Georg Fischer : responds to changed economic conditions

After a sales growth of 6% and an EBIT margin of 6.6% for the first six months of 2008, Georg Fischer expected in July 2008 to be able to repeat this result in the second half of the year, providing external factors remained stable. As expected, the Corporation further increased its sales compared with the previous year during the third quarter of 2008. Since October, however, conditions have changed dramatically - the economic downturn has hit the automotive sector and the machine-tool industry particularly hard. In addition, the euro has weakened significantly against the Swiss franc since mid-September 2008.

Until the end of September 2008, GF Automotive enjoyed buoyant demand in both the passenger and commercial vehicle markets. Production plants were operating above capacity. Starting in October, various carmakers have drastically scaled back production, and orders for cast parts have been revised or postponed. As a result, within a few weeks, most GF Automotive production plants have gone directly from a situation of overload to one of under-utilisation. Georg Fischer reacted swiftly and has adjusted production volume to the change in conditions. Additional measures to boost efficiency are in place, and Georg Fischer is carefully examining each of the Corporate Group's sites in order to align production capacity with demand. It is not possible today to predict how long the slump in demand in the automotive industry will last.

GF Piping Systems continues to report strong demand, and its business performance is on target. The negative impact of the weak euro since October 2008 is alleviated by the Group's strong position in Asia and the emerging markets. The companies acquired in 2008 - Central Plastics (USA), JRG Gunzenhauser (Switzerland) and Alfa Plastics (Canada) - are also performing according to plan and are supporting growth at GF Piping Systems. The sustainable development of GF Piping Systems into a more significant sales and earnings pillar within the Corporation remains a clear strategic goal for Georg Fischer.

Amidst unsettled global economic conditions, GF AgieCharmilles is experiencing a marked decline in investment activity among its customers. The Corporate Group is currently drawing up a worldwide programme to increase efficiency and in future will focus each of its production sites in Switzerland on one specific technology (milling, wire EDM or die-sinking EDM). The aim is to avoid product redundancy and streamline the organisation.