180718_GF_Mid-Year_Report_2018

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12 13 Consolidated financial statements Notes to the consolidated interim financial statements Segment information as of 30 June GF Piping Systems GF Casting Solutions GF Machining Solutions Total segments CHF million 2018 2017 2018 2017 2018 2017 2018 2017 Order intake 981 851 875 709 551 508 2’407 2’068 Orders on hand 138 85 461 342 252 246 851 673 Sales 1 947 826 924 723 525 444 2’396 1’993 Operating result (EBIT) 115 97 60 53 42 28 217 178 Return on sales (EBIT margin) % 12.1 11.7 6.5 7.3 8.0 6.3 1 Sales between segments are insignificant. Reconciliation to the segment information as of 30 June CHF million 2018 2017 Sales Total sales of reportable segments 2’396 1’993 Elimination of intercompany sales –1 Consolidated sales 2’396 1’992 Operating result (EBIT) Total EBIT for reportable segments 217 178 Other operating result (EBIT) –9 –10 Consolidated operating result (EBIT) 208 168 1 Income statement 1.1 Sales In the first half of 2018, sales increased by 20% to CHF 2’396 million. The positive currency effect of 5% amounted to CHF 97 million. The newly acquired companies contributed CHF 69 million, representing 3% of the growth in sales. The organic growth rate after adjusting for these effects came to 12%. In the first six months of 2018, the prices for scrap iron and aluminum increased again. As in the prior year, this had a positive impact on sales of 2.5% for GF Casting Solutions and 1.0% for the Corporation as a whole. The Corporation’s organic growth rate after adjusting for these effects stood at 11%. All three divisions reported double-digit growth in sales compared with the prior year. GF Piping Systems’ growth of 15% was largely due to sales in America and Asia. GF Casting Solutions’ 28% increase in sales was due, on the one hand, to 11% higher demand for innovative, light castings and, on the other hand, to positive currency and metal prices. The contribution of the newly acquired companies, GF Pitesti in Romania and the Precicast Group, was also a factor. GF Machining Solutions increased its sales by 18% thanks to the high number of orders on hand as of the end of 2017 and a strong order intake in the first six months of the year. All of the technologies contributed to this growth.
1.2 Operating result (EBIT) The operating result (EBIT) grew by 24% compared with the prior year to CHF 208 million, which represents an increase of CHF 40 million in EBIT and a margin of 8.7% (prior year: 8.4%). The positive currency translation differences increased the EBIT number by CHF 6 million. In the first six months of the year, GF Piping Systems recorded EBIT of CHF 115 million (prior year: CHF 97 million), which represents a 19% increase. This strong operational performance resulted in an EBIT margin of 12.1% (prior year: 11.7%). GF Casting Solutions recorded an operating result of CHF 60 million (prior year: CHF 53 million). The initial costs for the new die casting foundry (GF Linamar) in Mills River (USA), which started operations at the end of the first half of the year, and the higher metal prices reduced the operating result by CHF 10 million. Whereas the Euro had a positive effect of CHF 59 million on sales, the impact on the operating result was only CHF 3 million due to purchases in matching currencies. This effect led to a decrease in the EBIT margin to 6.5% (prior year: 7.3%). GF Machining Solutions increased its operating result by CHF 14 million, i.e. 50%, to CHF 42 million. Strong demand from the electronics and aerospace industries in Asia and Europe meant that plant utilization was high. 1.3 Financial result and taxes As of 21 March 2018, the CHF 150 million 1.5% bond, maturing on 12 September 2018, was refinanced early by means of a new CHF 200 million 1.05% bond. This resulted in an additional interest rate charge of CHF 0.5 million. The improved results meant that income taxes increased by CHF 8 million to CHF 39 million, which corresponds to a tax rate of 20%, as in the prior year. 1.4 Net profit and earnings per share Net profit after minorities increased by 27% to CHF 150 million. Earnings per share grew to CHF 37 (prior year: CHF 29). 2 Balance sheet Total assets increased by CHF 248 million to CHF 3’858 million compared with 31 December 2017. The strong sales growth led to increases in accounts receivable from customers and in inventories. Additionally, the acquisition of the Precicast Group beginning of April 2018 and the strengthening of the relevant foreign currencies against the Swiss franc also contributed to the increase. These effects contributed equally to the higher total assets. 2.1 Current assets Current assets account for almost two-thirds of total assets. Current assets grew by CHF 205 million compared with the end of 2017, thus representing the majority of the increase in total assets. These balance sheet items are higher at mid-year than at year-end for seasonal reasons. Inventories grew by CHF 135 million to CHF 908 million, while accounts receivable from customers grew by CHF 155 million to CHF 909 million. The strong organic growth of 12% and high orders on hand at GF Machining Solutions coupled with the guaranteed availability of certain groups of materials contributed further to this increase. The new acquisition contributed CHF 93 million to this increase. Cash and cash equivalents decreased by CHF 96 million in the first half of the year due to the payment of a dividend of CHF 99 million and the acquisition of the Precicast Group. 2.2 Non-current assets Non-current assets as of 30 June 2018 amounted to CHF 1’376 million, which represents an increase of CHF 43 million in the first six months of the year. In the first half of the year, investments in property, plant, and equipment were CHF 94 million, whereas depreciation amounted to CHF 72 million. 43% of the investments related to the Innovation and Production Center in Biel (Switzerland) at GF Machining Solutions and the die casting foundry GF Linamar at GF Casting Solutions in Mills River (USA). The recent acquisition contributed CHF 32 million to the increase of noncurrent assets. 2.3 Liabilities The debt ratio as of 30 June 2018 was 65%. Compared with the prior year, liabilities increased by CHF 278 million. CHF 200 million of this amount relates to the 1.05% ten-year bond issued in March. Trade accounts payable grew by CHF 20 million and other liabilities as well as accrued liabilities by CHF 41 million due to production and capacity utilization. The newly acquired Precicast Group contributed CHF 37 million to total liabilities.
Page 1 and 2: Mid-Year Report 2018 Driving profit
Page 3 and 4: Content Sales per region (in %) (10
Page 5 and 6: Yves Serra, President and CEO (left
Page 7 and 8: Income statement CHF million Notes
Page 9 and 10: Statement of changes in equity CHF
Page 11: Corporate accounting principles Bas
Page 15 and 16: CHF million Precicast Industrial Ho

180718_GF_Mid-Year_Report_2018

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