Pipemaker Geberit sees tough 2023 for Europe's builders after sales dip
CEO cites high rates, focus on heating system upgrades
FY sales down 2%, reaffirms EBITDA margin guidance
Shares volatile in early Zurich trade
Adds CEO comments
By John Revill
ZURICH, Jan 19 (Reuters) -Geberit GEBN.S expects 2023 to be "challenging" for Europe's building and construction industry, Chief Executive Christian Buhl said on Thursday, after the Swiss plumbing products supplier reported a drop in full-year sales.
Rising interest rates, a focus on upgrading heating rather than sanitation systems to counter rising energy prices and the end of a trend for home improvement projects that caught on during the COVID-19 pandemic were negative factors, he said.
The company, which makes toilets and showers and whose pipes and ceramics are used in renovations and new-build projects, expected raw materials prices to remain flat after they rose sharply during 2022, and its wage bill to rise around 5-6% this year, Buhl also told an analyst call.
Its shares were up 0.62% in mid-morning Zurich trade, recovering ground after falling in opening deals.
Geberit earlier said sales fell 2% to 3.39 billion Swiss francs ($3.70 billion) as wholesalers ran down stocks to skirt price rises. Sales rose 4.8% in local currency terms because of the strong Swiss franc. The figures are considered an indicator of the health of the broader construction industry.
Geberit also reaffirmed guidance from November for a core profit (EBITDA) margin of around 27% for 2022.
Zuercher Kantobalbank said in a note to clients that, if raw materials prices and energy costs stayed stable, it expected the company to boost that margin to a range of 28-30% this year.
Analysts at Vontobel said Geberit's 2022 sales had missed consensus estimates and forecast weak momentum going into 2023 given "subdued demand from the interest-rate sensitive residential market and continued FX headwinds."
Geberit's sales volumes fell in the second half of 2022 as wholesalers' ran down stocks and the pandemic-era trend of householders choosing to renovate their homes rather than move drew to an end, the company said.
Both trends were particularly marked in the fourth quarter, when sales fell 14%, it said.
The company is due to report full-year earnings on March 8.
($1 = 0.9164 Swiss francs)
Reporting by John Revill; additional reporting by John Stonestreet; Editing by Frank Jack Daniel
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