Letter to the shareholders

Successful year, major strategic transformation

Yves Serra, President and CEO (left), and Andreas Koopmann, Chairman of the Board of Directors, at GF Machining Solutions in Beijing (China).

Dear shareholders,

GF grew again double-digit in 2018 to reach CHF 4’572 million. Free of acquisitions, divestments and currency effects, growth amounted to 7%, well above the 2020 strategy objectives of 3–5% per annum. 

Sales grew by 7% to CHF 4’572 million.

The main pillar of organic growth has been GF Piping Systems, recording a high 8% organic growth rate for our largest division. The Corporation increased sales in all three regions Europe, Asia and America with America growing the most. After a very strong first semester, markets were affected during the second half-year by the ongoing trade tensions, which led to a softening of the GF growth rate.

The operational result (EBIT) increased by 9% to CHF 382 million. Both GF Piping Systems and GF Machining Solutions are the drivers of this increase.

The return on sales (ROS) stood at 8.4%, (2017: 8.5%), well in line with our 8–9% objective range. The return on invested capital (ROIC) further increased to 22.4%, compared to 20.3% in 2017, marginally surpassing our 18–22% objective range. The number of employees at year end decreased to 15’027, compared to 15’835 per end of 2017 as a consequence of the divestments of two iron foundries at GF Casting Solutions, whereas the acquisition of Precicast Industrial Holding SA (Switzerland) in April 2018 added 812 employees to the Corporation.

GF achieved a net profit after minorities of CHF 281 million, an increase of 12% compared to 2017 and a free cash flow before acquisitions of CHF 147 million (previous year CHF 204 million), basically at the lower end of GF’s target range of CHF 150–200 million. The main difference with previous year comes from future-oriented investments, namely the new production facility of GF Machining Solutions in Switzerland and the new US light metal foundry of GF Casting Solutions.

Earnings per share reached CHF 69 against CHF 62 in the previous year.

Earnings per share reached CHF 69, compared to CHF 62 in 2017. In view of the positive financial development in 2018, the Board of Directors will propose at the upcoming Annual Shareholders’ Meeting an increased dividend of CHF 25 a share, up from CHF 23 in the previous year.

GF Piping Systems

GF Piping Systems increased its sales by 9% to CHF 1’821 million. Organically the division grew by 8%. In 2018, the American and European operations of GF Piping Systems were the main growth contributors, whereas growth was muted in China as the ongoing trade disputes affected customer sentiment. The division generated an EBIT of CHF 217 million, 15% above previous year. The EBIT margin reached 11.9%, compared to 11.3% in 2017, as most plants were well-loaded and the sales of high-value products increased again over-proportionally.

GF Piping Systems

grew its sales by 9%


CHF million

GF Casting Solutions

GF Casting Solutions (formerly GF Automotive) also increased its sales in a significant manner to CHF 1’687 million, up 14%. The major growth drivers were the acquisitions of Precicast Industrial Holding SA (Switzerland) in April 2018 and of Eucasting Ro SRL (Romania) in November 2017. Organic growth stood at 5%. After a solid first half-year, the automotive industry in Europe suffered during the second half from new emission registration rules leading main car manufacturers to temporarily reduce production. The division’s operating result stood at CHF 86 million, compared to CHF 93 million in 2017. On one hand, the ramp-up of the new light metal foundry in the US had, as expected, a strong negative impact on profit and on the other hand, plant load suffered at year-end from the reduction of customer call-offs.

GF Casting Solutions 

grew its sales by 14%


CHF million

GF Machining Solutions

Order intake at GF Machining Solutions was slightly above the previous year with America showing a strong growth whereas the Chinese market became softer during the second half year as trade frictions affected customer sentiment. The division increased sales by 8% to CHF 1’066 million, organically +5%. The main drivers for the sales increase have been the aerospace and medical industries in Europe and the US. The operating result increased by 7% to CHF 88 million, resulting in an unchanged ROS of 8.3%.

GF Machining Solutions 

grew its sales by 8% to


CHF million

Portfolio actively reshaped towards higher value businesses

During 2018, the portfolio of GF Casting Solutions has been reshaped to intensify the focus on growing and promising fields such as light metal components for the automotive industry and precision castings for aircraft engines and gas turbines. Accordingly, the two large iron casting plants of Singen and Mettmann (Germany) have been divested in December to three experienced managers of GF Casting Solutions. 

Furthermore, in April 2018, GF acquired Precicast Industrial Holding SA (Switzerland), a well-known precision castings specialist for the aerospace and gas turbine sectors. These two important strategic steps aim at generating a clearly higher profit margin at GF Casting Solutions. They also lead to a substantial reduction in the GF Corporation’s exposure to the automotive industry.


Macroeconomic conditions have become even more uncertain and volatile during the last few months. Chances are however intact, barring unforeseen circumstances, to pursue our positive development.

Chances are intact, barring unforeseen circumstances, to pursue our positive development.

At GF Piping Systems, a high number of new products are being launched such as a whole line of digital valves whilst promising market segments are being developed, like the cooling of data centers. GF Casting Solutions expects a clearly improved operating performance. The division begins the year with a reshaped portfolio and a large amount of orders worldwide. In addition, its new light metal joint-venture, GF Linamar, in the US is rapidly increasing production. GF Machining Solutions expects a steady growth in the aerospace and medical sectors. Automation orders keep growing and the division recently launched new technologies such as promising 3D printing systems and digital services.

Moreover, the weight of the most profitable division, GF Piping Systems within the Corporation has continued to significantly increase to almost 50% of total sales.

For GF overall, the 2020 Strategy growth objectives remain unchanged at 3–5%. Regarding profitability, reinforced through the portfolio reshaping of GF Casting Solutions, the objectives for the current 2016–2020 strategy have been increased to 9–10% (from 8–9%) for the ROS and 20–24% (from 18–22%) for the ROIC.

Vice-Chairman Gerold Bührer to retire from the GF Board

In December 2018, we announced that our Vice-Chairman Gerold Bührer will retire from our Board at the next Annual Shareholders’ Meeting in April, having reached the age limit of 70. In the Board for the last 18 years, Gerold Bührer has been a long-standing member of our Audit Committee, combining his intimate understanding of GF where he had worked from 1991 to 2000 as CFO with his extensive knowledge of the national and international economic and political landscape. We wish Gerold Bührer all the best in his future endeavors and thank him again for his countless very valuable contributions he made to our company.

CFO Andreas Müller to succeed Yves Serra as CEO in April 2019

After 27 years at the service of GF, the last eleven as our CEO, Yves Serra (65) will retire in April 2019 and will be succeeded by the current CFO, Andreas Müller (48). Yves Serra will be proposed for election to our Board at the upcoming Annual Shareholders’ Meeting of 17 April 2019.

The Board of Directors nominated Mads Joergensen as new CFO, effective 18 April 2019. Since 2009, he has served as CFO of GF Piping Systems.

Carlos Vasto succeeds Josef Edbauer as Head of GF Casting Solutions

On 1 September 2018, Carlos Vasto (55) became Head of GF Casting Solutions. He replaced Josef Edbauer (61) who went into retirement after a long and successful career at GF. The Board and Executive Committee thank very much Josef Edbauer for his 40 years’ commitment to GF and wish him the best of health in this new chapter in his life.

Grateful thanks to our employees and customers

Our heartfelt gratitude goes to all GF employees whose remarkable team spirit allows us to better serve our clients across borders. Our innovation initiatives depend very much on listening to and quickly acting upon our customer needs. May we therefore equally thank our customers for their openness in sharing their needs.

We also thank you, our shareholders, for your continuing trust, and our banks for their long-standing support for our company.

Andreas Koopmann

Chairman of the Board of Directors

Yves Serra

President and CEO

The Board of Directors would like to thank Yves Serra, our outgoing CEO for his important contributions to GF in various operational positions during his long career in our company since 1991. In particular since 2008, when he took over the highest executive function in the Group as CEO, he has, with his teams, successfully led the company through deep transformations. GF has, during his tenure as CEO, experienced one of the longest periods of profitable growth in its history.

The Board of Directors looks forward, subject to his election by our shareholders, to a fruitful cooperation with Yves Serra as a Board member in the years to come.

Andreas Koopmann

Chairman of the Board of Directors