Ladies and gentlemen, welcome to the Analyst Conference 2020 of Georg Fischer. Today's presentation will be held by our CEO, Andreas Müller, and our CFO, Mads Joergensen. First, Andreas will comment on the course of the business 2019, and Mads will give you further details to the financial statements. After the presentation, we are pleased to answer your questions. There will be microphone, please make use of them. This conference will be recorded, and you will find a record as of tomorrow on our website. After the conference, you are invited to an apéro outside in the foyer. Having said that, we will start the conference. Andreas, the floor is yours.
Thank you, Daniel. Not really a lady, only our internal people. Gentlemen, welcome to our annual conference. Strong performance at our division GF Piping Systems, characterized by the strategic transformation of GF Casting Solutions and by economic headwinds. Slide two, geopolitical tensions and the upheaval in the automotive industry affected the overall economy in 2019. Consequently, business sentiment in key industries and markets were subdued and created a more challenging environment for GF. Our sales declined by 18% overall and by 4% organically to CHF 3.7 billion. The divestment of our iron companies in December 2018 and fall 2019 cut sales by CHF 633 million. Currency effects amounted to -CHF 88 million. The operating result before one-off items was supported by the strong performance of GF Piping Systems and came in at CHF 281 million.
Expected one-off items amounted to CHF 46 million for the relocation of the light metal foundry in Germany and the divestment of the iron casting company in Austria. The board of directors will propose a dividend on prior year's level of CHF 25 a share at the upcoming shareholders meeting on the 16th of April. GF is well positioned in its markets, and its focus on less cyclical segments has increased its resilience to economic slowdowns and headwinds. GF considers 2019 as a transitional year.
One of our three main strategic thrusts on slide three is to focus on customer-centric innovations. In 2019, GF redefined its innovation processes and fully incorporated the design thinking methodology. Many products were successfully launched in 2019, such as COOL-FIT 4.0 for industrial cooling applications, laser milling machines for ceramic matrix composite materials, and 3D-printed aero engine parts made by GF Casting Solutions.
On the right, you can see two breakthrough developments. At the top, as already shown at the Capital Market Day, a 5G digital application to transmit real-time kinetic workpiece data to optimize production processes and consequently reduce process times by up to 20%. At the bottom, I have to say this is actually a project which is accompanying me since I started at GF, so it has a legacy of 25 years, and last year we did a breakthrough here really.
A fire retardant plastic pipe that fulfills the Marine L3 fire standards for the first time. These are known as the harshest standards in the industry and are used to approve critical applications in ships and buildings of all kinds. The test requires the plastic pipe to resist the temperature of approximately 1,000 degrees Celsius for 30 minutes. GF will launch these products within the next few years.
In 2019, slide four, we consistently drove forward the implementation of our Strategy 2020. GF Casting Solutions accomplished its withdrawal from the European iron casting market for passenger car components with the sale of its iron foundry in Austria. This is fully in line with our strategy to shift our portfolio towards higher margin businesses. In September, GF Machining Solutions inaugurated its new innovation and production center for milling machines in Biel, Switzerland.
The various production sites have now been consolidated at one single location. This will lead to further synergies in the years to come. Also fully in line with our strategy to optimize the European production footprint. Also in line with our strategic thrust to widen our presence in growth markets, GF Piping Systems signed a joint venture contract to establish a pipe and fitting production company in Egypt.
Via this new company, GF will support the Egyptian infrastructure project to connect more than 20 million households to the gas and water supplies. The division also acquired a marine supply expert in the U.S. to strengthen its shipbuilding market segment. Let's move on to slide five. As you can see, GF Piping Systems grew organically by 1% thanks to its broad global customer base. The division was able to grow organically 3% in a challenging market situation in the second half of 2019. GF Casting Solutions and GF Machining Solutions shrank organically by 10% and 8%, respectively. The strong share of GF Piping Systems in our overall portfolio supported the sales development of the corporation. Nonetheless, GF faced market headwinds in all regions and declined organically by 4%.
As anticipated, the organic drop of 2.5% in the second half year was much less pronounced than the organic decline of 5.5% in the first six months of the year. On average, over the last four years, GF's annual sales have grown by 3.5% organically, in line with our strategic target range of 3%-5%. On slide six, you can see the development of the EBIT margin. GF overall achieved an EBIT margin of 7.6% before one-off items and 6.3% after one-off items. Our largest division, GF Piping Systems, maintained its high profitability of 11.9%. GF Casting Solutions was affected by the market turmoil and the ongoing strategic transformation of the division. EBIT before one-off items decreased to a low 2.3%. Lower sales also clearly impacted the EBIT and the EBIT margin of GF Machining Solutions, which dropped by 2.4 percentage points to 5.9%.
The return on invested capital before one-off items, slide seven, decreased to 15.3%, while GF Piping Systems' capital efficiency remained clearly above target at 26.1%. GF Casting Solutions' current subdued performance affected the overall result. The division delivered an ROIC of 3.2% before one-off items due to the market situation, the results of the German light metal foundry, whose partial closure we have already announced, and the ramp-up costs for the U.S. light metal foundry in North Carolina. GF Machining Solutions reached 18.4%. The gray column on the chart indicates the four-year average return on invested capital. GF considers all three businesses to be strategically well-positioned, but some work remains to be done.
Let's turn to GF Piping Systems, slide eight. Sales of the largest division were organically up by 1.3% to CHF 1.802 billion. By the way, this is also the year of our foundation. The division has grown in all three business segments: industry, utility, and building technologies. The European markets proved the strongest with growth of 5%. The U.S. market came in on the same level following strong growth in 2018.
In Asia, the division experienced a slight reduction of 2%, predominantly as a result of the subdued Chinese market. In the picture, you can see the division's recently inaugurated innovation and training center in Schaffhausen. We foster new developments and customer trainings with collaboration spaces and new training facilities. GF Piping Systems welcomes more than 10,000 customers and employees for training sessions every year. On slide nine, you can see two promising market segments for GF Piping Systems.
The cooling segment, the picture on the left, grew 12% last year, clearly supported by the new COOL-FIT 4.0 system, which enables our customers to save up to 30% of the energy they use for the cooling application. For example, data centers account for up to 3% of global electricity consumption, 40% of that energy is used for cooling. With our new systems, a substantial amount of this energy can be saved.
On the right, you can see skids for a water rehabilitation plant. GF is well-positioned in this segment, and its sales grew last year by 4%. It is quite a large segment for GF Piping Systems, with sales of more than CHF 200 million. Water scarcity will remain one of the major challenges in the years to come. GF is working on even further solutions in this segment. Customer-centric innovation, slide 10, results in attractive solutions for our customers.
GF has sold ball valves in the amount of CHF 50 million in 2019. It has set a new landmark with its new valve, which now also enables and includes digital features such as position sensors. On the right, you see a recently launched virtual training program. This program allow our customers to efficiently train their installers and workers wherever they are. With this kind of training methodologies, GF is at the forefront of the industries and addresses one of the major pains of unskilled labor.
Let's now turn to our Casting Solutions division, slide 11. The subdued Chinese and European automotive markets, combined with the structural change in the industry, left their mark on the sales of the division. GF Casting Solutions reported an organic drop of 9.7% to CHF 949 million. Most of this reduction was caused by the divestment of the European iron casting companies.
The operating result before one-off items stood at CHF 22 million, down from CHF 86 million in 2018. The reduction in volume plays an important role in the profitability development. The announced relocation of the German light metal foundry, combined with the drop of call-offs in this company, resulted in higher operational losses. The ongoing ramp-up costs for the U.S. facility remained on previous year's level, caused by the successful acquisition of customer programs that have to be prepared well ahead of their start of production, and slightly delayed customer projects. Our CFO, Mads, will come back to this topic. The focus on lightweight components made of aluminum and magnesium and parts for the aerospace and energy market is in full swing and is expected to deliver better returns in the years to come.
The picture on the right shows our new mold development and production center for lightweight component in Suzhou, China. It is an important facility for shortening time to market and expanding the value chain in China, clearly underpinning our strategic focus on higher value businesses. The strategic transformation of the division will continue throughout 2020. Thanks to its Nadcap certified investment casting and additive manufacturing center in Switzerland, slide 12, the picture on the left, GF Casting Solutions perfectly addresses the needs of its aerospace customers, and the segment has grown by 24% in the year under review.
On the right, you can see our new fully automated production of cross-cab beam members in Mills River in the United States. This is a typical body and structure component for the automotive industry. Despite the difficult market condition, the segment grew by 4% globally.
The repositioned GF Casting Solutions focuses on innovative solutions for its customers. Slide 13. The picture on the left shows the new e-car from Aiways, a Chinese startup. The company appreciates GF's ability to design, develop, and produce complex lightweight body and structure casts. In 2019, sales of products for e-cars increased by 50% to a total of CHF 70 million. The share of e-car lifetime orders increased to 30%, indicating the importance of these new powertrain technologies in the years to come. GF was awarded for its expertise in casting innovative structural components, picture on the right, at the most important casting exhibition in Germany, EUROGUSS. This is a cross-cab beam member with a lot of surfaces, which can be seen later on when the part is installed in the car. It looks simple, but it is super complex.
GF Casting Solutions is well positioned in its market segments. Let's turn now to Machining Solutions, slide 14. The division was impacted by the Sino-U.S. trade tensions during the entire year, and the slowdown in German machine tool demand in the second half of 2019. Thanks to its strong presence in the U.S. aero-engine market, GF Machining Solutions was able to offset part of the drop in the other regions. U.S. sales were up by 5%, while Europe was down by 4%, and Asia down by 17%. Ultimately, sales of the division fell organically by 7.5% to CHF 972 million. As a consequence, the operating result came in at CHF 57 million. New laser technology sales, with ongoing high demand, grew by 41%, once more reflecting the importance of innovative new products.
The picture on the right shows the inauguration of the new facility in fall last year in Biel. Growing market segments, slide 15, such as Aero Engines and Medtech, with 17% and 9% more sales respectively than in 2018, clearly demonstrate the importance of focusing on less cyclical market segments. The aerospace segment for the division accounts now for CHF 250 million. On the left, you can see a Microlution laser machine, which enables our customers to machine ceramic matrix composite materials to increase the fuel efficiency of jet engines by up to 20%. On the right, you can see a dental implant production supported by our latest cloud-based calibration systems. Excellence in innovation. GF Machining Solutions focuses on excellence in innovations, slide 16.
At EMO, the world-leading machine tool exhibition, GF Machining Solutions launched various new digital products, such as Spark Track, an application to precisely control each production step of safety parts. The picture shows the fir tree of a jet engine made by EDM technology. On the bottom right, the picture of our new factory dashboard to ensure high availability of the installed machine base. New laser technologies on the top left enable our customers to speed up their production processes up to three times. The division is well positioned in its markets thanks to its innovative machine tools and automation capabilities. I will now hand over to our CFO, Mads Joergensen, who will give you details of our 2019 financials.
Thank you very much, Andy. Gentlemen, also from my side, welcome to the conference. 2019 was a challenge, but it was also a year where Georg Fischer demonstrated its ability to weather stormy markets and still retain a very strong financial basis. I will now turn to present the 2019 financials. On slide 18, we see in the upper part of the table the sales by division. During the year-end review, the three divisions underwent quite different developments. At group level, we had declining sales of -4.1% organically to CHF 3.72 billion.
GF Piping Systems demonstrated resilience on the sales side, but was adversely impacted by negative foreign currency effects, leading to total sales of CHF 1.802 billion. The top-performing markets in Europe and North America compensated for the difficult situation in China, which was clearly impacted by the Sino-American trade dispute. Sales at GF Casting Solutions dropped to CHF 949 million.
Here, the divestment of the three European iron casting facilities impacted sales by CHF 633 million. The division was, in addition, heavily impacted by the crisis in the global automotive industry. These fundamental structural changes eventually led to the decision to partially close and relocate the Werdohl facility.
Correcting for negative currency effects from the Euro and the Chinese Yuan, sales declined organically by 9.7%. Sales at GF Machining Solutions came in at CHF 972 million, a decrease of CHF 94 million. The division was mainly adversely impacted by the drop in investments in the global ICT industry. The electrical discharge and milling machine business declined by 15% and 11%, respectively. This was compensated by an all-time high performance of the aerospace segment and more than 40% sales growth in advanced technologies such as femtosecond laser machines, laser texturing machines, and 3D printing machines.
Eventually, the division ended up with a 7.5% organic sales decrease. Moving now to the lower part of the table. In the first semester, sales declined organically by 5.5%, and in the second half, the sales situation improved somewhat to a decline of 2.5%. GF Piping Systems grew 3% in the second half against a flat first six months. GF Casting Solutions decreased by 8% compared to 11.1% in the first semester. Machining Solutions, the decrease was less pronounced in the second half by 6% and slightly better than the global industry, compared to a 9.1% decline in the first half.
It is worth mentioning that for the month of December, prior to the coronavirus pandemic, the sales in foreign currency for all three divisions in China were above previous year by more than 20%. Slide 19 shows additional details of the sales development.
The effect of the divestment of the three-year iron casting facilities amounted to CHF 633 million. The effect of the acquisitions was CHF 30 million, stemming from the full year effect of the acquisition of the investment casting business, Precicast, which was acquired at the start of April 2018. A second effect, but much smaller, is the acquisition of the marine piping business, Global Supply. The currency effect amounted to CHF 88 million, leading to an organic decline of CHF 161 million. Slide 20 shows the sales development from a regional standpoint.
The Americas grew 3% organically, with GF Linamar growing more than CHF 26 million, and GF Machining Solutions growing 6%, mainly driven by the strong aerospace and medical segments. GF Piping Systems ended up slightly below previous year due to a later in the year subdued oil and gas markets and declining industrial sales.
In Europe, the markets declined organically by almost 4%. Behind this was the challenging situation at GF Casting Solutions, as well as a subdued market for machine tools in general. This was compensated by the top performance of the European piping business. In 2018, we were still highly dependent on Europe with 55% of global sales. This has now decreased to 47%, however, mainly caused by the divestments. Asia decreased organically by 7.4%, which was almost entirely attributable to the Chinese market. The sales in the rest of the world is mainly impacted by the Turkish lira and subdued emerging markets. On slide 21, this slide provides some details on the foreign currency effects. Overall, currencies affected sales by CHF 88 million and the EBIT by CHF 21 million adversely.
It's the third most severe effect in the past decade from currencies. As can be seen, Georg Fischer Piping Systems was the division predominantly impacted by the negative currency developments, followed by GF Casting Solutions. From a currency perspective, on the right-hand side, most of the negative effects came from the Euro, the Chinese Yuan, and the Turkish lira.
Slide 22 shows the EBIT and the margin development. Despite the negative foreign currency effects, GF Piping Systems was able to keep the profitability at an all-time high level of 2018. EBIT for piping systems was CHF 214 million, with the EBIT margin of 11.9% equal to previous year. Due to the operational challenges in the other two divisions, piping systems contributed more than three-quarters to the consolidated results before one-offs. Let me spend a moment to elaborate on the profitability of GF Casting Solutions.
It is obvious that the division was hit by the drop in the automotive production in Europe and Asia. However, the impact of GF Casting Solutions was more pronounced due to a number of factors, which eventually led to the decision to partially close the Werdohl facility. This decision triggered one-off costs of CHF 37 million in the financial year 2019. Another one-off event was the consolidated book loss of CHF 9 million related to the divestment of the Herzogenburg iron casting facility, which brings the total one-off effects to CHF 46 million. To better understand the decrease in EBIT before the explicit one-offs, it is important to note the following. The CHF 22 million EBIT actually reflects two main elements. First, a CHF 16 million ramp-up cost at GF Linamar Mills River facility.
Secondly, a CHF 23 million operational loss relating to the substantial decrease in operational performance at the Werdohl facility after the announcement of the closing. In other words, the adjusted EBIT before one-offs still includes a total of almost CHF 40 million of costs, which can eventually be considered as non-recurring in character. Overall, for the GF Casting Solutions division, the EBIT margin before one-offs ended up at 2.3% compared to 5.1% in 2018. The EBIT of GF Machining Solutions dropped from CHF 88 million to CHF 57 million. This was mostly caused by the global drop in the machine tools business, combined with a high operational leverage. The EBIT margin declined from 8.3% to 5.9%. Before one-offs, the EBIT of the corporation came in at CHF 281 million, and the EBIT margin before one-offs decreased from 8.4% to 7.6%.
In the lower part of the table, you can see that in 2019, 54% of the EBIT was generated in the first semester and 46% in the second semester, which is similar to previous year. Turning to slide number 23. We here provide an update on the one-off effects. As first forecasted by mid-year 2019 are now compared to the current situation. Starting in the first row, we have the guidance issued by mid-year 2019, showing one-off effects of CHF 48 million in 2019, followed by estimated one-off ramp-up costs of CHF 17 million in 2020.
The second row shows that in 2019, we only incurred CHF 46 million in 2019. Our estimate of the ramp-up costs for 2020 remain CHF 17 million. From a cash flow perspective, shown in the lower part of the table, we only forecast slight changes compared to the original estimate.
Overall, we expect the net effects to be minus CHF 31 million in cash out. On slide 24, you see a summary of the consolidated income statement. Gross value added decreased by 17% to CHF 1,386 million, mainly due to the declining business and the divestment of the European iron casting facilities. The personnel cost expenses declined by CHF 127 million to CHF 1,012 million. This was impacted by changes to the scope of consolidation of CHF 160 million. On the other hand, the personnel cost increased by CHF 21 million due to the one-off restructuring cost of the Werdohl closing and due to other general increases. It is worth noticing that most of the capacity adjustment in the workforce were done in the area of leased employees as well. The EBITDA decreased from CHF 521 million to CHF 374 million.
Adjusting for the one-off related effects of the CHF 24 million, the operational decrease was CHF 123 million. Depreciation came in at CHF 139 million, down from CHF 147 million in 2018. Changes to scope of consolidation lowered the depreciation by CHF 16 million, and the partial closing of Werdohl led to impairments of fixed assets or an increase of CHF 12 million. On a like-for-like basis, depreciation was then more or less at the previous year's level. EBIT before one-offs came in at CHF 281 million, a decrease of CHF 101 million. 64% of the decrease relates to GF Casting Solutions. The financial result was close to the level of 2018.
Interest expense decreased by CHF 5 million due to a repayment of the corporate bond in 2018 and less bank loans. Cost increases by CHF 10 million due to a partial value adjustment of financial interest in associated parties relating to the two divested iron casting facilities. The effective income tax rate decreased from 20% to 15%.
This reduction was mostly caused by the one-off effects relating to the implementation of the Swiss tax and social security reform. Net profit attributable to GF shareholders decreased from CHF 281 million to CHF 173 million, leading to a decrease in earnings per share of CHF 27 to CHF 42. Slide 25 shows the assets of the consolidated balance sheet. We had CHF 3.3 billion of assets at the end of 2019, down from CHF 3.4 billion in 2018. Lower year-end currency spot rates reduced the assets of more than CHF 50 million.
Acquisition and divestments led to a net reduction in total assets by approximately CHF 28 million, and the one-off impairment effects from the Werdohl project further reduced assets by CHF 16 million. The reduction in accounts receivable of CHF 100 million was attributable to the lower business model.
The days sales outstanding remained with 65 days at the level of 2018. Inventory decreased by CHF 28 million, but due to the sales decline of GF Casting Solutions and GF Machining Solutions, the days inventory outstanding increased from 106 days to 122 days. Noteworthy is the liquidity position of the company remained very strong, with CHF 530 million available. Slide 26 shows the liability and equity section of the balance sheet. As mentioned, the half of the decrease in liabilities is caused by some of the lower currency spot rates. The current liabilities decreased by CHF 120 million, mainly due to the lower sales and investment level capital expenditures. You will see here also that GF's equity ratio increased even further from a solid 41% to 43%.
Let us now move to the cash flow statement on Slide 27. The increase in the net working capital was only CHF 10 million, net of acquisitions, divestments, and currencies. Also the accounts payable declined due to the lower business activities and therefore led to a cash out. Overall, the operational cash flow decreased by CHF 79 million, mostly caused by the lower EBITDA. Cash outflows from CapEx decreased from a record CHF 234 million in 2018 to CHF 178 million. The ramp-up activities at GF Linamar in North Carolina led to CapEx of CHF 48 million, thereof CHF 24 paid by GF.
The finalization of the GF Machining Solutions Biel facility, the new plant in Changzhou in China, as well as the new innovation center at GF Piping Systems in Schiltach accounted in total for CHF 31 million of the CapEx. Acquisition outlays in 2019 were minor. The CHF 5 million shown here relates to the acquisition of the piping marine business, as well as the payment of an earn-out to the former owners of the femtosecond laser business, Microlution. GF was in 2019 able to generate free cash flows before acquisitions of CHF 137 million, only slightly below the figure from previous year. On the last slide, we summarize a few important figures here. Despite the challenging business environment, our net debt continue to decrease to CHF 232 million.
Due to the lower level of profitability, the net debt to EBITDA multiple increased slightly to 0.6 times and remains at a solid level. The return on invested capital before one-offs decreased to 15.3%, down from 22.4% in 2018. The decrease was almost entirely caused by the lower profitability. As a result of the solid balance sheet, the continued strong free cash flow, and the intact fundamentals, the board will propose a dividend at previous year's level of CHF 25 per share. The headcount decreased by 249 people. The impact from the Herzogenburg divestment was 248. As part of the ramp-off of the business, GF Linamar had to increase staff by 80, and operationally, GF reduced staff by 180 to adapt to the lower business level. Let me now finally summarize the financial results.
Despite the economic headwinds, the ongoing transformation of the Casting Solutions division, as well as the lower profitability in Casting and Machining Solutions, Georg Fischer was in 2019 able to further strengthen its already very solid balance sheet. We increased our equity ratio from 41% to 43% and further boosted our cash and cash equivalence position to more than CHF 500 million.
This was facilitated on one hand side by the solid Piping Systems business, also by the good free cash flow of CHF 137 million, only slightly below previous year. The free cash flow, the solid balance sheet, and the favorable strategic position of the GF Group were the main drivers for the decision to maintain the proposed dividend at the level of previous year, even despite being temporarily above our indicated bandwidth for the payout ratio.
Thank you very much for your attention. I'll now hand over the word to Andreas for the outlook.
Thank you, Mads. Let's now turn to slide 30. Current events makes the visibility of the month ahead very challenging. Great tensions, political instabilities, and the recent corona pandemic clearly influence our Asian business in the first quarter, and most likely will have an impact on other regions in the upcoming month.
We are confident that the current exceptional situation caused by the coronavirus will pass, and that we will return to a more normalized business. It is far too early to give a guidance on the full year. We can't yet quantify the impact on quarter one and quarter two. It is clear that we have to improve our capability to respond to the fast changes of the world. We have started an agility program focusing on the core elements, operational excellence, lean processes in our production facilities, sales proficiency, and on our cost structures.
These initiatives in 2020 will set a solid base for a new GF Strategy 2025. They will complement the already initiated structural measures at GF Casting Solutions with the ambition to sustainably improve future results, and thereby bring our performance back to our strategic targets. GF will continue with its implementation of Strategy 2020, and thereby focuses on innovation and operational excellence.
The fundamentals of our business remain intact. Our innovation focus on solutions for clean water, for less CO2 emissions and lighter components, and for more energy efficient processes. These mega trends remain key pillars of our business. Sustainability is an integrated part of our daily activities. Let me shortly summarize 2019. Resilient GF Piping Systems against market headwinds. Transformation of GF Casting Solutions well on track. Strong focus on innovations and digitalizations in all divisions, headed by our GF Machining Solutions division.
GF is well positioned in its market as technology leader. With that, I would like to conclude our presentation. We are now ready to take your questions. Thank you.
Yeah, good afternoon, gentlemen. Martin Flückiger from Kepler Cheuvreux. Thanks for taking my questions. I've got three, and I'll take one at a time. Just going back to your comment, Mr. Müller, on the coronavirus and the situation in China, Asia overall, and now increasingly also in Europe. I know we all don't have a crystal ball. What do you see on the ground now, particularly in the second half of January, first half of February? What did you see? What kind of magnitudes are we theoretically talking about, at least in terms of scenarios? Was it just Casting Solutions and Machining Solutions impacted, which I would have assumed to be affected the most, or was it also Piping Systems? That would be my first question.
All right. Thank you, Mr. Flückiger. The coronavirus, as said in our outlook, is obviously the topic at this point of time. Our facilities in China have been ramped up beginning with the 10th of February, with an extended holiday season requested by the government. It was obvious that we could not resume our production in the last weeks in full. On the 10th, we started out of our 30 companies or 28 companies, 20 production sites and 3,000 peoples in China. We started with the first ones in that week, and it took us two and a half to three weeks before we had all our production facilities at least back to operation. That back to operation doesn't reflect the normal operational level. We still are missing people which are banned to travel, which are still in quarantine.
Therefore, we assume that we have approximately 80% of our people back in our facilities. That means that February was a very subdued month where we assume that business was on a level of 25%-30% only. We do not expect that March is fully recovering since we're also going to see a slowdown in the businesses. Since we don't know whether this impact of the coronavirus is ending at that point of time, we are also going to assume that Q2 will be required to fully recover and to get back to normal operations. Also, as you correctly said, we do not have a crystal ball and therefore we can only be pretty vague on whatever has to be expected.
We just know that in case that full demand comes back, our companies are now ready to deliver at the level as it was back. First, it is important that our people have, especially in that regions where we have the high outbreaks of the coronavirus, that our people stay safe. Which kind of scenarios? It is a good question. Otherwise, if we would have the answer to that, we would have given an answer in our outlook. Which of our divisions are impacted? For us, China is a very important market. Approximately a fifth of our business is being realized in China, and all three divisions are present there. For all three divisions, it is one of the largest markets as a single country. Therefore, all three businesses have been affected in the month of February.
Okay, thank you so much. Coronavirus and car market is sort of interconnected these days with the China situation. Just leaving corona aside for a while, it's not just the China car market, which was in the doldrums, at least as far as I've been reading, but also the European market has been quite difficult. My understanding is German car production was also quite challenging, to say the least. What are you seeing there? What are your customers telling you also in terms of outlook for at least the first half, if not the entire 2020? That would be my second question.
The German or the European car market most likely will remain in a subdued situation during the course of the first half of 2020. I don't think that it is time-wise correct now to guess on the second half of 2020. What we see is the strategic transformation going to bring a lot of consumer hesitations with it. The transformation towards these new kind of technologies, e-drive and cars, that has actually disturbed the markets in the year 2019. It seems that it continues to disturb the markets in the year 2020. We have seen a rather weak start into the year in January. The data have been already published. We have been double digit down in the European markets at the start of this year.
Yes, it is a challenging environment, and this is also one of the reasons why we have decided last year to refrain from the German production side or to relocate our German production side for lightweight components from Werdohl to our Austrian and also to our Romanian sites. That was also to adhere to the reduction in demand. As we have said also during the half-year conference, that we have been down in that specific facilities up to 30% in sales. That is somehow reflecting exactly the situation, what we have seen in Europe.
Okay, thanks. Third question, just sticking with Casting Solutions for a moment. If I understood you correctly, Mads, you were talking about ramp-up costs of CHF 16 million, in North Carolina, GF Linamar, is that correct?
Yes.
How much incrementally is that versus last year? Was that the same? Did I understand that correctly?
It was exactly the same.
What is your expectation for 2020? Is it going to be stable or is it going to be down, these ramp-up costs?
We expect that the cost would go a single digit. We expect to break even in the fourth quarter of 2020. It is ramping up the big series at the moment. As Andy has presented the Ford F-150, magnesium cross-car beam is being ramped up at the moment, and that would definitely have a positive contribution at the end of 2020.
Thank you. Two to three questions from my side, please. The first one would be on the automotive business. You did the divestment of two production site because you stated they are stronger alone. Why is it not the case for the whole division? Second question would be please, on the cost side, your organic sales are down in automotive close to 10%, in Machining 7.5%. What is your strategy on the cost side? Are you waiting and if demand is not picking up, you will reconsider the cost base in summer? Do you have room to save costs? What could be the magnitude?
Third question, just housekeeping. You mentioned in the CHF 22 million Casting Solutions EBIT, you had one-off cost in brackets of CHF 16 million in M&A, and the other CHF 24 million, if you just can remind me what you mentioned here again.
Thanks a lot. The automotive business, if you conclude what we said last year, that we're going to refrain from the iron casting component market for passenger cars in Europe. That was also mainly driven that competitive differentiation in that segment is rather complex at this point of time, and it has an overdemand, flexibility of management owners is higher in regards to negotiating restructuring concepts, to negotiating flexibility in the workforce. Therefore, we assume that those ones have a better cost structure. You may remember we also said that the corporate costs can't be hardly borne by these companies, at least in regards if you would like to achieve a profitability as we want to do, with 9%-10% of return on invested capital from 20%-24%. That would have been the main reasons, and these main reasons remain valid.
It was the absolute correct decision to refrain from this iron casting business in Europe and focusing on lightweight component business. The lightweight component business is a different kind of business. What we do is we have centralized development of body and structure components. We have a centralized mold technology center in Europe. We also have now a mold technology center in our Asian country, in Suzhou, just opened as shown. We have a strong focus on an expansion of the value chain. The picture we have seen in the presentation was also the steps after the cast process, where we have now a fully automated production and assembly process, where we add more than 140 components, for example, to this cross-car beam member. We have by far extended the value chain and believe that this is the right strategic focus.
The complexity of this lightweight cast car components in magnesium or aluminum are by far higher than the ones which you would have on iron casting. We believe that we can make a difference and also leverage economies of scale. You want to ask about the cost base. With the closure of our Werdohl facility, we were going to relocate approximately 300 people from Werdohl to our sites in Austria, but also to our sites in Romania. Due to the current situation, we most likely going to do this job or this relocation without any increase at the receipt in companies in headcount. That can be digested by operational excellence, by lean processes, by optimized production, and therefore we can lower the cost base.
We still have, in all our companies, a certain portion of flexibility via leased employees. We can make use of the instrument short-time work. If you're going to ask us how much more flexibility is given to adhere to the new level of utilization, we still have flexibility in that one. The CHF 22 million operational result in GF Casting Solutions, yes, you're absolutely correct, is including non-recurring or partially non-recurring items, not in the year 2020. We have to be very clear on that one.
We have approximately CHF 23 million of our Werdohl site operational loss caused by the less efficient processes, but also by the very subdued orders we had in the first half and in the second half, and also by the ramp-up cost of our Mills River facility. Overall, there's an impact of CHF 40 million, we say, in the midterm, non-recurring costs 2020.
We still see this kind of costs in our Werdohl site, maybe not at this magnitude. It depends a little bit on the progress of the closure, also we're going to see some costs of them recurring in the first half in our Mills River facility. Even so that this Mills River facility may already now once again in a year situation where we could not improve. We have stated in the half year conference that we have extended the Mills River facility since we have been successfully acquiring new orders, we have invested this year approximately CHF 50 million in this site, and we have already inaugurated the second phase or the phase Ib, as we call it internally, in our site there. That drove additional costs.
For example, such a cross cab being member has to be start before start of production, being first time produced 12 months ahead of time. We have already produced now these components. They are go now for sampling. They are now in a prototype version. You have to have your people, you're going to have to have your production equipment, and you're going to make a full run on this product before you can deliver this product and finally to your customer. We do know about it, and we have spoken many times about that. This ramping up a facility is a cumbersome process when it comes to profitability.
On the other hand, the other alternative is to buy a running company, which we couldn't at this back with this time, and that's the reason why we're going to have to accept this cost. We believe it's a strong footprint, what we have set in Americas, in the U.S., with products somehow pioneering the large structural components made out of aluminum and magnesium.
Thank you.
Thank you. It's not the first time this question has been asked, but it doesn't matter. The ROIC target is 20%-24%. Of course, this is nicely calculated without any goodwill because this has been wiped away with Swiss GAAP FER. Do you have an internal shadow accounting, at least, where you calculate the real number, including the goodwills you had accumulated in the past? Because of course you have put this money on the table, you spent it, and you need to generate a return on it. In order to be honest with yourself, you should calculate it including those goodwills. Do you have a translation of this 20%-24%, including those goodwill numbers? What would they look like?
First of all, what has to be marked or which has to be underpinned is when we have changed from IFRS to our Swiss GAAP FER accounting, we have increased the targets of our capital returnability of our return on invested capital. For the second question, I will hand over to Mads so that he can give you some ideas about the goodwills which have been accumulated over the last years.
We were constantly looking at this number, of course. If you look at it from an IFRS perspective, we're probably looking at a 3-4 percentage point lower figure. As I said, what we're comparing here, the corridor that we're comparing to the actual numbers is a apples to apples with the Swiss GAAP FER.
Okay. 3%-4% lower. What number do you take to calculate that? Is this the EBIT or is that the NOPAT?
It's the net operating profit after taxes.
Okay. Good. Thank you. That's it.
Thank you. Chris Obst from Baader Helvea. I have a question concerning cash flow. Can you give us an idea what kind of CapEx do you spend or intend to spend for your Strategy 2025? Can you give us also now some kind of an idea of what you'd like to achieve in the next five years? Having a longer term outlook and not looking at short-term corona impact. Will you give us some kind of an update on your new strategy during the year?
Do you see some ongoing reduction of working capital is more possible in the balance sheet in the years to come? Can you deliver more cash flow? What kind of free cash flow target do you have when you are fully have ramped up your facilities in the U.S. and are back on some kind of normal operations? Thank you.
It's quite a few questions, and a few of those questions obviously tie down to the situation, what we're going to forecast for the current year, which we said already now is quite complex at this point of time. Therefore it would be just not fair to give an unsolid estimate on what's going on this year. The situation when it comes to optimizing our balance sheet items, yes, that's an ongoing project and that goes also underneath this agility program. We have addressed a couple of these net working capital initiatives, which is a constant endeavor in a corporation such as GF.
The Strategy 2025, as said, will be elaborated in the year 2020. Therefore it would be by far and by all means too early to give a statement about what would be the capital expenditure requirements over a period of five years.
On average, what we as GF have invested is in the range of CHF 160 million-CHF 200 million. Yes, we had some elevated levels due to the fact that we had built a building in Biel, where we have decided to do it on our own. The same is valid that we have set up a new light metal casting facility in North Carolina, which was also quite a severe or quite a substantial amount, which we have invested there. Therefore, you have to be very fast. We will actually disclose that kind of figures, with the Strategy 2025, which most likely will happen in the early stage of 2021.
Thank you, Tobias Fahrenholz. From my end first, I would have three question blocks, starting with the first. Looking at structural growth opportunities in the automotive business, could you first clarify, please, if you're more or less completely out of the volatile trucks business and if you also expect further business insourcing of some of your clients during 2020, and what kind of additional revenues you are seeing in Linamar this next year?
You're completely right. We are nearly out of the rather cyclical truck business. With the divestment of the last iron casting facility in Herzogenburg, we have now withdrawn from the truck market nearly in complete. We still have a minor part of lightweight components which go into the truck industry, and a little bit in China, but it is really rather minor. We can say yes, we are now to a level which is insignificant to the overall business of GF Casting Solutions. Further insourcing of customers, I think we have been marked in the year 2019 by insourcing of customers. That's also one of the reasons why we have been underperforming, let's call it that way, the market last year, as you have seen with the growth development since we had also some growth in the U.S.
We have had obviously an accelerated decline in Europe, which is perfectly in line with our strategy. We once in a while said a couple of years ago, we want to focus on promising future technologies, we consider the body and structural components being the next or the future business markets. As seen, this market segment for GF has globally grown by 4%, this is reflecting exactly the need for more lightweight complex components in the car industry. I think there's a lot more to be replaced. This part of the car industry is growing 8% above the fundamental growth of this industry. At least, for the last two to three years, we have seen that, we also assume that will continue in the years to come.
We believe that these are also components which are not, let me say, exposed to potential insourcing of customers. We also address these body and structural components to a much larger customer base than we did that in the past with our, for example, iron casting business, which was much more focused on the German OEMs only. Additional revenues, yes, they will come, but as said, we also are not eager to replace products where we believe the future is not bright. Our focus is on these body and structural components, so we will not desperately go for and after such products, and that's the reason when we close this Werdohl or relocate this Werdohl foundry to Romania and to Austria, only a part of the sales will be relocated.
As we have seen the drop last year of approximately 30% in this entity, which was an insourcing topic, that will not come back and we are not after these quantities because we don't want to have these products in our product ranges of the future. Additional revenues, yes, that may come to the U.S. facility. The U.S. facility intends to increase their sales next year in the range of approximately CHF 40 million, CHF 40 million-CHF 45 million. That's the additional sales what we're going to expect in this Mills River facility.
Okay, maybe coming to piping. You once highlighted the cruise ships business as a quite interesting niche business, I think around 10% of revenues. Could you give us a figure here what it was in 2019, and do you see any structural weakening after all these Corona pictures or whatever? What's your view on this?
I think that would be a little bit quick, if you would already have now an impact on the ships to be built in a couple of months from the coronavirus. Will it have an impact? I don't know. I can't tell you. At least, at the moment, no one would join the Diamond Princess. The 2019 ship marine market was more or less flat in the piping systems division. We have last year developed and in the late of 2019 launched a few innovations which are going to address the weight on the ships. What you have seen, this breakthrough fire or flame retardant piping systems, is mainly a piping systems which you're going to find in the future then on ships. This is a very interesting application, not only on ships, but also on ships.
It may go also into critical buildings. Large office buildings, but also data centers. That's the request for some of these flame retardant businesses. It is a business which is driven by innovations. It is also driven by the sustainability aspects. It may sound a little bit odd. The ship need to become lighter in the years to come. Therefore, the shipyard is going to search for alternative materials. Obviously the plastic piping systems are a very good element to substitute iron pipes to many reasons. One is the light weight. Secondly, it is not corrosive. Therefore it has a much longer lifetime on a ship, which is constantly exposed to salty air.
The last one, if I may, for Mads. Could you give us a sales and cost split for your major currencies? I guess you still have some more costs in CHF.
Could you repeat the question? Sorry.
Could you give us a split how much sales and cost you have in each of your major currencies?
We have on the top line, 30% of our sales is euro. We have about 17% U.S. dollars, sales 5% Swiss francs. If we look at it from an exposure point of view, which probably is in your interest. If we take the cash flow exposure, we are EUR 77 million, CHF long. The biggest position we have is $228, CHF long position as well. That's mainly because of the machine tool business. We have about CNY 89 million, USD short position. That is the top. We run a very efficient hedging program. We use the normal forwards. Of course, that is only a short term regime. What we of course always tend to do is to get a better operational hedge, which we've done, especially in the area of euro.
If you go back to the big crisis in 2015, the currency crisis in January there, the exposure was substantially higher than it is today.
Thank you very much for taking my question, Michal Lichvar from Bank Vontobel. I would have several questions. First one, regarding your outlook, can you just clarify what you mean by bringing Georg Fischer's performance towards strategic targets? Towards this 9%-10% EBIT margins. Is this for 2021? Do you expect to be in this range in the year 2021?
Let me start to say, barring unforeseen circumstances, yes, we assume that 2021, GF will resume back to its strategic corridor.
Afterwards you will come up with the 2025 targets for growth rates and margins?
Exactly.
That's clear. A question regarding the coronavirus. I also have to ask one question regarding this. In terms of the Precicast business that's located in Ticino area, if I'm not mistaken, are you taking maybe some contingency measures if the situation accelerates there in terms of new cases in Italy and Ticino?
First of all, we're going to adhere, obviously, to all rules and guidelines being published by the state of Switzerland. We have, of course, a crisis team in our organization established, which going to focus us on measures and means in all our companies. All our companies have a set of guidelines which they have to obey at this point of time. Yes, it goes along with this increased hygienic approaches all over, and obviously also with some restrictions in traveling. Yes, we monitor the situation, but we stay somehow calm on this topic. We do the utmost in order to safeguard our people.
You don't see it as a risk for your business that you cannot supply your customers?
It depends which scenario you're going to think about. At this point of time, we are confident that the situation remains controlled, and therefore we do not see a risk. If the situation gets out of control, we're going to have to re-discuss this topic.
Thank you. Last question regarding GF Machining Solutions. In 2019, your customer services business was substantially down. Is this a leading indicator or indicator for capacity utilization of your machines that customers use? Does this mean that customers used less of your machines in 2019 and therefore, they will probably buy less in 2020?
The machining customer service business was down by approximately 4% last year. That was below the decrease or the decline of the overall division. A part of this decline is also on the account of the reduction of raw material prices. For example, there's also a part of it is consumables. Which is, for example, copper wires, that had also a minor impact. Maybe one percentage point is to be allocated to the reduction of the consumable prices. Overall, the customer service business was okay. It was obviously also affected, but it was not that much affected as this machine sales have been affected. Therefore, we are confident that the installed machine base was utilized.
Okay. Thank you very much.
I have one question concerning the liabilities related to the divestment of the iron foundries. Can you remind us about the liabilities you have in your balance sheet so far with that divestment and the payback terms? Thank you.
Thank you. I will hand over this question to our CFO.
In connection with the transaction we did in December 2018, and also disclosed at the end of the year, the liability we had was around CHF 61 million. At the time of the transaction, we also granted the company a operational credit line of additional CHF 20 million, which was drawn during the course of the year. At the end of the year, you can find it in the notes, we have an exposure of CHF 75 million financial liabilities in the balance sheet. That contains the before mentioned, the vendor loans, the operational credit. We also issued a credit. It was a bridging loan, for which another CHF three million was drawn. Due to the impact from the German automotive industry, the Iron Foundries, of course, impacted as well.
The payment terms have been extended, which led to a lower net present value, and therefore, we did a partial value adjustment on these loans. That's the reason. Those are the extended payments.
Did I get that right that in China you assume that now about 20% of your production capacity is on stream, or was that my imagination? This market is very important for you. Maybe can you tell us a bit, again, how you see the situation there right now?
Right now. The situation, what I described, was the overall assessment of the month of February. We assume 25%-30% of our production has been utilized in the month of February. That is caused by, first of all, a delayed start after the Chinese New Year. On the 10th, the first facilities of GF resumed business on a very moderate level, on an average of 40%-50% in the first week when they started. A few of our companies are back now to 70%-80%. A few of our companies still are in the lower digit numbers in the range to 40%-60%. Overall, we assume that the month of February was down by approximately 70%. The outlook, as I said, is that we expect some recovery in March.
That this will get back to normal business, we do not believe, to be honest. At this point of time, we have call-offs, and which can give us a little bit an idea where we're going to travel. We see a stronger March, but we don't see a full recovery, for sure not. We believe that we need at least Q2, and we need a recovery, or we need at least a reversing situation in the coronavirus. Otherwise, we do believe that the business will not resume fully back because we have seen consumer spending was quite subdued. I think the first statistics have been published just today, and we all have watched them. We all have been astonished. I have to say that certain consumer products have been dropped that substantially.
I have seen statistics this morning that car sales May is coming in in February only on the level of 10%, 12% of a normal month. Still varied figures. The first half of the month of February, I think it was down by 92%, 93%. This is quite substantial. Yes, we believe, and we are confident that there is also some rebouncing effects coming along with it. Not all of that can obviously be compensated. The time is gone and also the labor is gone. You cannot just endlessly postpone and then recover all of that.
Let me summarize maybe the markets about piping. I believe quite stable markets still, on maybe in China, for sure, subdued level, for sure. The Americas doing well, Europe maybe a little bit lower than GF Casting Solutions. I don't see a recovery all over globally. China, very difficult, as explained. We were talking about these two segments, but about GF Machining Solutions, what do you see there? Except China, there it might be, for sure it's very difficult right now. You had a very good year, a strong year in the Americas, especially with aero things. That's top issue. What do you see there?
Also here, visibility is, w e have seen a recovery in the last month of 2019 in the machine tool business in China, compared to a quite subdued level of the year 2018. As Mads mentioned, we have recorded in December a 20% growth in China, That may would have continued if we would have seen the situation with the coronavirus. We believe now there is a market, and it is and it will remain one of the largest markets for machine tools.
We're going to believe that China will recover. China is also moving towards higher quality products, higher precision requirements. We have seen that many times last year when we were traveling around China, that customers of ours have changed from rather low precision to high precision. A typical example is a gear for a window elevation that was It's a major customer of ours in the Shanghai area.
This customer has given up on producing these gears for windows of cars because he said, "This is too less of a precision product. This is too less of a quality demand. It's not so much a higher value business." That kind of business is going to move away from China. They go to Vietnam, they go to Cambodia.
This company is now focusing on high precision micro gears. Micro gears for all sorts of applications. One of the application, it was quite an amazing one, a simple one. One of these robot vacuum cleaner, which you may have at home. Those ones, if they want to have a high durability, they're going to have to have a very high precision made gear, which is, by all means, much more precise than a gear which you would have for a window elevation in your car.
They're going to start to focus more on that. That actually calls then for the kind of machine tools GF can supply. The same is valid for the whole optical electronic industry. You think about cars, autonomous driven cars. You're going to have up to eight already today installed cameras in a car. If you have a parking assistant, if you're going to have a lane control, that will actually even continue. You're going to have more precision parts required for optoelectronic detection in all areas. Not only in a car, but also in other application devices. This is exactly the sweet spot where GF Machining Solutions can make the difference.
This is also a part of our laser texturing. Laser texturing is being used to make a super accurate finishing or a special texturing to, for example, camera lenses. This gives opportunities.
It is complex to guess on the American market at this point of time. You may have seen that also the American market has been subdued, particularly in the second half of the year 2019. Whereas this market remained quite stable and strong in the first half, it was rapidly actually decreasing its order intakes in the second half of the year. Not only GF, I'm talking now the overall industry, not that we're going to mix the figures. GF actually had quite a strong second half with their deliveries and also their order intake on the aero-engine components.
The overall market was rather subdued in the second half, and so the year ended even in Americas with its reduction in order intake of 19% in the industry. Here we have also to have a look back to the year 2018, 2018 was rather an elevated year.
2018 was above average in Americas when it comes to machine tool spending. Is now 2019 more the normal year? To be questioned. We have seen, of course, that the order intake also have gone down. The confidence in the capital goods spending has been slightly reduced. Europe, yes, you're right. Europe was affected, and we have seen that effect already in the second half of 2019. We have seen Germany spearheading this development. In the last three months of the year, we have seen double-digit decreases of order intakes in the German machine tool industry, and this is actually also indicating that GF was affected by the German market. On the other hand, I just read yesterday, there was somehow a positive and optimistic mood.
The German capital goods producer actually assume a slight positive development now for the first six months, which is indicating a good sign, and I think we're going to have to give that also, let me say, a certain credibility, that businesses can come back on a higher level.
If I may, one last question regarding one-time effects, restructuring costs. You mentioned some costs at Werdohl, and the Agility program might cause also some costs. What do you expect there for this year?
The Agility program comprises also the structural change of our Casting Solutions division. This relocation and transformation and the adaptation to the new setup of the Casting Solutions division is included. We have said that it will be approximately CHF 70 million additional one-off costs, 2020. Obviously, it comes along with the operational losses of this entity, which we are considering somehow non-recurring, particularly when we have closed down the facility. Until we have closed this facility, as the casting part of it, the foundry part of it's a partial closure only, not a comprehensive one, then we're going to see a reduction of these costs. It will affect an impact also 2020.
You mentioned that within GF Machining Solutions, the ICT-related business, I think was down around 15% last year. Is that correct? Could you tell us how much sales do you actually do within the ICT business? Its profitability, is it above average within GF Machining Solutions?
I think profitability is across the various market segments, pretty much in a similar range. The most profitable may is the aero-engine part segment, which is approximately CHF 250 million of the Machining Solutions division. The ICT segment was the largest segment in the past. It has dropped over the last two years, and therefore it is now slightly below the, or on average, on the same level as the aero-engine business. The ICT, yes, you're right, has been down, and it has been down also mainly due to the trade tensions between the U.S. and China, because that has taken away confidence of the suppliers.
If you are a supplier to one of the Apple products, you have been may reluctant to invest in the last year until you definitely know whether this production of these mobile devices will still be in China or whether it's may being relocated to another country, such as Samsung has announced. Samsung is actually withdrawing their production from China and allocates their production or relocates their production to Cambodia, but also part of it to India.
I think, in the news it was mentioned, that is now one of the biggest facility in India to produce smartphones. It is changing the overall industry. On the other hand, I have to say, I have seen that many good customers of us there, and they are very confident. Of course, they have been somehow bounced back, on this reduction of volumes, but they are still very profitable. They are cash-rich.
They're going to go for new ideas. They're going to embark to the next level of quality. It was impressive. We have seen many customers last year, which are now automating, fully robotic process their facilities. It is actually without any people any longer in their facilities. I think there is a solid, strong base which will provide further ICT components. Obviously, we also supply to other companies, which are going to produce for all kinds. We are delivering to the Chinese, we're delivering to the Japanese, we're also delivering to the Korean ones.
I mean, anecdotal evidence suggests that there is a pickup, at least at the semiconductor end. Do you see that as well in your business now?
The semiconductor business is quite an interesting business. What we have seen now is that there is a certain repatriation, and this repatriation also drives an additional increase of fabs for semiconductor products. What we have seen now is that the American-based companies going to set up new facilities across the world, but not in China. We do see the Chinese, also government-driven, large investments in semiconductor factories. This is mainly a business where we observe in our Piping Systems division that we see that this is actually currently boosting the business in a situation where demand may remains pretty much on the same level, but you're going to see new facilities in China, and you see new facilities from Ireland to Israel to Americas to the U.S. all over. This is, it's quite a controversial, counterintuitive situation, what we're going to see.
Yes, we also believe that in the ICT business, it is all about innovation. We said it many times, innovation is the key, whether this business going to inspires us to buy these devices. I think we're going to have to see more to come. We have seen the cameras was a major driver for new devices, which all made us to buy many new devices because we suddenly enjoyed the better quality of the pictures. Such things going to drive such innovation, drive the demand, and also drive later on then demand for machine tools.
If there is a recovery in semiconductors, you will mostly profit in piping.
That's it.
Okay.
Yeah.
Great. Thank you.
Yeah. Martin Flückiger, just a couple of follow-ups. Sticking with pipings, please. You've just confirmed that semis is an important driver for top line this year, and I guess data centers as well is going to be a growth driver, although both businesses, I think are pretty small for you. How about the rig count in the U.S.? If I remember correctly, the U.S. shale gas business used to be an important driver, at least 2017, 2018. I was just wondering what's happening there for you and across the Pacific, also the greater Beijing area, you had this major project that you were participating in, switching from coal to gas heating. What have you been seeing there? That would be my first question.
The microelectronic segment in the piping system series is not that small. It is above CHF 100 million. Data center is still at its early stage. It has its birth a couple of years ago. We're going to see rather substantial growth rates in this segment, but we have enlarged our segment focus, and we're going to provide now solutions and also this COOL-FIT 4.0, what you have seen is a typical product which going to go exactly into this data center. The fire retardant piping systems is also a segment, very important product, which will boost in a one and a half to two years this market segment in addition, because it is a very important component to be allowed actually to install also in critical safety areas, this kind of piping systems.
It is, yes, small, but the segment's normally going to start small, and then we're going to intend to make them bigger. This is for Piping Systems. The shale gas business in America was not the predominant gas or the predominant end market for our businesses in Americas. We are very strong in the utility distribution of gas. We are market leader actually in Americas with gas meter systems and house connections for households when they're going to get plugged to the gas supplies, and that's actually quite a stable and quite a solid business, which we have seen also growth rates last year. The situation about the industrial end markets, yes, you're absolutely right. They have been affected, that's not only the oil and gas, that's also a few other adjacent business fields which have been affected last year in the U.S.
We have seen quite a mixed picture. We have seen, on the one hand side, strong industrial businesses on the high-end product ranges for semiconductor, for example. We have seen water treatment facilities, water rehabilitation facilities, which was quite strong last year. We have seen a subdued development in the oil and gas supply industry, which might include then also that shale gases. Predominantly, we have a strong business foothold when it comes to the connections of houses in the U.S., coal to gas. Yes, you're right, I mentioned it. The coal to gas business is still on hold. We haven't seen any recovery of this business in the year 2019. Overall, the utility business in China was also the main reason why the Chinese piping systems has been down last year.
In controversy, the industrial business of piping systems in China has been up, and that is mainly due to the fact that also sustainability drives major trends. Water treatment is a very important element, or also when it comes to landfills, for example, groundwater recovery systems. That's all application fields, but also process technologies, industrial process applications, or process liquids which had to be flushed or cleaned. This was a major driver. That business was actually the industrial business of piping systems for us, developing quite good in the year 2019. It was, as you correctly stated, the coal to gas, which has left a subdued utility business in China.
Okay, thanks. My final one, I guess, is one for Mads. Following the Swiss tax reform, I think that was one of the reasons why the tax rate went down, that you mentioned. What is your best guess? I realize there's various components driving it, but just going forward for the next two to three years, what's your best guess for its sustainable tax rate?
Thank you for the question, Martin. You're right. This year was positively impacted by about 5 percentage point down to 15. We actually expect that it will, in the next three to four years, come back to the level around 20 again and stay there. No, probably steep up and then as the assets will be amortized, we will probably pendulate in around the 20 mark. It will not go gradually. Already this year, we'll start going back again. I would say about the 20%, 21%.
Thank you. You mentioned also that you are looking at the aircraft industry. Perhaps one, the Boeing difficulties, have they affected your sales, your situation? To which extent? Two, in general, the increase in sales, would you account that at the expense of other competitors, or is it actually a growing market in this particular segment? I assume you are driving your sales by technology advantages. How difficult would it be for competitors to copy these features?
Thanks a lot, Arnold, for your question. Boeing's 737 MAX is the LEAP engine. The LEAP engine program consists of three jet engines, which is three turbines, A, B, C. Then there's a third one. The A obviously goes into the Airbus, Boeing. The effect at this point of time in our machine tool sales is not seen. It is obviously affecting, at this point of time, suppliers in Americas who want to supply into this jet engine business because obviously, the Boeing, the LEAP-1B was the largest portion of that one. That may going to affect them, at this point of time, it doesn't affect our business. Our business is rather long-term, and install base for this jet engines is already existing. It is a growing market, yes, you're absolutely right.
We see on average a growth of the years to come of 3%, some years a little bit more, some years a little bit less. It is a constant growing market, it needs a constant replacement. You have also, after a certain amount of hours, the jet engines have to be totally refurbished. When you have a total refurbishment, you're also going to have to supply new plates, new discs. This is exactly the business where GF machine tools going in. GF delivers, with its technology, a unique advantage to our customers. It is the focus that we combine the machine tool capability with special software, that actually delivers a higher value to our customers.
It is a strong focus on our customer's advantage that makes it rather hard for competition to enter, and it's not the market where you're going to find tons of competitors. You're going to find a couple of competitors, two to three, which are in that business, machining BLISK plates for jet engine components.
Are you earning money with this through 3D print you showed here and last year as well? Is it just something in the lab and will come to the market later?
If I'm not mistaken, once you correct me, we have approximately sales achieved of just a tad below CHF 30 million last year with 3D printing technologies, where we're going to have a partnership with a company called 3D Systems, where we have jointly developed now new machines, the DMP 350 and the DMP 500, which are fully integrated printing technologies. Adjacent technologies have been developed, for example, a CUT 400. A CUT 400, this is a wire EDM machine, which is capable to horizontally cut the 3D-printed components from a pallet. I think we're going to offer here an integrated solution to our customers. It is a business which has to be further developed. We have the AMotion Center, which is the additive production center from Casting Solutions. That's also a company which is located in the Ticino.
They focus on printing components for aero engines, but also for energy turbines. This is a business where we actually offer our customer solutions to this business.
Then the question in the U.S. for this Ford F-150 or whatever. You have an additional cost this year, but when will you have a nice money earned? Is it the next year? You said Q4 breakeven, but is it then ramping up or slowly coming up?
It is also here not to be expected that it is then overnight, that full profitability. It is a process where you're normally going to have, every eight years, you're going to exchange a product in the car industry. That's the normal lifespan. Seven to eight years, it depends if you have components which can't be seen, then it is a bit longer. Sometimes engine components, battery houses, they may going to last shorter or they may going to last longer. You're going to have to have, let me say, a couple of years before you have a product range constantly running before you come to ordinary results. It will not be like achieving breakeven and from the next day onwards, you are at full profitability levels, which we're going to expect to come with this foundry.
If there is no more questions, we would like to thank for your participation, for your interest in our companies, and hope to see you soon. Thank you.