The Geberit Group posted good results in a once again very challenging environment in the first quarter of 2024. A slight decline in volumes and an operating profitability that remained at a high level characterised the first three months of the year. Net sales decreased by 6.2% to CHF 837 million. Adjusted for currency effects, the decrease was 1.4%. Operating cashflow (EBITDA) reached CHF 275 million, which corresponds to a decrease in the EBITDA margin of 30 basis points to 32.8% compared to the previous year. Earnings per share fell by 9.9% to CHF 5.73.
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Net sales
In the first quarter of 2024, net sales for the Geberit Group decreased by 6.2% to CHF 837 million. Adjusted for negative currency effects of CHF 43 million, the decrease came to just 1.4%. These figures were positively impacted by the rebuilding of inventories at wholesalers and a weak prior-year period. However, demand and the corresponding sales volumes in the end markets again saw a decline.
Results
The results for the first quarter were negatively impacted on all levels to a significant extent by unfavourable currency developments. The volumes were only slightly below the weak prior-year period, as the decline in market demand was partly offset by the rebuilding of inventories at wholesalers. The lower direct material costs compared to the previous year had a positive impact. In contrast, the high wage inflation in many countries and various initiatives to strengthen the market position had a negative impact on results; these included growth initiatives in selected developing markets, marketing expenses for the launch of new products and for celebrating the 150th anniversary of the Geberit Group, plus various digitalisation and IT projects.
Outlook
The forecasts for the current year have not changed significantly since the announcement of the full-year results for 2023 in March. Due to the challenging conditions, the building construction industry is expected to decline overall in 2024. In the past two years, increased construction costs and interest rates have significantly dampened demand in the European building construction industry – especially in the new building sector. Driven by the weak development in residential construction, the number of building permits in Europe decreased by around 15% in 2023, leading to a corresponding decline in new building activities in the current year. The most pronounced decline is expected in Northern Europe and in Germany. However, new building activities in Switzerland are expected to develop more positively due to the lower inflation and lower interest rates. In contrast, a more robust development is expected in the global renovations business, which accounts for around 60% of Geberit sales.
Despite the negative overall forecasts for the European building construction industry in 2024, the expected reduction in interest rates during the course of the year – some of which have already been implemented – and the structural trend towards higher sanitary standards should positively stimulate demand. In the markets outside Europe in which Geberit is active, a mixed picture is expected for this year, with strong demand in India, the Gulf Region and Egypt, for example, and with a decline in China. Regardless of the challenging market environment, the objective for 2024 remains to gain further market shares.
More information:
Geberit Group
www.geberit.com