Good morning, ladies and gentlemen, and welcome to our conference call on our Q1 results. Geberit delivered in a continuous difficult market environment, good results. Let me start with the key statements for the first quarter. First, the unfavorable currency development impacted the entire P&L negatively. Second, net sales reached in local currencies, almost previous year's level. Thirdly, operational margins remained stable on a very high level. And fourthly, the tax rate increased significantly, mainly due to the new OECD minimum taxation law in Switzerland. Let me now comment on our net sales development in more detail. Net sales in Swiss francs declined by -6% to CHF 837 million. The unfavorable currency development affected net sales negatively by CHF 43 million or -5%. Hence, group net sales declined in local currencies by -1%.
This decline was caused by a volume decline of around 2%, which was partially offset by a positive sales price effect of around 1%. The small positive price effect was driven by carryover effects from slightly delayed price increases at the beginning of last year. The volumes were slightly below previous year's level. Adjusted by the one missing working day, volumes have been on previous year level in the first quarter. The volumes were driven by three factors: a positive base effect from destocking of wholesalers in the previous year. Secondly, a declining end market demand, and thirdly, selective restocking of wholesalers this year. However, stock levels at wholesalers were not yet back on normal levels end of Q1. We come now to the regional development. All growth figures refer to growth in local currencies. In Europe, net sales declined by -2%.
Net sales declined in all sub-regions and current countries, except in Italy and Eastern Europe, where a slight growth was achieved. In Middle East Africa, net sales increased only by 1% due to a very strong Q1 and Q4 in the previous year. Net sales in Far East Pacific increased by 7%, despite the sales decline in China. In America, net sales increased by 6%. Let me now comment on the sales development per product area. All three product areas showed a similar sales dynamic. Installation of flushing systems and bathroom system sales declined by -1% and piping systems by -2%. I will now comment on the operating and financial results. The operating results decreased due to the substantial negative currency effect. However, in local currencies, operational results reached previous year's level. I'll start with the discussion of the EBITDA development.
EBITDA in Swiss francs decreased by -7% to CHF 275 million. In local currencies, EBITDA reached previous year's level. The EBITDA margin decreased by thirty basis points and reached with 32.8% an excellent level. The margin decrease was driven by the negative currency development. In local currencies, EBITDA margin slightly increased by thirty basis points, thanks to lower direct material prices. Direct material prices were in Q1, 9% below the Q1 level last year. However, sequentially, prices in Q1 were only 2% below Q4 2023. Despite the significantly lower direct material prices, we kept our sales prices stable, confirming our pricing power. Main negative margin drivers in Q1 were a wage inflation of around 5% and several dedicated growth initiatives, marketing efforts, and additional expenditures for IT and digitalization.
EBIT and EBIT margin decreased in line with the EBITDA and EBITDA margin. Net income in Swiss francs decreased by -11% to CHF 190 million. In local currencies, the decrease was -5%. This decrease was mainly driven by a higher tax rate due to the new OECD minimum taxation law in Switzerland. Earnings per share reached 5.73 CHF, and declined by 4% in local currency, slightly better versus net income due to the continued share buyback program. Excluding the negative currency effect and the new OECD minimum taxation law in Switzerland, EPS would have been almost on previous year's level. The share buyback program was continued with 99,000 shares bought back in the first three months, for a total amount of CHF 51 million.
Let me now comment on our outlook, which does not, which does not differ significantly from our outlook given at our full year analyst conference in March. We expect a very challenging environment with an overall decline in building and stock market this year.... The increased building costs and interest rates over the last two years significantly dampened demand for building construction activities, especially in the new build sector. Building permits in Europe declined by around 15% in the full year, 2023, mainly driven by the residential sector, leading to a contraction of the European new build construction business this year. The strongest decline of the new build sector is expected in Northern Europe and Germany. The most robust new build sector should be seen in Switzerland due to lower inflation and lower interest rates.
Unlike the new build sector, we expect the renovation business, in which we generate around 60% of our sales, to be more robust, mainly driven by the fundamental need for renovation in several European countries, and no additional pressure from the shift from sanitary to heating solutions as experienced last year. Despite the overall negative sentiment for the building construction industry, we expect several positive catalysts for the sanitary construction markets. For example, the general and structural trend to better sanitary standards and the strong demand in several markets outside Europe, for example, in India or the Gulf region. We also expect challenges with regards to direct material prices. First, we expect sequentially increasing prices in Q2 versus Q1. Secondly, direct material prices peaked last year in March. Since then, material prices were continuously falling.
In other words, our margins will benefit less and less in the coming quarters from a positive base effect from high material prices in the previous year, as you can see on slide six of our PowerPoint presentation. This brings me to the Geberit priority this year. The overarching objective this year remains to gain further market shares, regardless of the declining market environment. We stick also in 2024 to our two guiding principles: strategic stability and operational flexibility. The purpose of this principle remain to manage the volume uncertainties in 2024 with a maximum of flexibility, but without harming the midterm potential of the business. This means that we continue to execute on our strategic agenda as presented at our Capital Market Day last October, and that we will further invest into our businesses, into innovation and into efficiency.
Furthermore, we will increase our expenditures for dedicated sales initiatives in emerging markets, for marketing efforts in the context of the launch of our new shower toilet, Alba, and our 150th anniversary this year, and for investment in IT and digitalization. In total, we will increase operational expenditures for these initiatives by CHF 30 million in 2024, further ramping up as of Q2. Before we close the introduction with a short summary, let me briefly comment on the sales development in April. Net sales in April were like-for-like, slightly above previous year's level, driven by restocking effects from wholesalers. Another priority this year remains our shareholder-friendly distribution policy. Based on a healthy balance sheet and a good cash generation, we will launch a new share buyback program this year.
The new program amounts to a maximum of CHF 300 million and will run over a period of maximum two years. It will be launched after the completion of the current program in Q3 this year. Let me close our introduction with a short summary and our key messages. Geberit delivered good results in Q1. Despite a very difficult environment with weak demand, currency adjusted net sales and margins reached previous year's level, supported by restocking of wholesalers and easy comps for direct material prices, due to still peak levels of direct material prices in Q1 last year. Earnings per share reached also previous year's level, excluding the effects from the strong negative currencies and the new OECD minimum taxation law in Switzerland. For 2024, we continue to expect a decline in market environment.
A specific challenge emerges from the fading positive base effect for the margins due to the falling direct material prices in the course of last year. However, Geberit is well prepared for the uncertainties emerging from this environment, as already demonstrated several times during the past. Our confidence remains based on the fundamental need for our products, our resilient strategy and business model, and our long-term focus and track record. Thank you for your attention. We are now ready to answer your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star and one at this time. The first question from the phone comes from Arnaud Lehmann, Bank of America Corporation . Please go ahead, sir.
Thank you very much. Good morning, gentlemen, and thank you for the introduction. A couple of questions on my side. Firstly, on the CHF 30 million increase in cost that you mentioned, for the anniversary and the investment in sales, et cetera, can you give us an indication of phasing through the year? I think you mentioned that Q2 will be higher than Q1, and then what we would expect into the second half. Secondly, we have seen a rebound in the cost of some industrial metals and also of natural gas. Does that create a bit of risk to your margins going forward, or would you consider a new pricing increase to offset the cost inflation? Thank you.
The first question with regards to the additional expenditures of CHF 30 million, that already impacted Q1. However, a little bit disproportional, and we expect a further ramp up as of Q2. With regards to direct material prices, they are expected to increase in Q2 versus Q1, but this does not trigger any thoughts around sales price increases. So we don't plan to increase sales prices due to the slight increase in raw material prices in Q2 versus Q1.
Thank you very much.
You're welcome.
The next question from the phone comes from Martin Hüsler with Zürcher Kantonalbank. Please go ahead.
Yes, good morning, gentlemen. I have two questions. First of all, do you have any feeling of how much was the impact of the restocking effect on the wholesalers on your sales development? And the second question would be about the launch of Alba, the new shower toilet. Is there already a certain impact in Q1, and maybe even a negative one, because everyone was waiting for this shower toilet and did not buy, let's say, a substitute product?
The first question, it is very difficult to quantify the impact of restocking. What we have heard from selective wholesalers, that they started to restock their very low stock levels in the course of Q1, but we can't quantify how much it contributed to our sales in the first quarter. Second question, around the new shower toilet, Alba. There was no significant impact in Q1, neither that we had the pre-sale, for example, or that we had a negative effect on other products of shower toilets, because the customers waited for Alba. However, the feedback which we got so far from customers along the value chain is very positive, and we are looking very much forward now as of April, since we're selling the product since April this year.
Mm-hmm. Okay, thank you.
You're welcome.
The next question comes from Martin Flückiger with Kepler Cheuvreux. Please go ahead.
Yeah, morning, gentlemen. Thanks for taking my question. I've got three, and I'd like to come back firstly to the inventory restocking by wholesalers. I seem to have heard that you mentioned it was selective. Could you elaborate a little bit on that? Because I'm wondering how broad-based it was. 'Cause I understand how difficult it is to quantify, but just to get another feel on it. That's my first question, and I'll go one at a time.
Selective means, first, that we only have selective feedback from wholesalers. It is not a systematic feedback from wholesalers. And secondly, it's also selective with regards to geography. There are some countries where stocking effects play much less of a role. For example, in Italy, where we haven't seen neither stock increases, decreases, or restocking this year. So it's selective in terms of customers and geographies.
Okay, great, thanks. Then the second one is on the carryover effect from last year's selling price increases. Can you remind us which round that was from last year's selling price increases? And were you... you know, it sounded to me at the time like you were guiding for more or less 0% price pricing impact on organic growth this year. So, were you a little bit surprised about the magnitude of this +1%?
First answer, no surprise. We also always have some delay effects. That was in the range of expectations. And it refers to the last price increase, which we implemented in January 2023, which was around 1.5%.
Okay, thanks. And finally, on looking at your EBITDA margin bridge for Q1, it looks to me like the other cost effects were a little bit higher than what I anticipated. You know, judging by the magnitude, it looks like it's around, I don't know, CHF 28 million, something like that, incremental impact on the margin. I realize that we have wage inflation, which is an important part there, but I would have thought that energy costs and you know would offset that. So is there anything in there that we should be aware of in that other cost effect block?
No, actually, that's really it. It's really wage inflation as the main driver. And then, as already said, there was the start of the ramp-up of the +CHF 30 million; that's also in there. And then the rest are minor effects.
Thanks so much.
The next question from the phone comes from Christian Arnold with Stifel Schweiz AG. Please, go ahead.
Good morning, gentlemen. Three questions, if I may. First, on the share buyback program. With CHF 300 million, it is smaller than in the last 10 years... Any reason for that? Any, any signal you want to send?
I wouldn't say it's small. The CHF 300 million corresponds to 100% distribution policy, so to say, but you're right, it is smaller than the recent share buyback program, which was maximum CHF 650 million over two years. But the reason for this stronger share buyback program, which we launched two years ago, was that we wanted to leverage the capacity of the balance sheet in a better way. We have done that now, and now we are back to a more 100% distribution policy.
Okay. Then maybe a word on the sales development in March. I mean, you said in April, year-over-year, it's slightly above previous year's level. That was probably also true in March, right? Despite the fact that we actually had a quite negative impact from the business base.
It is correct, yes. March was also a like-for-like from previous year's level. Correct.
Okay. And then maybe last question on personnel costs. Is the increase in salaries fully reflected in Q1 already, or is there more to come? I remember that sometimes wage inflation only kicks in later in the year. I mean, these, these salary increases, have they already taken place in all countries, or is there more to come?
No, you're right that not all the majority, but not all of the salary increases is as per first of January, therefore, there's more to come in the coming quarters.
But is it substantial more, or?
No, it's more, but in bulk is as per January.
Okay. And then I have just a follow-up. I don't know if I missed it. Your guidance for CapEx this year is about?
CHF 200 million.
Okay. Thank you very much.
Welcome.
The next question comes from Yassine Touahri with On Field Investment Research. Please go ahead.
Yes, good morning. Just so my first question would be on the development in April. I think you said the organic growth was slightly above. Is it something that we can quantify? Is it like 3%-4% above? And is it fair to assume that it's mostly volume and that prices is stable because there is no more lag effect?
We can quantify, but we don't want to quantify because we don't want to go into details on a monthly level with numbers that would not make sense. A price effect, we don't know yet. I would assume it's much smaller than what we have seen in Q1.
Is it fair... did you have also, like, a positive impact of working day in April because of the timing of Easter?
This is true, but I said like for like, it was slightly above previous year. If you add the working days, obviously much more, it was much better, but we will have less working days now in May, so therefore, I would not put too much on the working days on a monthly.
And then the second question on the outlook. When we look at what happened in Germany, in Switzerland, in Austria, the activity declined quite a lot in terms of new housing. Do you feel that we are close to the bottom? And do you think you could go back to a level of volume that is in line with what you achieved before COVID in the next few years, if interest rates come back down?
This is a very difficult question to answer because we have, as you know, these stocking effects, which are overlaying the underlying demand question. Therefore, we can't give you a precise answer to that question. We just don't know. That the volumes will come back to a certain level, to the 2019 levels, we are absolutely convinced. The question is only when, and there we don't have the answer.
Okay. Thank you very much.
The next question comes from Remo Rosenau with Helvetische Bank. Please go ahead.
Yes, good morning. If I remember correctly, in Q1 of last year, you profited from around 100 basis points positive margin impact due to energy subsidies in Italy and Poland of around CHF 8 million, right? I mean, was it, could you remember, or remind me, was it around CHF 8 million? And I mean, if that is true, the underlying margin this year actually improved by around 70 basis points, it didn't decline by 30. Or have there also been any special effect in Q1 2024 we should think about?
No, first, you're right. We had a positive one-time effect last year in Q1 due to energy subsidies of the amount which you've just mentioned. But, keep in mind that, for the rest of the year, we will have, significantly less tailwind from the raw material prices. If you look at page six of our presentation, you see that the raw material prices last year peaked in Q1 and continuously declined since then. So we will face much less tailwind from raw material prices this year that might compensate this one-time positive effect, which we have experienced last year in terms of energy subsidies in Q1.
Yeah, yeah, that is clear. But still, just looking at Q1, there was basically underlying a margin improvement and not decline, right?
Correct.
Okay, great. Thank you.
The next question comes from Alessandro Foletti with Octavian. Please go ahead, sir.
Yes, good morning. Thank you for taking my question. I was wondering, you mentioned in the your introduction that you expect the residential renovation market to be more robust than the new build. Can you sort of quantify that, what you mean with that, or give more color on this?
Yes, quantify, we expect that the new build market this year in Europe should be down double digits. Building permits were down in the full year, last year, by minus 15% in Europe. More robust means that the development in renovation should be much better. If it's also a decline or even a slight growth, it's very difficult to say, especially for our business, since our renovation business is also very much affected by the question of the shift to heating solutions, which we have experienced last year, which we experienced less this year, and that might have an impact on our renovation business.
Right. So you're already starting to answer the second question: Can you give a quantification on this shift to heating?
No, because we don't know how and why, and that, we don't know how we should do that. We can't. We don't have any number. Sorry.
All right. Can you maybe give an update on the order backlog that you sort of give always, in terms of weeks, et cetera?
Yeah.
and if it's more on the heating side, and...
The order backlog of Germany installers is at the moment at 15.5 weeks. This is significantly lower than what we have seen a year ago, where it was about 20.1 weeks, if I remember correctly. But this high record number last year was very much driven by the heating sector. So it came down, and I would assume we don't have any facts behind that statement, but we would assume that this decline was mainly also driven again by less renovation activities in the area of heating solutions.
But if I remember correctly, before this whole heating boom took place, we were round about at this level, where I have 13 weeks in mind that you mentioned in one of the calls. Could that indicate that the heating versus sanitary has now sort of renormalized?
I don't know. I think that maybe... I agree with the number. First, I agree with the number. It was around 13, 14 weeks before that whole heat transition topic started. If that is solely attributable to now to the heat, this, the heating discussion, I don't know. I don't know.
Right. Okay. Okay, just one last one, maybe, for the CFO. On the tax rate, which you mentioned again, can you remind us how it will sort of trend?
For this year will be around 19%.
19%, and then it trends higher still. Is that correct, or are we reaching there in 2025, 2026?
2025, 2026, it depends on a lot, obviously, on the evolution of the country mix, et cetera.
Mm-hmm.
But there's no structural effect that would impact the tax rate further.
Okay. Good. Thank you.
The next question from the phone comes from Charlie Fehrenbach. Please go ahead, sir.
Good morning, gentlemen. I'm not sure if I missed your guidance for the wage inflation for the full year. Is this still around 5%-6%?
Correct.
Okay. You may have an idea the negative Forex effect in Q1, how this will develop in Q2? Will this be similar?
Unfortunately, we don't have a crystal ball on FX. But right now, the effect obviously is much lower than in Q1, if I look the rate this year compared to last year. So, you know, if things were to stay like it is, the FX impact would be lower in Q2.
Thank you very much.
The next question comes from Patrick Rafaisz with UBS. Your line is open.
Thank you, and, good morning, everyone. Two or three questions, please. The first, a follow-up on the, wholesale restocking. You mentioned that this continued in April. What, what is your best estimate? Will that still impact most of Q2, when also the, the comps are still very easy, and then it's over by Q3? Yeah, that's the first question.
Unfortunately, I don't have the answer. To be very short, I don't know.
Okay. And then on the growth initiatives and the extra spending, can you remind us, is that only for 2024, or, will this extra spending potentially also continue in 2025? What's the current planning?
I would say the most of it will continue in 2025. There's some spending for the 150 years anniversary, which of course is only for this year, but the other initiative, like growth initiative, digitalization, et cetera, will continue.
Okay. And then the last question, within EMEA, I know you don't disclose the details on the country level, but can you maybe still highlight some outliers that are significantly better or worse than what you reported for the region?
In EMEA, you mean Europe, Middle East, Africa?
Yes. Yes.
So in the positive outliers in Europe were Italy, which were positive. In general, I would say Italy is a positive outlier, not only the first quarter. There, the business is going significantly better compared to the rest of Europe. And another outlier is Eastern Europe, which was also positive in the first quarter. There is no specific reason behind that. On the more negative side, outliers Europe, I would mention the Nordic region, which is declining significantly declining in the first quarter. Very much also driven by the very big new build business in Sweden, and maybe which is of importance for you, Germany is more or less in line with what we have seen in Europe.
Middle East Africa, looking at the Gulf region, which was not that strong in the first quarter, but just driven by the fact that we had strong business in Q4 last year, Q1 last year. The Gulf is very much project business. You have a lot of volatility in the quarters, but fundamentally, the market is still very good in the Middle East region.
Okay, thank you for that.
You're welcome.
The next question comes from Scholtysik Stefanie with Mirabaud Securities. Please go ahead.
Yes, good morning. I would have some questions on the Alba shower toilets. So is it right that you started to roll out in Switzerland in April, or are there already other countries that, where the product will be rolled out? And can you give us not a detail, but not a rough plan when do you plan to roll out in other countries as well?
The rollout is planned or has started in all countries in Europe as of April, not only Switzerland.
Okay. And then at the Capital Markets Day, you were also talking about that the Alba toilets would see a push also going into hotels and apartment blocks. How is the adoption rate there? Did you see a success than just coming from residential? So as it, it used to be more a consumer product, you also would see that it's more coming from the commercial side?
There we have received very positive signals. We know of a couple of projects, residential projects, which are now installing Alba, for example, in rental buildings in Switzerland or Germany, they buy Alba. I have not yet have heard about hotel projects directly, but I'm pretty sure that will also be a positive demand or a driver for demand for Alba.
I think last time you said you don't need to increase capacity for this product. Is this still the case, or do you need additional investments?
No, there are no additional investments needed for the Alba manufacturing.
Okay. And then maybe another one on the product side, on FlowFit. How much did FlowFit help to drive growth or less decline growth, let's put it this way, in the first quarter? And which are the countries you rolled it out in Q1, and what other countries are coming on?
We did not roll out FlowFit to further countries this year. We are happy with the countries, which we have it rolled out now in Europe. It's around 10 countries, 12 countries. And secondly, the sales development was very positive also in the first quarter. Strong growth, we are even above budget with FlowFit in the first quarter.
Okay, good to hear. Thank you.
Thank you.
For any further questions, please press star and one on your telephone. The next question comes from Christoph with HSBC. Please go ahead.
Hey, good morning, gentlemen. Most of my questions were already answered, but probably a follow-up on some of them. Again, on the wholesaler levels, you said at the beginning that stock levels are not yet back to normal, and you've now said a few times that you don't really—you can't really quantify. But, I mean, that idea comes from somewhere. So why do you say we are not back to normal yet? What is the reason for that?
That's just what we hear from the wholesalers when we ask them the same question, and they say, "Yeah, we are not back to normal levels." That has a lot to do with the short-term market outlook, I would assume. That has to do with stock levels of other product categories. So the answer just comes directly from wholesalers asking them the same question.
Okay, and does that probably have something to do with when we look in Germany, for example, we've seen a huge slump in heat pump sales to the wholesalers? Do you think that is replacement business, or is that a different kind of animal?
What do you mean with replacement business? Or can you rephrase?
The wholesalers obviously have stopped buying heat pumps.
Uh-huh.
And basically have probably some space left or some money left to again restock other stuff, because obviously the demand... I mean, the problem is that we don't really know what that means for the end demand in heat pumps, right, in Germany, we just see that the wholesalers have stopped buying them. And how does that impact your business as such?
It might be a driver for restocking, I agree. It might, but I—we don't know if that.
But do you think this could benefit you, say, in the medium term, also from the installer's point of view?
Benefit in what sense, in the medium term?
Well, if obviously, the heat pump discussion is fading, and we also-
Mm-hmm.
See that in the numbers, so how much time would it take for a consumer to basically take the decision, say, "Okay, well, I've now basically decided on the heat pumps, and now I'm back to sanitary installations." Does that typically come with a time shift, or is that immediately? I would assume with a time shift, right?
To be honest, I don't know, because it's such a one-time experience. You never experienced this crazy situation around heat pumps, therefore we never experienced how we come out of this crazy situation. I think what we can say, what we have heard in the first quarter, is that the demand for heat pumps was much lower. That's what we said already at the beginning of the year. We expect less pressure on our business from this transition to heat pumps, for example, in Germany. This pressure was significantly lower in Q1. Midterm, I would assume we will find a new balance, that there is a balance again between sanitary and heating.
Okay. Then last but not least, also in your statement you say that interest rate cuts could fuel demand. Now, how much of your, let's say, guidance is or not guide, implicitly we don't give a guidance, we know that, but how much of your, say, our implicit outlook is based on interest rate cuts? Because obviously they probably take longer than expected.
Almost, there's no direct correlation. Obviously, interest rates are important for end customer demand in our business, and that's what we are referring to. Lower interest rates should positively influence demand, but what is the direct impact or the share of this driver for demand? We don't know. It's just a matter of fact that lower interest rates obviously would trigger more demand for construction.
Okay, thanks so much.
You're welcome.
The next question from the phone comes from Axel Stasse with Morgan Stanley Please go ahead.
Good morning, everyone. Thanks for taking my questions. The first question I have is about the installers and the wholesalers. How optimistic are they in terms of recovery, especially in new builds? Can you provide maybe a feedback from the discussions you have with them, and maybe some countries that they highlight that could surprise positively in the near term?
So first of all, we don't have systematic reviews, feedbacks from plumbers across Europe. We don't do that. That's quite time consuming. Secondly, if you ask plumbers these kind of questions, they give you the answer more or less, "I don't know." And why should they know? They have much more maybe an idea the next 6 months, or do they have open orders or not. They have hardly a view, especially on a plumber level, what the new build segment will do in the next six, nine month. So what they, if at all, what they will do, they refer to the building permits as what we do as well. From the wholesaler view, it's a bit different. That's what I said before, there you get a, let's say, a more broader feedback.
What I referred to before, that the wholesalers seem, at least by restocking effects, to come to a bit higher expectation in terms of their stock level, but they don't have even a clear view on the new build sector neither.
Okay, perfectly. My second question was about energy pricing picking up again. Is this not representing an opportunity for you guys to pass on this price increase? I know you said no to another question previously asked, but I just try to understand why you do not take the opportunity to offset some of the volume weaknesses that you can see this year with some price increases. Is this solely driven by your wish to gain market share, or higher competition or... Yeah, I just wanted to understand this.
Two answers. Energy prices or energy is around less than 2% of our net sales. So whatever energy prices do in the second quarter, even if they're up 10%, that doesn't affect our margins really. And secondly, we have reached an EBITDA margin of almost 33%, with a volume level which is lower than four years ago. If you look at our competitors, we are miles away with our margin, so there is no reason, pressure to even if energy prices would have an impact on the margins, to immediately increase our prices. And keep in mind, raw material prices in the first quarter, year-on-year were 9% below previous year's quarter, and we kept sales prices stable. So this is definitely not the environment to talk about price increases.
Okay. Okay, very clear. And should we then expect an EBITDA margin in H1? I think it's usually H1 that you speak about the EBITDA margin guidance. But should we then expect your EBITDA margin guidance to be at the upper end of the 28%-30%, initially guided or?
We will, as usual, only give an EBITDA margin guidance in our guidance, in our H1 results. But one additional comment, again, referring to our slide six in our PowerPoint presentation, where you see that this tailwind of 9% lower raw material prices will come down over the next two, three quarters substantially.
Okay, perfectly. Last question on my side. Given the fact that you have reduced your share buyback, is there any risk that you also reduce the dividends for 2024? Or actually, because of the lower share buyback, you now feel comfortable with the leverage of the balance sheet?
No. We’ve increased the dividend for 13 years in a row, and actually almost every time since the IPO, we plan to continue to have at least a stable dividend.
Okay. Okay, thank you very much.
Welcome.
We have a follow-up question from Mr. Hüsler with ZKB. Please go ahead.
Yes, thank you. For the first time, I think in several quarters, you increased your staff slightly. I was just wondering if this trend is about to continue, and in which areas or functions did you actually increase your workforce?
The driver was the sales organization outside Europe. We increased personnel around 3% in the region outside Europe, mainly for these dedicated sales initiatives, which we talked about at our Capital Market Day, but also at our full year press conference.
Mm-hmm. And should we expect now this number more or less to stay because you hired now those people? Or should we see further increase in number of staff over the course of the year?
For the sales organization, you could assume that this number will be more or less stable, or we will further ramp it up in the markets outside Europe. On group level, it's difficult to answer because that depends on the volume development. Depending on the volumes, we will then also adjust our organization, mainly in the operations area.
Oh, sure. Okay, thank you.
You're welcome.
That was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.
Thank you for your attention, and if there are no more further questions, we wish you all a great day.