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.
Sales per segment
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 |
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
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
|
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.
1.2.1 Products, services and most important revenue sources
|
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
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.
1.3.1 Operating expenses
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
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).
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.
|
|
|
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.
|
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.