2023-11-02 18:25:19
The Ebitda margin increased by 3.2 percentage points to 31.3%. The cost reduction measures have notably borne fruit, assures the group. The action takes off.
Bathroom equipment manufacturer Geberit faced quite a few headwinds in the third quarter, between a sluggish construction market and the strength of the franc. The drop in volumes over nine months did not prevent the Saint-Welsh group from increasing its margins and timidly raising its annual objectives.
Between January and September, revenue fell by 12.3% year-on-year to 2.39 billion francs. Adjusted for exchange rate effects, they show a decline of 7.9%, the sanitary facilities specialist said on Thursday. The strong franc affected turnover by 119 million.
Geberit has raised its prices in order to partially cushion the monetary impact. The effect of these measures will erode over time. It will positively affect turnover by 2% in the fourth quarter, compared to 6% in the third, said general manager Christian Buhl in a teleconference.
The decline in revenue is attributable to declining volumes. In its press release, Geberit points to the slowdown in the construction sector in Europe and a high basis of comparison. All regions show a decline, with the exception of the Middle East Africa region.
The drop in volumes did not affect profitability too much. Operating income before interest, taxes, depreciation and amortization (Ebitda) stood at 749 million francs, which represents a decline of 2.4% in francs but an increase of 4.0% in local currencies (ML). . The Ebitda margin increased by 3.2 percentage points to 31.3%. The cost reduction measures have notably borne fruit, assures Geberit.
Net profit declined by 2.9% to 634 million francs (+2.1% excluding currency effects). The published figures are higher than the AWP consensus forecasts.
A favorable month of October
In the third quarter alone, Geberit generated a turnover of 728 million francs, reduced by 7.9% year-on-year (-4.8% in ML). Ebitda nevertheless grew by 8.1% (+13.4% in ML) to 223 million for a related margin of 30.6%, up 4.5 points. Net profit reached 148 million, or +6.2% or +10.8% without currency effects.
For the year 2023 as a whole, management still anticipates a decline in ML turnover of around 5%. The Ebitda margin target is slightly raised to between 29 and 30%, compared to 29% previously.
“Volumes in the fourth quarter should fall less quickly than in the third, or even increase at an annual rate,” according to Mr. Buhl. Turnover in local currencies thus increased in October compared to the same month of 2022. Between October and December, the operating margin will benefit from the favorable evolution of raw material prices. Energy prices should start to rise once more.
Overall, analysts highlight Geberit’s good performance and promising prospects. The bleeding of volumes should end. At Baader Helvea, we even anticipate two quarters of revenue stabilization.
On the Swiss Stock Exchange, Geberit shares soared 9.5% to 462.30 francs, well ahead of an SMI up 0.84%.
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