Geberit AG

Reported Q4 2022 net sales declined 14% year over year, or 7% in local currencies, including about 13% price contribution, minus 2% from one fewer working day, and roughly 18% volume decline. For full-year 2022, net sales were CHF3.39 billion, down 2% reported but up 5% in local currencies; the company also cited a CHF234 million negative currency effect, or minus 7%. Management guided to an EBITDA margin of around 27% for 2022, an extraordinarily low single-digit tax rate due to Swiss tax reform transitional measures, a positive one-time impact of around plus 10% on net income and EPS, and CapEx of around CHF160 million. For 2023, Geberit expects a price effect of around 6% to 7%, raw material prices in Q1 to be at Q4 2022 levels, and wage inflation of around 5% to 6%.

Christian Buhl said the quarter and year were shaped by the end of the COVID home-improvement boom, extraordinary wholesaler stocking and destocking, and major input-cost inflation. He emphasized that Geberit believes most excess channel inventory has now been worked off, and that the company will focus in 2023 on strategic stability, operational flexibility, and market-share gains through new products, full WC-system penetration, and prefabrication. His tone was cautious on the market but confident about Geberit’s ability to navigate it, pointing to the company’s resilience and its midterm targets of 4% to 6% average annual sales growth and 28% to 30% EBITDA margin.

Tobias Knechtle clarified that the 2022 tax item is a one-time Swiss tax reform effect that should create a very low tax rate, and he said the Board has not yet decided whether that effect will be reflected in the dividend. He also noted that Geberit bought back 1,109,000 shares for CHF570 million in 2022, and that together with the dividend the company returned CHF1 billion to shareholders. On costs, he said marketing spend is expected to be around last year’s level and not yet back to the pre-COVID CHF120 million level, while travel is roughly back to pre-COVID levels; he also said energy is now 100% spot exposed after 20% had previously been hedged.

Analysts pressed management on whether the April price increase was set, whether falling energy costs could materially help 2023, and whether the tax one-off should influence the dividend or buyback pace. Geberit said it has not yet decided on an April price increase, that energy buying is now fully spot-exposed while raw-material purchasing patterns are unchanged, and that the dividend decision has not been made. Management also said it would not comment on 2023 margin guidance before the half-year update and does not currently foresee price reductions, while repeatedly attributing Q4 volume weakness to wholesaler destocking rather than end-demand collapse.