Georg Fischer AG

GF Piping Systems increases strong prior-year performance - swift actions to address automotive drop

Announcement according to SIX adhoc publication article 53 KR

Schaffhausen (pta006/18.07.2019/07:00) - * Sales decrease 5.5% organically to CHF 1'915 million
* EBIT margin before one-off items of 8%
* Operating result (EBIT) before one-off items of CHF 153 million
* Measures at GF Casting Solutions generate one-off items of about CHF 65 million, of which CHF 48 million in 2019
* Implementation of Strategy 2020 is fully on track

In the first half of 2019, geopolitical uncertainties such as the trade dispute between the USA and China, the situation in Middle East and the upcoming Brexit in Europe had a negative impact on the economic environment.

Sales at GF experienced a 5.5% organic decline in the first half-year of 2019. The decrease compared to the prior year of CHF 1'915 million (-20%) was due primarily to the divestment of two iron foundries in Germany at the end of 2018 with sales of approx. CHF 350 million. The operating result compared to the year before declined 26.4% to CHF 153 million, which is equal to an EBIT margin of 8.0% (prior year: 8.7%), or 7.3% if one-off items of CHF 14 million are taken into account. The return on invested capital (ROIC) was 13.8% compared to 21.2% in the first half of 2018. Net profit after minorities and one-off items was CHF 101 million compared to
CHF 150 million in the first semester of 2018.

Free cash flow before acquisitions was CHF -58 million in the first semester compared to CHF -55 million during the same period in 2018. For the year as a whole, GF expects free cash flow before acquisitions to be in line with our published range of CHF 150 to 200 million.

GF Piping Systems was able to increase its profitability once again despite the challenging environment. Most of the production plants were well utilized in the first half of 2019. The ongoing focus on higher-margin products and solutions contributed to the result as well. The division continued to benefit from the global trend for sustainable and safe solutions for the transport of liquids, especially drinking water.

The strong sales in the first half of 2018 - corrected for currency effects - were maintained at CHF 921 million. The operating result of CHF 117 million was ahead of the prior-year result. The division was able to increase its EBIT margin above the prior-year period by 60 basis points to 12.7%. The strong momentum continued in the US and European markets in particular. The mood among Chinese customers was clouded by the trade tensions with the USA.