Outlook

Construction industry looking more positive

The construction industry should develop favourably in 2017. However, the individual regions/markets and construction sectors will carry on performing very differently. In Europe, the recovery that began in the previous year should continue. Overall, a favourable market environment is expected for Germany, the Nordic Countries, Switzerland, Austria, France, the Benelux Countries and the countries of Eastern Europe. The situation in Italy should stabilise, while the uncertainty in the United Kingdom will continue as a result of Brexit. In North America, stagnation is predicted in the public sector construction industry, which is important to Geberit’s business in the USA, along with moderate growth in residential construction. In the Far East/Pacific region, the Chinese residential construction sector should stabilise, while the business climate in Australia and India is expected to be positive. In terms of the Middle East/Africa region, the outlook in South Africa remains sound, whereas the construction industry in the Gulf countries will continue to see low activity due to the depressed oil price.

Fluctuations in the Swiss francs compared to other important currencies used by the Geberit Group will continue to affect sales and earnings. Gains and losses result mainly from the translation of local results into Swiss francs (translation effects). In general, the effects of currency fluctuations on margins are warded off as far as possible with an efficient natural hedging strategy. This entails making sure that costs in the various currency areas are incurred in the same proportion in which sales are generated. The influence of currency fluctuations on operating profit margins is relatively small due to the natural hedging strategy. With regard to the impact of foreign currency effects, please refer to the information and the sensitivity analysis in the Management of currency risks section.

In the first half of 2017, raw material prices are likely to exceed their prior-year level – driven mainly by higher prices for industrial metals and, to a lesser extent, for plastics.

Geberit

The Geberit Group’s 2017 financial year will see further progress with the integration of the ceramics business. A focus will be on continuing to consolidate the sales teams in the countries; another emphasis will be on the further harmonisation of systems and processes, further development of the product range, and continuous improvements in the ceramics manufacturing. However, Geberit will pay just as much attention to its daily business. The objective will be to perform strongly in all markets and, as in previous years, to gain market shares. There will be concerted marketing of the new products that have been introduced in recent years, focusing on greater penetration of markets in which Geberit products or technologies are still under-represented, and on further expansion of the very promising shower toilet business. In line with the Geberit strategy, these measures shall be accompanied by efforts to continuously optimise business processes.

The Board of Directors and the Group Executive Board are convinced that the company is very well equipped for the upcoming opportunities and challenges. The opportunities offered as a result of combining technical know-how in sanitary technology “behind the wall” and design expertise “in front of the wall” will be firmly seized. Experienced and highly motivated employees, a number of promising products that have been launched in recent years and product ideas for the more distant future, a lean and market-oriented organisation, an established cooperation based on trust with our market partners in both commerce and trade, and the Group’s continued solid financial foundation are vital to our future success.