Georg Fischer Business report FY2006

Business Highlights

Business overview
For FY2006, GF Automotive grew by 9% in an economic environment that was favorable on the whole. Sales reached CHF 1.93 billion (2005: CHF1.76 billion), with the second half of the year making a particularly large contribution to the steep rise in revenues.
Cast iron production had a record year. Output reached 440,000 tonnes, the highest level ever.
The increase in production was achieved solely by improvements in operating efficiency, as a result of which the division gained additional capacity. In the light metal segment, GF Automotive had to cope not only with the closure of the Munich plant but also with the demands of outsourcing just as capacity utilization in the pressure die casting facilities was increasing. The takeover of the ThyssenKrupp Elevator production with its order books made GF Automotive into one of the world's largest manufacturers of elevator steps. The sophisticated parts are produced in Herzogenburg and Suzhou. The pressure die casting plant in Suzhou (China) is a success and is in profit territory in the first year of operation. The first stage of expansion has already been completed in order to adjust to the rise in order volume. The expansion in China is set to continue.
In December 2006, the Company acquired the entire capital of E.D.C. Inc., Montreal, with effect from December 31, 2006. The foundry's pressure die casting operations produce light-metal components for the automotive industry and other industrial sectors. With this strategic move, Georg Fischer has taken another step towards gaining direct access to the important North American automotive and commercial vehicle market.
About E.D.C.
-Founded in 1940
-70 employees
-Specialized in aluminum pressure die casting
-Has been manufacturing a panel and slide for a customer in the NAFTA market on behalf of GF since 2005.

Concentration of Aluminium Production Facilities
- On June 21, 2005, the Company announced that it would concentrate its manufacturing of aluminum die cast parts, shifting production from Georg Fischer Druckguss GmbH in Munich to its Austrian sites in Herzogenburg, Altenmarkt and Gleisdorf. In an internal comparison, it was found that the Munich site operated far less efficiently owing to specific negative factors such as high wage costs and an unfavorable infrastructure.


R&D Expenditure

 in million (CHF) 2006 2005 2004
Group total 131 124 114

GF Automotive

58 53 52

- Group-wide, a total of 600 employees work in R&D.
- The amount invested in R&D is equivalent to 3% of sales.
- The Company has over 4,000 patents and on average applies for around 50 new patents a year.

Technological Alliance
In May 2006 Georg Fischer Automobilguss GmbH, Schaeffler KG and Knorr-Bremse Systeme fur Nutzfahrzeuge GmbH signed a co-operation agreement for the development, production and sale of wheelends for trucks, trailers and buses in Europe. The companies intend to develop innovative solutions aimed at increasing the operating life, improving the serviceability and reducing the weight of brake discs and wheel bearings.

Investment Activities

- The Company's investments in plant and equipment amounted to CHF 138 million. GF Automotive amounted for 60% of the total. The geographical focus on Europe will basically remain unchanged. However, all three Corporate Groups attach great importance to Asia, and in particular to the Chinese market.

Overseas Investments
The Company announced that its new light metal foundry in Suzhou was officially inaugurated. The plant began operations in mid-August, and the number of machinery is being gradually expanded. The overall plan calls for expansion to reach a maximum of four buildings with about 24 casting machines.
Its customer base includes, in addition to several European companies, two emerging Chinese automotive manufacturers, Cherry (headquartered in Wuhu, Anhui province) and Great Wall Motors (headquartered in Baoding, Hebei province). Both these companies are now ready to take on the North American market with new models, for which Georg Fischer will supply the engine blocks and aluminum die cast parts.