Geberit Ag · SIX:GEBN
Geberit — FY2018 Earnings Presentation
55 slides from Geberit's earnings presentation, Mar 12, 2019
Slide 1: Analyst conference - Full year review 2018
Analyst conference Full year review 2018 Christian Buhl, CEO Roland Iff, CFO March 12, 2019
Slide 2: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building construction outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 2 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 3: Key figures 2018
Key figures 2018 Sales growth Sales growth EBITDA margin Adj. net income (reported) (in local currencies) growth +5.9% +3.1% 28.2% +3.7% (same as PY adj.) Adj. earnings per Free cashflow growth Dividend proposal Continuation of share share growth 2018 buyback program of maximum CHF 450 million start
Slide 4: Sales & marketing 2018 – Continuous investment in customer relations
Sales & marketing 2018 – Continuous investment in customer relations Geberit sales force Geberit Market activities 2018 – Example Germany Push • Customer Visits “Technical” Pull Wholesalers − “Push”: 7’700 − “Technical Pull”: 54’500 “Showroom” Pull Installers / Planners − “Showroom Pull”: 7’000 “End
Slide 5: Sales & marketing 2018 – Example of customer events in Germany
Sales & marketing 2018 – Example of customer events in Germany “Geberit Sicher dabei!” (“Technical“ Pull) • 26 events in urban areas with 5’100 customers • 329 events in rural areas (Geberit on Tour) with 12’600 customers • Focus on fire and noise protection, drinking water hygiene, waste water hydr
Slide 6: Marketing 2018 – Expenditure
Marketing 2018 – Expenditure Digital Others % of sales Marketing expenditure CHF million 108 112 105 98 22% 84 • Continuous investments in customer relations and brand reputation • Marketing spend of 3.6% of sales 2018 78% • CHF 25 million or 22% of total marketing spend for digital tools and digita
Slide 7: Marketing 2018 – Example of digital activities for professionals
Marketing 2018 – Example of digital activities for professionals Building Information Modelling (BIM) • Accelerated build-up of a dedicated team responsible for completing and maintaining BIM data for the Geberit assortment • Almost all relevant Geberit assortment behind the wall available as BIM da
Slide 8: Marketing 2018 – Example of digital activities for end consumers
Marketing 2018 – Example of digital activities for end consumers 3D Planning Tool for end consumers and showrooms • Web-based 3D planning and configuration of bathrooms for end consumers and showrooms • Generation of end consumer leads and creation of customer insights B2C CRM system • Cloud-based t
Slide 9: Innovation 2018 – Strengthened innovation pipeline due to Sanitec integration
Innovation 2018 – Strengthened innovation pipeline due to Sanitec integration Pre Sanitec integration Post Sanitec integration R&D expenditure % of sales CHF million 72 78 78 56 63 • Continuously high investments in innovation pipeline 2.4% 2.6% 2.7% 2.5% • R&D expenditure of 2.5% of sales in 2018 R
Slide 10: Innovations 2018 – Successful product introductions
Innovations 2018 – Successful product introductions Geberit sanitary flush Geberit energy retaining Washbasins VariForm Tuma Classic Rapid valve ERV Comprehensive Automated flushing Energy saving valve on Entry-level shower toilet portfolio of countertop system for supply piping top of drainage stac
Slide 11: CAPEX 2018
CAPEX 2018 New products Modernisation & rationalisation Capacity expansion CAPEX % of sales CHF million +1.9% 159 162 147 • 2018 capital expenditures +1.9% 139 12% above prior year 105 43% • Increased spend for modernisation & rationalisation as well as new products 45% • Investments 2018 correspond
Slide 12: Investments 2018 – Key projects
Investments 2018 – Key projects Complete renewal of production site in Langenfeld (DE) • Complete renewal of the building infrastructure for metal piping systems • 2 new buildings: Production hall (15’400m2) and admin building (5’500m2) • Start of production as of 2019 • CAPEX: EUR 35 million (2017-
Slide 13: Investments 2018 – Capacity expansion & efficiency increase
Investments 2018 – Capacity expansion & efficiency increase Capacity expansion & efficiency increase of factory in Pfullendorf (DE) • Additional new building for cistern production • New blow moulding machines with payback of 3 years • New further automated assembly line for concealed cisterns • CAP
Slide 14: Continuous productivity improvements – Metal and plastics plants
Continuous productivity improvements – Metal and plastics plants Production volume1 and productivity2, indexed (2014 = 100) Volume1 Productivity2 • Productivity improvement of +4.8% in 2018 121 112 115 108 • Continuous productivity gains of 100 about +5% p.a. since 2014 100 • Productivity gains base
Slide 15: Investments 2018 – Projects in our ceramics plants
Investments 2018 – Projects in our ceramics plants Productivity and capacity increase in Kolo (PL) • 2 new robotic glazing lines • +18% higher productivity and improved working conditions • CAPEX: CHF 2 million (2017-2018) Flowing factory in Bromölla (SE) • Optimised flow of refire and approved piec
Slide 16: Employees 2018 – Decrease driven by efficiency improvements in production
Employees 2018 – Decrease driven by efficiency improvements in production Number of employees, in FTE Total variance: -79 FTEs (-0.7%) 11’709 17 12 11’630 -189 -4 85 End 2017 Production Sales & Admin R&D Apprentices End 2018 Marketing • Reduction in Production driven by closure of two French ceramic
Slide 17: Sustainability 2018 – Relative environmental impact reduced by -22%
Sustainability 2018 – Relative environmental impact reduced by -22% since Sanitec integration Environmental impact 2014-2018 249 • Absolute energy consumption reduced by 239 230 220 -4.6% in 2018 -22% • Environmental impact in relation to sales declined by -7.3% in 2018 • CO2 emissions in relation t
Slide 18: Social responsibility 2018
Social responsibility 2018 Social project with Geberit apprentices in Morocco • Renovation of the sanitary facilities in several schools in the region of Marrakesh • Geberit apprentices from Germany, Austria and Switzerland working on site New skill sharing projects in Mozambique and Nepal • Geberit
Slide 19: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building construction outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 19 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 20: FY 2018 – Sales growth of +5.9%
FY 2018 – Sales growth of +5.9% CHF million Total variance: + CHF 172 million (+5.9%) 3′081 83 90 2′908 Sales FY2017 Growth Currency Sales FY2018 in local currency effect +3.1% +2.8% Note: Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All
Slide 21: Sales 2018 – General quarterly volatility
Sales 2018 – General quarterly volatility Sales Variance to prior year Quarter Comment CHF million % CHF % c.a. Q1 823 11.7% 4.7% • Strong sales in Switzerland due to pre- buying effects Q2 807 10.3% 3.9% • Strong growth of AquaClean due to specific marketing efforts H1 1’630 11.0% 4.3% Q3 741 1.1%
Slide 22: Sales 2018 – Sales growth in all regions
Sales 2018 – Sales growth in all regions Share of sales and currency adjusted growth 2018 by region, % Europe (90.9% of sales) America (3.2% of sales) +2.8% Far East / Pacific (3.2% of sales) +3.5% Middle East / Africa (2.7% of sales) +13.9% +1.4% Total +3.1% SLIDE 22 ANALYST CONFERENCE - FY 2018 MA
Slide 23: Sales 2018 – Development in European countries / regions (1/2)
Sales 2018 – Development in European countries / regions (1/2) Sales Variance to PY Country / Region Comment CHF million % CHF % c.a. • Limited growth due to bottleneck of qualified installers Germany 934 7.7% 3.1% • Above market growth driven by upselling strategy and new product introductions • We
Slide 24: Sales 2018 – Development in European countries / regions (2/2)
Sales 2018 – Development in European countries / regions (2/2) Sales Variance to PY Country / Region Comment CHF million % CHF % c.a. • Deteriorating market in H2 due to political uncertainty Italy 216 7.5% 2.7% • Above market growth due to dedicated sales & marketing initiative • Market slowdown in
Slide 25: Sales 2018 – Development in international regions
Sales 2018 – Development in international regions Sales Variance to PY Country / Region Comment CHF million % CHF % c.a. • Moderate improvement of institutional sector America 99 2.8% 3.5% • Strong growth of electronic faucets • Mixed picture of building construction markets Far East / Pacific 100 1
Slide 26: Sales 2018 – Development by product areas
Sales 2018 – Development by product areas Sales Variance to PY Comment CHF million % CHF % c.a. • Strong growth of Installation Systems Installation & Flushing Systems 1’133 8.0% 4.9% driven by European expansion markets and upselling in mature markets • Strong growth of new draining piping Piping S
Slide 27: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building construction outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 27 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 28: Key figures 2018
Key figures 2018 CHF million 2018 2017 % YoY • EBITDA margin kept at industry leading level Sales 3’081 2’908 5.9% • Higher raw material prices and tariffs compensated Adj. EBITDA 868 821 5.7% by Margin 28.2% 28.2% − Sales price increases EBITDA 868 772 12.4% Adj. EBIT 744 706 5.4% − Volume growth M
Slide 29: Income statement 2018
Income statement 2018 CHF million 2018 % 2017 % % YoY Sales 3’081 100.0% 2’908 100.0% 5.9% Cost of materials 893 29.0% 830 28.5% 7.6% Personnel expenses 744 24.2% 747 25.7% -0.4% Depreciation 105 3.4% 106 3.6% -0.7% Amortisation 55 1.8% 45 1.5% 23.8% Other operating expenses, net 576 18.7% 560 19.2%
Slide 30: EBITDA margin 2018 – Profitability on high level despite headwinds
EBITDA margin 2018 – Profitability on high level despite headwinds Adjustments / one-off Reported EBITDA margin +0.1% 28.2% +0.4% -0.4% 28.2% -0.1% 1.7% 26.5% Adj. EBITDA Volume and Price effects, Other cost Currency effect EBITDA margin 2017 product mix effect net effects margin 2018 • Positive imp
Slide 31: Adj. net income and adj. EPS 2018 – Above prior year's level
Adj. net income and adj. EPS 2018 – Above prior year’s level CHF million 2018 % 2017 % % YoY Operating profit (EBIT) 708 23.0% 622 21.4% 13.8% Financial result, net -20 -0.7% -9 -0.3% -117.0% Profit before income tax expenses 687 22.3% 612 21.1% 12.2% Income tax expenses 90 2.9% 85 2.9% 6.0% in % pr
Slide 32: Free cashflow 2018 – Strong increase of free cashflow
Free cashflow 2018 – Strong increase of free cashflow CHF million 2018 20171 % YoY EBITDA 868 772 12.4% Changes in net working capital from operating core activities -19 -7 Changes in the other positions of the net working capital 8 -11 Changes in provisions -12 20 Income taxes paid -103 -130 Other
Slide 33: Balance sheet 2018
Balance sheet 2018 CHF million 31.12.2018 31.12.2017 Cash and cash equivalents 282 413 Net working capital 206 173 Property, plant and equipment 829 813 Deferred tax assets 92 96 Other non-current assets and non-current financial assets 37 35 Goodwill and intangible assets 1’652 1’749 Total assets 3
Slide 34: Dividend 2018 – Proposed increase of +3.8%
Dividend 2018 – Proposed increase of +3.8% CHF thousand 2018 2017 Net income Geberit AG 480’166 501'972 Balance brought forward 2’563 3'169 Total available earnings 482’729 505'141 Transfer to free reserves 80’000 120'000 Proposed / paid dividend 393’019 1 382’578 2 Balance to be carried forward 9’7
Slide 35: Free cashflow and distribution to shareholders
Free cashflow and distribution to shareholders Free cashflow, CHF million 2’558 557 582 460 484 476 Average FCF margin 2014- 2018 in % of sales: 19.1% 2014 2015 2016 2017 2018 Total 22.0% 18.7% 19.8% 16.4% 18.9% 19.1% Distribution to shareholders, CHF million Share buyback Dividend payments 2’176 52
Slide 36: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building construction outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 36 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 37: Building industry outlook
Building industry outlook Number of new residential building permits in Europe (% vs PY period) • Fundamentals of building industry remain positive 15.3% 13.3% • Increased uncertainties leading to higher volatility and weaker predictability of building industry 10.7% • Slowdown of selected markets a
Slide 38: Building industry outlook – Europe
Building industry outlook – Europe Mixed construction market environment • Confident about demand in Germany – limited qualified installation capacity most likely remains a bottleneck • Switzerland, slight decline • Nordic Region at best stagnation – positive for Denmark, stagnation in Norway and Fi
Slide 39: Building industry outlook
Building industry outlook Europe Overall favourable but mixed construction market environment North America Middle East / Africa Asia Pacific Moderate improvement of Cautious for Gulf and stagnation Mixed picture across the region institutional sector in South Africa SLIDE 39 ANALYST CONFERENCE - FY
Slide 40: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building construction outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 40 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 41: Product introductions 2019 – New bathroom series Geberit ONE
Product introductions 2019 – New bathroom series “Geberit ONE” Description • New bathroom series combining knowhow behind and in front of the wall B2C benefits • Space saving: In-wall wash place siphon, mirror cabinet, and shower shelves • Easy to clean: rimless turbo-flush toilet, WC lid- system, c
Slide 42: Product introductions 2019 – New DuoFresh module
Product introductions 2019 – New DuoFresh module Description • Odour extraction and hygienic flushing water for WC B2C benefits • No bad smell in the bathroom • Insert for “DuoFresh” stick for hygienic flushing water • Compatible with almost all actuator plates • Automatic activation or coupling to
Slide 43: Product introductions 2019 – New AquaClean Sela
Product introductions 2019 – New AquaClean Sela Description • New mid-level shower toilet with focus on design and hygiene B2C benefits • Highly attractive design • Atmospheric orientation light • Hygienic and silent TurboFlush technology with rimless WC ceramic • Controllable via smartphone app • A
Slide 44: Product introduction 2019 – SMYLE Upgrade
Product introduction 2019 – SMYLE Upgrade Description • Modernisation and extension of bathroom series SMYLE in the mid price segment B2B benefits • Installers: Easy fixing solution for toilet and bidet • Wholesalers: Upgrade of a successful series ensures high acceptance B2C benefits • Aesthetic so
Slide 45: Product introductions 2019 – SuperTube
Product introductions 2019 – SuperTube Description • Flow optimised drainage fittings to ensure a continuous air column in stacks B2B benefits • No ventilation pipe and smaller pipe dimensions • Space gaining in high-rise buildings − Increase of net floor area (up to 20%1 reduced shaft size) − Incre
Slide 46: Investments 2019 – Capacity expansion and renewals
Investments 2019 – Capacity expansion and renewals Complete renewal of production site in Langenfeld (DE) • Renewal of machinery and tools for metal piping systems to improve efficiency • Start of production as of 2019 • CAPEX: EUR 17 million (2019) Capacity increase and productivity increase in Vil
Slide 47: Marketing outlook 2019 – Brand portfolio simplification
Marketing outlook 2019 – Brand portfolio simplification • Phase-out of 4 ceramic brands (Keramag, Sphinx, Allia, Pozzi- Ginori) and replacement with Geberit brand, starting in 2019 • Key benefits − Improved customer support − Simplified cross- and upselling − Reduced complexity in operations and log
Slide 48: Marketing outlook 2019 – Further roll-out of digital tools
Marketing outlook 2019 – Further roll-out of digital tools Launch of new digital tools • New Geberit Pro app for installers with more functionalities, e.g., − automated product identification based on artificial intelligence − chat function • Web-based calculation tools for planners and installers,
Slide 49: Agenda
Agenda Review C. Buhl Sales development C. Buhl Financial results R. Iff Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl SLIDE 49 ANALYST CONFERENCE - FY 2018 MARCH 12, 2019
Slide 50: Summary – Geberit with a good year 2018
Summary – Geberit with a good year 2018 • Solid organic sales growth • Further improved productivity driven by site closures in France and continuous investments in operations • Consequent price increases and high cost discipline in inflationary environment • Stable profitability despite substantial
Slide 51: Summary – Outlook 2019
Summary – Outlook 2019 • Mixed construction market outlook with a slowdown in selected markets • Raw material prices in Q1 2019 below Q4 2018, but increasing again in Q2 2019 • Increasing wage inflation from labour tariffs • Key priorities for Geberit 2019 − Further solidification and improvement of
Slide 52: Summary – Solid fundamentals delivering industry leading financials
Summary – Solid fundamentals delivering industry leading financials Decision maker Sales growth (c.a./org) Adj. EBITDA margin Focused and oriented 6.4% stable strategy Ø 4.3% 28.3% 28.2% 28.2% business model 3.5% 3.1% 2016 2017 2018 2016 2017 2018 Continuous Innovation focus investments Adj. ROIC Fr
Slide 53: Important dates in 2019
Important dates in 2019 • April 3, 2019 • Annual meeting • April 9, 2019 • Dividend payment • May 2, 2019 • Interim report first quarter 2019 • Media release and conference call • August 15, 2019 • Information on the half-year results 2019 • Media release and conference call • October 31, 2019 • Int
Slide 54: Appendix - Historical sales vs. net sales
Appendix - Historical sales vs. net sales Sales growth (c.a./org) 14.4% 11.4% • Reporting on sales till 9.6% 8.9% 9.5% 6.4% 6.4% 2014 before switching to 4.8% 5.0% 5.0% 4.5% 3.6% net sales reporting 3.0% 3.2% 3.5% • Since 2018 reported net -1.0% sales named as sales in our presentations -6.5% Net sa
Slide 55: Disclaimer
Disclaimer While Geberit is making great efforts to include accurate and up-to-date information, we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this handout and disclaim any liability for the use of it. The statements