Geberit and COVID-19

Significant impacts caused by the first lockdown wave

From mid-March to mid-May, the construction industry in Europe was massively impacted by the COVID-19 pandemic. In several countries – Italy, France, the United Kingdom and Spain – most construction sites remained closed for extended periods. Meanwhile, in the other countries the restrictions enforced as a result of the pandemic led to a slowing of construction activities. Moreover, the showrooms for sanitary products across Europe remained largely closed for around two months. Outside Europe, construction activity was massively restricted in some cases too.

The decline in net sales at Geberit during this period was unprecedented in the scale, speed and simultaneity of events. Net sales fell by 29% in April and by 15% in May – the biggest monthly declines in sales seen for decades and also significantly greater that those seen in 2008/2009, for example. In these two months, volumes decreased by 23%.

Despite the restrictions enforced due to COVID-19, the supply chain at Geberit remained intact during 2020. Although five small plants were closed by the authorities for a few weeks, the regional supply chain setup and the high share of in-house production ensured stability.

Key decisions made at the end of March 2020 for dealing with the crisis

The key element of the cost-saving programme – which was driven bottom up and implemented within just a few days – was the dividing up of all activities into three categories by the managers of all levels:

• A: immediate stop
• B: stop if crisis deteriorates further
• C: No change

As a result, it was possible to determine the short- and medium-term savings potential within a short period of time and to align the organisation with activities to be stopped or to be continued. This also made it possible to prevent negative impacts on long-term potential.

Emerging stronger from the crisis thanks to a dedicated approach

Due to high levels of cost flexibility as part of the aforementioned cost-saving programme and to active price management, it was largely possible to offset the margin losses seen in the most critical months April and May – which saw a volume decline of 23%.

Thanks to the high flexibility of the employees – particularly in the production plants and in logistics – it was possible to largely avoid short-time work and thus financial support from the state. Across the Group, COVID-19 did not result in any dismissals, nor did it result in any salary reductions for the employees.

In terms of marketing and sales, it was even possible to increase the number of contacts with customers. Despite a reduction in face-to-face meetings, the overall number of customer contacts increased by 9% in 2020 as a result of the significant increase in virtual contacts of over 200%. The number of virtual customer trainings increased from 2,000 to 52,000, with the total number of trainings carried out across the entire Group seeing an increase of 114% as a result – despite the significant reduction in physical training activities. Furthermore, virtual showrooms were quickly established and virtual trade fairs held, which were visited by over 30,000 customers across 2020 as a whole.

Finally, investments were also made in further training of employees through eLearning, podcasts and webcasts. 20 newly created modules in a wide range of areas resulted in a 154% increase in internal virtual training sessions to 127,000.

Most important insights of the COVID-19 crisis for Geberit