Georg Fischer AG: Performance substantially improved despite headwinds

Georg Fischer increased its sales by 6 percent to CHF 3.64 billion with solid growth in all regions of the world. Whereas the top line went up 10 percent during the first half year, growth slowed down to 1 percent in the second half. This compares however to a very strong second semester in 2010.

Georg Fischer raised its operational result by 31 percent to CHF 235 million (previous year CHF 180 million). As a result, the EBIT margin (ROS) went up to 6.5 percent (previous year 5.2 %), and the return on invested capital (ROIC) reached 13.3 percent against 9.1 percent in 2010. The net result jumped 56 percent to CHF 168 million, and the profit per share to CHF 39 against CHF 24 in 2010. Free cash flow amounted to CHF 103 million against CHF 150 million in 2010. The overall headcount increased by approx. 700 to 13,606 employees. The bulk of the increase took place in Asia. Personnel costs remained below the 2010 level in Swiss franc terms.

In view of the clearly improved result and in accordance with the dividend policy of the Corporation, the Board of Directors will propose to the Annual General Meeting a dividend payout of CHF 15 per share (previous year CHF 10).

Early measures mitigated the currency impact
The currency effects in 2011 were considerable. At 2010 rates, sales would have reached CHF 4.1 billion for a 18 percent increase and operating profit CHF 312 million (+73 % versus the previous year) for a 7.7 percent ROS.

The currency impact affected GF Piping Systems and especially GF AgieCharmilles, as an important part of their production takes place in Switzerland. However, thanks to the measures taken early in the year such as price adjustments and increased procurement in euros, both Corporate Groups limited the impact.

Georg Fischer will continue to implement these measures in 2012 in order to reduce its overall net currency exposure.

All three Corporate Groups clearly generate value
GF Piping Systems reported sales of CHF 1.17 billion, unchanged from 2010. In local currencies, sales increased by 11 percent.

After a strong first half, demand growth slowed down in the second half, especially in Europe, whereas growth in the US and in Asia remained stable at a high level. Utilities, water treatment, mining but also the building technology applications of GF Piping Systems enjoyed robust growth but more cyclical business areas such as semi-conductors and photovoltaics went into a clear downturn.

Countermeasures were taken early in the year, which allowed GF Piping Systems to reduce the impact of the Swiss franc appreciation and book operating profit of CHF 137 million, equal to the previous year record, for a strong ROIC of 16.6 percent (previous year 17.7 %).

In October, GF Piping Systems opened its eleventh and largest plant in China, allowing the Corporate Group to better cover the Chinese territory. New logistics centers have been opened in Atlanta, USA, for North America and in Singapore for Southeast Asia, while the main hub in Schaffhausen has been enlarged. In December, Georg Fischer acquired Harvel Plastics (which will be consolidated as of 2012), the leading industrial pipe manufacturer in the US, thus significantly strengthening the position in that country.

GF Automotive increased its sales 7 percent to CHF 1.66 billion. In local currencies, the growth amounts to 20 percent. Truck-related demand remained buoyant and passenger-car- related sales were stable at a high level all through the year, thanks to sustained demand from premium manufacturers for mid- and high-end vehicles. Sales in the second half were slightly below the first half owing to seasonal effects, especially the customer holidays in August and December.

Whereas primary raw material prices for aluminium or scrap iron were stable on the whole throughout the year, secondary raw material prices went up significantly from the outset, especially rare earths, but also coke, manganese, and copper. This led to a significant increase of about CHF 25 million in input costs, thus eroding margins.

Nevertheless, GF Automotive significantly increased its operating profit from CHF 37 million in 2010 to CHF 71 million in 2011 for a much improved ROIC of 11.9 percent (5.9 % in 2010).

GF Automotive is investing in a state-of-the-art moulding line in its iron foundry in Mettmann, Germany. The facility, which will be commissioned in the second half of 2012, aims at maintaining and enhancing productivity and competitiveness in its core market, Germany. In China, the capacity of the two GF Automotive plants is being steadily enhanced to cope with demand. In the US, a license and partnership agreement has been signed with Grede, spreading the use of the successful SiboDur® iron alloy but also allowing GF Automotive to cover its customer needs in the US.

GF AgieCharmilles enjoyed healthy sales growth of 11 percent in Swiss francs in 2011, as much as 25 percent in local currencies. Sales grew to CHF 800 million. The order intake also jumped 26 percent in local currencies and the backlog at year-end was 49 percent higher than previous year. New products generated significant revenues especially on the milling side. Markets also developed positively in 2011, in Europe generally and particularly in Germany. In China, inflationfighting measures and credit restrictions significantly affected small and medium sized customers but major orders were booked with major customers. The culmination came at yearend with the largest single order ever for almost 100 machines placed by a well-known manufacturer of components for electronic devices.

Contact
Georg Fischer AG Amsler-Laffon-Strasse 9 8201 Schaffhausen Urs Frei Leiter Konzernkommunikation Tel. 052 631 26 31 Fax 052 631 28 63 urs.frei@georgfischer.com

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