Geberit outperforms expectations despite challenging conditions

The Swiss group reported an increase in net sales to CHF 2.4 billion in the first three quarters of the year.

Geberit, one of the world’s largest manufacturers of sanitaryware and bathroom solutions, reported better-than-expected results in an extremely challenging environment in the first three quarters of 2024. Despite the sharp decline in the building construction industry and unfavourable currency developments, the Swiss multinational achieved slight growth in sales volume and maintained its operating profitability at a high level. Net sales increased by 0.4% to CHF 2.4 billion, or 3.1% in currency-adjusted terms. Operating cashflow (EBITDA) reached CHF 754 million (+0.7%, or +4.6% adjusted), while EBITDA margin increased by 10 basis points to 31.4%. Net income decreased by 3.1% to CHF 501 million (currency-adjusted +1.3%) due to the significantly higher tax rate, which was primarily driven by the OECD minimum taxation law in force since 2024.

In general, the decline in market demand was offset by the rebuilding of inventories at wholesalers in the first half of the year, followed by a fairly dynamic third quarter. Between July and September, turnover reached CHF 762 million, an increase of 4.7% over the same quarter of the previous year (+6.2% adjusted for currency effects).

Overall, the group’s results benefited from lower direct material costs but were impacted negatively by high levels of wage inflation in many countries. During the year, Geberit invested in a range of digitalisation and IT projects, as well as in strengthening its market position. These included growth initiatives in selected developing markets, the launch of new products and the group’s 150th anniversary celebrations.

Sales by markets and product areas

European markets have continued to be the worst affected by the fall in demand in the sanitaryware industry. Nevertheless, currency-adjusted net sales in Europe increased by +2.2% in the first nine months of 2024. Above-average increases were achieved in Eastern Europe (+9.9%), Italy (+6.3%), Benelux (+3.5%) and Germany (+3.3%). Austria (+0.5%) also made slight gains. By contrast, net sales in Switzerland (-0.4%), Western Europe (-1.4%) and Northern Europe (-4.3%) were down on the previous year.

Outside Europe, positive currency-adjusted increases were achieved in the Middle East/Africa (+19.1%), America (+3.3%) and the Far East/Pacific (+3.2%).

In the product areas, all three of the group’s business segments reported an increase in currency-adjusted net sales: Bathroom Systems +1.7%, Piping Systems 2% and Installation and Flushing Systems +5.1%.

Outlook for full year 2024

In Europe, the new building sector is expected to see an overall decline in 2024 (the number of building permits decreased by 3% in the first half of the year). The sharpest declines are in Northern Europe, Germany and Austria, while new building activities in Switzerland are developing more positively due to the lower inflation and lower interest rates. In contrast, a more robust development is apparent in the global renovations business, which accounts for around 60% of Geberit sales. According to the group’s management, the reduction in interest rates and the structural trend towards higher sanitary standards should positively stimulate demand

In the markets outside Europe in which Geberit is active, strong demand is expected in India, the Gulf Region and Egypt, while a decline is anticipated in China.

In this scenario, Geberit’s management expects growth of 1-2% in net sales in local currencies for 2024 as a whole (previously stable) and an EBITDA margin of around 29.5% (previously about 29%).

The Geberit Group has 26 production facilities, of which 22 are located in Europe, and employs around 11,000 people in approximately 50 countries. Geberit is listed on the SIX Swiss Exchange and generated net sales of CHF 3.1 billion in 2023.