In an exceptionally challenging environment marked by a downturn in the European building construction industry, the Geberit Group reported a currency-adjusted decline in net sales of 4.8% in 2023. Net sales in Swiss francs decreased by 9.1% to CHF 3,084 million. Despite the reduction in sales, Management anticipates achieving an EBITDA margin of 30% for the full year 2023.
Due to challenging macroeconomic conditions and ongoing geopolitical risks, the building construction industry is anticipated to experience an overall decline in the current year. Over the past two years, heightened construction costs and interest rates have significantly subdued demand in the European building construction industry, particularly in the new building sector.
The weak development in residential construction has led to a notable decrease of around 20% in building permits in Europe during the first nine months of 2023, resulting in a corresponding decline in new building activities projected for 2024. However, a more resilient outlook is expected in the renovations business, which constitutes approximately 60% of Geberit sales. This is attributed to a fundamental need for renovations in several European countries and the absence of additional pressure from a shift in demand from sanitary to heating solutions, as observed in the previous year.
Despite the negative forecasts for the European building construction industry in 2024, the expected reduction in interest rates throughout the year and the structural trend towards higher sanitary standards are anticipated to positively stimulate demand.
In markets outside Europe where Geberit operates, a mixed picture is expected for the year. Strong demand is anticipated in regions such as India, the Gulf Region, and Egypt, while China and Australia may experience a decline.
Despite the challenging market environment, the objective for 2024 remains to gain further market shares. This will be pursued through two guiding principles: 1) strategic stability and 2) operational flexibility. The goal is to navigate uncertainties and challenges arising from volume development without compromising medium-term potential. Despite the declining market environment, various strategic growth initiatives and investment projects, especially in selected growth markets outside Europe, will continue or be newly launched as planned in 2024.
Source: Geberit
