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.

1.1Segment information

Sales per segment

in CHF

2019
2018

Sales per region

in CHF

2019
2018
Corporation
GF Piping Systems
GF Casting Solutions
GF Machining Solutions

Income statement

in CHF million

2019
2018

Balance sheet

in CHF million

2019
2018

Investments

in CHF

2019
2018

Investments per region

in CHF

2019
2018
Corporation
GF Piping Systems
GF Casting Solutions
GF Machining Solutions
Other investments

Segment information

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GF Piping Systems

 

GF Casting Solutions

 

GF Machining Solutions

 

Total segments

CHF million

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order intake 1

 

1’788

 

1’865

 

953

 

1’617

 

954

 

1’042

 

3’695

 

4’524

Orders on hand at year-end 1

 

119

 

134

 

267

 

289

 

177

 

200

 

563

 

623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales 2

 

1’802

 

1’821

 

949

 

1’687

 

972

 

1’066

 

3’723

 

4’574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales per region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

640

 

631

 

659

 

1’380

 

450

 

484

 

1’749

 

2’495

– Thereof Germany

 

168

 

165

 

326

 

792

 

138

 

160

 

632

 

1’117

– Thereof Switzerland

 

111

 

110

 

18

 

25

 

70

 

70

 

199

 

205

– Thereof Rest of Europe

 

361

 

356

 

315

 

563

 

242

 

254

 

918

 

1’173

Americas

 

432

 

427

 

78

 

61

 

228

 

214

 

738

 

702

Asia

 

563

 

590

 

210

 

226

 

261

 

315

 

1’034

 

1’131

– Thereof China

 

437

 

457

 

188

 

216

 

184

 

235

 

809

 

908

– Thereof Rest of Asia

 

126

 

133

 

22

 

10

 

77

 

80

 

225

 

223

Rest of world

 

167

 

173

 

2

 

20

 

33

 

53

 

202

 

246

Sales

 

1’802

 

1’821

 

949

 

1’687

 

972

 

1’066

 

3’723

 

4’574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

264

 

269

 

48

 

160

 

71

 

102

 

383

 

531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation on tangible fixed assets

 

–47

 

–50

 

–70

 

–73

 

–12

 

–12

 

–129

 

–135

Amortization on intangible assets

 

–3

 

–2

 

–2

 

–1

 

–2

 

–2

 

–7

 

–5

Operating result (EBIT)

 

214

 

217

 

–24

 

86

 

57

 

88

 

247

 

391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets 3

 

1’431

 

1’417

 

971

 

1’023

 

704

 

763

 

3’106

 

3’203

– Thereof current assets

 

850

 

865

 

372

 

417

 

511

 

552

 

1’733

 

1’834

– Thereof non-current assets

 

581

 

552

 

599

 

606

 

193

 

211

 

1’373

 

1’369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments per region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

39

 

35

 

24

 

51

 

16

 

19

 

79

 

105

– Thereof Germany

 

3

 

2

 

10

 

16

 

 

 

1

 

13

 

19

– Thereof Switzerland

 

27

 

24

 

2

 

3

 

15

 

16

 

44

 

43

– Thereof Rest of Europe

 

9

 

9

 

12

 

32

 

1

 

2

 

22

 

43

Americas

 

16

 

15

 

48

 

35

 

1

 

2

 

65

 

52

Asia

 

16

 

14

 

7

 

7

 

10

 

11

 

33

 

32

– Thereof China

 

15

 

12

 

7

 

7

 

10

 

10

 

32

 

29

– Thereof Rest of Asia

 

1

 

2

 

 

 

 

 

 

 

1

 

1

 

3

Rest of world

 

6

 

4

 

 

 

 

 

 

 

 

 

6

 

4

Investments

 

77

 

68

 

79

 

93

 

27

 

32

 

183

 

193

– Thereof capital expenditures

 

72

 

65

 

79

 

92

 

24

 

26

 

175

 

183

– Thereof investments in intangible assets

 

5

 

3

 

0

 

1

 

3

 

6

 

8

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

742

 

754

 

659

 

647

 

449

 

498

 

1’850

 

1’899

– Thereof current liabilities

 

432

 

439

 

270

 

288

 

280

 

313

 

982

 

1’040

– Thereof non-current liabilities

 

310

 

315

 

389

 

359

 

169

 

185

 

868

 

859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

49

 

47

 

18

 

22

 

60

 

58

 

127

 

127

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

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CHF million

 

2019

 

2018

 

 

 

 

 

Sales

 

 

 

 

Sales of reportable segments

 

3'723

 

4'574

Elimination of intercompany sales

 

–3

 

–2

Consolidated sales

 

3'720

 

4'572

 

 

 

 

 

Operating result (EBIT)

 

 

 

 

Total EBIT for reportable segments

 

247

 

391

Total EBIT Corporate Center and Corporate Services

 

–12

 

–9

Consolidated operating result (EBIT)

 

235

 

382

 

 

 

 

 

Interest income

 

5

 

2

Interest expense

 

–26

 

–31

Other financial result

 

–4

 

–6

Share of results of associates

 

–13

 

 

Ordinary result

 

197

 

347

 

 

 

 

 

Non-operating result

 

6

 

1

Profit before taxes

 

203

 

348

 

 

 

 

 

Income taxes

 

–31

 

–69

Net profit

 

172

 

279

 

 

 

 

 

Assets

 

 

 

 

Assets of reportable segments

 

3'106

 

3'203

Elimination of intercompany positions

 

–357

 

–353

Other assets

 

 

 

 

– Current assets (mainly cash and cash equivalents)

 

293

 

320

– Non-current assets

 

302

 

274

Consolidated assets

 

3'344

 

3'444

 

 

 

 

 

Investments

 

 

 

 

Investments of reportable segments

 

183

 

193

Other investments

 

 

 

 

– Germany

 

 

 

6

– Switzerland

 

14

 

45

– Rest of Europe

 

7

 

4

Investments of Corporation

 

204

 

248

 

 

 

 

 

Liabilities

 

 

 

 

Liabilities of reportable segments

 

1'850

 

1'899

Elimination of intercompany positions

 

–608

 

–613

Other liabilities

 

 

 

 

– Current liabilities

 

43

 

94

– Non-current liabilities

 

601

 

613

Other unallocated amounts

 

20

 

24

Consolidated liabilities

 

1'906

 

2'016

Geographical information

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Non-current assets

 

Sales

CHF million

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Total

 

1'345

 

1'316

 

3'720

 

4'572

 

 

 

 

 

 

 

 

 

Europe

 

863

 

883

 

1'747

 

2'494

– Thereof Germany

 

160

 

240

 

632

 

1'116

– Thereof Switzerland

 

445

 

347

 

197

 

205

– Thereof Rest of Europe

 

258

 

296

 

918

 

1'173

Americas

 

239

 

190

 

737

 

702

Asia

 

216

 

214

 

1'034

 

1'130

– Thereof China

 

203

 

201

 

809

 

815

– Thereof Rest of Asia

 

13

 

13

 

225

 

315

Rest of world

 

27

 

29

 

202

 

246

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 and high-quality components for the safe transport of water, chemicals and gases, as well as corresponding services. The product portfolio of fittings, valves, pipes, automation and jointing technologies covers all applications of the water cycle.

GF Casting Solutions is one of the leading solution providers of lightweight components in the mobility and energy industry. As a future-oriented company, GF Casting Solutions acts as a driving force for innovation in the foundry and additive manufacturing world and wants to take the lead in shaping the development of sustainable mobility.

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 die-sinking EDM machines. Moreover, the division offers Spindles, Laser texturing, Laser micromachining, Additive Manufacturing, Tooling and Automation, as well as 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.

1.2Sales and other operating income

1.2.1 Products, services and most important revenue sources

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Sales

CHF million

 

2019

 

2018

 

 

 

 

 

GF Piping Systems

 

1'802

 

1'821

 

 

 

 

 

Utility 1

 

716

 

733

Industry 2

 

646

 

643

Building technology 3

 

440

 

445

 

 

 

 

 

GF Casting Solutions

 

949

 

1'687

 

 

 

 

 

Automotive (remaining)

 

688

 

808

Automotive (divested) 4

 

59

 

693

Industrial applications

 

111

 

109

Aerospace/Energy

 

91

 

77

 

 

 

 

 

GF Machining Solutions

 

972

 

1'066

 

 

 

 

 

Milling

 

282

 

335

EDM

 

261

 

308

Customer service

 

276

 

289

Advanced manufacturing/Automation & Tooling

 

153

 

134

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 Correspond to divested sales see [note 4.1.1] Additions, disposals and mergers.

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

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CHF million

 

2019

 

2018

 

 

 

 

 

Sales of material, waste, and scrap

 

11

 

18

Income from insurance contracts

 

5

 

7

Income from services

 

11

 

9

Gains on disposals of property, plant, and equipment

 

1

 

1

Foreign exchange gains/losses

 

–8

 

–5

Other operating income

 

14

 

26

Total

 

34

 

56

1.3Expenses

1.3.1 Operating expenses

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CHF million

 

2019

 

2018

 

 

 

 

 

External services 1

 

170

 

196

Selling costs, commissions

 

134

 

130

Repair, maintenance

 

77

 

118

Advertisements, communication

 

98

 

108

External energy supply

 

84

 

107

Rent, leases

 

48

 

54

Other expenses 2

 

54

 

63

Total

 

665

 

776

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 2.7 million (previous year: CHF 2.4 million).

1.3.2 Personnel expenses

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CHF million

 

2019

 

2018

 

 

 

 

 

Salaries and wages

 

817

 

935

Employee benefits

 

32

 

32

Social security

 

163

 

172

Total

 

1'012

 

1'139

In the year under review, the expenses for share-based payment transactions to members of the Executive Committee and to members of the Senior Management recorded in the personnel expenses amounted to CHF 7.9 million (previous year: CHF 5.6 million). For more details on transactions with Executive Committee see Compensation Report and note 4.3 (4.3.2 Transactions with members Board of Directors and the Executive Committee).

1.4Non-operating result

The non-operating result includes gains from sale of investment properties of CHF 6 million (previous year: CHF 0 million), see also note 2.4.

1.5Income taxes

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2019

 

2018

CHF million

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

Total

 

Thereof current taxes

 

Thereof deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax rate reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxes

 

203

 

 

 

 

 

348

 

 

 

 

Expected income tax rate in % (rounded)

 

21

 

 

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax expense

 

42

 

50

 

–8

 

74

 

59

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-tax deductible expenses/tax exempted income

 

–2

 

–2

 

 

 

6

 

5

 

1

Use of unrecognized tax loss carryforwards

 

–3

 

–4

 

1

 

–5

 

–6

 

1

Effect of non-recognition of tax losses in current year

 

4

 

4

 

 

 

 

 

 

 

 

Recognition of previously unrecognized tax loss carryforwards

 

 

 

 

 

 

 

–2

 

 

 

–2

Tax charges and credits related to prior periods, net

 

–1

 

–1

 

 

 

–6

 

–7

 

1

Non-creditable foreign withholding tax

 

5

 

5

 

 

 

4

 

4

 

 

Effect of change in tax rates

 

–5

 

 

 

–5

 

 

 

 

 

 

Other effects

 

–9

 

–1

 

–8

 

–2

 

–4

 

2

Effective income tax expense

 

31

 

51

 

–20

 

69

 

51

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate in %

 

15

 

 

 

 

 

20

 

 

 

 

The Corporation’s expected income tax rate amounts to 21% (previous year: 21%) 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 expected income tax rate based on the ordinary result is also 21% (previous year: 21%).

Management assumptions and estimates

Current tax liabilities are calculated based on an interpretation of the tax regulation 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 be offset them. This assessment depends on a variety of influencing factors and developments.

The Corporation’s effective income tax rate amounts to 15% (previous year: 20%). The effective income tax rate was affected by the Swiss Corporate Tax Reform that entered into force on 1 January 2020. The reform includes cantonal tax rate cuts and the abolition of special cantonal tax regimes. The cantonal tax rate cuts led to a one-time deferred tax income of CHF 5 million due to the revaluation of the deferred tax positions. In addition, the abolition of the holding company status of Georg Fischer Ltd. led to a one-time deferred tax income of CHF 9 million due to the step-up of hidden reserves for tax purposes in relation to the trademark +GF+. Apart from the one-time effects described above, the overall effects of the Swiss Corporate Tax Reform on GF are assessed as neutral.

The unrecognized tax loss carryforwards in 2019 totaling CHF 127 million (previous year: CHF 132 million) have a potential tax relief effect of CHF 33 million (previous year: CHF 35 million), whereof CHF 98 million (previous year: CHF 110 million) can be utilized for an indefinite period. CHF 1 million is to expire within one year.

As of 31 December 2019, tax loss carryforwards of CHF 19 million (previous year: CHF 22 million) were capitalized, resulting in a deferred tax asset of CHF 5 million (previous year: CHF 6 million).

Management assumptions and estimates

Current tax liabilities are calculated based on an interpretation of the tax regulation 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 be offset them. This assessment depends on a variety of influencing factors and developments.

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 where it is probable that the temporary difference will not reverse in the foreseeable future.

1.6Earnings per share

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2019

 

2018

 

 

 

 

 

Earnings per share (CHF)

 

42

 

69

Number of shares (Ø)

 

4'093'519

 

4'093'613

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.

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