Geberit Group reports it has achieved “convincing” results in the first three quarters of 2023 in an “extraordinarily difficult” environment, with a declining construction industry in Europe.
Volume sales declined significantly from record levels of the previous year and net sales were impacted by negative currency effects, with a strong Swiss Franc, however profitability increased.
In the first nine months of 2023, sales fell by 12.3% to CHF 2,390 million or 7.9% in currency-adjusted terms. However price increases of 10% had a positive effect
Operating cashflow (EBITDA) reached CHF 749 million, which corresponds to an increase in the EBITDA margin of 320 basis points to 31.3%.
According to Geberit it was achieved by a high level of operational flexibility, especially in its plants and logistics, a “significant” fall in energy prices and “consistent” price management.
Net sales in Q3 reached CHF 728 million, which is equivalent to a decline of 7.9% compared to the same quarter in the previous year.
Currency-adjusted, this resulted in a decrease of 4.8% driven by a drop in volume and a positive price effect of around 6%.
According to Geberit, the European markets suffered the most from “extraordinarily difficult” underlying conditions for the construction industry.
Currency-adjusted net sales in Europe decreased by 9.2% overall after nine months, with Italy and Western Europe (which includes the UK) slightly down on the previous year with -1.1% and -1.4%, respectively.
Whereas Benelux, Switzerland and Northern Europe sustained more pronounced declines and double-digit decreases were recorded in Austria, Germany and Eastern Europe.
Net sales also declined in the Far East/Pacific region and in America, whereas the Middle East/Africa region posted growth of 11.5%.
In terms of products bathroom sales declined by 7.9%, with installation and flushing systems showing the biggest drop of 10.1% and piping systems also falling by 5.4%.
The group highlighted challenges for the sanitary industry which included pull-forward effects from the COVID-19-induced home improvement trend and shift from sanitary to heating solutions – primarily heat pumps – in some European countries.
However, it also offered opportunities in the form of demand for home renovations, a trend for higher sanitary standards and positive market in countries outside of Europe, such as India or the Gulf Region.
In light of the trading environment, Geberit management defined two guiding principles for 2023 which is strategic stability and operational flexibility to overcome volume decline without affecting medium-term potential.
For 2023 as a whole, Geberit expects a mid-single-digit decline in net sales in local currencies and an EBITDA margin of 29 to 30%.
In its quarterly report, the company stated: “Management is convinced that Geberit will emerge stronger from this challenging and declining market environment and gain further market shares.”