Geberit’s first half results hit by Covid-19
Despite a 9.8% decline in revenues and a 13.9% fall in net income, Geberit is maintaining its investments in technology and R&D
In the first half of 2020, the business performance of the Geberit Group, the Swiss sanitaryware and bathroom accessories giant listed on the SIX Swiss Exchange, was inevitably impacted by the Covid-19 pandemic and negative currency developments. Compared to the first half of 2019, net sales fell by 9.8% to CHF 1,468 million (-4.5% net of negative currency effects totalling CHF 87 million).
The results in different markets varied according to the durations of the construction site and showroom shutdowns. In Europe (down 3.3% on 2019 at constant exchange rates) the worst hit countries were the United Kingdom and Ireland (-34.1%), Italy (-25.1%), the Iberian Peninsula (-20.9%) and France (-19.2%). Positive performances were seen in Germany (+2.9%), the Nordic countries (+2.2%), Eastern Europe (+1.4%), Switzerland (+0.5%), Austria (+0.4%) and Benelux (+0.2%). Outside Europe, the biggest falls were in the Middle East/Africa (-25.9%), the Far East/Pacific (-18.5%) and America (-5.4%).
Overall, all three of the Group’s business units reported falls in turnover. Installation & Flushing Systems saw a 4.8% drop in sales (at constant exchange rates) to CHF 556.3 million; Bathroom Systems lost 4.6% to CHF 464 million, while the Piping Systems BU posted a 3.8% decline to CHF 447.8 million.
In terms of profitability, operating cashflow (EBITDA) fell by 7.8% to CHF 462 million, operating profit (EBIT) dropped by 10.5% to CHF 386 million and net income declined by 13.9% to CHF 315 million. Rapid implementation of cost containment measures right from the start of the pandemic enabled the group to increase its EBITDA margin to 31.5% of revenues (compared to 30.8% in 2019).
Despite the uncertainties of the period, Geberit Group maintained a high level of investment at CHF 55 million (compared to CHF 52 million in the first half of 2019), equivalent to 3.7% of net sales. The bulk of this spending was used for capacity expansion and plant modernisation. R&D expenditure amounted to CHF 38 million (CHF 39 million in the first half of 2019), equal to 2.6% of net sales.
It is difficult to make forecasts for the second half of 2020. Barring a second wave of lockdowns, the construction industry appears likely to continue its gradual return to normality during the second half of the year. However, delayed or interrupted projects, particularly in non-residential construction, and the temporary closure of the showrooms in the second quarter may have a negative impact on demand. Under these assumptions, Geberit expects currency-adjusted net sales in the second half of the year to be slightly below the level of the second half of 2019. Thanks to its strong foundations and very solid balance sheet, the group will continue to pursue its strategic and operative priorities and will maintain its R&D budget.