Geberit AG

Thank you for the introduction and good morning ladies and gentlemen. Welcome to our Q1 results conference call. Geberit had a successful start into the year with strong results. Let me start with the key statements for Q1. First, we achieved the mid single digit net sales growth despite one working day less. And second, We kept operating margins stable on all levels of the P&L, excluding one-time costs for the closure of our ceramics plant in Wesel, announced in January this year. We booked in the first quarter 14 million Swiss francs one-time costs for this site closure, 12 million on OPEX and 2 million on depreciation level. Let me now comment on our net sales development in more detail. Net sales grew by 5%, both in Swiss franc and local currencies, to 878 million Swiss francs. This growth was fully driven by volume and a slightly negative price effect on net sales price level. The small negative price effect on net sales level was caused by two factors. First, the technical reason. We increased sales prices as of April as announced. However, we increased customer bonuses already as of January this year as this is regular market practice. This difference in timing led to a slight negative price effect on net sales level in Q1. Secondly, we selectively adjusted prices for selected product categories in Switzerland this year due to the appreciation of the Swiss rank over the last years. The strong volume growth in Q1 was driven by a the strong development of new products and b pre-buying by wholesalers in anticipation of the April sales price increase. We come now to the regional development. All growth figures refer to growth in local currencies. In Europe, net sales increased by 5%. Net sales increased in all sub-regions except Western Europe, which was negatively affected by a marked decline in France. In Middle East Africa, net sales increased by 15%, driven by Turkey and South Africa. In America, net sales increased by 4%. Net sales in Far East Pacific declined by minus 1%, driven by declines in China, almost fully offset by strong growth in India. Let me now comment on the sales development per product area, which all showed a similar sales dynamic last quarter. Installation and flossing systems grew by 6%, while piping systems and bathroom systems increased by 5%. I will now comment on the operating and financial results. I'll start with the ABTA development. ABTA in Swiss francs and local currencies increased by 1% to 277 million Swiss francs. The ABTA margin reached 31.5%, decreasing by 130 basis points, which can be fully attributed to already mentioned one-time operating expenses of 12 million Swiss francs, related to the site closure in Wehl. Excluding this one-time effect, the ABDA margin in Swiss Franc reached exactly previous year's levels. The positive effect from the operating leverage was offset by mainly two factors. First, a 3% wage inflation and second, 36% higher energy prices. Direct material prices were basically on previous year's level and did not have a material impact on the margins. EBIT margin reached 27.1%, a decrease of 150 basis points, also fully driven by the planned closure in VETL, which amounted to 14 million Swiss francs on EBIT level. Excluding these one-time charges, the EBIT margin would have reached exactly previous year's level. Also, the net income margin would have reached exactly previous year's level of 22.7%, excluding the one-time closure costs. Earnings per share reached 5 Swiss francs 69. Excluding the effect of the closure-related charges, EPS would have reached 6 Swiss francs 05, an increase of 6% in Swiss francs. We also continued our share buyback program in the first quarter. In the first three months, 71,000 shares were bought back for a total amount of 37 million Swiss francs. Let me now comment on our outlook, which does not differ from our market outlook given at our four-year analyst conference in March. In Europe, We still expect a slight decline in new-build activity, with building permits in Europe down minus 2% in the full year 2024. This decline is offset by a positive renovation market, as indicated by several indicators, for example increased real estate transactions. In sum, we continue to expect overall building construction demand in Europe to stabilize in the course of 2025. Outside Europe, we expect a mixed picture for the building construction industry. We expect in several markets, for example in India or the Gulf region, a strong demand. Other markets, for example China, will be in a decline, mainly driven by the residential sector. On the direct material side, we expect prices in Q2 to be on the level of Q1. In terms of operating expenses, We expect further charges related to the basal plant closure, related to the social plan, retention, transfer costs and depreciation in 2025 and also 2026. Let me finish our outlook with a trading update for April. Net sales were like for like mid single digit above previous year's level, supported by order deliveries from Q1. Please also keep in mind that Q2 this year has one working day less than Q2 last year. Let me now briefly comment on the GEPRIT priorities this year. We will continue to have a strong focus on new products this year. For example, the new Duofix installation elements, but also important new products introduced over the last years, like FloFix, Maples Therm, and the new Shower Toilet Alba. Other important initiatives this year are dedicated sales activities outside Europe and in the area of IT and digitalization. We will continue to invest in our four dedicated sales initiatives in emerging markets, namely in India, Egypt, Saudi Arabia and Vietnam, by strengthening the respective local sales organizations with additional headcounts and targeted marketing efforts. Secondly, we will further invest into IT and digitalization specifically into AI initiatives and digital marketing efforts. In total, we are increasing our operational expenditures by 20 million Swiss francs this year for these initiatives. These expenses are ramping up in the course of the year. Let me close our introduction with a short summary and our key messages. GIBRID delivered strong results in the first quarter. with a mid-single-digit net sales growth driven by a strong development of new products and pre-buying of wholesalers in anticipation of the April price increase. Operating margins were constant on all levels of the P&L, excluding the one-time costs related to the vehicle plant closure. This means that earnings per share, excluding these one-time charges, grew in line with top line. For 2025, we continue to expect stabilizing market demand in Europe and a mixed environment overseas. AG is well prepared to continue its outperformance in this environment, as already demonstrated several times in the past and also last year. Our confidence is based on the fundamental need for our products, our resilient strategy and business model, and our long-term focus and track record. Thank you for your attention. We are now ready to answer your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. Our first question comes from Elodie Rahl from JP Morgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. So, first of all, I was wondering if you could give us a bit of color about how much you think you are outperforming your underlying markets, in particular thanks to the push through of your new products. And if you think that the trend that you have reported so far, including April, is what you think you can deliver for the full year. And second, you said margin was flat, excluding the one-offs. Is that also something that you think is sustainable for the full year? Thanks very much.