Georg Fischer Continues to Grow
Georg Fischer achieved top-line growth of 6% in the first half of 2008, with sales amounting to CHF 2.4 billion. Currency effects and soaring material and energy costs had a negative impact of over CHF 60 million on earnings.
Pricing and efficiency measures have been put in place as a counterbalance, but with a delayed effect. As a result, EBIT dropped to CHF 157 million (EBIT margin 6.6%) against CHF 193 million at mid-2007 (EBIT margin 8.6%). GF Piping Systems again put in a strong performance; the strategic acquisition Central Plastics is well on track.
GF Automotive enjoyed sustained demand but is facing a steep increase in materials costs. GF AgieCharmilles achieved continuing high growth in the milling machine business, lengthening delivery times short-term, but a stagnating EDM (electric discharge machining) business and the weak dollar affected overall sales and margins. At CHF 2,383 million, corporate sales were 6% up on the previous year (CHF 2,248 million). Adjusted for currency effects and for changes in the scope of consolidation, the growth rate stands at 7.5%. While GF Automotive and GF Piping Systems continued to grow, GF AgieCharmilles returned a slight decrease in sales. Corporate turnover in local currencies increased by 7% in
Europe and by 8% in Asia, whilst the Americas showed no growth.
Earnings at mid-2008 are clearly below the record previous year’s first half. Currency effects reduced EBIT by CHF 28 million, particularly at GF AgieCharmilles and GF Piping Systems. The GF Automotive result was affected by the soaring costs of iron scrap, coke and other materials to
an amount of CHF 35 million. These external effects lowered the EBIT margin at mid-year by over two points. Net profit totals CHF 109 million, corresponding to a reduction of 20% compared to previous year. Free cash flow stands at CHF –212 million. The main impact stems from the acquisitions of Central Plastics and the 50% stake in Georg Fischer Simona, which used funds totalling CHF 120 million.
Additionally, investments in China and the overall sales growth induced a considerable increase in working capital. Net debt therefore jumped up to CHF 573 million. Corporate headcount rose by 10%, partly as a result of acquisitions, partly from expansion moves in growth markets mainly in
Outlook and measures
GF is well-positioned worldwide in its three core businesses, each of which is enjoying sustained demand despite certain indications of a downward economic trend. Barring unforeseen circumstances, GF Corporation should continue on its growth path during the second half of 2008
albeit at a more moderate pace. The volatile currency and raw material situation will probably continue to put pressure on margins.
Pricing measures are in place to counterbalance such effects, either as part of the sales contracts at GF Automotive or within the framework of already announced general price increases at GF Piping Systems and GF AgieCharmilles. Efficiency-enhancing programmes including the
improvement of the net working capital have been set up in all three Groups. Moreover, new facilities are being built in Asia in all three Groups of GF, which, together with the recent acquisitions in North America, will further reduce currency exposure.
About Georg Fischer
Georg Fischer is focused on its three core businesses GF Automotive, GF Piping Systems and GF AgieCharmilles. Founded in 1802, the company is headquartered in Schaffhausen, Switzerland, and has over 140 locations worldwide including 50 production facilities. With some 13,000 employees, it generated annual sales of 4.5 billion Swiss francs in 2007. The Corporation makes a direct contribution to the quality of life: Mobility, comfort and precision are key market requirements that we satisfy with our products and services.
Source: Georg Fischer AG