Mi., Jan. 17th 2024
Geberit’s Resilience Amidst Market Challenges: Navigating Currency Impacts and Construction Industry Shifts
Geberit AG (Geberit) is a manufacturer of sanitary products and bathroom ceramics. Its key offerings include faucets and flushing systems, traps and drains, ceramics and pipes and fittings for the construction of new buildings, renovation, and modernization projects.
Geberit generated lower sales in the 2023 financial year than in the previous year. Weak construction industries in Europe and a stronger Franc held Geberit this year.
Group sales for the year as a whole fell by 9.1% to CHF 3.08 billion, as Geberit announced on Wednesday. Excluding the negative currency effects, the organic decline was a more moderate 4.8%. Sales were therefore slightly above analysts’ expectations.
Currency effects also depressed sales. The company puts the resulting negative effect at CHF 147 million. Price increases had a positive impact on sales of around 8 percent.
In Germany, sales in local currencies fell by more than 10%, in Switzerland by 4%. For Europe as a whole, there was a decline of 6%. Only the markets in Italy and Western Europe developed positively.
The situation for Geberit improved somewhat towards the end of the year. Sales in the fourth quarter, which is usually the weakest due to the Christmas vacations, increased by 4.1% to CHF 694 million. Adjusted for currency effects, the increase even amounted to 8.3 percent, to which price increases contributed 2 percent.
With regard to earnings, the statements made last November were formulated with even more confidence. Accordingly, the operating cash flow margin (EBITDA) should reach 30% in 2023 as a whole. The previous forecast was 29 to 30 percent.
Geberit attributes the margin development to the significant drop in energy prices, price management and operational flexibility in the plants and logistics. By contrast, the fall in raw material prices over the course of the year will only have a minor impact on the result.
Geberit is already making statements about the current financial year. Accordingly, a downturn in the construction industry is also expected in 2024.
According to Geberit, the rise in construction costs and higher interest rates have significantly dampened demand in the European construction industry – particularly in the new construction sector – over the past two years.
In the first nine months of 2023 alone, building permits in Europe fell by 20 percent due to weak residential construction. This will also lead to a corresponding decline in new construction activity in 2024.
In contrast, the renovation business, which contributes around 60% of Geberit’s sales, is expected to be more robust.
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