Georg Fischer AG

GF Piping Systems increases strong prior-year performance - swift actions to address automotive drop - Seite 2

The business performance of GF Casting Solutions was impacted in the first half of 2019 by the steep drop in production figures for the automotive industry in Western Europe and China and by shifts within the product ranges by important customers. Due to the significant divestment of two large iron foundries in Germany at the end of 2018, sales fell by 43.6% (an organic decline of 11.1%) to CHF 521 million. The performance of organic sales corresponds to the decline in the key markets of China and Western Europe, which led to reduced capacity utilization at several production sites.

The operating result before one-off items fell from CHF 60 million to CHF 20 million, which is equal to an EBIT margin before one-off items of 3.9% (1.2% after one-time items).

The new light metal plant in Mills River (USA) has started operations. The ramp-up of new orders weighed on the half-year result in the amount of CHF 8 million. The large number of new orders required the expansion of the site.

GF is swiftly undertaking actions to ensure its competitiveness in Europe. Over the coming months, approximately 300 jobs should be shifted from the location in Werdohl (Germany) to Romania and Austria. The light metal casting plant has suffered in recent months from the changing market conditions and the shift by customers in their range of products. For the affected employees in Werdohl, the search is underway, together with the workers' council, for socially responsible solutions.

In line with its strategy, GF is also planning to divest the iron foundry in Herzogenburg (Austria), following the divestment of the plants in Singen and Mettmann (Germany). It is foreseen to close the transaction in the second half of 2019. The light metal foundry at the same location is not affected by this measure. This divestment will complete the strategic withdrawal from iron casting in the European automotive industry that was begun in December 2018.

These structural adjustments, including the divestment of the iron foundry in Herzogenburg, will reduce net profit in 2019 and 2020, with planned one-time costs of approximately CHF 65 million. Of these one-time costs, CHF 14 million will be in the first half 2019, approximately CHF 34 million in the second half, and another CHF 17 million in 2020.

At GF Machining Solutions the book-to-bill-ratio was at a good level of 1.1, not least thanks to the strong presence in the aerospace business. In the first half of the year, the division was able to win various large orders from well-known aircraft engine manufacturers.