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

2020
2019

Sales per region

in CHF

2020
2019
Corporation
GF Piping Systems
GF Casting Solutions
GF Machining Solutions

Income statement

in CHF million

2020
2019

Balance sheet

in CHF million

2020
2019

Investments

in CHF

2020
2019

Investments per region

in CHF

2020
2019
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

2020

2019

2020

2019

2020

2019

2020

2019

 

 

 

 

 

 

 

 

 

Order intake 1

1’716

1’788

740

953

706

954

3’162

3’695

Orders on hand at year-end 1

116

119

251

267

147

177

514

563

 

 

 

 

 

 

 

 

 

Sales 2

1’708

1’802

752

949

725

972

3’185

3’723

 

 

 

 

 

 

 

 

 

Sales per region

 

 

 

 

 

 

 

 

Europe

626

640

492

659

307

450

1’425

1’749

– Thereof Germany

157

168

217

326

89

138

463

632

– Thereof Switzerland

113

111

18

18

46

70

177

199

– Thereof Rest of Europe

356

361

257

315

172

242

785

918

Americas

382

432

74

78

149

228

605

738

Asia

568

563

186

210

246

261

1’000

1’034

– Thereof China

450

437

176

188

188

184

814

809

– Thereof Rest of Asia

118

126

10

22

58

77

186

225

Rest of world

132

167

 

2

23

33

155

202

Sales

1’708

1’802

752

949

725

972

3’185

3’723

 

 

 

 

 

 

 

 

 

EBITDA

245

264

26

48

34

71

305

383

 

 

 

 

 

 

 

 

 

Depreciation on tangible fixed assets

–49

–47

–59

–70

–12

–12

–120

–129

Amortization on intangible assets

–3

–3

–1

–2

–2

–2

–6

–7

Operating result (EBIT)

193

214

–34

–24

20

57

179

247

 

 

 

 

 

 

 

 

 

Assets 3

1’399

1’431

948

971

613

704

2’960

3’106

– Thereof current assets

827

850

349

372

401

511

1’577

1’733

– Thereof non-current assets

572

581

599

599

212

193

1’383

1’373

 

 

 

 

 

 

 

 

 

Investments per region

 

 

 

 

 

 

 

 

Europe

30

39

27

24

9

16

66

79

– Thereof Germany

1

3

5

10

 

 

6

13

– Thereof Switzerland

23

27

4

2

8

15

35

44

– Thereof Rest of Europe

6

9

18

12

1

1

25

22

Americas

15

16

31

48

4

1

50

65

Asia

10

16

12

7

2

10

24

33

– Thereof China

9

15

12

7

1

10

22

32

– Thereof Rest of Asia

1

1

 

 

1

 

2

1

Rest of world

5

6

 

 

 

 

5

6

Investments

60

77

70

79

15

27

145

183

– Thereof capital expenditures

57

72

67

79

13

24

137

175

– Thereof investments in intangible assets

3

5

3

0

2

3

8

8

 

 

 

 

 

 

 

 

 

Liabilities

724

742

653

659

386

449

1’763

1’850

– Thereof current liabilities

442

432

272

270

243

280

957

982

– Thereof non-current liabilities

282

310

381

389

143

169

806

868

 

 

 

 

 

 

 

 

 

Research and development

46

49

17

18

49

60

112

127

1 Order intake and orders on hand at year-end were not included in the 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

2020

2019

 

 

 

Sales

 

 

Sales of reportable segments

3’185

3’723

Elimination of intercompany sales

–1

–3

Consolidated sales

3’184

3’720

 

 

 

Operating result (EBIT)

 

 

Total EBIT for reportable segments

179

247

Total EBIT Corporate Center and Corporate Services

–13

–12

Consolidated operating result (EBIT)

166

235

 

 

 

Interest income

5

5

Interest expense

–24

–26

Other financial result

 

–4

Share of results of associates

–7

–13

Ordinary result

140

197

 

 

 

Non-operating result

3

6

Profit before taxes

143

203

 

 

 

Income taxes

–31

–31

Net profit

112

172

 

 

 

Assets

 

 

Assets of reportable segments

2’960

3’106

Elimination of intercompany positions

–395

–357

Other assets

 

 

– Current assets (mainly cash and cash equivalents)

592

293

– Non-current assets

288

302

Consolidated assets

3’445

3’344

 

 

 

Investments

 

 

Investments of reportable segments

145

183

Other investments

 

 

– Germany

 

 

– Switzerland

5

14

– Rest of Europe

1

7

Investments of Corporation

151

204

 

 

 

Liabilities

 

 

Liabilities of reportable segments

1’763

1’850

Elimination of intercompany positions

–571

–608

Other liabilities

 

 

– Current liabilities

35

43

– Non-current liabilities

812

601

Other unallocated amounts

17

20

Consolidated liabilities

2’056

1’906

Geographical information

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Non-current assets

Sales

CHF million

2020

2019

2020

2019

 

 

 

 

 

Total

1’303

1’345

3’184

3’720

 

 

 

 

 

Europe

821

863

1’424

1’747

– Thereof Germany

127

160

462

632

– Thereof Switzerland

445

445

177

197

– Thereof Rest of Europe

249

258

785

918

Americas

249

239

606

737

Asia

210

216

999

1’034

– Thereof China

198

203

814

809

– Thereof Rest of Asia

12

13

185

225

Rest of world

23

27

155

202

Information about major customers

There are no single customers whose sales account for 10% or more of Corporation’s sales.

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.

As the leading flow solutions provider for the safe and sustainable transport of fluids, GF Piping Systems creates connections for life. The division focuses on system solutions and high-quality plastic and metal components for a diverse installed base. The portfolio of fittings, valves, pipes, automation, and jointing technologies covers all water cycle applications. Simultaneously, specialized solutions, including engineering, customizing, and prefabrication, provide expertise at every project phase.

GF Casting Solutions is one of the leading solution providers of lightweight components in the mobility and energy industries. As a future-oriented company, GF Casting Solutions acts as a driving force for innovation in the foundry and additive manufacturing world and aims to take the lead in developing and manufacturing innovative and energy-efficient lightweight solutions.

GF Machining Solutions is one of the world’s leading providers of complete solutions for the tool and mold making industry and manufacturers of precision components. The portfolio includes milling and EDM machines. The division also offers spindles, laser texturing, laser micromachining, additive manufacturing, automation and tooling, as well as digitalized 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

2020

2019

 

 

 

GF Piping Systems

1’708

1’802

 

 

 

Utility 1

648

716

Industry 2

646

646

Building technology 3

414

440

 

 

 

GF Casting Solutions

752

949

 

 

 

Automotive (remaining)

596

688

Automotive (divested) 4

 

59

Industrial applications

82

111

Aerospace/Energy

74

91

 

 

 

GF Machining Solutions

725

972

 

 

 

Milling

213

282

EDM

185

261

Customer service

224

276

Advanced manufacturing/Automation & Tooling

103

153

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

2020

2019

 

 

 

Sales of material, waste, and scrap

9

11

Income from insurance contracts

4

5

Income from services

8

11

Gains on disposals of property, plant, and equipment

14

1

Foreign exchange gains/losses

–6

–8

Other operating income

14

14

Total

43

34

A large part of the gains on disposals of property, plant, and equipment is attributable to the sale of a building by GF Machining Solutions in Switzerland.

1.3Expenses

1.3.1 Operating expenses

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CHF million

2020

2019

 

 

 

External services 1

142

170

Selling costs, commissions

115

134

Repair, maintenance

71

77

Advertisements, communication

61

98

External energy supply

77

84

Rent, leases

45

48

Other expenses 2

65

54

Total

576

665

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 2.7 million).

1.3.2 Personnel expenses

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CHF million

2020

2019

 

 

 

Salaries and wages

715

817

Employee benefits

34

32

Social security

134

163

Total

883

1’012

Due to the adverse economic effects of the COVID-19 crisis, state compensation programs were availed of at the level of individual GF Corporate Companies as a result of short-time work. Such compensation is reported under salaries and wages. In the period under review, CHF 43 million in short-time work benefits were received, hereof CHF 27 million in Switzerland. A significant part was attributable to GF Casting Solutions and GF Machining Solutions.

In the year under review, 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 7.2 million (previous year: CHF 7.9 million). For more details on transactions with the Executive Committee see Compensation Report and note 4.3 (4.3.2 Transactions with members of the Board of Directors and the Executive Committee).

1.4Non-operating result

The non-operating result includes gains from the sale of investment properties of CHF 3 million (previous year: CHF 6 million), see also note 2.4.

1.5Income taxes

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2020

2019

CHF million

Total

Thereof current taxes

Thereof deferred taxes

Total

Thereof current taxes

Thereof deferred taxes

 

 

 

 

 

 

 

Tax rate reconciliation

 

 

 

 

 

 

Profit before taxes

143

 

 

203

 

 

Statutory tax rate in %

14

 

 

16

 

 

 

 

 

 

 

 

 

Income tax expense at statutory tax rate

20

18

2

32

35

–3

 

 

 

 

 

 

 

Effect of income taxed at different rates 1

6

3

3

10

15

–5

Non-tax deductible expenses/tax exempted income

 

 

 

–2

–2

 

Use of unrecognized tax loss carryforwards

–4

–4

 

–3

–4

1

Effect of non-recognition of tax losses in current year

10

17

–7

4

4

 

Recognition of previously unrecognized tax loss carryforwards

–1

 

–1

 

 

 

Tax charges and credits related to prior periods, net

–1

–1

 

–1

–1

 

Non-creditable foreign withholding tax

5

5

 

5

5

 

Effect of change in tax rates

 

 

 

–5

 

–5

Other effects

–4

–1

–3

–9

–1

–8

Effective income tax expense

31

37

–6

31

51

–20

 

 

 

 

 

 

 

Effective income tax rate in %

22

 

 

15

 

 

1 GF operates worldwide and is subject to income tax in many different tax jurisdictions. The effect of income taxed at different rates may vary from year to year due to varying results of the individual Corporate Companies and changes in local tax rates.

The presentation of income taxes has been adjusted. The statutory tax rate is now used as the applicable tax rate instead of the expected income tax rate. The previous year’s figures have been adjusted accordingly.

The table shows the main elements that cause the Corporation’s effective tax rate to differ from the statutory tax rate. The Corporation’s statutory tax rate is the ordinary tax rate applicable in the canton of Schaffhausen in Switzerland, where Georg Fischer is headquartered. Georg Fischer uses the Swiss domestic tax rate as it provides more meaningful information than a weighted average tax rate. The statutory tax rate has changed to 14% (previous year: 16%).

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 22% (previous year: 15%). The increase in the effective income tax rate is mainly due to the fact that the effective income tax rate in the previous year was influenced by the Swiss Corporate Tax Reform. In the previous year, the Swiss Corporate Tax Reform led to a one-time reduction in the effective income tax rate. The reform included 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+.

The unrecognized tax loss carryforwards in 2020  totaling CHF 159 million (previous year: CHF 127 million) have a potential tax relief effect of CHF 41 million (previous year: CHF 33 million), of which CHF 113 million (previous year: CHF 98 million) can be utilized for an indefinite period. CHF 4 million is to expire within one year (previous year: CHF 1 million).

As of 31 December 2020, tax loss carryforwards of CHF 51 million (previous year: CHF 19 million) were capitalized, resulting in a deferred tax asset of CHF 12 million (previous year: CHF 5 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 critically assess the probability of future taxable profits that can be offset. 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 be reversed in the foreseeable future.

1.6Earnings per share

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2020

2019

 

 

 

Earnings per share (CHF)

28

42

Number of shares (Ø)

4’093’471

4’093’519

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

Accounting principles

Earnings per share are 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 take into account any potential additional shares that may result, for instance, from exercised options or conversion rights.

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