1 Operating performance

This section explains the performance and results as well as the segment results, which are reported on the same basis as GF’s internal management structure.

1.1Segment information

The reportable segments are the three operating divisions GF Piping Systems, GF Casting Solutions, and GF Machining Solutions.

GF Piping Systems focuses on system solutions and high-quality plastic and metal components. Its portfolio of fittings, valves, pipes, automation, and jointing technologies covers all water cycle applications. The division further offers specialized solutions, including engineering, customizing, and prefabrication. Customers are served globally by the following customer segments: Utility, Industry, and Building Technology.

GF Casting Solutions provides lightweight components to the mobility and energy industries. The division serves its customers in all global key markets and categorizes its offering into the customer segments Automotive, Industrial Applications, and Aerospace/Energy.

GF Machining Solutions provides complete solutions to the global tool and mold making industries and manufacturers of precision components. The division manufactures high-precision machine tools for milling and EDM (electro discharge machining) applications. The division further offers spindles, laser texturing, laser micromachining, additive manufacturing, automation, and tooling, as well as digitalized solutions. Customers are served globally by the following customer segments: Milling, EDM, Customer Services, and Advanced Manufacturing/Automation & Tooling.

Segment reporting

	GF Piping Systems		GF Casting Solutions		GF Machining Solutions		Total segments
CHF million	2022	2021	2022	2021	2022	2021	2022	2021

Order intake 1	2’319	2’211	965	907	945	941	4’229	4’060
Orders on hand at year-end 1	442	326	284	276	206	213	932	815

Sales per region
Europe	690	702	608	556	435	398	1’732	1’655
– Thereof Germany	171	176	284	258	124	123	579	557
– Thereof Switzerland	121	118	19	22	87	64	226	204
– Thereof rest of Europe	398	407	305	276	224	211	928	894
Americas	612	469	78	129	171	150	861	749
Asia	699	647	206	194	316	298	1’220	1’139
– Thereof China	487	498	199	187	243	238	929	924
– Thereof rest of Asia	212	149	7	7	73	60	291	216
Rest of world	159	153	1	1	27	27	187	180
Sales	2’160	1’971	892	880	948	873	4’001	3’724

EBITDA	341	302	99	63	81	61	522	426
Depreciation on tangible fixed assets	–47	–52	–44	–58	–12	–12	–102	–121
Amortization on intangible assets	–4	–3	–1	–1	–3	–3	–7	–6
Operating result (EBIT)	291	247	55	5	67	47	413	298

Assets	1’620	1’563	796	946	786	744	3’203	3’252
– Thereof current assets	1’010	942	403	404	529	469	1’942	1’814
– Thereof non-current assets	610	621	394	542	257	275	1’261	1’438

Investments per region
Europe	32	25	23	17	19	18	74	60
– Thereof Germany	4	2	5	3	2	4	10	9
– Thereof Switzerland	21	17	2	2	15	12	38	31
– Thereof rest of Europe	8	6	16	13	2	2	26	20
Americas	24	14	2	16	0	0	27	30
Asia	26	16	28	23	2	2	56	41
– Thereof China	24	15	28	23	1	2	53	40
– Thereof rest of Asia	3	1			0	0	3	1
Rest of world	14	9				0	14	9
Investments	97	64	53	56	21	20	171	141
– Thereof in capital expenditures	95	60	53	56	19	16	166	132
– Thereof in intangible assets	2	4	0	0	2	5	4	9

Liabilities	847	828	478	680	524	505	1’848	2’012
– Thereof current liabilities	515	532	289	265	356	340	1’161	1’137
– Thereof non-current liabilities	331	296	189	414	167	164	688	874

Research and development	53	47	13	12	54	54	120	113

1 Order intake and orders on hand at year-end were not included in the scope of the audit by the statutory auditor.

Reconciliation to the consolidated income statement and the consolidated balance sheet

CHF million	2022	2021

Sales
Sales of reportable segments	4’001	3’724
Elimination of intercompany sales	–3	–2
Consolidated sales	3’998	3’722

Operating result (EBIT)
Total EBIT for reportable segments	413	298
Total EBIT Corporate Center and Corporate Services	–22	–19
Consolidated operating result (EBIT)	391	278

Assets
Assets of reportable segments	3’203	3’252
Elimination of intercompany positions	–372	–423
Other assets
– Current assets (mainly cash and cash equivalents)	568	667
– Non-current assets	300	271
Consolidated assets	3’698	3’767

Liabilities
Liabilities of reportable segments	1’848	2’012
Elimination of intercompany positions	–527	–608
Other liabilities
– Current liabilities	65	202
– Non-current liabilities (mainly bonds)	656	666
Consolidated liabilities	2’042	2’271

Sales by customer segment

CHF million	2022	2021

Industry	933	774
Utility	801	722
Building Technology	426	474
GF Piping Systems	2’160	1’971

Automotive	683	702
Industrial Applications	136	110
Aerospace/Energy	73	69
GF Casting Solutions	892	880

Customer Service	275	263
EDM	275	249
Milling	254	220
Advanced Manufacturing/Automation & Tooling	145	140
GF Machining Solutions	948	873

Elimination of intercompany sales	–3	–2
Total	3’998	3’722

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

Accounting principles revenue recognition

Billings for goods and services are recognized as sales when they are delivered or when the principal risks and rewards incidental to ownership are transferred. An assessment as to whether the principal risks and rewards 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 rewards. 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.

Accounting principles segment reporting

In accordance with the management structure and the reporting to the Executive Committee and the Board of Directors, the divisions represent the reportable segments. 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. Customer segments manufacture similar products with comparable production processes and supply them to similar customer groups using similar distribution methods.

1.2Other operating income

CHF million	2022	2021

Sales of material, waste, and scrap	16	14
Income from insurance contracts	4	4
Income from services	6	8
Gains on disposals of property, plant, and equipment	2	6
Government grants	9	13
Foreign exchange gains/losses	–11	–12
Other 1	12	11
Total	37	42

1 Primarily includes other operating income from suppliers and customers.

1.3Operating expenses

CHF million	2022	2021

External services 1	166	162
Selling costs, commissions	141	135
Repair, maintenance	78	83
Advertisements, communication	88	71
External energy supply	90	84
Rent, leases	49	46
Other expenses	68	58
Total	680	640

1 Primarily includes temporary employees, IT costs, R&D, insurance costs as well as consulting services.

The total compensation of the Board of Directors is recognized as other expenses and amounts to CHF 2.7 million (previous year: CHF 2.9 million). The members of the Board of Directors received a fixed remuneration paid in cash and a fixed number of GF restricted shares. The valuation of the restricted shares of CHF 1.5 million (previous year: CHF 1.7 million) is based on the year-end share price of CHF 56.60 (previous year adjusted for share split: CHF 69.25). A total of 26’084 restricted shares were granted to the Board of Directors (previous year adjusted for share split: 24’940).

1.4Personnel expenses

CHF million	2022	2021

Salaries and wages	853	807
Employee benefits	30	25
Social security	170	163
Total	1’053	995

Expenses for share-based payment to members of the Executive Committee and members of the Senior Management amounted to CHF 7.5 million (previous year: CHF 8.1 million) and are recognized as personnel expenses.

Long-term share-based incentive (LTI) for the members of the Executive Committee in the form of Performance Shares (PS) is included therein as follows:

			Recognized as personnel expenses
LTI plan	Number of granted PS	Grant value in CHF million	2022 in CHF million	2021 in CHF million

2021-2023 1	39’760	2.1	0.9	0.9
2022-2024	31’040	2.0	0.8
Total	70’800	4.1	1.7	0.9

1 In April 2022, a 1:20 share split was conducted, see note 3.6. Number of granted PS has been adjusted accordingly.

Accounting principles

The compensation for the Executive Committee consists of a fixed base salary, a short-term cash incentive (STI), and a long-term share-based incentive (LTI), and is recognized as personnel expenses. The LTI is based on a grant value corresponding to a percentage of the base salary per member, which at the beginning of the period is translated into a specific number of future subscription rights in the form of Performance Shares (PS). The PS are subject to a three-year vesting period. The vesting is further conditional on the achievement of non-market conditions (diluted earnings per share target) as well as market conditions (relative total shareholder return target). Depending on the level of target achievement, the PS will be settled in shares of GF at a conversion rate of between 50% (threshold) and 150% (maximum payout). If the threshold is not met, no settlement will take place. After vesting, vested PS are blocked for additional two years. The current cost of the LTI at grant date is determined by applying a Monte Carlo simulation. Anticipated dividends are included in the model. Subsequent to the grant date, non-market conditions are remeasured at each reporting date. Adjustments from the remeasurement are recognized prospectively. Market conditions are already included in the calculation of actual value at the time they are granted and no subsequent revaluation is conducted. The expenses for PS are recognized over the three-year vesting period as salaries and wages against other retained earnings. Additional information on the functionality of the LTI plan is provided in the Compensation Report.

The payments under share-based compensation for Senior Management are reported as personnel expenses. Costs are recognized fully in the year in which service is rendered.

Entitlements to short-time work compensation programs at the level of individual GF Corporate Companies due to adverse economic effects are reported under salaries and wages.