• Net Sales (Q3): CHF 762 million, increased by 5% in local currencies.
• Net Sales Growth (Local Currencies): 6% in Q3.
• EBITDA (Q3): Grew by 8% in local currencies, EBITDA margin at 31.0%.
• Net Income (Q3): Increased by 7% in local currencies, net income margin at 19.7%.
• Earnings Per Share (Q3): Grew by 8% in local currencies.
• Share Buyback (Q3): 18,000 shares bought back for CHF 10 million.
• Net Sales (First Nine Months): Stable at CHF 2.4 billion.
• EBITDA (First Nine Months): Increased by 1% to CHF 754 million in CHF, 5% in local currencies.
• EBITDA Margin (First Nine Months): Increased by 10 basis points to 31.4%.
• Net Income (First Nine Months): Increased by 1% in local currencies to CHF 501 million.
• Earnings Per Share (First Nine Months): Increased by 3% in local currencies.
• CapEx (First Nine Months): Decreased by 19% to CHF 103 million.
• Free Cash Flow (First Nine Months): Increased by 1% to CHF 426 million.

• Warning! GuruFocus has detected 3 Warning Sign with ING.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Geberit AG (GBERF) delivered strong top and bottom line results in Q3, with net sales growing by 6% in local currencies.
• The company achieved an EBITDA margin increase of 40 basis points, reaching 31.0%, despite wage inflation and less favorable material prices.
• Net sales in the Middle East Africa region increased by 45%, driven by strong growth in the Gulf region.
• The new share buyback program was launched successfully, with 18,000 shares bought back for CHF10 million by the end of Q3.
• Geberit AG (GBERF) reported double-digit sales growth for shower toilets in Europe, driven by new products like Alba.

Negative Points

• Currency impact negatively affected the top line by CHF10 million, or minus 1%.
• Net sales in the Far East Pacific declined by 2%, primarily due to market contraction in China.
• The piping systems segment showed relatively weaker development, with only a 1% increase, due to its higher exposure to the declining new build sector.
• Net income growth was slightly lower due to a significantly higher tax rate, influenced by the new OECD minimum taxation law in Switzerland.
• The European building construction market is declining, particularly in the new build sector, with building permits down by 15% last year.

Q & A Highlights

Q: Looking at the strong volume developments despite a depressed backdrop, what would Geberit reinvest in if margins go above the top end of the 28-30% range? A: Christian Buhl, CEO: We would invest in areas like sales and marketing or sales initiatives outside Europe, similar to what we started this year. These are the main areas where we would reinvest any structural margin potential.

Q: Can you explain the adverse developments in working capital and whether they are temporary? A: Christian Buhl, CEO: The higher accounts receivable were due to increased sales and year-on-year effects. Inventory declined less than the previous year due to a higher safety stock. These are temporary effects, and we expect them to reverse.

Q: Has there been any change in underlying demand patterns in end markets during Q3? A: Christian Buhl, CEO: The statement refers to the first nine months, with a declining market environment in terms of end customer demand. There was no material difference between H1 and Q3; market demand was declining across Europe.

Q: What are the reasons for the expected decline in EBITDA in Q4, despite growth in the past two quarters? A: Christian Buhl, CEO: The negative margin expectations in Q4 are due to lower tailwinds from raw material prices and an expected volume decline, impacting operating leverage.

Q: How do you assess the impact of wholesaler inventory levels on your sales? A: Christian Buhl, CEO: Compared to a year ago, wholesaler stock levels are higher, but there was no material stocking effect in Q3. This was based on qualitative feedback from wholesalers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.