As partner of the two month long entrepreneurial leadership seminar, Georg Fischer worked together with 18 master students of the ETH Zurich to figure out how Cleantech drives innovation. The students worked on real business cases in strategy, innovation, and leadership in all three divisions. The results will be integrated into current and future projects at Georg Fischer.
|million CHF ||2012||2011||2010|
|Return on sales (EBIT margin) %||6.1||6.6||5.2|
|Return on invested capital (ROIC) %||12.1||13.4||9.1|
|Free cash flow||19||103||150|
|Dividend (proposed) per registered share in CHF||15||15||10|
|Employees at year-end||13 412||13 153||12 908|
Letter to the Shareholders
Resilient thanks to global footprint
Despite a clear market slowdown in Europe, Georg Fischer generated a turnover of CHF 3.6 billion in 2012, 3 percent above the 2011 figure. On a like-for-like basis, sales reached the same level as in 2011. All three divisions both considerably increased their sales in Asia and the Americas and continued to generate value.
Operating profit (EBIT) reached CHF 221 million, down from CHF 233 million in 2011 on account of low capacity utilization at several European plants. As a result, the EBIT margin (ROS) stood at 6.1 percent versus 6.6 percent in 2011, and the return on invested capital (ROIC) stood at 12.1 percent versus 13.4 percent in the previous year. Nevertheless, all three divisions continued to generate value. The equity ratio increased again to 44 percent, up from 42 percent in 2011. Free cash flow before acquisitions reached CHF 97 million, slightly below the 2011 figure of CHF 103 million.
The three divisions of Georg Fischer reported mixed growth patterns in 2012. Whereas GF Piping Systems and GF AgieCharmilles increased their top line, GF Automotive suffered a drop of 5 percent due to its large exposure to the European car and truck market.
Headcount went up by 259 to 13,412 employees. More personnel was hired in the growing markets of Asia. In America headcount increased on account of the two acquisitions.
Net profit reached CHF 127 million after the CHF 28 million non-cash impact of the GF Automotive divestments. Earnings per share stood at CHF 30, including the abovementioned one-off effect. The Board of Directors will propose an unchanged dividend of CHF 15 at the Annual Shareholders’ Meeting.
Chairman of the
Board of Directors
President and CEO
Corporate Report 2012
Topics of the Corporate Report
Interview with CEO Yves Serra
This annual report has been released under the title “All about you”. What is the idea behind it?
“All about you” encapsulates our attitude towards our customers. We want to give them an outstanding service and be better than our competition in quickly understanding and addressing their needs.
What does this mean more specifically for the three divisions of Georg Fischer?
In the automotive business for instance, our customers need, until 2020, to drastically reduce the CO2 emissions of the cars they sell. One way is to reduce the weight of the cars. This is what we can contribute through new materials and part designs which reduce weight by 20 percent to 30 percent. At GF Piping Systems our contribution is to offer safe and secure water networks free of leaks and contamination. I think here for example about preventing chemical spillage or the proliferation of legionella in hospital pipes. And at GF AgieCharmilles we develop machinetools which allow our customers to achieve the highest precision and best surface finishes required for the production of smartphones or LEDs.
How relevant in this respect is the close contact to the clients?
Keeping in close touch with our customers allows us to quickly understand their future needs as well as what we can improve on their behalf. In addition, our managers frequently visit the customers to underline how much we care for them and to give the right signal within the organization.
Employees shown in your report illustrate a customer-oriented attitude. How do you make sure that this value is delivered and reinforced within Georg Fischer?
First of all we focus ourselves on those market segments where we believe we can bring to our customers a superior offering. Secondly we train our employees to work together as a team in order to serve our customers more quickly and more efficiently. Assume for a second that one of our customers overseas is not satisfied with one of our products and that our local company cannot find a solution. It is imperative that our research and development crews quickly offer their support. Teamwork training helps in that respect, because employees learn to know and trust each other despite cultural and language differences. And finally we celebrate successes and especially shared successes, how for example the good collaboration of two or more of our companies allowed us to enter a new market or gain the trust of a new customer.
You have been mentioning for years the need for Georg Fischer to achieve a balanced presence worldwide. Where is Georg Fischer today regarding this topic?
Ten years ago more than three quarters of our sales were generated in Europe. In 2012 more than 40 percent of our turnover was achieved outside of this region. During that period each of our three divisions has experienced an accelerated shift of their markets towards Asia. Today, more than 50 percent of the machine-tools sold worldwide are sold in China, as well as 25 percent of all cars. And if we look at market dynamics, chances are this shift is not over. In addition, we saw in America new opportunities especially in water infrastructure where our presence was insufficient. This is why we increased our investments and acquisitions in Asia and in America in the past decade. And we will probably continue to do so to achieve step-by-step a more balanced presence worldwide, in line with the respective importance of each region for our relevant markets.
On which areas will you focus in the coming months?
We will further implement our strategy by adapting our portfolio towards Asia and America, but also towards less cyclical market segments in all three divisions. We will continue to do our best to attract talents not only in Switzerland but worldwide. Finally, we will keep on offering innovative solutions in order to remain our customer’s first choice.
Corporate organization and structure
Organization of Georg Fischer
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.
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.
Georg Fischer Corporation is organized in three divisions and two Corporate Staff Units. The divisions are GF Piping Systems, GF Automotive and GF AgieCharmilles. 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.
The CEO and the CFO form the Corporate center in the narrower sense. The Corporate center is closely involved in management, planning, communications, finance, management development, and corporate culture and is supported in these tasks by a team of about 50 people. The Corporate center ensures that risk management, 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.
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 in Georg Fischer and a presence and reputation in the public sphere from which all divisions benefit. Internal and external communications and investor relations (i. e. relations with the financial markets) reinforce the public perception and the image of the Corporation.
A shared corporate culture is the basis for overall sustainable development and is 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 this corporate culture. Open, active, and timely communication with employees, customers, investors, and the public makes for both credibility and trust.
For detailed information about the Corporate Governance of Georg Fischer see pages 44 to 55.