

 

4’572

 

4’150

 

 

 

 

 

 

 

 

 

Europe

 

883

 

924

 

2’494

 

2’247

– Thereof Germany

 

240

 

364

 

1’116

 

1’046

– Thereof Switzerland

 

347

 

274

 

205

 

173

– Thereof Austria

 

215

 

229

 

99

 

93

– Thereof Rest of Europe

 

81

 

57

 

1’074

 

935

Americas

 

190

 

152

 

702

 

592

Asia

 

214

 

219

 

1’130

 

1’060

– Thereof China

 

201

 

207

 

815

 

817

Rest of world

 

29

 

38

 

246

 

251

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 GF Piping Systems, GF Casting Solutions, 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 Casting Solutions is a technologically pioneering development partner and manufacturer of cast components and systems for the global automotive industry, the aerospace and energy market, off-highway vehicles 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 electric discharge machines (EDM), 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. There are no differences in 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

 

2018

 

2017

 

 

 

 

 

GF Piping Systems

 

1’821

 

1’678

 

 

 

 

 

Utility 1

 

733

 

667

Industry 2

 

643

 

578

Building technology 3

 

445

 

433

 

 

 

 

 

GF Casting Solutions

 

1’687

 

1’482

 

 

 

 

 

Automotive (remaining)

 

884

 

785

Automotive (divested) 4

 

617

 

613

Industrial applications

 

109

 

84

Aerospace/Energy

 

77

 

 

 

 

 

 

GF Machining Solutions

 

1’066

 

992

 

 

 

 

 

Milling

 

335

 

318

EDM

 

308

 

293

Customer service

 

289

 

269

Automation/Tooling/Laser

 

134

 

112

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.

4 Sales disclosed for the full year in 2017 and for eleven months in 2018, see note 4.1 (4.1.1 Changes in scope of consolidation).

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 recognized 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

 

2018

 

2017

 

 

 

 

 

Sales of material, waste, and scrap

 

18

 

11

Income from insurance contracts

 

7

 

7

Income from services

 

9

 

7

Gains on disposals of property, plant, and equipment

 

1

 

2

Foreign exchange gains/losses

 

–5

 

Other operating income

 

26

 

16

Total

 

56

 

43

1.3 Expenses

1.3 Expenses

1.3.1 Operating expenses

CHF million

 

2018

 

2017

 

 

 

 

 

External services 1

 

196

 

170

Selling costs, commissions

 

130

 

123

Repair, maintenance

 

118

 

108

Advertisements, communication

 

108

 

98

External energy supply

 

107

 

95

Rent, leases

 

54

 

50

Other expenses 2

 

63

 

56

Total

 

776

 

700

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 2.4 million (previous year: CHF 3.1 million)

1.3.2 Personnel expenses

CHF million

 

2018

 

2017

 

 

 

 

 

Salaries and wages

 

935

 

853

Employee benefits

 

32

 

24

Social security

 

172

 

171

Total

 

1’139

 

1’048

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 5.6 million (previous year: CHF 9.7 million).

1.4 Income taxes

1.4 Income taxes

 

 

 

 

 

 

2018

 

 

 

 

 

2017

CHF million

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax rate reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxes

 

348

 

 

 

 

 

322

 

 

 

 

Expected income tax rate in % (rounded)

 

21

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax expense

 

74

 

59

 

15

 

66

 

69

 

–3

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-tax deductible expenses/tax exempted income

 

6

 

5

 

1

 

 

 

 

 

 

Use of unrecognized tax loss carryforwards

 

–5

 

–6

 

1

 

–7

 

–9

 

2

Effect of non-recognition of tax losses in current year

 

 

 

 

 

 

 

1

 

1

 

 

Recognition of previously unrecognized tax loss carryforwards

 

–2

 

 

 

–2

 

 

 

 

 

 

Tax charges and credits related to prior periods, net

 

–6

 

–7

 

1

 

2

 

1

 

1

Other effects

 

2

 

 

 

2

 

2

 

5

 

–3

Effective income tax expense

 

69

 

51

 

18

 

64

 

67

 

–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 necessary to assess critically the probability that there will be future taxable profits which can offset them. This assessment depends on a variety of influencing factors and developments.

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 21% (previous year: 20%) 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 GF 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 GF Corporate Companies. The expected income tax rate based on the ordinary result also amounts to 21% (previous year: 20%).

The unrecognized tax loss carryforwards in 2018 totaling CHF 132 million (previous year: CHF 159 million) have a potential tax relief effect of CHF 35 million (previous year: CHF 44 million), whereof CHF 110 million (previous year: CHF 135 million) can be utilized for an indefinite period. CHF 1 million is to expire within one year.

As of 31 December 2018, tax loss carryforwards of CHF 22 million (previous year: CHF 18 million) were capitalized, resulting in a deferred tax asset of CHF 6 million (previous year: CHF 4 million).

Accounting principles

Income taxes include current and deferred taxes. 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 is 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 whether it is probable that the temporary difference will not reverse in the foreseeable future.

1.5 Earnings per share

1.5 Earnings per share

 

 

2018

 

2017

 

 

 

 

 

Earnings per share (CHF)

 

69

 

62

Number of shares (Ø)

 

4’093’613

 

4’091’237

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.