180718_GF_Mid-Year_Report_2018

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.