The figures 2011 have not been adjusted according to Swiss GAAP FER.
|million CHF ||2013||2012||2011|
|Return on sales (EBIT margin) %||6.7||6.0||6.5|
|Return on invested capital (ROIC) %||16.7||15.7||13.3|
|Free cash flow before acquisitions/divestitures||174||99||103|
|Dividend (proposed) per registered share in CHF||16||15||15|
|Employees at year-end||14 066||13 412||13 606|
Innovation at GF
Acting on our customers' needs
At GF innovation processes are based on a close collaboration with customers in order to address their specific needs. GF’s quest for customer-oriented solutions is reflected in its global R&D centers, which contribute their expert knowledge to the development of well-adapted solutions – to remain our customers’ first choice.
All about GF
Our Profile //
GF comprises three divisions GF Piping Systems, GF Automotive, and GF Machining Solutions. Founded in 1802, the Corporation is headquartered in Switzerland and is present in 32 countries, with 124 companies, 48 of them production facilities. Its approximately 14 000 employees generated sales of CHF 3.77 billion in 2013. GF is the preferred partner of its customers for the safe transport of liquids and gases, lightweight casting components in vehicles, and high-precision manufacturing technologies.
GF Piping Systems
GF Piping Systems is a leading supplier of piping systems made of plastics and metal. The division focuses on system solutions and high-quality components for the safe transport of water and gas in industry, utility, and building technology. Its product line includes fittings, valves, pipes, automation and jointing technology and covers all water cycle applications.
GF Piping Systems supports its customers in over 100 countries
through its own sales companies and representatives. The division is
present in Europe, Asia and the Americas withmore than 30
manufacturing sites and research and development centers, which also
energy-saving use of raw materials and resources.
GF Automotive is a technologically pioneering development partner and manufacturer of lightweight cast components and systems made of ductile iron, aluminum and magne-sium for the global automotive industry as well as a variety of industrial applications. The highly complex lightweight com-ponents contribute to making modern vehicles lighter and reducing the CO2 emissions.
GF Automotive manufactures some 600 000 tons of lightweight components at 9 production plants in Germany, Austria, and China. In those countries as well as in Switzerland, Korea and Japan it operates sales offices. The lightweight research and development competency is in Schaffhausen (Switzerland) and Suzhou (China).
GF Machining Solutions
GF Machining Solutions’ electrical discharge, high-speed milling and laser texturing machines, along with automation solutions, make it the world’s leading provider to the tool and mold making industry and to manufacturers of precision components. Most important customer segments are information and communication technology, aerospace, and the automotive industry.
The division has its own sales companies in more than 50 countries
and production plants in Switzerland, Sweden, and China. GF Machining
Solutions operates research and development centers in Meyrin, Losone,
and Nidau (Switzer-
land), Vällingby (Sweden), Beijing, and Changzhou (China).
At the 4th GF Technology Day in October more than 60 analysts and journalists came for a presentation of several key innovations and for a glimpse at what is in store at GF regarding technology. The company invested more than CHF 100 million in research & development and registered 46 new patents last year. The three divisions showcased their latest innovations that were explained during workshops and key notes by the heads of the divisions.
Revisit on YouTube // GF is present on Social Media channels. The video of the Technology Day you can see below is also available on our YouTube channel.
Letter to the Shareholders
A substantial rise in performance
GF generated sales of CHF 3 766 million in 2013 for a nominal increase of 1%. On a like-for-like basis, corrected for changes in the scope of consolidation and currency effects, growth amounted to 2%.
After a weak first quarter, sales recovered especially in the second half year, which showed growth of 4% on the back of better market conditions but also market share gains.
Operating profit (EBIT) rose 13% to CHF 251 million as plants were better loaded in the second half and overhead costs were kept at the previous year’s level.
The EBIT margin went up from 6.0% to 6.7%, and the return on invested capital (ROIC) from 15.7% to 16.7%. All three divisions contributed to the profitability increase and generated ROICs well above their cost of capital.
Free cash flow before acquisitions went up 76% to CHF 174 million thanks to the higher profit but also as net working capital was kept at previous year level and capital expenditures went slightly down.
The number of employees increased by 654 to 14 066 mainly on account of the acquisition of Hakan Plastik (Turkey) in July 2013.
Net profit grew 5%, amounting to CHF 145 million after the deduction of CHF 26 million resulting from the divestment of the gravity die-casting business of GF Automotive.
Earnings per share stood at CHF 34, after the above mentioned one-off effect. The Board of Directors will propose a dividend of CHF 16 (CHF 15 in 2012) at the Annual Shareholders’ Meeting.
Significant progress towards strategy implementation //
The acquisition in July 2013 of Hakan Plastik, a leading Turkish plastic piping systems manufacturer with annual sales of CHF 100 million, brings GF Piping Systems a strong presence in Turkey, in the Middle East and Eastern Europe as well as a whole array of complementary products, which will be sold by the whole GF Piping Systems sales organization.
The divestment of the aluminum gravity die-casting plant of Herzogenburg (Austria) at the beginning of 2014 allows GF Automotive to focus on its core iron sand casting as well as aluminum and magnesium pressure die-casting activities.
The cost reduction program of CHF 25 million announced at the beginning of the year has been implemented in full and already supported the second-half result. It will be fully effective in 2014.
All three divisions increased their sales and operative profits
Working together to serve our customers
We express our gratitude to our investors and our banks for their continuing trust as evidenced by the successful placement of our two bonds in 2013.
We also send our heartfelt thanks to our customers for their constant feedback and close collaboration which inspires and allows us to serve them better and quicker. Finally, our special thoughts go to our employees whose willingness to live up to our values and work together across borders makes all the difference.
Chairman of the
Board of Directors
President and CEO
Corporate Report 2013
Topics of the Corporate Report
Yves Serra, CEO interview
“Customers are a key source of inspiration for us”
“Innovations – inspired by our customers” is the title of your annual report. What do you mean by this?
Customers are a key source of inspiration for us. By noticing how they use our products, by working together on addressing their needs, we bring about innovations which have a better chance to really serve them.
Can you provide examples of such GF innovations?
Take the three cases presented on the following pages. GF Piping
Systems developed the large-size fittings and valves as well as all
sensors required for the huge amount of water used at the vast
water-based amusement park near Sydney. We guarantee therefore their
compatibility, eliminating leaks and contamination. GF Automotive was
involved in the development of the new DAF commercial vehicle at a
very early stage and designed components which allow DAF to reduce the
weight of each truck by 70 kilograms. This clearly helps to reduce
diesel consumption and CO2 emissions. In the aeronautics sector,
GF Machining Solutions worked together with its customer MTU and adapted its high speed milling machines, inclu-ding a new CNC (Computerized Numerical Control) to fit the needs of its customer regarding the large scale produ-ction of blisks for the new aircraft engines to be mounted on the Airbus A320neo.
GF has decentralized its R&D centers. Why?
Customers in our market sectors want to have partners who are located in their countries and therefore who can better understand their needs and quickly act upon them. That is why we have decentralized R&D operations in the major markets where we operate, in Europe, in the Americas, and in Asia.
"Customers in our market sectors want to have partners who are located in their countries."
What is the role of Switzerland in this regard?
We have over the years accumulated a huge amount of expertise in Switzerland and our central R&D facilities and are therefore located in this country. In addition, we are producing the core components for our machine tools or our piping systems in Switzerland because this is where we have the know-how to do so. The R&D facilities worldwide benefit from the support of our engineers based here, for example in the transfer of technology and expertise. We also coordinate from Switzerland the worldwide R&D activities to make sure of their efficiency and avoid duplications.
All the more important to have the right talents. What are you doing to make GF attractive to them?
We continuously offer a large amount of internships to business and engineering students across the world. We collabo-rate on numerous research and development projects with the key universities located in the main markets. For example, in 2012 we started a new collaboration with the Department of Management, Technology and Economics (MTEC) at ETH Zurich, one of the world’s leading universities. The project, which will continue in 2014, offers master class students pro-jects for their theses which give them insights into an actual company environment, while we get an outside perspective and new ideas. All the above we do to make sure GF not only remains but is also regarded as an attractive employer offering interesting jobs internationally.
Organization of GF
Georg Fischer Ltd, the Holding Company of the Georg Fischer Corporation, is organized under Swiss law, headquartered in Schaffhausen (Switzerland) and listed on the SIX Swiss Exchange.
Board of Directors //
The ten members of the Board of Directors, elected individually by the Shareholders’ Meeting, are responsible for determining the Corporation’s strategic direction, the design of accounting, the financial controlling and financial planning. It appoints the Executive Committee and has ultimate responsibility for supervising and monitoring the management of Georg Fischer Ltd. All members of the Board of Directors are non-executive.
A shared corporate culture is becoming increasingly important with the spread of internationalization.
Executive Committee //
The Chief Executive Officer is responsible for the management of the Corporation. Under his leadership, the Executive Committee addresses all issues of relevance to the Corporation, takes decisions within its remit and submits proposals to the Board of Directors. The Heads of the Divisions and the Corporate Staff Units are responsible for drafting and achieving their business objectives and for managing their units autonomously.
Corporate structure //
GF Corporation is organized in three divisions and two Corporate Staff Units. The divi-sions are GF Piping Systems, GF Automotive and GF Machining Solutions. The Corporate Staff Units are Finance & Controlling and Corporate Development. The Heads of the Divisions and the Corporate Staff Units are responsible for managing their businesses and for achieving their business objectives.
Corporate center //
The CEO and the CFO form the Corporate center in the narrower sense. The Corporate center is closely involved in management, planning, IT, communications, finance, management development, and corpo-rate culture and is supported in these tasks by a team of about 50 people. The Corporate center ensures that risk manage-ment, transparency, corporate governance, sustainability, and compliance practices meet the requirements of the owners and the public, and it supports the Board of Directors in meeting its responsibilities.
Corporate Finance & Controlling uses powerful information systems to ensure the time-critical financial management of the Corporation. A standardized system of financial reporting is used throughout the entire Corporation, guaranteeing immediate and complete transparency. Currency, interest-rate, and credit risks are monitored and managed at Corporation level.
Management development //
Strategically important competencies and information are shared and made available throughout the Corporation. Considerable importance is attached to internal training and to the focused nurturing and development of leaders and managers.
The Corporation has a strong brand with GF. In 2013, the company has implemented a rebran-ding and an alignment of its brand architecture. A new Corporate Design has been adopted worldwide throughout all three divisions in October. The new Corporate Design, internal and external communications as well as investor relations (i.e. relations with the financial markets) reinforce the public perception and the image of the Corporation.
Corporate values //
Shared corporate values are the basis for overall sustainable development and are becoming increasingly important with the spread of internationalization. The Corporate center conveys and promotes the fundamental corporate values throughout the company, thereby nurturing and fostering its corporate culture. Open, active, and timely communication with employees, customers, investors, and the public makes for both credibility and trust.
Corporate Governance //
For detailed information about the Corporate Governance of GF see pages 40 to 49 in the Annual Report 2013.
Download Organization of GF
The Board of Directors and Executive Committee of GF attach very great importance to good Corporate Governance in the interest of shareholders, customers, business partners, and employees. The implementation and ongoing improvement of the generally accepted principles of Corporate Governance ensure the necessary transparency to enable investors to judge the quality of the Corporation. This Report provides information on structures and processes, areas of responsibility and decision-making procedures, control mechanisms as well as the rights and obligations of the various stakeholders.
The present publication fulfills all obligations of the relevant SIX Swiss Exchange directive on information relating to Corporate Governance in terms of content and order and is based on the Swiss Code of Best Practice for Corporate Governance of economiesuisse, the Swiss Business Federation. The Compensation Report is presented in a separate chapter on pages 50 to 57. All data and information apply to the cutoff date of 31 December 2013, unless otherwise noted. Any changes occurring before the copy deadline on 14 February 2014 are listed at the end of this chapter. Any changes occurring after the copy deadline can be found on our website.
More information about Corporate Governance
This remuneration report provides information about the compensation policy, the compensation programs and the process of determination of compensation applicable to the Board of Directors and to the Executive Committee of GF. It also includes details on the compensation payments related to 2013. This report is written in accordance to the transparency regulations of the Swiss Code of Obligations Art. 663b bis and 663c, the standards related to information on Corporate Governance issued by the SIX Swiss Exchange and the principles of the Swiss Code of Best Practice for Corporate Governance of Economiesuisse.
The remuneration paid in accordance with the abovementioned provisions of the Code of Obligations is listed and commented in the consolidated financial statements (Annual Report 2013, page 102) and in the statements of Georg Fischer Ltd (Annual Report 2013, pages 114 to 116).