The geopolitical uncertainties affected the global economy in the first half of 2019 and have become even more evident in the second semester of the year. The trade tensions between USA and China, the lengthy Brexit discussions, ongoing confrontations in the Middle East region and in particular, the transformational change in the automotive business led to economic headwinds. As a consequence, the business sentiment in key industries and markets was affected by these uncertainties, creating a more challenging environment for GF.
GF sales amounted to CHF 3'720 million (2018: CHF 4'572 million), a decline of 18.6%. The development was primarily due to the proactive withdrawal of GF Casting Solutions from the iron casting activities in the European automotive industry and negative currency effects of CHF 88 million. Organically, sales decreased by 4.1%. The organic decline in the second half of the year decelerated to 2.5% versus a 5.5% decrease in the first semester 2019. Whilst GF Piping Systems grew organically by 1.3%, sales of GF Casting Solutions and GF Machining Solutions organically decreased by 9.7% and 7.5% respectively. GF increased the top line in the Americas, whereas markets in Europe and Asia recorded a lower sales volume.
The operating result (EBIT) amounted to CHF 281 million before one-off items compared to
CHF 382 million in 2018, equal to an EBIT margin (ROS) of 7.6% (2018: 8.4%). Including
one-off items amounting to CHF 46 million in connection with initiated structural adjustments of GF Casting Solutions, the EBIT was CHF 235 million (EBIT margin 6.3%).
The return on invested capital (ROIC) reached 12.4%. GF Piping Systems achieved a remarkable ROIC figure of 26.1%. As a result of the divestment at GF Casting Solutions, the number of employees at year-end fell to 14'678 (2018: 15'027).
GF's net profit after minorities amounted to CHF 173 million (2018: CHF 281 million). The free cash flow before acquisitions reached CHF 137 million, which is CHF 10 million below previous year's level. Earnings per share reached CHF 42 compared to CHF 69 in 2018. The Board of Directors will propose at the upcoming Annual Shareholders' Meeting a dividend per share of CHF 25 on strong previous year's level. GF is well positioned in its markets and the focus on less cyclical market segments has increased the resilience of GF to economic slowdowns. These efforts will be pursued in the years to come.