2011 was a year full of challenges and a global economic situation that confronted us with great uncertainties. This situation was compounded by various factors, such as raw material prices marked by high volatility and the slowly developing building sector in many markets. Finally, as a Swiss company, we also suffered from the strong Swiss Franc. Nevertheless, Geberit was very successful in maintaining its position in 2011 as well.

Geberit Group sales for 2011 as a whole amounted to CHF 2,122.6 million. In Swiss Francs, this resulted in a minus of 1.1% in comparison with prior year figures. When calculated in local currencies, however, on a long-term basis an above-average increase in sales of 9.5% was achieved. Operating profit (EBIT) dropped by 7.6% to CHF 449.2 million. This decline was mainly due to the strong Swiss Franc. Calculated with prior year’s exchange rates an increase in operating profit would have been posted. An EBIT margin of 21.2% was reached (prior year 22.6%). Net income decreased in comparison to the operating results slightly disproportionately by 5.6%, to CHF 384.0 million, with a return on sales of 18.1% (prior year 18.9%). Earnings per share dropped by 4.8% to CHF 9.82. While free cashflow did not reach the record figure of the prior year, it still remained at a high level of CHF 386.0 million.

In addition to the successful business development, 2011 was also characterized by exceptional activities, for example the introduction of new products such as Geberit DuoFresh, a concealed cistern with integrated → odor extraction, an → actuator plate that can be installed surface-even in the wall and an → extra-thin concealed cistern for the specific requirements of the Australian market, where the walls of the houses are thin. Furthermore, we have used a new branding to make our appeal to architects and end users more emotional and more professional. The focus of Geberit market activities is concentrating increasingly on these customer groups. Our most important customer, however, is and remains the plumber himself. Two initiatives were launched for this target group in the year under review which contribute to a stronger emotional bond. “Geberit on tour” is a mobile exhibition that made it possible for plumbers to experience more closely and more directly the advantages of Geberit products at more than 450 events in eight countries. The “Geberit Challenge” was carried out in nine countries in 2011. To the accompaniment of great media attention, the best teams of plumbers in each country were selected at professional competitions involving theoretical and practical tasks. In November 2011, Geberit was awarded the → German Logistics Prize in Berlin. With this renowned prize, which is considered one of the most important awards in the world in its sector, we were honored for the successful, radical restructuring of our logistics in Europe.

The Board of Directors intends to maintain an attractive distribution policy. For this reason the Board decided to propose a distribution of CHF 6.30 to the General Meeting, an increase of 5.0% over the prior year. The payout ratio of 63.7% would thus lie in the upper range of the increased payout corridor of 50 to 70% of net income that had been newly defined in the prior year. The distribution will once again, as in the prior year, take place in the form of a tax-exempt payment to shareholders taken from reserves from capital contribution. Also continuing is the share buyback program begun in January 2011, by means of which additional liquid funds are flowing back to the shareholders.

The generational change in the Board of Directors started last year will be concluded at the General Meeting of 2012. As replacements for Randolf Hanslin and Robert Heberlein, both Members of long standing who have reached retirement age, → Jeff Song and → Jørgen Tang-Jensen will each be proposed for a three-year term of office in the supervisory body. The Board of Directors is convinced that the two nominees will enhance the international orientation of the body, in order, that Geberit may establish itself even better in Asia as an important market of the future. In addition, well-founded know-how, in both the B2B and the B2C business, and particularly in the construction industry, will be brought into the Board of Directors. The current Member of the Board of Directors, Susanne Ruoff, is a candidate for re-election for another three years.

We credit the gratifying results in 2011 to the outstanding commitment, the high motivation and the skills of our employees in 41 countries. At this point, we wish to express our thanks and appreciation for their exemplary performance. We would again like to devote special thanks to our customers in the commercial and trade sectors for their solidarity and the constructive collaboration. Last but not least, we also wish to express our gratitude, esteemed shareholders, for your continued confidence in our company.

It is our intention to continue the determined pursuit of our successful path in the new year and to continue to provide good results. In doing so, we continue to anticipate exacerbated economic and political conditions. It is our objective, not only in the construction markets that are still healthy, but also in those that are shrinking, to provide convincing market performances and to continue to gain market shares. The focus in this connection will be on the concerted marketing of the products newly introduced in recent years, on various organic growth initiatives and on the very promising shower toilet business. The Geberit Group is well equipped to achieve the ambitious goals that have been set. With the performance capability of our competent and motivated managers and employees, our effective, efficient and market-oriented organization and the continued faithful cooperation we have with our market partners, we look to the future with confidence.

Albert M. Baehny Chairman and CEO	Robert F. Spoerry Lead Director and Vice Chairman