Georg Fischer Expects Worst Will Be Over in 09

In its midyear update, industrial group Georg Fischer Corp. reports that the restructuring program it started in May is “working effectively” to reduce overall costs by 350 million Swiss francs (est. $327.5 million) by 2012. The group, which includes ferrous and nonferrous metalcasting plants in its GF Automotive unit, said it expects to post an operating profit in 2010. Georg Fischer consists of three business units: GF Automotive; GF Piping Systems, which produces plastic pipe, joints, valves, and fittings for industrial conveying and treating of liquids and gases; and GF AgieCharmilles, which manufactures EDM systems and other machine tools. In its forecast, GF sees signs that GF Automotive and GF Piping Systems have reached the bottom of their respective markets, but that GF AgieCharmilles has a more uncertain outlook. Georg Fischer Corp. says its first-half results reflect weak global industrial demand. Sales were 39% below its “excellent" results in the first six months of 2008, and the group posted a loss (EBIT) of 122 million Swiss francs (est. $114 million) for the first two quarters of 2009, a figure that includes 59 million Swiss francs (est. $55.2 million) in one-time charges for the restructuring program. The group anticipates that “the worst will be over in 2009,” but it does not expect any sustainable growth before 2011. It contends that 2009 demand is stabilizing at a low level, and that markets will be flat or will recover gradually in 2009. Georg Fischer is forecasting a one-third drop in 2009 sales revenues versus 2008. The ongoing restructuring program involves cost-cutting measures, adjustments to capacity and structures, and divestment of non-essential assets. Specifically, GF Automotive sold its Gleisdorf, Austria, nonferrous diecasting plant to Bavaria Industriekapital AG for an undisclosed price, and it has offered its Garching, Germany, diecasting plant for sale, too. Three plants at Herzogenburg, Austria, will be consolidated, and the shift of production from a Montreal, Quebec, diecasting plant to China will be completed by midyear. Meanwhile, GF started up an iron foundry (it’s first in China) in May; its light metal foundry in Suzhou, China, has been in operation for several years, and will be absorbing operations from the Montreal plant. The group confirmed that it is concentrating its automotive production capacity in China, the world’s largest automotive market.