Geberit generated less sales in the 2023 financial year than in the previous year. The sanitary technology group was slowed down by the weak construction economy in large parts of Europe, but also by the strong Swiss franc. Geberit also expects the construction industry to decline in 2024.
Group sales fell by 9.1 percent to 3.08 billion francs for the year as a whole, as Geberit reports. Without the negative currency effects due to the strong Swiss franc, there was a more moderate organic decline of 4.8 percent. Sales were therefore slightly above analysts’ expectations.
Legend: Geberit presents its sales figures for the 2023 financial year and records a decline in sales of 9.1 percent. Keystone/Gian Ehrenzeller
Geberit justifies the declining sales by saying that the financial year was characterized by an extraordinarily difficult environment with a declining construction industry in Europe. Due to the strong period in the previous year and the weak construction industry in Europe, significantly less sales were possible in 2023.
Currency effects also depressed sales. The group estimates the resulting negative effect at 147 million francs. Price increases, on the other hand, had a positive impact on sales – by around 8 percent.
European markets suffered particularly
From a geographical perspective, according to Geberit, the markets in Europe in particular suffered from the extraordinarily difficult conditions. The European market accounts for around 90 percent of sales.
In the most important individual market, Germany, sales in local currencies fell by over ten percent, and in Switzerland by four percent. For Europe as a whole there was a minus of six percent. Only the markets in Italy and Western Europe developed positively.
Within the product areas, the decline in sales for piping systems was somewhat smaller than for bathroom systems and installation and flushing systems.
Towards the end of the year, the situation for Geberit improved somewhat. Sales in the fourth quarter, which is usually the weakest because of the Christmas holidays, increased by 4.1 percent to 694 million francs. Adjusted for currency effects, the increase was as high as 8.3 percent, with price increases of two percent contributing.
Legend: The decline in sales was greater for bathroom systems and installation and flushing systems than for piping systems. imago images/Stephan Görlich
With a view to the result, the statements from last November were formulated a little more confidently. Accordingly, the operating cash flow margin (EBITDA) is likely to reach a value of 30 percent in 2023 as a whole. The previous forecast was 29 to 30 percent.
Geberit attributes the margin development to the significantly lower energy prices, price management and operational flexibility in the factories and logistics. However, the raw material prices that fell over the course of the year will only have a minor impact on the result.
No better forecast for 2024
Geberit is already making statements about the current financial year. They also expect the construction industry to decline in 2024. The increased construction costs and higher interest rates have significantly dampened demand in the European construction industry – especially in the new construction sector – over the last two years.
In the first nine months of 2023 alone, building permits in Europe fell by 20 percent due to weak housing construction. This will also lead to a corresponding decline in new construction activity in 2024. In contrast, a more robust development is expected in the renovation business, which contributes around 60 percent of Geberit’s sales.