Results

Profitability still at a high level

In comparison with previous years, the operating cashflow (EBITDA) was no longer impacted in 2018 by one-off costs related to the Sanitec acquisition. Adjusted figures are only shown for operating profit and net income, as well as for earnings per share. These adjusted figures are shown for the last time in the reporting year.

The operating cashflow (EBITDA) rose by 5.7% to CHF 868 million, its highest ever level in Geberit’s history. As in the previous year, the EBITDA margin came to 28.2%. The increased year-on-year operating results were above all attributable to higher sales volumes, price increases, positive effects of the closure of two plants in France in the previous year as well as to continuous efficiency improvements, while higher raw material prices as well as tariff-related increases in personnel expenses had a negative impact. In terms of the operating margins, currency fluctuations only had a marginally negative impact due to the natural hedging.

The adjusted operating profit (adj. EBIT) rose by 5.4% to CHF 744 million, and the adjusted EBIT margin reached 24.2% (previous year 24.3%). Adjusted net income rose by 3.7% to CHF 626 million, which led to an adjusted return on sales of 20.3% (previous year 20.8%). The below-average growth when compared with the operating results was due to a negative development of the financial result as a consequence of negative foreign currency effects, which could only be compensated in part through a lower tax rate. The adjusted earnings per share were up by 4.7% to CHF 17.21 (previous year CHF 16.43).

EBIT, EBITDA, Net income, Earnings per share (EPS) 2016–2018

(in CHF million) (EPS: in CHF)

EUR/CHF exchange rates 2017/2018

(Period-end exchange rates)

Operating expenses under control

The cost of materials increased by 7.6% to CHF 893 million, representing a higher share of sales at 29.0%, compared to 28.5% in the previous year. The higher cost of materials was driven by rises in the first three quarters in the price of industrial metals on the one hand and plastics on the other. Personnel expenses fell by 0.4% to CHF 744 million, which equates to 24.2% of sales (previous year 25.7%). This slight decrease in absolute terms was due to positive effects from the costs incurred in the previous year connected to the closure of two ceramics plants in France, and also to synergies and efficiency-improving measures. These factors were partly offset by tariff-related salary increases as well as the higher personnel expenses needed for handling greater volumes, see also Business and financial review, employees. Depreciation came to CHF 105 million, which was around the previous year’s figure. The adjusted amortisation of intangible assets rose to CHF 19 million (previous year CHF 10 million) due to amortisation related to the ceramics brands that are being discontinued in 2019 and 2020. Other operating expenses increased by 2.8% to CHF 576 million.

Raw material price development 2014-2018

(Market price; index: December 2013 = 100)

The net financial result came to CHF -20 million, which was below the previous year’s performance (CHF -9 million). Tax expenses grew from CHF 85 million to CHF 90 million. This resulted in a tax rate of 13.1% (previous year 13.9%).

Acquisition and integration costs now only having a marginally negative impact on the income statement

One-off costs arising from the Sanitec acquisition/integration amounted to CHF 36 million as regards EBIT and CHF 29 million as regards net income. These costs are reported here for the last time and are well below the level of previous years. The non-adjusted figures were CHF 708 million for EBIT, CHF 597 million for net income, and CHF 16.40 for earnings per share.

Acquisition and integration related costs
(in CHF million)
  20172018
Integration costs 490
Total cost on EBITDA level 490
Depreciation and amortisation 3536
Total cost on EBIT level 8436
Tax effect -7-7
Total cost on net income level 7729

Significant increase in free cashflow

The higher operating cashflow, lower investments in net working capital compared to the previous year, and lower cash tax payments had a positive impact on cashflow. However, the payments during the reporting year in relation to the closure of two ceramics plants in France in the previous year had a negative effect. With investments in property, plant and equipment remaining at the previous year’s level, free cashflow increased by 22.2% to CHF 582 million (see also Financial Statements of the Geberit Group, Notes to the Consolidated Financial Statements, 28. Cashflow figures). CHF 566 million, or 97.3% of the free cashflow, was distributed to shareholders during the reporting year as part of the dividend payment and the share buyback programme.

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