Record result for Georg Fischer

The Corporation's portfolio was rationalized in 2006 by selling off the non-strategic stakes in Simona and Coperion and by fully integrating GF AgieCharmilles. Georg Fischer further expanded its scope for financial action, and the Corporation's enterprise value increased substantially. Order intake is 12 percent higher than the previous year; with this good backlog, Georg Fischer is starting 2007 with confidence.

The key ratios of all three Corporate Groups are pointing upwards. GF Automotive achieved gratifying progress in both sales and earnings. GF Piping Systems again grew strongly, posting another improvement in earnings on sales that were just below CHF 1 billion. GF AgieCharmilles also grew in a year that was marked by the fast pace of numerous changes and it lifted earnings to a healthy level.

GF Automotive increased sales revenues to CHF 1.93 billion, a 9 percent increase. That this was possible without any investment in additional capacity is due to the constant efficiency gains achieved in the plants. The biggest challenge in the light metal segment was outsourcing production from Munich to other plants at the same time as demand was on the increase and aluminium prices were rising. Posting EBIT of CHF 142 million and an EBIT margin of 7.4 percent, the Corporate Group lifted earnings by 42 percent. It took some key strategic steps towards a more global focus by expanding its business in China and buying a light metal foundry in Canada. GF Automotive increased its order books by 16 percent over the previous year, setting the stage for a strong 2007.

GF Piping Systems took advantage of the favourable economic environment to capture further market share. Sales came to CHF 0.98 billion. Adjusted for disposals and currency translation effects, this equates to organic growth of 16 percent. The growth was driven by all regions, in particular by Eastern Europe, the Middle East and Asia.

The sales increase came to 36 percent in China; 80 percent of the products sold in China were manufactured locally. The markets outside Western Europe now generate 40 percent of the Corporate Group's sales. Sales per customer also increased sharply, which was attributable in part to bundling by application segments. Posting EBIT of CHF 109 million – equivalent to an EBIT margin of 11.1 percent – the Corporate Group improved its profitability by more than a third within a year and has more than doubled it in the past three years. The Corporate Group is poised to maintain its growth course in 2007.

GF AgieCharmilles lifted its sales by 8 percent to CHF 1.14 billion. The increase stems from all market regions. Owing to marked progress in the second half of the year and the ongoing drive to cut costs, EBIT improved to CHF 91 million and the EBIT margin climbed to 8.0 percent. Numerous strategic projects to generate synergies are in full swing and they will have a positive impact on the numbers in the medium term. A slowdown in the growth trend cannot be ruled out for some markets in 2007.

Free cash flow came to CHF 298 million, 62 percent higher than the previous year (CHF 184 million). Net debt was reduced by almost half within a year to CHF 324 million (2005: CHF 606 million). This achievement greatly increases the scope for the Corporation's strategic expansion. Net profit came to CHF 249 million (2005: 175 million), a 42 percent increase in earnings. This equates to earnings per share of CHF 62 (2005: CHF 46). The Board of Directors will propose to the Annual General Meeting that the profit distribution be made in the form of a par value repayment of CHF 25 per share (2005: CHF 15). This is equivalent to a payout ratio of 40 percent.

Georg Fischer is implementing its growth strategy step by step. It continues to give top priority to organic growth by its own efforts, which is expected to be 4 percent per annum in the longer term. In good years, this number must be higher (organic growth in 2006: 9%). The purchase of EDC, a production partner in Canada, has procured GF Automotive a manufacturing base for light metal casting in North America. GF Automotive and GF Piping Systems are working on additional strategic projects. Owing to the implementation of this strategy and the steady improvement in profitability, along with a favourable market environment, the market capitalization of Georg Fischer climbed above the CHF 3 billion mark for the first time at the end of 2006.

Owing to the steady progress achieved in the past three years, Georg Fischer has strengthened the confidence of investors, customers and employees. The situation for 2007 is promising in view of the strong order books and the positive outlook for the economy. Nevertheless, we will continue to make every conceivable effort to improve our efficiency and competitiveness. Georg Fischer will continue to focus on innovativeness as a key to growth. The core businesses will be expanded further. Barring any major changes in the economic environment, Georg Fischer will remain on its growth trajectory in 2007. The employees of Georg Fischer have made this success possible by their commitment and innovative energy. They will make every effort again in 2007 to satisfy our customers and shareholders and to retain the confidence placed in us in future, too. We thank all of them.

Annual General Meeting for the financial year 2006: Wednesday, March 21, 2007, 3:30 p.m., Steel Foundry Assembly Hall, Schaffhausen Publication of mid-year report 2007: July 17, 2007